TaxTMI Updates e-Newsletter
Dec 26,2022

Show-cause notice must disclose reasons - principles of natural justice - requirement of reasons - quashing of administrative order for non-speaking proceedings - restoration of registration and remand for fresh adjudication with opportunity of hearing

Show-cause notice must disclose reasons - principles of natural justice - requirement of reasons - quashing of administrative order for non-speaking proceedings - Legality of the show-cause notice dated 26.05.2022 and the cancellation order dated 11.10.2022. - HELD THAT: - The show-cause notice did not specify the factual basis or particulars justifying the allegation of issuance of invoices without supply or wrongful availment/utilisation of input tax credit. A notice that is bereft of reasons is incapable of informing the recipient of the case to be met and thus violates the rules of natural justice. Reasoning is integral to a valid show-cause process; non-communication of reasons amounts to denial of a reasonable opportunity of hearing. Applying these principles, the impugned show-cause notice is non-speaking and the consequential order of cancellation, which proceeded without adequately considering the petitioners' reply, cannot stand and must be quashed. [Paras 7]

The show-cause notice dated 26.05.2022 and the cancellation order dated 11.10.2022 are quashed and set aside.

Restoration of registration and remand for fresh adjudication with opportunity of hearing - procedural direction to issue fresh speaking notice - Relief to be granted and further course of action following quashing of the notice and order. - HELD THAT: - In view of the invalidity of the impugned proceedings, the registration is to be restored immediately. However, the respondents are permitted to initiate fresh proceedings if justified: any fresh notice must incorporate particulars and reasons with supporting details, the petitioners must be afforded a reasonable opportunity of hearing, and the authority must pass a speaking order on the merits. The Court has not adjudicated the substantive merits of the allegations and confined its decision to procedural irregularity, leaving substantive consideration to a properly conducted process. [Paras 7]

Registration restored forthwith; respondents may issue a fresh detailed notice, grant reasonable hearing, and pass an appropriate speaking order on merits; petition disposed of with no costs.

Final Conclusion: The High Court quashed the non-speaking show-cause notice and the consequential cancellation order, restored the petitioners' registration, and permitted the authorities to issue a fresh reasoned notice and decide the matter after affording a reasonable opportunity of hearing; the court did not decide the merits of the underlying allegations.

Opportunity of personal hearing - service of notice through common portal under Section 169 of the Central Goods and Services Tax Act, 2017 - cancellation of GST registration and access to common portal - setting aside of order and remand for fresh consideration - deeming an order to be a show cause notice for purpose of filing reply

Opportunity of personal hearing - service of notice through common portal under Section 169 of the Central Goods and Services Tax Act, 2017 - cancellation of GST registration and access to common portal - setting aside of order and remand for fresh consideration - deeming an order to be a show cause notice for purpose of filing reply - Validity of the order dated 05.05.2022 confirming excess claim of input tax credit in light of alleged non-receipt of personal hearing and mode of service of notices - HELD THAT: - The Court examined whether the petitioner had been afforded an opportunity of personal hearing before the adverse order was passed and whether uploading of the show cause notice and notices of personal hearing on the common portal constituted effective service when the petitioner's GST registration was cancelled and access to the portal was disputed. The Court noted that sub section (4) of Section 75 of the CGST Act grants an opportunity of personal hearing where an adverse order is contemplated. In view of the factual contention that the petitioner's registration was cancelled and it could not access the common portal, and in the interest of justice, the Court concluded that the matter requires fresh adjudication after giving the petitioner an opportunity of hearing, including personal hearing. Consequently, the impugned order was set aside and remitted for fresh consideration; the order set aside was treated as a show cause notice enabling the petitioner to file a reply within a stipulated period, after which the Assistant Commissioner is to pass an appropriate order in accordance with law following due opportunity of hearing. [Paras 6, 7]

Order dated 05.05.2022 set aside and matter remanded to the Assistant Commissioner for fresh adjudication after affording the petitioner a due and personal opportunity of hearing; the set aside order to be treated as show cause notice and petitioner to file reply within fifteen days.

Final Conclusion: Writ petition allowed to the extent that the impugned order is set aside and remitted for fresh decision after giving the petitioner a personal hearing; petitioner granted fifteen days to submit reply; no order as to costs.

Taxability of affiliation services - exemption under entry 66 of Notification No. 12/2017-C.T.(Rate) - services relating to admission to, or conduct of examination by, an educational institution - scope of phrase "in relation to" in exemption entries - distinction between accreditation/affiliation and conduct of admission/examination

Taxability of affiliation services - exemption under entry 66 of Notification No. 12/2017-C.T.(Rate) - services relating to admission to, or conduct of examination by, an educational institution - Whether affiliation services provided by University of Kota to colleges are a taxable supply and whether affiliation fees are exempt under SI.No.66 of Notification No.12/2017-C.T.(Rate) dated 28.06.2017 as amended. - HELD THAT: - The Authority found that the University, established under the University of Kota Act, 2003, performs functions of recognition, approval and monitoring of colleges (affiliation) and collects affiliation fees. The exemption at SI.No.66 was examined in its amended form (w.e.f. 25.01.2018) and the Fitment Committee/GST Council material shows the amendment was intended to exempt services supplied to educational institutions that relate to admission of students or conduct of entrance examinations. Circulars and pre-GST case law relied upon by the applicant do not squarely cover affiliation fees under the present GST dispensation. The Authority held that affiliation, as understood from the University's statutes and the regulatory scheme, is an activity of recognising and ensuring institutional infrastructure and standards (approval for courses, increase in intake, continuation/permanent affiliation, monitoring), and is therefore distinct from services that are directly "relating to admission to, or conduct of examination" for admission. Services such as approval of a college, grant/continuation of affiliation, permission to start courses or increase intake, and related regulatory functions do not fall within the exempted category which is confined to services in relation to admission or conduct of (entrance) examinations. Consequently, affiliation fees are not covered by SI.No.66 and are taxable as supply under GST. [Paras 13, 14, 15]

Affiliation services provided by University of Kota are a taxable supply and the affiliation fees are not exempt under SI.No.66 of Notification No.12/2017-C.T.(Rate) dated 28.06.2017 as amended.

Final Conclusion: The Authority ruled that the affiliation services rendered by the University of Kota to its colleges constitute a supply liable to GST and the amounts collected as affiliation fees do not qualify for exemption under SI.No.66 of Notification No.12/2017-C.T.(Rate) (as amended).

Reopening of assessment u/s 147 - Allowability of expenses incurred on advertisement and marketing by the Petitioner - change of opinion - Reopening beyond period of four years

As decided by HC [2021 (11) TMI 776 - BOMBAY HIGH COURT] Once the Assessing Officer had applied his mind in the regular assessment proceedings of Petitioner having incurred advertisement and marketing expenditure, it is not open for the Assessing Officer to reopen the assessment - when the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled to a change of opinion for commencing proceedings for reassessment. AO could not have reopened the assessment merely on the basis of change of opinion

HELD THAT:- We are not inclined to interfere with the impugned judgment and hence, the special leave petition is dismissed.

Disallowance of expenditure under Section 40(a)(ii) read with Section 37 - retrospective amendment by the Finance Act, 2022 with effect from 01.04.2005 - non allowability of education cess as business expenditure

Disallowance of expenditure under Section 40(a)(ii) read with Section 37 - non allowability of education cess as business expenditure - Education cess paid by the assessee is not allowable as an expenditure under Section 37 read with Section 40(a)(ii) of the Income tax Act in view of the retrospective amendment by the Finance Act, 2022. - HELD THAT: - The Court allowed the appeal on the basis of the respondent assessee's concession that the retrospective amendment effected by the Finance Act, 2022 (with effect from 01.04.2005) brings the education cess within the disallowance contemplated by Section 40(a)(ii) when read with Section 37. In consequence, the payment characterised as education cess cannot be treated as an allowable business expenditure. The bench recorded that the assessee has already paid the applicable tax on the disallowance.

The education cess paid by the respondent assessee is not allowable as an expenditure under Section 37 read with Section 40(a)(ii); the appeal is allowed in those terms.

Final Conclusion: Appeal allowed on the stated concession and direction: education cess held not allowable as business expenditure under Section 37 read with Section 40(a)(ii) in light of the retrospective amendment; no order as to costs.

Discrimination - reasonable classification - Article 14 - Writ of Mandamus - Article 226 - no mandamus to legislature - legislative power to tax and amend statutes - judicial restraint in taxation - extension of statutory timelines

Article 14 - discrimination - reasonable classification - extension of statutory timelines - Whether the Petitioner has established discriminatory treatment violative of Article 14 by comparing members eligible under section 80-IBA with persons covered by section 80-IAC and other provisions which received extensions. - HELD THAT: - The Court held that to sustain a claim of discrimination under Article 14 the petitioner must plead and establish specific facts demonstrating that the classes compared are similarly situated and that any differentiation lacks a rational nexus to the object of the statute. Merely asserting parity with beneficiaries of extensions under other provisions (such as section 80-IAC) is insufficient. The petition was found to be deficient in pleadings and material particulars required to demonstrate equivalence between the petitioner's members and those granted extended timelines, and therefore the element of hostile discrimination necessary to invoke Article 14 was not made out. The Court applied established principles that taxing and incentive provisions permit reasonable classification and merit judicial restraint, requiring a clear basis of equivalence before treating groups alike under Article 14. [Paras 6, 11]

The claim of discrimination under Article 14 was rejected for lack of adequate pleadings and failure to establish similarity between the classes; the petitioner did not make out a case of unconstitutional discrimination.

Writ of Mandamus - Article 226 - no mandamus to legislature - legislative power to tax and amend statutes - Whether the High Court may issue a writ of Mandamus directing the Union of India or the legislature to extend the timelines in section 80-IBA(2)(b). - HELD THAT: - Relying on authoritative precedent, the Court reiterated that the power to legislate, including to grant tax incentives or to alter statutory timelines, is a legislative function and, even where delegated, remains essentially legislative. Courts do not possess the power to command the legislature or an executive exercising delegated legislative functions to enact, amend or extend statutes. Accordingly, the relief sought in the nature of a writ of Mandamus to compel legislation or executive action to extend statutory eligibility timelines is not available under Article 226. The petition sought precisely such a mandate and therefore could not be granted as a judicial remedy. [Paras 10, 12, 13]

A writ of Mandamus cannot be issued to direct the legislature or to compel the executive to legislate or make subordinate legislation; the petition seeking such relief was dismissed.

Final Conclusion: The petition seeking a writ of Mandamus to direct extension of the timelines in section 80-IBA was dismissed: the petitioner failed to establish discriminatory treatment under Article 14 and the Court declined to direct legislative or executive action, holding that mandamus cannot be used to compel legislation or extension of statutory timelines.

Exemption under section 10(37) - compulsory acquisition deemed for public purpose under town planning law - concurrent findings of fact by CIT(A) and ITAT - requirement of agricultural use for two years immediately preceding transfer - reopening of assessment under Section 147

Exemption under section 10(37) - compulsory acquisition deemed for public purpose under town planning law - concurrent findings of fact by CIT(A) and ITAT - Whether the assessee was entitled to exemption under section 10(37) in respect of compensation/consideration received for transfer of agricultural land situated within municipal limits which was acquired by the municipal authority for a Sewage Treatment Plant. - HELD THAT: - The Court upheld the approach of the CIT(A) and the Tribunal which, after appreciation of evidence, recorded concurrent findings that the land in question was agricultural, lay within the municipal limits, and had been acquired by the municipal authority for a town planning/public purpose (Sewage Treatment Plant) amounting to compulsory acquisition under the relevant town planning statute. Those concurrent factual findings satisfied the conditions required for exemption under clause (37) of section 10, and the Tribunal did not rely on irrelevant material nor ignore material contrary to its conclusion. In the absence of any shown perversity in those findings, no question of law arises for interference with the Tribunal's conclusion that the assessee was entitled to the exemption. [Paras 4, 5, 6]

Concurrent findings that the conditions for exemption under section 10(37) were satisfied were upheld and the Tribunal's confirmation of the CIT(A)'s order was maintained.

Requirement of agricultural use for two years immediately preceding transfer - reopening of assessment under Section 147 - Whether omission by the department to raise the factual contention that the land was not used for agricultural purposes for two years immediately before transfer could be entertained by the Court to deny exemption. - HELD THAT: - The Court observed that the factual aspect concerning two years' agricultural use was not raised by the department before the Assessing Officer, and none of the appellate authorities had formed an opinion on that specific factual point. Because this contention was not taken in the proceedings below and no adverse finding on that fact was recorded by the authorities whose concurrent findings the Tribunal adopted, the Court held that that factual omission cannot supply a ground for reversing the concluded entitlement to exemption. Consequently, there was no substantial question of law arising from this unraised factual issue to entertain the appeal. [Paras 7, 8, 9]

The unraised factual contention regarding two years' agricultural use does not vitiate the concurrent findings; it cannot be used to displace the Tribunal's order and does not give rise to a substantial question of law.

Final Conclusion: The tax appeal is dismissed; the concurrent factual findings of the CIT(A) and the ITAT that the conditions for exemption under section 10(37) were fulfilled (including compulsory acquisition for public purpose) are upheld and no substantial question of law is shown to warrant interference.

Award and quantum of costs - judicial discretion in imposition and reduction of costs - compliance with court directions and departmental remedial action - deposit of costs within stipulated time

Award and quantum of costs - judicial discretion in imposition and reduction of costs - compliance with court directions and departmental remedial action - deposit of costs within stipulated time - Reduction of the previously imposed cost and acceptance of the department's compliance and undertaking regarding improvement of functioning - HELD THAT: - The Court recorded the statement of the Additional Solicitor General that the department is taking steps in compliance with the Court's observations in the earlier judgment and placed on record the CBDT communication calling for explanation from the Jurisdictional Assessing Officer and forwarding the same to DGIT (Vigilance). The petitioner did not oppose reduction of cost and submitted that the petitioner would not dispute the Court's decision on costs. In view of the departmental action taken and the assurance given, and having no reason to doubt the statements made on behalf of the respondent, the Court exercised its discretion to modify the quantum of costs previously awarded. The Court therefore reduced the cost awarded by its order dated 11.08.2022 from the earlier quantum to a lesser quantum and directed payment within a stipulated period to ensure compliance with the judgment. [Paras 2, 5]

The cost awarded by the judgment dated 11.08.2022 is modified and reduced to Rs.5 lacs, to be deposited by the respondents within one month; the departmental compliance and remedial action recorded are accepted.

Final Conclusion: The Court, on being satisfied with the departmental compliance and the assurances recorded, with the petitioner's consent, reduced the costs awarded earlier to Rs.5 lacs and directed deposit of the reduced cost within one month; all pending applications stand disposed of.

Applicability of Section 50C to stamp duty valuation - Role of Stamp Duty Authorities' assessed value in determining sale consideration - Power of Assessing Officer versus Valuation Officer under section 50C(2) - Effect of pre-01/04/2008 purchase of stamp paper on stamp duty assessment

Applicability of Section 50C to stamp duty valuation - Role of Stamp Duty Authorities' assessed value in determining sale consideration - Effect of pre-01/04/2008 purchase of stamp paper on stamp duty assessment - Whether the Assessing Officer was justified in rejecting the stamp duty authority's assessed value and adopting Jantri rates to make an addition under Section 50C for the assessment year 2009-10. - HELD THAT: - The Court held that Section 50C requires the value adopted or assessed by the Stamp Duty Authorities to be considered for the purpose of determining sale consideration where an agreement of sale is shown; the Assessing Officer was not correct in substituting the stamp duty authority's assessment by adopting Jantri rates. The judgment notes that the assessee executed the agreement on 29/03/2008, payment instruments were cleared in the previous year relevant to AY 2009-10, and stamp duty valuation was accepted because the assessee had purchased stamp paper before 01/04/2008. The Court observed that the statutory amendment inserting the specified provision in Section 50C became effective from 01/10/2009 and applicable from AY 2010-11, but nevertheless the principle that the stamp duty authority's assessed value is to be treated as sale consideration governed the dispute. The Tribunal's reliance on the decision in Hasmukhbhai M. Patel v. ACTT Circle - 1(1) Baroda (as applied by the Tribunal) and the reasoning in the earlier coordinate bench decisions supported the conclusion that the AO was not justified in adopting a value different from that adopted by the Stamp Duty Authorities. [Paras 6, 7]

The Assessing Officer's adoption of Jantri rates and independent valuation in place of the stamp duty authority's assessed value was held to be incorrect and the addition under Section 50C was not sustained.

Power of Assessing Officer versus Valuation Officer under section 50C(2) - Role of Stamp Duty Authorities' assessed value in determining sale consideration - Whether the Assessing Officer was empowered to reject the Valuation Officer's report once a valid reference under Section 50C(2) was made. - HELD THAT: - The Court agreed with the Tribunal that once a valid reference is made to the Valuation Officer under Section 50C(2), the Assessing Officer is not empowered to reject the Valuation Officer's report. This finding was affirmed by reference to the coordinate-bench authority Principal Commissioner of Income-Tax-3 v. Ravjibhai Nagjibhai Thesia , and the Tribunal's conclusion that the AO could not adopt a value other than that adopted by the stamp duty authority or reject the valuation officer's report was upheld. [Paras 8]

Assessing Officer was not justified in rejecting the Valuation Officer's report; the Tribunal's finding on this point was upheld.

Final Conclusion: The tax appeal is dismissed; the Tribunal and CIT(A) were found correct in holding that the stamp duty authority's assessed value governs the sale consideration for the purposes in dispute and that the Assessing Officer could not reject the Valuation Officer's report - no substantial question of law arises. No costs.

Jurisdiction to entertain writ petition - territorial jurisdiction - part of cause of action accruing within territorial jurisdiction - notice under Section 148A(b) of the Income Tax Act, 1961 - notice under Section 148 of the Income Tax Act, 1961 - order under Section 127 of the Income Tax Act, 1961 - opportunity of being heard - interim relief

Jurisdiction to entertain writ petition - territorial jurisdiction - part of cause of action accruing within territorial jurisdiction - notice under Section 148A(b) of the Income Tax Act, 1961 - This Court has territorial jurisdiction to entertain the petition challenging the notices/orders impugned. - HELD THAT: - The Court found that a part of the cause of action accrued within its territorial jurisdiction because the initial notice under Section 148A(b) was issued by the Assessing Officer in Mumbai. Given that the petitioner had earlier challenged an earlier notice in this Court and that the Mumbai issuance of the Section 148A(b) notice is material to the controversy, the Court was prima facie satisfied that it may exercise jurisdiction to entertain the present writ petition. The Court therefore issued notice to the relevant respondents and directed filing of objections within a prescribed time. The Court's conclusion on jurisdiction was based on the location of the initial notice under Section 148A(b) and the prior proceedings before this Court, and not on a final adjudication of merits concerning the validity of the notices or orders impugned. [Paras 5, 6]

Petition entertained by this Court; notice issued to Respondent Nos. 2, 4 and 5 and objections directed to be filed within six weeks.

Order under Section 127 of the Income Tax Act, 1961 - opportunity of being heard - interim relief - Ad-interim relief granted and further proceedings stayed as prayed pending further hearing. - HELD THAT: - The petitioner challenged the order under Section 127 inter alia on the ground that it was passed without affording an opportunity of being heard. While the Court did not finally adjudicate the substantive challenge to the Section 127 order or to the validity of the subsequent notices, it granted ad-interim relief in terms of the petitioner's prayer clause 'd' pending disposal of the writ petition. The Court listed the matter for further hearing and directed procedural steps (service and filing of objections) to be completed within specified timeframes. [Paras 7, 8, 9]

Ad-interim relief granted in terms of prayer clause 'd' and matter listed on 13th January, 2023.

Final Conclusion: The High Court prima facie held that a part of the cause of action arose within its territorial jurisdiction because the initial notice under Section 148A(b) was issued in Mumbai; it issued notice to the respondents, directed filing of objections, granted ad interim relief in terms of the petition and listed the matter for further hearing.

Search assessment under section 153A of the Income-tax Act - search and seizure under section 132 - unabated assessment - incriminating material - addition not sustainable without incriminating material found during search - scope of proceedings under section 153A - precedent of the Delhi High Court in CIT v. Kabul Chawla

Search assessment under section 153A of the Income-tax Act - unabated assessment - incriminating material - addition not sustainable without incriminating material found during search - precedent of the Delhi High Court in CIT v. Kabul Chawla - Whether additions made in assessment framed under section 153A in respect of an unabated/completed assessment are sustainable where no incriminating material was found during the search. - HELD THAT: - The Tribunal found that the assessment for the year under consideration was unabated at the time of search under section 132 and that no incriminating documents or material relating to that year were found or seized during the search. Applying the precedent of the Delhi High Court in CIT v. Kabul Chawla and following relevant decisions relied upon by the CIT(A) and the ITAT, the Tribunal held that additions made de hors any incriminating material discovered during the search are not sustainable in proceedings under section 153A when the assessment has not abated. The Tribunal observed that the issue was one of the Assessing Officer's jurisdiction/power to make such additions in the absence of incriminating material and, on that legal ground, upheld the CIT(A)'s deletion of the additions without entering into the merits of the transaction. [Paras 6, 7]

Addition made under section 153A in respect of AY 2012 - 13, where no incriminating material was found and the assessment had not abated, is unsustainable; the CIT(A)'s deletion is upheld.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s deletion of the addition under section 153A for AY 2012 - 13, holding that in an unabated assessment additions not founded on incriminating material discovered during the search cannot be sustained.

Royalty under Article 12 of India-Turkey DTAA - capital gains under Article 13 of India-Turkey DTAA - transfer as relinquishment or extinguishment under section 2(47) - licence versus assignment - test of retention of proprietary rights - royalty as chargeable under section 9(1)(vi) - Explanation 2 to section 9(1)(vi) treating lump sum consideration as royalty - treaty taxation rate and examination under section 90(2)

Royalty under Article 12 of India-Turkey DTAA - capital gains under Article 13 of India-Turkey DTAA - licence versus assignment - test of retention of proprietary rights - transfer as relinquishment or extinguishment under section 2(47) - royalty as chargeable under section 9(1)(vi) - Characterisation of lumpsum consideration received under the Trademark Licence Agreement as royalty or capital gains - HELD THAT: - The Tribunal examined the Trademark Licence Agreement (TLA) and found that, although described as exclusive, irrevocable and perpetual, the licence was expressly subject to detailed conditions - including acknowledgment that ownership remains with the licensor, restrictions on manner of use governed by the brand booklet, licensor's supervisory rights, prohibition on acquisition of title by the licensee, non assignment without licensor's consent and termination rights on breach. Applying the test set out by the jurisdictional High Court for distinguishing licence from assignment - especially whether the licensor retained rights and control - the Tribunal held that the assessee did not alienate, relinquish or extinguish its ownership rights in the trademarks/brand names. The expression 'transfer' in section 2(47) contemplates sale/exchange or extinguishment of rights; those elements were absent. Further, Explanation 2 to section 9(1)(vi) and Article 12(3) of the DTAA treat payments for the use of, or the right to use, trademarks as royalty and Article 12(2) permits source country taxation. On this basis the Tribunal concluded that the lumpsum consideration fell within royalty as defined by section 9(1)(vi) read with Article 12 of the India-Turkey DTAA and not capital gains under Article 13. [Paras 10, 11, 12, 13, 17]

Consideration received under the TLA is in the nature of royalty and not capital gain; grounds challenging this characterisation are dismissed.

Treaty taxation rate and examination under section 90(2) - Claim for taxation of the royalty at the treaty rate (15%) instead of the lower domestic rate - HELD THAT: - The Tribunal observed that the Assessing Officer and the DRP did not examine the assessee's claim on applicable treaty rate and interaction with domestic law. Since the matter was not adjudicated below, the Tribunal restored the issue to the Assessing Officer for fresh consideration in light of the DTAA and section 90(2), directing that the assessee be given a reasonable opportunity of being heard. [Paras 18]

Issue restored to the Assessing Officer for examination afresh with reference to the treaty and section 90(2); no adjudication on merits by the Tribunal.

Set off of royalty income against long term capital loss under section 71(3) - Claim for set off of the royalty income against long term capital loss - HELD THAT: - The Tribunal noted that this claim was not addressed by either the Assessing Officer or the DRP. In view of non adjudication below, the Tribunal directed the Assessing Officer to examine the claim in accordance with section 71(3) of the Act after affording the assessee a reasonable opportunity of being heard. [Paras 19]

Issue restored to the Assessing Officer for fresh consideration; ground allowed for statistical purposes.

Dismissal of consequential and premature grounds - Grounds raised as consequential/premature - HELD THAT: - The Tribunal found certain grounds to be consequential and premature at the present stage of adjudication and, accordingly, declined to entertain them. [Paras 20]

Consequential and premature grounds dismissed.

Final Conclusion: The Tribunal holds that the lumpsum consideration under the Trademark Licence Agreement is royalty (section 9(1)(vi) read with Article 12 of the India-Turkey DTAA) and not capital gains; the assessee's challenge to that characterisation is dismissed. Two procedural issues - taxation at the treaty rate and set off against long term capital loss - were not examined below and are restored to the Assessing Officer for fresh consideration after giving the assessee a reasonable opportunity of being heard; other consequential grounds are dismissed.

Additions under section 68 for unexplained sundry creditors - remission or cessation of trading liability under section 41(1) - requirement of confirmations and inquiries under section 133(6) - appellate interference in absence of fresh evidence or opportunity to AO

Additions under section 68 for unexplained sundry creditors - requirement of confirmations and inquiries under section 133(6) - appellate interference in absence of fresh evidence or opportunity to AO - Deletion by CIT(A) of addition of sundry creditors/trade payables made by AO was not justified and the AO's order is restored. - HELD THAT: - The Tribunal observed that the Assessing Officer made additions due to the assessee's failure to furnish confirmations for certain trade payables. Although the CIT(A) relied on acceptance of purchases and trading results and some confirmations produced before the AO, the CIT(A) did not itself make inquiries nor did the assessee produce fresh evidence before the CIT(A). The Bench noted that if the assessee lacked time to file confirmations before the AO, the assessee could have produced them before the first appellate authority; instead the CIT(A) deleted the additions without making independent inquiry or providing the AO an opportunity to verify. In these circumstances, interference with the AO's limited-scope scrutiny was improper and the deletion was set aside, restoring the AO's assessment order. [Paras 6, 7]

Deletion of addition of sundry creditors of Rs. 3,41,56,172/- was disallowed and the Assessing Officer's order restored.

Remission or cessation of trading liability under section 41(1) - additions under section 68 for unexplained sundry creditors - appellate interference in absence of fresh evidence or opportunity to AO - Deletion by CIT(A) of addition relating to advances from customers was not justified and the AO's order is restored. - HELD THAT: - The Tribunal treated the deletion of the addition in respect of advance from customers similarly to the sundry creditors issue. The CIT(A) deleted the addition despite lack of cross-confirmations from the parties; the assessee did not furnish fresh evidence before the CIT(A) nor did the CIT(A) conduct independent inquiries. Given the absence of additional material on record to justify overturning the AO's finding, the appellate interference was unwarranted and the AO's addition was reinstated. [Paras 6, 7]

Deletion of addition of Rs. 3,97,586/- relating to advances from customers was set aside and the Assessing Officer's order restored.

Final Conclusion: The Revenue appeal is allowed; the CIT(A)'s deletions of additions in respect of sundry creditors and advances from customers are set aside and the assessment order of the Assessing Officer is restored.

Exemption under section 11 of the Income-Tax Act, 1961 - allowability of expenses of charitable trusts - ad hoc disallowance for want of verification of books - genuineness and admissibility of books of account - exemption of dividend income under section 10(34) of the Income-Tax Act, 1961 - admission by the Tribunal of new legal grounds of appeal - application of precedents of other High Courts to ensure uniformity

Exemption under section 11 of the Income-Tax Act, 1961 - allowability of expenses of charitable trusts - ad hoc disallowance for want of verification of books - genuineness and admissibility of books of account - Denial of exemption under section 11 and ad hoc disallowance of 50% of expenses on the ground of allegedly non-genuine or improperly maintained books of account. - HELD THAT: - The Tribunal found that the AO acted beyond the limited scope of earlier directions only to the extent of re-examining the impounded books obtained from DGIT(Exemption), but that the record, including bills, vouchers and account-payee cheque payments, contained no specific adverse finding that expenses were incurred for non-charitable purposes. The Tribunal noted that FSL observations and the AO's finding that books were written in few sittings did not, by themselves, justify blanket 50% ad hoc disallowances where items were supported and not shown to be inauthentic. The Tribunal also relied on continuity of concession in other years, registration under section 12AA and authoritative decisions holding that fundamental factual conclusions sustained across years should not be disturbed. On these bases the Tribunal deleted the ad hoc disallowances and held that denial of exemption under section 11 was unjustified, allowing exemption for both years. [Paras 11]

Denial of exemption under section 11 is set aside and the ad hoc 50% disallowances are deleted; exemption under section 11 allowed for AY 2006-07 and AY 2008-09.

Exemption of dividend income under section 10(34) of the Income-Tax Act, 1961 - admission by the Tribunal of new legal grounds of appeal - application of precedents of other High Courts to ensure uniformity - Admissibility and merits of the additional ground claiming that dividend income is exempt under section 10(34) and therefore excluded from computation for charitable institutions. - HELD THAT: - The Tribunal admitted the additional ground as a pure question of law arising on the record, relying on the Supreme Court principle that the Tribunal may consider questions of law even if not earlier raised. On the merits, the Tribunal followed the decision of the Bombay High Court in DIT(E) v. Jasubhai Foundation holding that income exempt under section 10 need not be considered for purposes of section 11, i.e., income covered by section 10(34) is excluded in computing taxable income and the requirements of section 11 as to application do not apply to such income. Finding no contrary binding precedent, and having regard to persuasive value and the need for uniformity, the Tribunal allowed the additional ground in favour of the assessee for both years. [Paras 6, 14, 16, 18]

Additional ground admitted and allowed: dividend income is excluded under section 10(34) and shall not be included in computation for the two assessment years.

Final Conclusion: Both appeals for AY 2006-07 and AY 2008-09 are allowed: exemption under section 11 is granted and the ad hoc 50% disallowances are deleted; additionally the Tribunal admitted and allowed the claim that dividend income is excluded under section 10(34). Interest-related issues are consequential to these findings.

Notional income versus commercial (real) income of a charitable trust - application and accumulation under section 11(1)(a) - violation of section 13(1)(c) read with section 13(2)(b) - assessment of annual value for rent (computation of notional rent) - taxation at maximum marginal rate under section 164(1)

Notional income versus commercial (real) income of a charitable trust - application and accumulation under section 11(1)(a) - Whether notional rent (accrual-based/annual value) can be assessed as income of the charitable trust for the purpose of exemption under section 11. - HELD THAT: - The Tribunal held that the expression 'income' in section 11(1)(a) must be understood in its commercial sense and that 'application' or 'accumulation' under section 11(1)(a) must relate to real income actually available to the trustees. The CBDT Circular No.005P(LXX-6) dated 19.6.1968 and precedents of High Courts (including Madras and Gujarat decisions relied upon by the assessee) support the view that notional income computed on mercantile/accrual basis, which cannot be actually applied or accumulated by the trust, should not be treated as income for the purpose of section 11. Applying this principle, the Tribunal held that the trust cannot be assessed on notional rental income and that exemption under section 11 cannot be denied on the basis of such notional computation alone. [Paras 7]

Notional rental income cannot be the basis for denying exemption under section 11; income for section 11 must be commercial (real) income actually available to the trust.

Violation of section 13(1)(c) read with section 13(2)(b) - assessment of annual value for rent (computation of notional rent) - taxation at maximum marginal rate under section 164(1) - Whether the lease arrangements with the two lessees (specified persons) attract disallowance under section 13(1)(c) and consequent denial of exemption and taxation at maximum marginal rate. - HELD THAT: - On the material before it, the Tribunal found that the two lessee companies were specified persons (relatives/concerns in which trustees or their relatives had substantial interest). The Tribunal accepted the AO/CIT(A)'s conclusion that the trust had not charged fair market rent to those specified persons and thereby breached the prohibition in section 13(1)(c) read with section 13(2)(b). While the Tribunal agreed with the assessee that notional rent generally cannot be the basis for section 11 denial, it nevertheless held that, on the facts, the provisions of section 13(1)(c) are violated and exemption under section 11 must be denied in respect of income declared; the AO is to assess the income (the income declared by the assessee) to tax accordingly and apply the maximum marginal rate as provided in section 164(1). The Tribunal noted that CIT(A) correctly limited computation to the land portion where appropriate (finding recorded at 5(I)). [Paras 5, 7]

Findings of violation of section 13(1)(c) r.w.s. 13(2)(b) are sustained; exemption under section 11 is denied in respect of the income so affected and the income is to be assessed to tax at the maximum marginal rate.

Final Conclusion: The appeal is partly allowed: the Tribunal held that a charitable trust cannot be denied exemption on the basis of notional rental income (income for section 11 must be real/commercial), but on the facts the trust's leases to specified persons contravened section 13(1)(c) r.w.s. 13(2)(b), so exemption is denied for the income concerned and it is assessable to tax at the maximum marginal rate.

Deduction under section 80IA - requirement of filing Form 10CCB with return - Processing under section 143(1) - disallowance for incorrect claim in revised return - Effect of rectification under section 154 on appeals (infructuous appeal)

Effect of rectification under section 154 on appeals (infructuous appeal) - Appeal against the appellate order dated 31.08.2020 became infructuous and liable to be dismissed after suo motu rectification by the CIT(A) under section 154 followed by a fresh order. - HELD THAT: - The Tribunal observed that the appellate order passed by the CIT(A) dated 31.08.2020 was not digitally signed and that the same mistake was rectified suo motu by the CIT(A) by an order under section 154 dated 28.09.2020 followed by a fresh order under section 250. Because the assessee had preferred an appeal against the original unsigned order, the subsequent rectification and reissuance rendered that appeal infructuous. In consequence the appeal against the original unsigned order was dismissed. [Paras 2]

Appeal against the CIT(A) order dated 31.08.2020 dismissed as infructuous.

Deduction under section 80IA - requirement of filing Form 10CCB with return - Processing under section 143(1) - disallowance for incorrect claim in revised return - Whether deduction claimed under section 80IA could be allowed where Form 10CCB was filed before completion of assessment but not with the original return, and CPC had disallowed the claim while processing under section 143(1). - HELD THAT: - The Tribunal found on the facts that the assessee had filed the audit report in Form 10CCB on 13.11.2017 whereas the CPC processed the return under section 143(1) on 16.03.2019. Relying on the jurisdictional High Court decision affirmed by the Supreme Court (as noted in the order), the Tribunal held that although Form 10CCB is mandatorily required to be filed with the return, filing the certificate before the final order of assessment entitles the assessee to the deduction. The CPC's disallowance in the 143(1) processing for non-filing with the original return could not defeat the assessee's claim where the certificate was submitted prior to completion of assessment. Applying that principle to the facts, the Tribunal set aside the orders below and directed the Assessing Officer to allow the section 80IA deduction. [Paras 6]

Claim of deduction under section 80IA allowed; orders below set aside and Assessing Officer directed to allow the deduction.

Final Conclusion: One appeal (against the unsigned CIT(A) order dated 31.08.2020) dismissed as infructuous after rectification; the other appeal allowed - deduction under section 80IA upheld because Form 10CCB was filed before completion of assessment, and the matter is remitted to the Assessing Officer for giving effect to the allowed deduction.

Approval under section 80G(5) - Rejection of application for non-submission of documents - Natural justice - opportunity of hearing - Remand for fresh consideration

Approval under section 80G(5) - Rejection of application for non-submission of documents - Natural justice - opportunity of hearing - Remand for fresh consideration - Whether the order of the Commissioner of Income Tax (Exemptions) rejecting the assessee's Form No.10AB application for approval under section 80G(5) for failure to furnish information should be set aside and remitted for fresh opportunity to be heard. - HELD THAT: - The Tribunal noted that the assessee had submitted a substantial part of the information called for at the time of filing Form No.10AB (including PAN, society registration certificate, bye-laws, members' details, returns and financial statements) and that the assessee furnished medical evidence explaining inability to respond to the post-application questionnaire. Having perused the written submissions and medical records, the Tribunal found that the circumstances warranted giving the assessee one more opportunity to furnish the remaining details. In consequence, the Tribunal concluded that the CIT(E)'s rejection for non-submission should be set aside and the matter remitted for fresh consideration, with a direction to afford the assessee another hearing and to cooperate in furnishing all relevant information. [Paras 4, 8]

Order of the CIT(E) rejecting the application is set aside and the matter is remitted to the CIT(E) with directions to grant the assessee one more opportunity of being heard and to allow the assessee to furnish the requisite information; appeals allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the CIT(E)'s order rejecting the Form No.10AB application under section 80G(5) and remitted the matter to the CIT(E) with a direction to grant the assessee one further opportunity to furnish the required information and be heard; appeals disposed of accordingly.

Revisional jurisdiction under section 263 - Deduction under section 80P(2)(d) - Allowability of interest income from deposits with co-operative banks - Application of mind by the Assessing Officer - Precedential weight of High Court and Tribunal decisions

Revisional jurisdiction under section 263 - Deduction under section 80P(2)(d) - Application of mind by the Assessing Officer - Allowability of interest income from deposits with co-operative banks - Whether the Principal CIT was justified in exercising powers under section 263 to hold the assessment order erroneous and prejudicial to the revenue by disallowing deduction under section 80P(2)(d) in respect of interest earned on FDRs with co-operative banks. - HELD THAT: - The Tribunal examined whether the Assessing Officer failed to make requisite enquiries or did not apply his mind before allowing deduction under section 80P(2)(d). The record shows that the assessee filed submissions during assessment and the AO considered and allowed the claim after verification. The Principal CIT invoked section 263 relying on other decisions to contend that interest from deposits with banks is not eligible for deduction; however, the Tribunal noted binding and persuasive precedents of the jurisdictional High Court and other benches which recognise that interest earned on deposits with co-operative banks can fall within the scope of section 80P(2)(d). Having regard to those decisions and the fact that the AO had made enquiries and applied his mind, the prerequisites for invocation of revisional jurisdiction under section 263 were not satisfied. Accordingly, the Principal CIT's conclusion that the assessment order was erroneous and prejudicial was unsustainable.

The Principal CIT erred in invoking section 263; the AO had made due enquiries and correctly allowed deduction under section 80P(2)(d) in respect of interest from co-operative banks; the assessment order set aside by the Principal CIT is quashed.

Final Conclusion: The appeal is allowed: the order passed under section 263 setting aside the assessment for alleged erroneous and prejudicial allowance of deduction under section 80P(2)(d) is quashed because the Assessing Officer had applied his mind and relevant High Court/Tribunal authorities support the allowability of interest on deposits with co-operative banks.

Supply of relied-upon documents in legible form - communication of grounds of detention in a language understood by the detenu - right to make an effective representation under Article 22(5) - subjective satisfaction of the detaining authority - placement of retractions and co-accused statements before the detaining/sponsoring authority - non-supply of translated relied-upon documents vitiating preventive detention

Supply of relied-upon documents in legible form - right to make an effective representation under Article 22(5) - subjective satisfaction of the detaining authority - Illegible copies of documents relied upon by the Detaining Authority vitiated the subjective satisfaction and rendered the detention order invalid. - HELD THAT: - The Court examined the originals and found that several RUDs supplied to, and relied upon by, the Detaining Authority were illegible. Applying settled precedent, the Court held that a detenu is entitled to legible copies of documents relied upon in the grounds of detention so as to make an effective representation; supply of illegible or blurred copies violates Article 22(5) and vitiates the subjective satisfaction on which a COFEPOSA order must rest. Consequently the Detaining Authority's reliance on illegible RUDs was held to be a grave error going to the validity of the detention order. [Paras 30, 31, 34, 35]

The supply of illegible RUDs vitiated the Detaining Authority's subjective satisfaction and invalidated the detention order.

Communication of grounds of detention in a language understood by the detenu - right to make an effective representation under Article 22(5) - non-supply of translated relied-upon documents vitiating preventive detention - Failure to furnish relied-upon documents in a language the detenu understands (or translated copies) violated Article 22(5) and rendered the detention order illegal. - HELD THAT: - Relying on Supreme Court authorities, the Court reiterated that mere oral explanation or a signature does not suffice; the grounds and relied-upon documents must be communicated in writing in a language the detenu understands. The detenu had specifically requested translated copies (pages in Chinese and allegedly illegible pages) which were not supplied; the respondents' contention that prejudice must be shown was rejected because the law requires strict compliance with Article 22(5) and translation of relied-upon documents when necessary. The Court therefore concluded that non-supply/non-translation of RUDs amounted to denial of the constitutional right to make an effective representation. [Paras 35, 46, 48, 49]

The Detaining Authority's failure to supply translated/legible relied-upon documents violated Article 22(5) and invalidated the detention order.

Placement of retractions and co-accused statements before the detaining/sponsoring authority - subjective satisfaction of the detaining authority - The Detaining Authority erred in relying on inculpatory statements of the detenu and co-accused without adequate consideration or placement of retractions, which undermined the validity of its subjective satisfaction. - HELD THAT: - The Court noted that retractions by the detenu and co-accused were on record and that there was a significant delay between retraction and the DRI's rebuttal. Precedent requires that where confessional or inculpatory statements of co-accused are placed before the Detaining Authority, associated retractions must also be placed so that the detaining authority can form a proper subjective satisfaction. The record showed that these retractions and their implications were not given due weight by the Detaining Authority. This omission further contributed to invalidating the subjective satisfaction underlying the detention order. [Paras 52, 53, 54, 55, 56]

Reliance on inculpatory statements without due placement and consideration of retractions vitiated the Detaining Authority's subjective satisfaction.

Final Conclusion: The writ petition is allowed. The COFEPOSA detention order dated 01.02.2022 is quashed and the detenu is directed to be released forthwith unless his custody is required in connection with any other case.

Binding effect of an earlier appellate order - classification under the Drawback Schedule - remand for fresh consideration

Binding effect of an earlier appellate order - classification under the Drawback Schedule - remand for fresh consideration - Whether the impugned revisionary and appellate orders could be sustained when a prior Commissioner (Appeals) order dealing with classification of the same product was not considered for its implications, and what relief is appropriate. - HELD THAT: - The Court found that an earlier order of the Commissioner (Appeals) dated 31 December 1997, concerning the same product and holding classification under S.S. No. 85.37, was placed on the record and referred to in subsequent proceedings but not discussed for its implications. That omission caused prejudice to the petitioner because the prior inter partes appellate order supported the petitioner's claim on classification. In these circumstances the Court concluded that the impugned orders, which reached a different classification, could not be sustained without examining the effect of the earlier appellate order. The Court therefore quashed the impugned revisionary order and the earlier appellate order under challenge and remanded the proceedings to the Commissioner of Customs (Appeals) for fresh consideration of classification and for addressing the implications of the 31 December 1997 order. The Court expressly left open the substantive interpretation of the Drawback Schedule entries and did not decide the parties' rival interpretations on classification. The question as to the authorities' power to undertake the proceedings was not pressed and was not decided. [Paras 11, 12]

Impugned orders quashed and set aside; proceedings restored to the file of the Commissioner of Customs (Appeals) for fresh consideration of classification and for dealing with the implications of the earlier Commissioner (Appeals) order dated 31 December 1997.

Final Conclusion: The Revisionary Authority's order dated 13 June 2012 and the related appellate order are quashed; the matter is remanded to the Commissioner of Customs (Appeals) to consider afresh the classification issue and the effect of the earlier Commissioner (Appeals) order dated 31 December 1997; no order as to costs.

Prohibition of vessel entry under United Nations (Security Council) Act - enabling power versus express prohibition - confiscation under section 111(d) of the Customs Act - effect and temporal scope of United Nations Security Council resolutions - narrowing of measures by subsequent UNSC resolutions - mis-declaration before customs

Enabling power versus express prohibition - confiscation under section 111(d) of the Customs Act - Whether the MEA S.O. 2158(E) dated 20.06.2016 itself prohibited entry of the vessel so as to attract confiscation under section 111(d) of the Customs Act. - HELD THAT: - The Tribunal held that paragraph 4 read with paragraph 4(b) of the S.O. confers enabling powers on the central government to take measures to prevent designated vessels from entering Indian ports but does not itself constitute an express prohibition. No notification or executive mechanism under the S.O. or under section 11 of the Act was shown to have been issued to bring any such prohibition into force in respect of the subject vessel. In absence of an express prohibition or operational modality making the S.O. effective to prevent entry, confiscation under section 111(d) could not be sustained. The learned Commissioner erred in treating the enabling words of paragraph 4 as an extant prohibition. [Paras 5]

S.O. 2158(E) is an enabling instrument and, without an express prohibition or operative notification, the vessel could not be treated as imported contrary to a prohibition attracting confiscation under section 111(d).

Effect and temporal scope of United Nations Security Council resolutions - narrowing of measures by subsequent UNSC resolutions - Whether the S.O. and the UNSC resolutions relied upon were in force and applicable to the subject vessel imported in February 2018. - HELD THAT: - The Tribunal examined the chain of UNSC resolutions referenced in the S.O. and noted that the base resolution 2146(2014) was extended to 31.03.2016 by resolution 2213(2015) and subsequently altered in scope by later resolutions. The S.O. did not itself extend the operative adoption of those resolutions beyond 31.03.2016. Further, resolution 2362(2017) narrowed applicable measures to vessels loading, transporting or discharging petroleum products from Libya. The subject vessel was imported without such cargo for breaking/recycling in February 2018 and therefore did not fall within the narrowed measures. Consequently the UNSC regime, as effected by the S.O., did not apply to the importation in question. [Paras 6]

The S.O. and the UNSC measures relied upon were not applicable to the vessel as imported in February 2018; subsequent resolutions curtailed the scope to petroleum-related carriage and the S.O. did not extend operative effect to the later period.

Mis-declaration before customs - Whether there was sufficient material to hold the appellants guilty of mis-statement or mis-declaration in the customs documentation. - HELD THAT: - On the record the IMO number 8900878 and the vessel name MT Capricorn were correctly stated in the Bill of Entry and supported by the certificate of ownership dated 12.02.2018. The Tribunal found no sufficient material to substantiate any wilful mis-statement by the appellants. Since importation was not contrary to any prohibition in force, the penalties and redemption fine imposed in the impugned order lacked foundation. [Paras 7]

No mis-declaration established; penalties and redemption fine set aside.

Final Conclusion: The impugned order holding the vessel liable to confiscation and imposing penalties is set aside. The appeals are allowed and consequential relief granted to the appellants.

Regularisation of shifting of capital goods - condonation of delay in fulfilment of export obligation - confiscation under EPCG scheme - duty demand for duty foregone on import - sealing and de-sealing of imported machinery

Regularisation of shifting of capital goods - condonation of delay in fulfilment of export obligation - confiscation under EPCG scheme - sealing and de-sealing of imported machinery - Whether confiscation and duty/penalty demand for non-fulfilment of export obligations and for shifting machinery without prior permission could be sustained in view of DGFT's extension of export obligation period and the fact that the machines remained under Customs seal. - HELD THAT: - The Tribunal found on the material that the appellant's business was disrupted by a fire and by subsequent shifting of the imported capital goods to a new premises, and that DGFT had later granted an extension of time for fulfilment of export obligations and amended licence terms. The DGFT extension was held to have condoned the delay in achieving export obligations and to have regularised the shifting of the capital goods. However, the Tribunal noted that the extension could not be meaningfully availed of because the machines had been sealed by Customs prior to the DGFT amendment and remained under seizure, preventing manufacture and exports. In these circumstances the Tribunal concluded that sustaining confiscation, duty recovery and attendant penalties was not appropriate: the DGFT extension and the factual inability to export while the machines were sealed disentitled the Department from enforcing confiscation and immediate duty recovery. The Tribunal therefore set aside the adjudication orders, directed de-sealing of the machines within 30 days if still sealed, and granted the appellant two years from de-sealing to fulfil the export obligation, after which the Department would have a fresh cause of action in case of non-fulfilment. [Paras 13]

Impugned orders confirmed by lower authorities set aside; machines to be de-sealed within 30 days if not already de-sealed; appellant granted two years from de-sealing to fulfil export obligation; appeals allowed.

Final Conclusion: The Tribunal allowed the appeals, set aside the orders of confiscation and duty/penalty demand in light of DGFT's extension and the fact that the machines remained under Customs seal, directed immediate de-sealing within 30 days if required, and granted two years from de-sealing for fulfilment of export obligations, permitting the Department to act only thereafter if obligations remain unfulfilled.

Pre-deposit requirement under section 129E of the Customs Act, 1962 - Power to waive or reduce pre-deposit - Dismissal of appeal for non-compliance with mandatory statutory condition - Maintainability of appeal without statutory deposit

Pre-deposit requirement under section 129E of the Customs Act, 1962 - Dismissal of appeal for non-compliance with mandatory statutory condition - Appeal liable to be dismissed for non-compliance with the statutory pre-deposit mandated by section 129E. - HELD THAT: - The Tribunal recorded that the appeal was filed without making the statutory pre-deposit under section 129E and that the appellant failed to comply despite communications and multiple listings over a period of years. The Tribunal noted that the appellant had earlier pursued the same contention in the Madhya Pradesh High Court in relation to an earlier appeal which had been dismissed for non-deposit, and that the High Court had rejected the contention that pre-deposit could be waived. Given the continued non-compliance with the mandatory deposit requirement and the appellant's long inaction (including non-appearance on numerous listed dates and failure to make the deposit or secure relief from the High Court), the Tribunal concluded that the appeal could not be entertained and must be dismissed for failure to comply with the statutory condition precedent to maintainability of the appeal. [Paras 5, 6]

Appeal dismissed for non-compliance with the mandatory pre-deposit requirement under section 129E.

Power to waive or reduce pre-deposit - Maintainability of appeal without statutory deposit - Tribunal lacks power to waive or reduce the statutory pre-deposit under section 129E. - HELD THAT: - The Tribunal relied on the Madhya Pradesh High Court's order reproduced in the record, which held that section 129E makes the pre-deposit mandatory and does not empower the Tribunal or the Commissioner (Appeals) to waive or reduce the pre-deposit. The High Court considered and distinguished decisions under the Central Excise Act and other High Court orders, and concluded that the statutory scheme of section 129E does not permit waiver or reduction. The Tribunal treated that determination as binding for present purposes and found no ground to exercise or to entertain a power to waive/reduce the pre-deposit under section 129E. [Paras 4]

No power to waive or reduce the pre-deposit under section 129E; therefore waiver cannot be granted.

Final Conclusion: The appeal is dismissed for want of the mandatory pre-deposit required by section 129E of the Customs Act, 1962; the Tribunal, consistent with the High Court's view reproduced in the record, has no power to waive or reduce that pre-deposit.

Mandatory pre-deposit under section 129E of the Customs Act, 1962 - deposit as a condition precedent to entertain an appeal - statutory bar on appellate authorities to waive pre-deposit - limits on appellate discretion to reduce or waive pre-deposit

Mandatory pre-deposit under section 129E of the Customs Act, 1962 - deposit as a condition precedent to entertain an appeal - statutory bar on appellate authorities to waive pre-deposit - Whether the appeal is maintainable where the statutory pre-deposit required by section 129E has not been made and whether the Tribunal or Commissioner (Appeals) has power to waive or reduce that pre-deposit. - HELD THAT: - The Tribunal examined the amended provision of section 129E (substituted w.e.f. 06.08.2014) and held that, after the amendment, neither the Tribunal nor the Commissioner (Appeals) has power to waive the statutory requirement of pre-deposit. The Court applied the principle that where a statute confers a right of appeal subject to a condition precedent, the appellate authority cannot entertain the appeal unless that condition is fulfilled; reliance was placed on the Supreme Court's reasoning in Narayan Chandra Ghosh (and subsequent Supreme Court authority) that a pre-deposit mandated by statute is mandatory and appellate bodies cannot grant a waiver beyond what the statute permits. The Tribunal noted consistent High Court decisions holding that the amendment effected a legislative waiver of the bulk of the duty and made the residual pre-deposit mandatory, so courts or tribunals cannot further waive that statutory deposit. On the facts, the appellant failed to make the pre-deposit despite notices and opportunities, and therefore the statutory condition precedent for entertaining the appeal stood unsatisfied. Consequently the appeal could not be entertained and had to be dismissed for non-compliance of the mandatory pre-deposit requirement. [Paras 4, 5, 12, 13]

Appeal dismissed for non-compliance with the mandatory pre-deposit requirement under section 129E; Tribunal has no power to waive or reduce the pre-deposit beyond what the statute permits.

Final Conclusion: The appeal is dismissed for failure to make the mandatory pre-deposit under section 129E of the Customs Act, 1962; the Tribunal and Commissioner (Appeals) have no jurisdiction to waive or further reduce that statutory pre-deposit.

Exemption under Notification No.1/2017-IT Integrated Tax (Rate) dated 28.06.2017 - classification as "Fertilizer Grade Phosphoric Acid" - identical facts and precedent effect of prior adjudication - remand for fresh adjudication - opportunity to file defence and for hearing

Exemption under Notification No.1/2017-IT Integrated Tax (Rate) dated 28.06.2017 - classification as "Fertilizer Grade Phosphoric Acid" - identical facts and precedent effect of prior adjudication - remand for fresh adjudication - opportunity to file defence and for hearing - Whether the matter should be remanded to the Adjudicating Authority for fresh consideration of the appellant's claim of exemption and classification of the imported goods in view of an earlier adjudication on identical goods. - HELD THAT: - The Tribunal noted that the present import entries concern the same goods from the same supplier as those adjudicated earlier, and that the earlier adjudicating order dated 24.06.2021 had resulted in dropping the demand. Having regard to the absence of factual difference between the earlier adjudication and the present entries, and in view of the development in the earlier matter (including the department's acceptance as per information obtained), the Tribunal found it appropriate to require the Adjudicating Authority to re-consider the claim. The Tribunal therefore set aside the impugned orders and directed a fresh adjudication, keeping all issues open and expressly directing that the appellant be afforded adequate opportunity to file its defence and be heard. The Tribunal did not decide on the merits of the exemption claim or classification but remanded the matter for fresh consideration in light of the earlier order. [Paras 4, 5]

Impugned orders set aside; matter remanded to the Adjudicating Authority for fresh adjudication of the exemption and classification issues, with all issues kept open and the appellant to be given opportunity to file defence and be heard.

Final Conclusion: Appeals allowed by way of remand: impugned orders set aside and the matter remitted to the Adjudicating Authority for fresh consideration of the appellant's eligibility for exemption and the classification of the imported goods, with all issues left open and the appellant granted opportunity to file its defence and be heard.

Dismissal for non-prosecution - cartelisation / bid rigging in contravention of Section 3(3)(d) read with Section 3(1) - leniency / lesser penalty application treated as admission/confession - calculation of penalty - relevance of "relevant turnover" v. total turnover and doctrine of proportionality - exercise of discretionary penalty power and requirement to record reasons when imposing maximum penalty - remand for reconsideration of penalty quantum after affording opportunity - direction for criminal / anti corruption enquiry where appellate record discloses cognisable misconduct

Dismissal for non-prosecution - Certain appeals were dismissed for non-prosecution. - HELD THAT: - The Tribunal recorded repeated non-appearance by appellants in specified appeals and, to avoid deciding ex parte on merit without hearing, ordered dismissal of Competition Appeal (AT) Nos. 44/2018, 45/2018, 46/2018, 56/2018, 57/2018, 58/2018, 59/2018, 60/2018, 61/2018 and 67/2018 for non-prosecution. The order reflects the Court's procedural decision to dismiss those appeals rather than decide them on merits in the absence of representation. [Paras 2]

Competition Appeal (AT) Nos. 44/2018, 45/2018, 46/2018, 56/2018, 57/2018, 58/2018, 59/2018, 60/2018, 61/2018 and 67/2018 are dismissed for non-prosecution.

Cartelisation / bid rigging in contravention of Section 3(3)(d) read with Section 3(1) - leniency / lesser penalty application treated as admission/confession - The Tribunal upheld that the material, including leniency applications and DG report, established cartelisation and that appellants' admissions precluded challenging the merits; appeals survive only on penalty. - HELD THAT: - On review of the information, DG investigation report and the CCI order, the Tribunal found sufficient evidence of bid rigging in the specified tenders and noted that several appellants had filed lesser penalty (leniency) applications and admitted involvement. The Tribunal observed that such admissions, when corroborated by evidence, operate as confessional and bar assailing the finding of contravention; accordingly the substantive findings of contravention under Section 3(3)(d) read with Section 3(1) stand on the record, and the appeals were limited to challenge on quantum of penalty. [Paras 23]

The findings of cartelisation recorded by the CCI are sustained on the appellate record; appellants' leniency admissions preclude reopening the merits and restrict the appeals to issues of penalty.

Calculation of penalty - relevance of "relevant turnover" v. total turnover and doctrine of proportionality - exercise of discretionary penalty power and requirement to record reasons when imposing maximum penalty - remand for reconsideration of penalty quantum after affording opportunity - Though the Tribunal declined to grant appellants the benefit of the Excel Crop Care principle on the facts of this case, it found that the CCI had not adequately exercised its discretion in imposing the maximum penalty and therefore remitted the question of penalty to the CCI for fresh consideration after giving appellants an opportunity to be heard on quantum. - HELD THAT: - The Tribunal noted that the Supreme Court's decision on "relevant turnover" (Excel Crop Care) had been considered by the CCI, but, given the peculiar factual matrix (proxy/cover bidders not engaged in the relevant activity), concluded that Excel Crop Care did not entitle appellants to automatic relief. Nevertheless, because the CCI imposed penalty up to the statutory maximum without recording detailed reasons and without showing that appellants were afforded an opportunity to address the imposition of an exemplary (maximum) percentage, the Tribunal held that the CCI's exercise of discretion required reconsideration. The Tribunal remitted all surviving appeals (including Appeal No. 68/2018 arising out of the same case) to the CCI with directions to re-examine the penalty, articulate reasons if the maximum is to be imposed, and give full opportunity to the appellants to address the quantum. [Paras 23, 25, 26]

The appeals are remitted to the CCI to reconsider and re-determine the penalty in accordance with law after affording full opportunity to the appellants to address the question of quantum and the imposition of any maximum penalty.

Direction for criminal / anti corruption enquiry where appellate record discloses cognisable misconduct - The Tribunal directed a criminal/anti corruption enquiry into the role of Pune Municipal Corporation officials insofar as the appellate record disclosed facts warranting such inquiry. - HELD THAT: - While ordinarily confined to appellate review under the Competition Act, the Tribunal observed that the investigation and record disclosed facts (including call records and other indicia) suggesting possible involvement of PMC officials in facilitating the cartel. The Tribunal held that such material warranted further inquiry by appropriate law enforcement authorities rather than being ignored on appeal. Consequently, it directed that the matter be referred to the Director General of Police, Maharashtra / Director General, Anti Corruption, Maharashtra to examine the role of PMC officials and, if cognisable offences are found, to register FIR and pursue statutory investigation. [Paras 27, 28, 29]

A copy of the order is to be sent to the Director General of Police, Maharashtra and the Director General, Anti Corruption, Maharashtra with a direction to conduct an enquiry into the role of Pune Municipal Corporation officials and to take statutory action if cognisable offences are revealed.

Final Conclusion: The Tribunal dismissed several appeals for non prosecution, upheld the CCI's findings of cartelisation in respect of the contested tenders and constrained the appeals to the question of penalty; however, because the CCI imposed maximum penalties without adequate recorded reasons or apparent opportunity to address exemplary quantum, the Tribunal remitted the surviving appeals (including Appeal No. 68/2018) to the CCI for fresh consideration of penalty after affording full opportunity to the appellants, and directed the State anti corruption/police authorities to enquire into the role of Pune Municipal Corporation officials where the appellate record discloses material warranting such inquiry.

Restriction on extension under the first proviso to Section 12 - mandatory outer limit of 330 days under the second proviso to Section 12 - limited additional period under the third proviso to Section 12 - scope of the non obstante clause in Section 60(5) - permissibility of extension beyond 330 days as articulated in paragraph 127 of Essar Steel - role of Committee of Creditors' resolution in seeking extension of CIRP

Restriction on extension under the first proviso to Section 12 - Whether the first proviso to Section 12 prohibits grant of more than one extension of the CIRP period. - HELD THAT: - The Court holds that the first proviso to Section 12, by the negative formulation 'shall not be granted more than once', is explicit and unambiguous and must be given its plain meaning: no extension beyond the one permitted extension is permissible. Negative statutory language of this character is ordinarily mandatory and not directory, and prior authority construing similarly worded provisions supports a mandatory reading. Consequently, successive or multiple extensions beyond the single extension authorized by the first proviso are not permissible under Section 12. (Paras 15-16, 21, 23-25) [Paras 15, 16, 21, 23, 25]

No extension of the CIRP period can be granted more than once under the first proviso to Section 12.

Mandatory outer limit of 330 days under the second proviso to Section 12 - permissibility of extension beyond 330 days as articulated in paragraph 127 of Essar Steel - How the second proviso (330 days) interacts with the first proviso and whether it permits cumulative successive extensions or an extension beyond 330 days. - HELD THAT: - A harmonious reading requires treating the second proviso as specifying the outer limit (330 days) within which the CIRP must be completed including any extension permitted by Section 12(3). The second proviso does not nullify or dilute the first proviso's prohibition on more than one extension; it simply prescribes the overall maximum period including the permitted extension. The Court rejects the contention that Section 12(3) should be read to allow 330 days plus a further 90 days. Separately, the Court notes the Supreme Court's decision in Essar Steel (para 127) which struck down the word 'mandatorily' and permitted exceptional extensions beyond 330 days where only a short period remains and extension is necessary to put the corporate debtor back on its feet; but such exceptional relief requires satisfaction of those specific conditions. In the present case the record did not show that those narrow conditions were satisfied. (Paras 20-23, 28-36) [Paras 23, 28, 30, 35, 36]

The second proviso fixes an overall outer limit of 330 days (including any extension) and does not permit successive extensions beyond the single extension; extensions beyond 330 days are permissible only in the exceptional circumstances identified in paragraph 127 of Essar Steel and on satisfaction of those conditions.

Limited additional period under the third proviso to Section 12 - Whether the third proviso (90 days from commencement of the Amendment Act, 2019) applied to the present CIRP which commenced after the Amendment Act came into force. - HELD THAT: - The third proviso applies to resolution processes that were pending on the effective date of the Amendment Act (16.08.2019). Where the CIRP commenced after that date, the third proviso has no application. Applying the third proviso to proceedings initiated post commencement would render the first proviso otiose, which is impermissible. Thus the third proviso is inapplicable to the present proceeding which began on 12.08.2021. (Paras 11, 26-27) [Paras 11, 26, 27]

The third proviso does not apply to CIRP proceedings commenced after 16.08.2019 and is therefore inapplicable to the present case.

Scope of the non obstante clause in Section 60(5) - Whether Section 60(5)'s non obstante clause permits invoking NCLT jurisdiction to override the internal limitations of the IBC such as the first proviso to Section 12. - HELD THAT: - Section 60(5) contains a non obstante clause 'notwithstanding anything to the contrary contained in any other law for the time being in force' which is intended to confer priority over other laws. The Court, relying on authoritative interpretation, holds that such a clause is not to be read as overriding other provisions of the same statute; it addresses inconsistency with other laws, not internal statutory limits. Therefore Section 60(5) cannot be invoked to circumvent the specific bar on successive extensions contained in the first proviso to Section 12. An application under Section 60(5) cannot make maintainable what Section 12 expressly prohibits. (Paras 37-42) [Paras 37, 38, 41, 42]

Section 60(5)'s non obstante clause does not empower the NCLT to set aside or override the internal prohibition in Section 12 on granting more than one extension.

Role of Committee of Creditors' resolution in seeking extension of CIRP - permissibility of extension beyond 330 days as articulated in paragraph 127 of Essar Steel - Whether a resolution of the Committee of Creditors approving an extension (by voting majority) suffices to justify a subsequent extension beyond the single extension permitted under Section 12. - HELD THAT: - The Court finds that a COC resolution seeking further extension, even if passed by a voting majority, cannot alone validate a subsequent extension that is barred by the first proviso. Granting extension beyond the single permitted extension is permissible only under the narrow circumstances identified in Essar Steel (para 127)-namely that only a short period remains beyond 330 days and that extension is necessary in the stakeholders' interest to revive the corporate debtor. The resolution placed on record did not demonstrate that the resolution plan would put the corporate debtor back on its feet or that only a short period was required; the plan evidenced a management takeover by lease rather than a demonstrable short term revival. Accordingly, the COC resolution did not satisfy the conditions for exceptional extension. (Paras 30-36, 43-45) [Paras 35, 36, 43, 44, 45]

A Committee of Creditors' resolution alone cannot validate a subsequent extension barred by Section 12; exceptional extensions require satisfaction of Essar Steel criteria, which were not shown here.

Final Conclusion: The NCLT order dated 25.08.2022 granting a further extension of the CIRP is set aside as impermissible: Section 12 permits only one extension, the second proviso (330 days) does not abrogate that restriction, Section 60(5) cannot be used to override an internal statutory bar, and the COC resolution did not meet the narrow conditions for any exceptional extension; parties remain free to pursue remedies permissible under law.

Moratorium on institution and continuation of proceedings - effect of interim directions passed under Sections 241 and 242 of the Companies Act - jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996 - supervisory jurisdiction of the High Court over statutory tribunals - cut-off date in a corporate resolution process - obligation to lodge claims with a claims management advisor during a resolution process

Moratorium on institution and continuation of proceedings - jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996 - Whether the petitioner can be referred to arbitration under Section 11 of the Act of 1996 despite the NCLAT orders staying institution or continuation of proceedings against IL&FS group companies, including the respondent. - HELD THAT: - The court treated the NCLAT orders dated October 15, 2018 and March 12, 2020 as operating to stay the institution or continuation of suits or other proceedings, including arbitration, against IL&FS and its group companies. The court observed that the interim order does not distinguish between claims arising before or after the cut-off date and prohibits initiation of any proceedings irrespective of the period to which claims pertain. Because the order dated March 12, 2020 confirming the NCLAT directions is under challenge before the Supreme Court and is not stayed, this Court declined to entertain an application under Section 11 that would have the effect of rendering the NCLAT order otiose or defeating its purpose of protecting the assets and integrity of the resolution process. The court relied on the principle that it should not sit in appeal over the NCLAT order in a petition under Section 11 when that order is not under challenge before this Court. [Paras 55, 56, 64, 65, 66]

Reference to arbitration under Section 11 is precluded while the NCLAT moratorium remains in force; the petition seeking appointment of an arbitrator is not maintainable on that footing.

Supervisory jurisdiction of the High Court over statutory tribunals - effect of interim directions passed under Sections 241 and 242 of the Companies Act - Whether this High Court can exercise supervisory jurisdiction to override or disregard the NCLAT moratorium in order to appoint an arbitrator. - HELD THAT: - The court acknowledged general principles on supervisory jurisdiction but held that those principles do not permit this Court to nullify or render ineffectual the interim order of the NCLAT that has not been set aside. Granting the relief sought would defeat the purpose and consequences of the NCLAT directions, particularly while the legality of those directions is pending before the Supreme Court. Reliance on precedents concerning supervisory jurisdiction did not persuade the court to act because the NCLAT order has concrete consequences and is not under challenge in the present petition. [Paras 68, 69, 70, 71]

The High Court will not exercise its supervisory jurisdiction to override the operative effect of the NCLAT moratorium in these proceedings; the petitioner cannot be permitted to circumvent the NCLAT order by seeking appointment of an arbitrator.

Cut-off date in a corporate resolution process - obligation to lodge claims with a claims management advisor during a resolution process - Whether claims arising after the NCLAT-prescribed cut-off date (October 15, 2018) can be referred to arbitration during the currency of the NCLAT moratorium and whether denial of arbitration would leave the petitioner remediless. - HELD THAT: - The court found that the NCLAT order prescribes a resolution framework with a cut-off date for claims and, more importantly, imposes a stay on institution or continuation of any proceedings against IL&FS group companies. The stay operates without distinguishing pre- and post-cut-off claims and therefore bars initiation of arbitration for claims arising after the cut-off date while the moratorium subsists. The court rejected the contention that permitting arbitration only for post-cut-off claims would be consistent with the NCLAT order, noting that allowing fresh proceedings for post-cut-off claims would undermine the protective purpose of the moratorium. The court also noted that the petitioner had submitted claims to the Claims Management Advisor and that the CMA had deferred consideration in light of the court proceeding; but the existence of those procedural steps does not permit bypassing the operative stay of proceedings. [Paras 62, 63, 64, 65, 66]

Claims arising after October 15, 2018 cannot be referred to arbitration while the NCLAT moratorium operates; the petitioner must await adjudication of the challenge to the NCLAT orders in the Supreme Court and cannot be granted arbitration relief in the present petition.

Final Conclusion: The petition under Section 11 of the Arbitration and Conciliation Act, 1996 is dismissed. Liberty is granted to the petitioner to apprise the Claims Management Advisor of this decision, and the CMA, if so apprised, shall consider the petitioner's claims in accordance with law.

Condonation of delay for filing appeal - sufficient cause - maintainability of claim based on unregistered lease - effect of non-registration of lease exceeding twelve months - power of adjudicatory forum to direct payment during CIRP

Condonation of delay for filing appeal - sufficient cause - Whether the delay of 12 days in preferring the appeal beyond the statutory 30-day period under Section 61(2) of the I&B Code should be condoned. - HELD THAT: - The Tribunal noted that the appeal was filed 12 days beyond the 30-day limit and that the Appellants are senior citizens who experienced difficulty in coordinating and obtaining signatures, which caused the delay. Section 61(2) permits the Appellate Tribunal to condone delay not exceeding 15 days if satisfied that there was a sufficient cause. Applying a lenient and sympathetic approach rather than a pedantic or hyper-technical one, the Tribunal found the explanation satisfactory and within the permissible 15-day extension. Accordingly the application for condonation of delay (IA No.1068/2022) was allowed.

Delay of 12 days is condoned and IA No.1068/2022 is allowed.

Maintainability of claim based on unregistered lease - effect of non-registration of lease exceeding twelve months - power of adjudicatory forum to direct payment during CIRP - Whether the Interlocutory Application seeking possession and payment of enhanced lease rent was maintainable given that the lease deeds for 15 years were unregistered, and whether the Adjudicating Authority correctly directed payment of agreed rent during the CIRP. - HELD THAT: - The Tribunal examined the unregistered lease deed dated 16.01.2007 and the supplementary lease dated 21.07.2009, both for 15 years, and noted that those instruments were not registered and the lease had expired in January 2022. While recognizing authorities that permit courts to determine the factum of tenancy from conduct in certain cases, the Tribunal held that a lease exceeding twelve months must be registered in the manner known to law and an unregistered lease/document cannot be looked into by a court or tribunal even for collateral purposes. On that basis the Adjudicating Authority correctly held IA/434(CHE)/2022 to be not maintainable. Separately, the Adjudicating Authority directed the Resolution Professional to pay the agreed monthly rent of Rs.2,25,000 till the continuation of the CIRP; the Tribunal observed that this direction flowed from the admitted payments/agreement and affirmed that direction. Having found the appeal devoid of merits on the maintainability ground, the Tribunal dismissed the appeal.

IA/434(CHE)/2022 in CA/1/IB/2017 is not maintainable due to non-registration of the long-term lease; the Adjudicating Authority's direction to the Resolution Professional to pay the agreed rent during CIRP stands; the Company Appeal is dismissed.

Final Conclusion: The Appellate Tribunal allowed condonation of delay (IA No.1068/2022) for 12 days but dismissed the appeal on merits: the interlocutory application based on unregistered long-term lease was not maintainable, while the Adjudicating Authority's direction to pay the agreed rent during the CIRP is upheld; connected IA No.1069/2022 is closed.

Approval of a resolution plan under Section 31 - limited judicial review of the adjudicating authority under Section 30(2) - commercial wisdom of the Committee of Creditors - differential treatment of classes of creditors in a resolution plan - principles of natural justice and procedural regularity in pronouncement of orders - treatment of statutory/secured creditors in the insolvency resolution process

Principles of natural justice and procedural regularity in pronouncement of orders - approval of a resolution plan under Section 31 - Validity of the Impugned Order approving the Resolution Plan where other interlocutory applications were reserved and the order was pronounced by an Acting President presiding virtually. - HELD THAT: - The Tribunal found no procedural illegality or breach of natural justice in the Adjudicating Authority's pronouncement. The Cause List on 01.06.2021 recorded that the Resolution Plan was to be approved and the Bench had announced allowance of I.A.2083/2019 with a direction that a detailed order would follow. The Appellants had earlier approached the High Court and withdrew that petition with liberty to challenge the order on merits; they cannot now resurrect procedural objections on the same grounds. The virtual pronouncement by the Acting President and subsequent upload of the detailed order did not vitiate the approval. [Paras 9, 10, 11]

The challenge based on procedural irregularity and breach of natural justice is rejected; the approval stands.

Limited judicial review of the adjudicating authority under Section 30(2) - commercial wisdom of the Committee of Creditors - approval of a resolution plan under Section 31 - Whether the Adjudicating Authority (and this Tribunal) could re-examine commercial choices of the CoC or modify claims provided for in the approved Resolution Plan. - HELD THAT: - Relying on Supreme Court precedents, the Tribunal reiterated that the jurisdiction under Section 31(1) is limited to ascertaining compliance with the requirements of Section 30(2). The adjudicating authority does not possess an equity based jurisdiction to reappraise the commercial wisdom of the CoC or to direct modification of allocations made in a plan approved by the requisite majority. Delay in approval and implementation considerations also weigh against reopening an approved and implemented plan. [Paras 11, 12, 18]

The Tribunal will not interfere with the CoC's commercial decision so long as the plan complies with Section 30(2); commercial challenges are beyond its remit.

Differential treatment of classes of creditors in a resolution plan - treatment of statutory/secured creditors in the insolvency resolution process - Whether the Resolution Plan's differential treatment (100% to GMADA while other operational creditors got 25%) offended the Code or rendered the plan non compliant. - HELD THAT: - The Tribunal applied governing precedents which recognise that differential payments to different classes of creditors are permissible where the plan otherwise complies with the Code and Regulations. The CoC may, as part of commercial negotiation, provide for full payment to certain creditors (including secured or statutory bodies) if necessary for viability of the project. Given that the corporate debtor's business depended on land and approvals from GMADA, and having regard to the CoC's commercial assessment and majority approval, the differential treatment did not amount to a material irregularity warranting interference. [Paras 14, 15, 16]

Differential treatment of GMADA vis a vis other creditors does not, by itself, invalidate the Resolution Plan.

Treatment of statutory/secured creditors in the insolvency resolution process - differential treatment of classes of creditors in a resolution plan - Whether GMADA could be treated as a creditor entitled to payment under the Resolution Plan despite not having formally preferred a claim or registered a charge. - HELD THAT: - The Tribunal noted the factual matrix that the project was on land owned/linked to GMADA and that GMADA had been in communication with the Resolution Professional. While observing that GMADA's failure to formalise claims was not praiseworthy, the Tribunal held that the commercial necessity of securing GMADA's cooperation for completion of the real estate project justified the CoC's decision to provide for its dues. The CoC's commercial judgment in this context, given the nature of the corporate debtor's business and the security interest linked to land, could not be set aside. [Paras 16, 18]

GMADA's treatment as a creditor for purposes of the plan was permissible on the facts; its non filing of a formal claim did not vitiate the plan.

Approval of a resolution plan under Section 31 - limited judicial review of the adjudicating authority under Section 30(2) - Whether the Appeals should succeed and the approved and implemented Resolution Plan be set aside. - HELD THAT: - Considering the CoC's unanimous approval in 2019, subsequent operational implementation of the plan, infusion of funds by the SRA, the jurisprudence disfavoring re opening of approved plans absent non compliance with Section 30(2), and the procedural posture in which appellants had earlier sought and obtained liberty from the High Court, the Tribunal declined to set aside the approval. It also observed the prejudice of unwinding an implemented plan and emphasised the policy aim of time bound revival under the Code. [Paras 17, 20, 21]

All Appeals are dismissed and the approval of the Resolution Plan is upheld; pending IAs closed.

Final Conclusion: The Tribunal dismissed the appeals and upheld the Adjudicating Authority's approval of the Resolution Plan. The challenge based on procedural irregularity and alleged breach of natural justice was rejected; the Tribunal affirmed that its review is limited to Section 30(2) compliance, that the CoC's commercial wisdom and differential treatment of creditor classes (including provisioning for GMADA) were permissible on the facts, and that the approved and implemented plan should not be set aside.

Removal and appointment of Resolution Professional - Power of Adjudicating Authority to appoint Resolution Professional in absence of consensus - Locus of a party in CIRP to file appeals through authorised representative - Effect of erroneous reliance on a memo not jointly filed - Duty to give effect to superior court directions pending change of Resolution Professional

Locus of a party in CIRP to file appeals through authorised representative - SREI Equipment Finance Ltd. has locus to file the Appeals through its authorised representative despite being itself under CIRP. - HELD THAT: - The Tribunal examined the pleadings in Company Appeal (AT) (Ins.) No. 1520 of 2022 which averred that SREI Equipment Finance Ltd. was under CIRP and that Mr. Rajneesh Sharma was appointed as Administrator, and that Mr. Pradeep Faujdar, Senior Vice President-Legal, was duly authorised to file the appeal. On that basis the objection to competence was rejected and the Tribunal held that SREI had locus to maintain the appeals filed through the authorised representative. [Paras 11, 12]

Objection to locus of SREI Equipment Finance Ltd. is dismissed and SREI has locus to prosecute the appeals.

Removal and appointment of Resolution Professional - Effect of erroneous reliance on a memo not jointly filed - The appointment of Mr. Sapan Mohan Garg as Resolution Professional by the Adjudicating Authority on 28.11.2022 is set aside because it was based on a mistaken recording that the three name memo was jointly filed by the Applicants. - HELD THAT: - The Tribunal analysed the order of 28.11.2022 and the contemporaneous memoranda. A Joint Memo recommending Mr. Avil Jerome Menezes had in fact been filed by two Applicants (SREI and IIRF), whereas the three name memo which included Mr. Sapan Mohan Garg was filed only by Indiabulls and UV ARC. The Adjudicating Authority's order recorded that the Applicants had jointly mentioned three names; that recording was subsequently corrected by the Adjudicating Authority's own order dated 05.12.2022 which deleted references to a joint memo. Because the appointment of Mr. Garg proceeded on the erroneous basis that the three name memo represented joint endorsement, the Tribunal concluded that the appointment was vitiated and set aside the appointment insofar as it appointed Mr. Sapan Mohan Garg. [Paras 16, 17, 19, 20]

Order of 28.11.2022 appointing Mr. Sapan Mohan Garg as Resolution Professional is set aside.

Power of Adjudicating Authority to appoint Resolution Professional in absence of consensus - Removal and appointment of Resolution Professional - In absence of consensus among Applicants, the Adjudicating Authority was entitled to appoint a Resolution Professional on its own, but it erred by relying on the memo of a single Applicant as if jointly endorsed. - HELD THAT: - The Tribunal emphasised that the order of 28.11.2022 required counsel for Applicants to mutually decide a name, failing which the Bench would appoint a suitable RP. Since there was no consensus, the Adjudicating Authority had the power to appoint an RP. However, instead of independently selecting an eligible RP, the Adjudicating Authority relied upon the names contained in the memo filed by Indiabulls - treating it as a joint memo - which was incorrect. Consequently the Tribunal directed the Adjudicating Authority to pass a fresh order appointing a Resolution Professional without reference to the names submitted by Applicants. [Paras 13, 18, 20, 23]

Adjudicating Authority to appoint a Resolution Professional afresh, not by relying on the names submitted by the Applicants; the appointment must be made within the directions given by this Tribunal.

Duty to give effect to superior court directions pending change of Resolution Professional - Removal and appointment of Resolution Professional - A Resolution Professional must be in place to give effect to the Supreme Court's order; the Adjudicating Authority is directed to appoint a Resolution Professional promptly to enable compliance with that order. - HELD THAT: - The Tribunal noted the Supreme Court order requiring deposit of funds and execution of a sale deed within specified timeframes. Given that the earlier RP had been removed and the appointment under challenge set aside, the Tribunal found it necessary that a Resolution Professional be appointed without delay so the directions of the Supreme Court can be effectuated. Accordingly the Tribunal directed the Adjudicating Authority to appoint a Resolution Professional within one week from production of this order and required the appellant to produce a copy of the Tribunal's order to facilitate prompt action. [Paras 21, 22]

Adjudicating Authority directed to appoint a Resolution Professional within one week to enable compliance with the Supreme Court's order.

Final Conclusion: The Tribunal dismissed the locus objection to SREI Equipment Finance Ltd.; set aside the appointment of Mr. Sapan Mohan Garg as Resolution Professional made on 28.11.2022; held that in absence of consensus the Adjudicating Authority could appoint an RP but erred in relying on a memo not jointly filed; and directed the Adjudicating Authority to appoint a Resolution Professional afresh within one week to enable compliance with the Supreme Court's directions. Parties to bear their own costs.

Authorisation for Assignment - Regulation 7A of IBBI (Insolvency Professional) Regulations, 2016 - Deemed issuance under Regulation 12A of Model Bye Laws - Interim injunction confined to disciplinary committee orders - Power to remove or replace liquidator as incident of appointment - Appointment and replacement of liquidator under Sections 33 and 34 of the IBC - Section 16 of the General Clauses Act - power to suspend or dismiss - Section 276 of the Companies Act - removal of liquidator

Authorisation for Assignment - Regulation 7A of IBBI (Insolvency Professional) Regulations, 2016 - Deemed issuance under Regulation 12A of Model Bye Laws - Validity of the Appellant's AFA on the date of his appointment as liquidator and whether a deemed AFA or subsequent AFA cures non compliance with Regulation 7A. - HELD THAT: - Regulation 7A requires an insolvency professional to hold a valid Authorisation for Assignment on the date of acceptance or commencement of any assignment after 31.12.2019. Applications for AFA are governed by Regulation 12A of the Model Bye Laws, including the deeming provision that an AFA is deemed issued if not acted upon within fifteen days. The Appellant's own averments and the record show his application was rejected on 14.01.2020 and that he was appointed liquidator on 29.05.2020. The Tribunal finds that assignments (IRP, RP, liquidator) are separate and compliance must be satisfied for each appointment; the Appellant did not possess a valid AFA on the date of acceptance as liquidator. The deeming argument is not sustainable on the facts because the application was rejected and the Appellant later received a valid AFA only on 30.12.2020; there is no provision to ratify or give retrospective effect to an AFA so as to cure non compliance at the date of acceptance. Consequently the Appellant failed to meet the statutory requirement of Regulation 7A and the impugned order correctly records non compliance. [Paras 46]

The Appellant did not hold a legally valid AFA on the date he accepted the liquidator assignment and the subsequent AFA cannot retrospectively cure that non compliance; no error is found in the impugned order on this ground.

Interim injunction confined to disciplinary committee orders - Extent and effect of the interim order of the Madras High Court on the Adjudicating Authority's proceedings for removal of the liquidator. - HELD THAT: - The Madras High Court granted an interim injunction in WMP No. 5088 of 2021 in WP No. 4458 of 2021. The Tribunal examined the High Court order and the reliefs sought and finds that the interim injunction was directed to restrain coercive action arising out of the disciplinary committee proceedings (penalty and related orders) and does not stay or nullify the Adjudicating Authority's jurisdiction to consider removal of the liquidator under the IBC. The High Court's order is silent on the requirement of AFA under Regulation 7A or on restraining the Adjudicating Authority from deciding IA/815/2020. The Tribunal therefore finds no basis to treat the High Court interim order as operative to prevent the Adjudicating Authority from adjudicating the removal petition. [Paras 47]

The interim order of the Madras High Court is confined to disciplinary committee action and does not restrain the Adjudicating Authority from adjudicating the removal of the liquidator.

Power to remove or replace liquidator as incident of appointment - Appointment and replacement of liquidator under Sections 33 and 34 of the IBC - Section 16 of the General Clauses Act - power to suspend or dismiss - Section 276 of the Companies Act - removal of liquidator - Whether the Adjudicating Authority has the power to remove or replace the liquidator. - HELD THAT: - The IBC does not exhaustively enumerate all grounds for removal, but Sections 33 and 34 set out the appointment and replacement mechanism for a liquidator. Section 16 of the General Clauses Act supports the proposition that the power to appoint carries with it the power to suspend or dismiss unless a contrary intention appears. Section 276 of the Companies Act provides analogous grounds and safeguards (including reasons in writing and opportunity to be heard). Authorities and recent precedent recognise that a liquidator has no personal right to continue and that the Adjudicating Authority may replace a liquidator after recording reasons. On combined reading, the Adjudicating Authority, vested with appointment power under the IBC, also has the power to replace the liquidator for valid reasons and after observing procedural fairness. [Paras 48]

The Adjudicating Authority has the power to remove or replace the liquidator, subject to reasons being recorded and observance of fair procedure.

Final Conclusion: The appeal is dismissed for lack of merit; the Tribunal finds no error in the impugned order removing the Appellant as liquidator for non possession of a valid AFA at the relevant time, the Madras High Court injunction did not bar the Adjudicating Authority from adjudicating the removal petition, and the Adjudicating Authority had the power to replace the liquidator. No order as to costs; connected IAs are closed.

Violation of moratorium - validity of sale certificate registered during moratorium - protection under Section 44 (good faith) - priority of IBC moratorium over SARFAESI/DRT remedy - registration and stamp duty for sale certificate issued by Authorised Officer - remedy of Resolution Professional to take possession and manage corporate debtor's assets

Violation of moratorium - validity of sale certificate registered during moratorium - Sale certificate registered after commencement and public announcement of moratorium is void and unenforceable. - HELD THAT: - The Tribunal held that the moratorium arising on admission of CIRP protects the corporate debtor's assets and any act in breach of the moratorium, including registration of a sale certificate, cannot be allowed to confer legal title. The Bench examined authorities distinguishing sales by Civil/Revenue officers from sales by an Authorised Officer under SARFAESI and concluded that registration of the sale certificate in breach of the moratorium vitiated the transfer. The Tribunal noted the chronology showing publication of moratorium and subsequent registration and accordingly found the registration to be in negation of Section 14(1) consequences and thus non est in law. [Paras 27, 31, 34, 106, 108]

Sale certificate registered in breach of the moratorium is void and the purchaser acquires no right, title or interest.

Protection under Section 44 (good faith) - The purchaser could not invoke Section 44 (protection for acquisition in good faith) because the acquisition followed registration in clear violation of the moratorium. - HELD THAT: - The Tribunal rejected the 2nd respondent's plea of good faith under Section 44 of the IBC, observing that conscious violation of the moratorium and lack of material to demonstrate bona fides disentitled the purchaser to protection. The Tribunal treated the registration effected during moratorium as an illegality which cannot be cured by a plea of good faith. [Paras 32, 33, 108]

Good faith protection under Section 44 is unavailable where the sale/registration is effected in conscious breach of the moratorium.

Priority of IBC moratorium over SARFAESI/DRT remedy - Remedies under the SARFAESI Act/DRT do not avail where acts are in violation of the IBC moratorium; the moratorium and IBC provisions prevail. - HELD THAT: - The Tribunal held that the grievance in the present case was that registration of the sale certificate violated the moratorium under the IBC and therefore its sustainability had to be examined under the IBC and not under SARFAESI. It concluded that invocation of Section 17 of SARFAESI as an alternate remedy was otiose in face of the IBC moratorium, since the IBC overrides inconsistent provisions and the CIRP regime must be protected from actions that would defeat its object. [Paras 36, 110]

The IBC moratorium overrides SARFAESI/DRT remedies where the impugned action violates the moratorium; alternative remedy before DRT did not bar the Tribunal's jurisdiction to set aside the sale.

Registration and stamp duty for sale certificate issued by Authorised Officer - A sale certificate issued by an Authorised Officer pursuant to a private treaty sale requires registration and stamp duty; non-registration in the present context did not validate the sale where moratorium was violated. - HELD THAT: - The Tribunal reviewed precedents treating sale certificates issued by Authorised Officers as distinct from those issued by Civil/Revenue officers and observed that sales by an Authorised Officer under a private treaty attract registration and stamp duty. While this point supported the view that registration was material, the Tribunal emphasised that the core illegality was registration during the moratorium, which rendered the document void notwithstanding arguments that registration was a mere formality. [Paras 28, 30, 31, 107]

Sale certificates issued by Authorised Officers in private treaty sales require registration and stamp duty; in any event registration effected during moratorium cannot validate the transfer.

Remedy of Resolution Professional to take possession and manage corporate debtor's assets - Resolution Professional is entitled to take physical possession and manage the subject property; respondents must cooperate in completing the CIRP. - HELD THAT: - The Tribunal noted factual findings that physical possession remained with the corporate debtor at least until the relevant date and directed the Resolution Professional to take physical possession and manage the property in terms of the NCLT order. The respondents were directed to cooperate with the Resolution Professional in completing the CIRP. [Paras 35, 106]

Resolution Professional directed to take physical possession and manage the subject property; respondents to cooperate.

Final Conclusion: The impugned NCLT order setting aside the sale certificate registered in breach of the moratorium is upheld; the sale certificate and registration are declared void and unenforceable, the purchaser is not entitled to any right, title or interest, the Resolution Professional is directed to take physical possession and manage the property, and the appeal is dismissed.

Limited judicial review of a resolution plan under Section 30(2) - commercial wisdom of the Committee of Creditors - approval of resolution plan under Section 31 - EPF dues as excluded from liquidation estate under Section 36(4) - statutory obligations not waived by approval of a resolution plan

Leave to file an appeal - Grant of leave to the appellant to prefer the company appeal against the impugned order. - HELD THAT: - The Tribunal found that the appellant was not a party before the Adjudicating Authority and had a grievance that its claim was not paid in full and in priority under the approved resolution plan. Having regard to this position and the appellant's contention, the Tribunal granted leave to file the instant appeal and allowed the IA seeking leave, but without costs. [Paras 4]

IA/471/2022 is allowed and leave is granted to prefer Comp. App. (AT)(CH)(INS) No.215/2022 (without costs).

Limited judicial review of a resolution plan under Section 30(2) - commercial wisdom of the Committee of Creditors - approval of resolution plan under Section 31 - statutory obligations not waived by approval of a resolution plan - Validity of the Adjudicating Authority's approval of the resolution plan and whether that approval was legally flawed. - HELD THAT: - The Tribunal examined the Adjudicating Authority's findings that the resolution plan had been approved by the Committee of Creditors with 97.18% voting share and that the resolution professional had certified compliance with the Code and CIRP Regulations (see the Adjudicating Authority's observations at Paragraphs 15-22). Applying the established principle that the Adjudicating Authority's scrutiny is confined to the requirements of Section 30(2) and that it must give due weight to the commercial wisdom of the CoC, the Tribunal found that the Adjudicating Authority had applied its mind and was satisfied that the plan met the statutory requirements and IBBI regulations. The Tribunal therefore concluded that the impugned order approving the resolution plan was free from legal infirmity and the appellate challenge to re-open the commercial decision of the CoC could not be entertained. [Paras 38, 42, 45, 46, 47]

The impugned order dated 10.01.2022 approving the resolution plan is sustained; the appeal challenging approval on these grounds fails.

EPF dues as excluded from liquidation estate under Section 36(4) - statutory obligations not waived by approval of a resolution plan - Whether the resolution plan's treatment of EPFO's admitted claim violated the EPF Act or Section 30(2)(b)/Section 36(4) of the IBC so as to render the approval invalid, and remedial avenue available to EPFO. - HELD THAT: - The appellant argued that EPF dues are excluded from the liquidation estate and should be paid in priority and in full, and that the resolution plan's payment to EPFO (a small proportion of the admitted claim) violated the EPF Act and Section 30(2)(b) of the IBC. The Adjudicating Authority had expressly recorded that approval of the resolution plan shall not constitute any waiver of statutory obligations and that any waiver would require approval of the concerned authorities (Paragraph 21). Having regard to the limited scope of judicial review and the CoC's commercial decision, the Tribunal held the impugned approval to be legally valid. At the same time, the Tribunal observed that the dismissal of the appeal would not preclude the EPFO from pursuing its claim for the balance amount before the competent forum in accordance with law. [Paras 20, 21, 22, 42, 47]

The challenge that the resolution plan violated EPF statutory rights does not invalidate the approval; EPFO remains free to pursue recovery of the balance claim before competent authorities in accordance with law.

Final Conclusion: Leave to file the appeal was granted; on merits the Tribunal upheld the Adjudicating Authority's approval of the resolution plan as meeting the requirements of the Code and regulations and accorded due weight to the CoC's commercial wisdom, dismissed the appeal (no costs), and clarified that the EPFO may pursue its remaining claim before appropriate fora in accordance with law.

Construction of residential complex service - definition of "residential complex" and "personaluse" exclusion - taxability of construction services provided to JnNURM/Rajiv Awas Yojana projects

Definition of "residential complex" and "personaluse" exclusion - Whether the construction of residential complexes undertaken by AMC/AUDA for economically weaker sections under the JnNURM scheme falls outside levy as "residential complex" intended for "personaluse" and is therefore not exigible to service tax. - HELD THAT: - The Tribunal examined the statutory definition of "residential complex" and the Explanation declaring that "personaluse" includes permitting the complex for use as residence by another person on rent or without consideration. It held that complexes constructed by AMC and AUDA for the urban poor under the JnNURM scheme constitute accommodation provided for residential use of the intended beneficiaries and accordingly fall within the "personaluse" exclusion. The Tribunal drew support from earlier decisions which applied the same explanation to hold that complexes intended for residential use by beneficiaries are excluded from the taxable ambit of construction of residential complex service. [Paras 9, 10]

The construction services in question are excluded from levy by reason of the "personaluse" exclusion in the definition of "residential complex" and thus are not exigible to service tax.

Taxability of construction services provided to JnNURM/Rajiv Awas Yojana projects - Whether the demand of service tax confirmed by the adjudicating authority against the appellant for the period under consideration is sustainable. - HELD THAT: - The Tribunal noted the Government notification exempting construction of complexes provided to JnNURM/Rajiv Awas Yojana w.e.f. 01.07.2010 but proceeded to decide the appeal on the statutory definition and "personaluse" exclusion for the period 01.04.2006 to 30.06.2010. Applying that interpretation and relying on precedents addressing identical facts, the Tribunal concluded that the demand confirmed by the Commissioner could not be sustained. Accordingly the adjudicated demand was set aside and the appeal allowed with consequential relief. [Paras 11, 12]

The confirmed demand of service tax is unsustainable and the impugned order is set aside; the appeal is allowed with consequential relief.

Final Conclusion: On the facts that the complexes were constructed by AMC/AUDA for residential use of the urban poor under the JnNURM scheme, the Tribunal held such works fall within the "personaluse" exclusion in the definition of "residential complex" and consequently set aside the service-tax demand for the period 01.04.2006 to 30.06.2010, allowing the appeal with consequential relief.

CENVAT credit under reverse charge mechanism - availment of credit after payment of tax - compliance with Rule 9(5) of the CENVAT Credit Rules, 2004 - requirement of opportunity of hearing on change of adjudicating officer - remand for de novo adjudication and verification of records

CENVAT credit under reverse charge mechanism - availment of credit after payment of tax - compliance with Rule 9(5) of the CENVAT Credit Rules, 2004 - Denial of CENVAT credit claimed on services (manpower agency and transport) under reverse charge - whether sustainable in law - HELD THAT: - The Tribunal found that it is undisputed that service tax under RCM had been paid and that the appellant asserts it availed CENVAT credit only after payment of the tax. The First Appellate Authority observed non-production of contemporaneous ledger or records to demonstrate availment within the prescribed period under Rule 9(5). Because the factual controversy as to whether credit was actually availed in the appellant's ledgers within the statutory timeframe and whether the procedural requirements of Rule 9(5) were complied with remains unresolved on the record, the Tribunal held that this question requires fresh verification of documents and a speaking adjudication. The Tribunal therefore set aside the impugned part of the order and remanded the matter for de novo consideration by the Adjudicating Authority, permitting production and examination of relevant records and verification of the factual claim of bona fide availment after payment. [Paras 7, 8, 9]

Remanded to the Adjudicating Authority for de novo adjudication and verification of records on the question of entitlement to CENVAT credit claimed under RCM; impugned denial set aside to that extent.

Requirement of opportunity of hearing on change of adjudicating officer - remand for de novo adjudication and verification of records - Whether the adjudication was vitiated by change of officer and absence of a fresh opportunity of hearing - HELD THAT: - The appellant contended that the Show Cause Notice was issued by an Officer authorised only to conduct audit and that the Order-in-Original was ultimately passed by a different officer without giving a fresh opportunity of hearing, which, it was argued, is mandatory when there is a change in the Officer. The Tribunal noted competing contentions about whether a hearing notice had been served and not availed, but held that a speaking order on these aspects and verification of opportunity afforded is necessary. Accordingly, the Tribunal restored the matter to the file of the Adjudicating Authority and directed that a reasonable opportunity be afforded before passing a fresh order. [Paras 5, 7, 9]

Remanded for the Adjudicating Authority to afford reasonable opportunity and, if appropriate, reconsider the matter in a de novo order; all contentions left open.

Final Conclusion: The impugned order is set aside insofar as challenged before the Tribunal; the matters concerning entitlement to CENVAT credit under RCM and the adequacy of opportunity of hearing are remanded to the Adjudicating Authority for de novo adjudication after verification of records and after affording reasonable opportunity to the appellant. The appeal is allowed to that extent.

Extended period of limitation - time-bar - limitation for service tax demands - absence of mala fide intention / wilful misstatement / suppression of facts - public sector undertaking / government organisation - cannot be alleged to have intention to evade tax - cum-tax benefit

Extended period of limitation - time-bar - public sector undertaking / government organisation - cannot be alleged to have intention to evade tax - absence of mala fide intention / wilful misstatement / suppression of facts - Maintenability of service tax demand raised by invoking the extended period of limitation against the appellant, a government organisation. - HELD THAT: - The Tribunal found that the show cause notice challenged related to periods of March/July 2007 and 2003 to May 2007 and was issued on 11.01.2009, thus invoking the extended period. Relying on earlier Tribunal and High Court decisions dealing with government entities, and on an identical earlier order in the appellant's own case, the Tribunal held that where the respondent is a government organisation or public sector undertaking and there is no material to infer any intention to evade tax by means of fraud, collusion, wilful mis-declaration or suppression of facts, the longer/extended limitation period is not invocable. In such circumstances allegations of mala fide intention cannot be sustained and the demand must be confined to the normal limitation period; penalties are not warranted in absence of mala fide intent. Applying that principle to the present facts, the Tribunal set aside the impugned orders and allowed the appeals on the ground of limitation without adjudicating the merits.

Appeals allowed on limitation; demands raised under the extended period held not maintainable in view of absence of mala fide intention by the government appellant.

Final Conclusion: The impugned orders are set aside and the appeals are allowed on the ground of limitation: the demand insofar as raised under the extended period is not maintainable against the government organisation, with consequential relief; merits were left undecided.

Service tax on commission paid to foreign commission agent - registration under the category BAS - Section 73(3) of the Finance Act, 1994 - adjustment of excess tax against interest liability - remand for fresh consideration

Section 73(3) of the Finance Act, 1994 - adjustment of excess tax against interest liability - remand for fresh consideration - Whether the Commissioner (Appeals) failed to consider the appellant's claim for settling the liability under Section 73(3) of the Finance Act, 1994 and ordering remand for fresh consideration. - HELD THAT: - The Tribunal noted that the appellant did not dispute the demand substantively but asserted that Service Tax had been paid in excess and that the excess should be adjusted against the interest liability. The Commissioner (Appeals) did not address the appellant's specific contention regarding settlement under Section 73(3) of the Finance Act, 1994. Because the claim that excess tax payment could be applied to interest is directly linked to the possible application of Section 73(3), the Tribunal held that the Commissioner (Appeals) ought to have considered and given a finding on that claim. In the absence of any such finding, the Tribunal found it appropriate to set aside the impugned order and remit the matter to the Commissioner (Appeals) for reconsideration in light of Section 73(3), including the appellant's request for adjustment of the excess payment against interest.

Impugned order set aside; matter remitted to the Commissioner (Appeals) to decide the appellant's claim under Section 73(3) of the Finance Act, 1994, including consideration of adjustment of excess tax against interest.

Final Conclusion: The appeal is allowed in part: the Tribunal set aside the impugned order and remanded the matter to the Commissioner (Appeals) for fresh consideration of the appellant's claim under Section 73(3) of the Finance Act, 1994 (including the alleged excess tax payment and its adjustment against interest).

Classification of micronutrients as fertilisers - Essential constituent requirement of nitrogen, phosphorous or potassium for heading 3105 - Distinction between plant growth regulators and fertilisers - Application of the General Rules for Interpretation of the First Schedule - Validity and role of Board circulars in classification - Section 9D of the Central Excise Act, 1944 - admissibility and testing of statement of employee

Classification of micronutrients as fertilisers - Essential constituent requirement of nitrogen, phosphorous or potassium for heading 3105 - Distinction between plant growth regulators and fertilisers - Application of the General Rules for Interpretation of the First Schedule - Validity and role of Board circulars in classification - Whether the impugned products are classifiable as 'other fertilisers' under heading 3105 or as 'plant growth regulators' / chemicals under other chapters, and whether presence of nitrogen in chelates, even in negligible quantity, attracts heading 3105. - HELD THAT: - The Tribunal held that micronutrients, including chelated metals used to remedy soil or foliage deficiency, are fertilizers by intended use and regulatory recognition (Fertilizer (Control) Order, 1985) and are not plant growth regulators. The court explained that 'plant growth regulators' are hormones and not nutrients, and that micronutrients intended for nutrient enrichment are within chapter 31. Note 6 to chapter 31 requires that products classed under heading 3105 contain, as an essential constituent, at least one of nitrogen, phosphorus or potassium; the Tribunal found that the presence of nitrogen in chelates is sufficient to satisfy this requirement despite the negligibility of quantity. The Tribunal surveyed prior circulars and case-law, observing inconsistency and limited authoritative weight of Board circulars, and concluded that classification must follow the scheme of the Schedule and the General Rules for Interpretation. Accordingly, proceedings based on classification as 'plant growth regulators' fail where the products are fertilizers by use and composition, and classification under heading 3105 cannot be denied on the basis of negligible quantities of the primary fertilising elements. [Paras 15, 19, 20, 21, 22]

The Tribunal held that the impugned products are fertilizers for the purposes of heading 3105; micronutrients are not plant growth regulators and the presence of nitrogen in chelates suffices to bring them within heading 3105.

Section 9D of the Central Excise Act, 1944 - admissibility and testing of statement of employee - Whether the statement of the appellant's employee was properly dealt with and whether the matter requires fresh consideration under section 9D. - HELD THAT: - The Tribunal found that the statement of the employee, relied upon by Revenue and said to contradict test reports, had not been subjected to the procedural safeguards mandated by section 9D of the Central Excise Act, 1944. Observing that the statement was of particular relevance to the classification outcome and that the statutory prescription had not been followed, the Tribunal set aside the impugned order and remanded the matter to the original authority to subject the statement to the procedure in section 9D and to afford the appellant adequate opportunity to rebut the show-cause notice, including by production of documents, in accordance with natural justice. [Paras 8, 9, 10]

The impugned order is set aside and the matter is remanded to the original authority for compliance with section 9D and fresh adjudication on merits after allowing the appellant opportunity to rebut and produce evidence.

Final Conclusion: The appeal is allowed by way of remand: the Tribunal affirms that the impugned products are fertilizers under heading 3105 (presence of nitrogen in chelates suffices) and rejects classification as plant growth regulators, but it sets aside the adjudication and directs fresh consideration by the original authority to comply with section 9D and to decide the classification and liability after allowing the appellant to rebut the show-cause notice.

Refund of legacy cenvat credit under transitional provisions - refund in cash versus re-credit to cenvat account - Section 142(6)(a) of the CGST Act - transitional refund treatment - condonation of delay and maintainability of appeal - interest on refund under Section 35FF of the Central Excise Act

Condonation of delay and maintainability of appeal - communication from adjudicating authority as triggering limitation - Whether the appeal before the Commissioner (Appeals) was rightly dismissed as time-barred. - HELD THAT: - The Tribunal found that the appellant had not deliberately delayed prosecution of its remedy but had sought correction from the Adjudicating Authority after reliance on changed law and transitional provisions. The appeal to the Commissioner (Appeals) was filed within thirty days from the date of the Adjudicating Authority's communication indicating it was functus officio. On these facts the Commissioner (Appeals) erred in dismissing the appeal as time-barred, since limitation was measured from the communication received and no deliberate delay was shown. [Paras 6]

The dismissal by the Commissioner (Appeals) as time-barred is set aside and the appeal is held to have been filed within time.

Refund of legacy cenvat credit under transitional provisions - refund in cash versus re-credit to cenvat account - Section 142(6)(a) of the CGST Act - transitional refund treatment - interest on refund under Section 35FF of the Central Excise Act - Whether the amount deposited as pre-deposit during pendency of appeal should be re-credited to the cenvat account or refunded in cash in view of the CGST transitional provision. - HELD THAT: - The Tribunal held that the adjudicating authority's order directing re-credit to the cenvat account was in direct conflict with the transitional provision contained in Section 142(6)(a) of the CGST Act, which contemplates refund in cash for amounts admissible arising out of the erstwhile Central Excise regime. Applying that transitional principle, the Tribunal directed that the pre-deposit shall be refunded in cash rather than re-credit to cenvat. The Tribunal also applied the statutory entitlement to interest on refund and directed interest be paid at the rate prescribed under Section 35FF of the Central Excise Act from the date of deposit until the date of refund. [Paras 6]

The order directing re-credit is modified; the pre-deposit shall be refunded in cash with interest under Section 35FF of the Central Excise Act, and the refund is to be granted within 45 days.

Final Conclusion: The appeal is allowed: the Commissioner (Appeals)'s dismissal as time-barred is set aside, and the adjudicating authority's direction to re-credit the pre-deposit to cenvat is modified to require a cash refund with interest; refund to be paid within 45 days with consequential benefits.

Inclusion of value of bought out items in assessable value - excisability and movability versus emergence as immovable property - jurisdiction to adjudicate excise on goods manufactured/assembled at buyer's site - treatment of erection and commissioning charges in assessable value - application of extended period, interest and penalty for suppression/undervaluation - CENVAT credit entitlement where duty is demanded on bought out items

Jurisdiction to adjudicate excise on goods manufactured/assembled at buyer's site - Adjudicating Commissioner Pune I lacked competence to decide excisability and valuation of machines alleged to emerge only upon assembly/erection at customers' sites beyond Pune I jurisdiction. - HELD THAT: - The Tribunal found that the contracts produced goods which, according to the appellants and record, came into existence only after assembly/erection at customers' sites located beyond the territorial jurisdiction of the Pune I Commissionerate. On that basis the adjudication of excisability and valuation of the goods as arising from on site assembly could not properly be determined by the Pune I Commissionerate. The Tribunal relied on precedents holding that duty can be demanded only by the officer having jurisdiction over the place where the alleged manufacturing/assembly takes place and concluded that questions concerning excisability/valuation of goods that emerge at customers' sites fall outside Pune I's competence. For these reasons the impugned adjudications were unsustainable on jurisdictional grounds. [Paras 4, 25]

Proceedings and demands confirmed by Pune I in respect of goods said to emerge upon on site assembly were not sustainable for want of jurisdiction and must be set aside.

Excisability and movability versus emergence as immovable property - inclusion of value of bought out items in assessable value - Where goods manufactured and other bought out items when assembled/erected at site result in an immovable installation, excise liability on the assembled installation and inclusion of site delivered bought out items in the manufacturers' assessable value cannot be sustained. - HELD THAT: - The Tribunal examined authorities on whether goods assembled/erected at site become excisable movable goods or immovable property (not exigible to excise). It observed that where the assembled product at site is essentially immovable and cannot be marketed or removed without dismantling, it is not an excisable good. Applying that principle and reviewing precedents, the Tribunal concluded that the impugned orders attempted to impose duty by adding value of bought out items (delivered directly to site and not received in the manufacturer's factory) and certain undetermined design/engineering additions. The adjudication had not properly established that the manufacturers' clearances had converted those site delivered items into excisable goods cleared from the factory; many decisions favour non inclusion where bought out items never entered the factory and the emergent product at site is immovable. On the merits the Tribunal therefore held the demands predicated on including such bought out items in the manufacturers' assessable value unsustainable. [Paras 4]

Demands based on addition of direct to site bought out items to the assessable value of the appellants' factory clearances cannot be sustained where those items were not received in the factory and the assembled installation at site is immovable; the impugned additions are set aside.

Treatment of erection and commissioning charges in assessable value - Erection and commissioning charges are not includible in the assessable value chargeable to Central Excise duty. - HELD THAT: - The Tribunal reiterated settled law that charges for erection and commissioning do not form part of the assessable value of manufactured goods for excise purposes. Reliance was placed on Supreme Court and Tribunal precedents holding installation/erection charges and similar service type charges outside the scope of assessable value. The impugned orders had correctly recorded this principle but the confirmed demands otherwise were unsupportable. [Paras 4, 32]

Erection and commissioning charges cannot be treated as part of the assessable value; demands founded on including such charges are improper.

CENVAT credit entitlement where duty is demanded on bought out items - If revenue seeks to demand duty by adding value of bought out items, the manufacturer is entitled to claim CENVAT credit of duty actually paid on those bought out items. - HELD THAT: - The Tribunal noted that vendors supplying bought out items to site had in many instances discharged duty, and that where the department attempts to recover differential duty by imputing additional value to the manufacturer, the manufacturer would be entitled to credit for duty already paid by vendors (or at least to an accounting of such duty) to avoid double recovery. The point was addressed as a consequence of rejecting the impugned demands, and the Tribunal observed entitlement to consequential reliefs where applicable. [Paras 4, 26]

Where demand is raised on bought out items, the manufacturer is entitled to CENVAT credit or equivalent adjustment of duty actually paid on those items; consequential benefits must follow if demands are annulled.

Application of extended period, interest and penalty for suppression/undervaluation - The adjudication upholding extended period, interest and penalties could not be sustained given the deficiencies in jurisdictional competence and on merits; accordingly the impugned orders confirming duty, interest and penalties were set aside. - HELD THAT: - The impugned orders had invoked extended periods and levied interest and penalties for alleged suppression and undervaluation. The Tribunal declined to uphold those consequences because the foundational demands on valuation and excisability were unsustainable for the reasons given (jurisdiction and immovability/merits). Having found the primary demands unsupported, the attendant orders for interest and penalties could not stand. The Tribunal therefore allowed the appeals and set aside the impugned adjudications in their entirety. [Paras 4, 32]

Interest and penalties confirmed with the impugned demands cannot be sustained; the adjudications are set aside and appeals allowed.

Final Conclusion: The appeals are allowed. The Tribunal held that Pune I Commissionerate lacked competence to determine excisability/valuation of goods said to arise only on assembly at customers' sites; that where the assembled installation at site is effectively immovable the department cannot sustain demands by adding direct to site bought out items to the manufacturers' assessable value; and that erection/commissioning charges are not includible in assessable value. Consequential interest and penalty demands founded on the impugned valuation and excisability findings were therefore set aside.

Entitlement to Fixed Capital Investment Subsidy (FCIS) - Entitlement to Interest Subsidy - Requirement of payment of interest in full and on due dates as condition for subsidy - Adjustment of subsidies against dues and effect of One Time Settlement (OTS) - Waiver of Electricity Duty under incentive scheme - Strict construction of eligibility clauses in concession/incentive schemes - Liberal construction once eligibility is established - Promissory estoppel not applicable absent a withdrawn promise by competent authority

Entitlement to Fixed Capital Investment Subsidy (FCIS) - Strict construction of eligibility clauses in concession/incentive schemes - Liberal construction once eligibility is established - Adjustment of subsidies against dues and effect of One Time Settlement (OTS) - Writ petitioner entitled to Fixed Capital Investment Subsidy in full as claimed under the WBSSIS-2008. - HELD THAT: - The writ petitioner held itself to be a Scale-1 unit in Area B and produced the requisite certificates from the Commissioner of Commercial Taxes showing non-default in VAT payments. The registration certificate issued by the Director of Industries recorded eligibility under clause 9.1. Having satisfied the eligibility clause, the Court applied the settled approach that while eligibility clauses are construed strictly, once eligibility is established the benefit is to be given a beneficial (liberal) construction. The Court rejected the respondent's contention that granting FCIS would amount to double benefit because WBIDC acted in two distinct capacities as Authorized Agent and as Financial Institution; accordingly the denial on that ground could not be sustained and the Single Judge's allowance of FCIS was upheld. [Paras 24]

FCIS granted in full to the writ petitioner in accordance with clause 9.1 of the Scheme.

Entitlement to Interest Subsidy - Requirement of payment of interest in full and on due dates as condition for subsidy - Adjustment of subsidies against dues and effect of One Time Settlement (OTS) - Writ petitioner entitled to interest subsidy only up to 31st August, 2011; not entitled to interest subsidy for the period after that date. - HELD THAT: - Clause 9.2.2 conditions payment of interest subsidy on submission of a certificate by the FI that interest was paid in full and within due dates. The Single Judge found, on loan records relied on, that the petitioner last paid interest up to 31.8.2011 and therefore satisfied clause 9.2.2 only up to that date. The Court held that the OTS effected in April 2017 cannot be the basis to claim subsidy for the intervening period after 31.8.2011 because the statutory condition of timely payment during those years was not met. The petitioner's reliance on promissory estoppel was rejected for lack of any pleaded or demonstrated withdrawal of a promise by the competent authority. [Paras 25, 26, 27]

Interest subsidy allowed only up to 31st August, 2011; claim for interest subsidy for subsequent period denied.

Waiver of Electricity Duty under incentive scheme - Grant of waiver of electricity duty in terms of clause 9.3 of WBSSIS-2008 affirmed. - HELD THAT: - The petitioner's entitlement to waiver of electricity duty was not seriously challenged before the Court and no infirmity in the Single Judge's order granting the waiver was pointed out. There being no basis shown to interfere, that part of the order was upheld. [Paras 28]

Total waiver of electricity duty in terms of clause 9.3 affirmed.

Final Conclusion: The appeals are dismissed and the order of the learned Single Judge is affirmed: FCIS granted as claimed, interest subsidy allowed only up to 31.08.2011 (claims for later periods rejected), and total waiver of electricity duty under the Scheme upheld.

Refund of excess tax - maintainability of writ petition when tribunal is non-functional - parallel remedies and requirement to withdraw proceedings - independence of refund proceedings from recovery/proceedings for tax dues - entitlement to statutory interest on delayed refund

Maintainability of writ petition when tribunal is non-functional - parallel remedies and requirement to withdraw proceedings - Whether the writ petition was maintainable despite pendency of proceedings before the West Bengal Taxation Tribunal which was non-functional for want of quorum. - HELD THAT: - The Court found that the Tribunal was not functional because of lack of quorum and that no final decision had been rendered by the Tribunal in the matter. Given the Tribunal's non-functionality, the petitioner and similarly placed taxpayers were entitled to invoke the writ jurisdiction under Article 226. The Single Bench's conclusion that the petitioner should first withdraw the proceedings before the Tribunal was not appropriate where withdrawal was not realistically possible due to the Tribunal's inability to proceed and there was no material to show a subsisting demand order accepted or adjudicated by the Tribunal. The Court held that the existence of parallel proceedings did not preclude exercise of writ jurisdiction under the facts of the case. [Paras 3, 4, 5, 6, 11]

Writ petition was maintainable as the Tribunal was non-functional and no final adjudication had been rendered; therefore the Single Bench's dismissal was set aside.

Refund of excess tax - independence of refund proceedings from recovery/proceedings for tax dues - entitlement to statutory interest on delayed refund - Whether the appellant was entitled to refund of the excess tax recorded in Form-27 dated 4th August, 2016 and to statutory interest for delay in payment. - HELD THAT: - The Court noted that Form-27 issued on 4th August, 2016 recorded that the assessee had paid excess tax. There was nothing on record to show that a demand or assessment order under the relevant enactments preceded the refund order or that any recoverable demand had crystallised prior to issuance of Form-27. The Court held that sanction and payment of an excess tax refund is an independent proceeding distinct from any recovery action for alleged tax dues, and that where the department withholds a refund despite issuance of Form-27, the assessee is entitled to the refund and to interest for the delay. Consequently the respondents were directed to refund the amount recorded in Form-27 together with statutory interest from August, 2016 until actual payment. [Paras 1, 7, 8, 9, 10]

Respondents directed to refund the excess tax accepted in Form-27 dated 4th August, 2016 together with statutory interest from August, 2016 until payment.

Closure of tribunal proceedings - effect of writ relief on pending tribunal proceedings - Effect of granting writ relief on the proceedings pending before the Tribunal. - HELD THAT: - Having granted the writ relief and directed refund with interest, the Court observed that nothing further survived for adjudication before the Tribunal in Case No. RN-1968 of 2017 and accordingly directed that the proceedings before the Tribunal stand closed. The Court preserved the department's right to proceed in accordance with law if it contends any alleged tax dues remain payable by the appellant. [Paras 10, 11]

Proceedings before the Tribunal in Case No. RN-1968 of 2017 stand closed; departmental rights to proceed in accordance with law are preserved.

Final Conclusion: The appeal was allowed: the Single Bench order was set aside; respondents were directed to refund the excess tax recorded in Form-27 dated 4th August, 2016 with statutory interest from August, 2016, to be paid within four weeks of service of the order; consequent tribunal proceedings were closed and the department may still pursue any lawful claims thereafter.

Pre-deposit requirement for admission of appeal - rejection of appeal for non-payment of pre-deposit - condonation of delay in making pre-deposit - restoration of appeal upon fulfillment of pre-deposit - application of Supreme Court precedent in Innovative Systems - adjudication on merits after restoration

Pre-deposit requirement for admission of appeal - rejection of appeal for non-payment of pre-deposit - condonation of delay in making pre-deposit - application of Supreme Court precedent in Innovative Systems - Whether the petitioner, whose appeal was rejected for non-payment of the mandatory pre-deposit, can be permitted to make the pre-deposit belatedly so that the appeal may be restored. - HELD THAT: - The Court noted that the petitioner filed the appeal within the statutory period but did not make the 12.5% pre-deposit required for admission and that the appeal was rejected by the Appellate Deputy Commissioner on that ground. Relying on the Supreme Court's decision in Innovative Systems, which approved condonation where the pre-deposit was made after dismissal and restored the appeal for decision on merits, the Court held that the ratio of Innovative Systems is applicable. The Court observed that the present Writ Petition had been admitted in 2015 and that the period during which the writ was pending should be excluded in assessing delay. In view of these facts and the precedent, the Court exercised its equitable jurisdiction to permit belated compliance with the pre-deposit requirement, subject to strict time-bound payment. Accordingly the Court directed the petitioner to deposit the prescribed pre-deposit within two weeks and held that upon payment and proof thereof the earlier order rejecting the appeal would be set aside and the appeal restored. [Paras 17, 18, 19, 20, 21]

Petitioner permitted to make the 12.5% pre-deposit within two weeks; upon proof of payment the order rejecting the appeal dated 01.08.2015 is set aside and the appeal is restored.

Restoration of appeal upon fulfillment of pre-deposit - adjudication on merits after restoration - Whether the restored appeal must be decided on merits and the course to be followed by the Appellate Deputy Commissioner after restoration. - HELD THAT: - The Court directed that upon the petitioner making the pre-deposit within the stipulated time and filing proof of payment with the Appellate Deputy Commissioner, the earlier rejection order would be set aside and the appeal restored to the file. The Appellate Deputy Commissioner was directed to grant the petitioner an opportunity of personal hearing and thereafter decide the appeal on merits in accordance with law. The direction confines the Court's intervention to restoration and mandates fresh adjudication by the appellate authority instead of the Court delving into factual controversies in the assessment order. [Paras 21]

Appeal restored to the Appellate Deputy Commissioner; appellate authority to grant personal hearing and decide the appeal on merits after compliance with the pre-deposit direction.

Final Conclusion: Writ petition disposed by permitting the petitioner to make the required 12.5% pre-deposit for the assessment period April, 2011 to March, 2012 within two weeks; on proof of payment the order rejecting the appeal dated 01.08.2015 is set aside, the appeal is restored, and the Appellate Deputy Commissioner is directed to grant personal hearing and decide the appeal on merits.

Maintainability of writ petition - parallel proceedings - abstention where alternative remedy exists - avoidance of rendering pending adjudication infructuous

Maintainability of writ petition - parallel proceedings - avoidance of rendering pending adjudication infructuous - Whether the writ petition is maintainable in view of a pending parallel proceeding before the West Bengal Taxation Tribunal seeking the same relief. - HELD THAT: - The court found that the petitioner has already initiated a parallel proceeding before the West Bengal Taxation Tribunal which remains pending and has not been withdrawn. Granting the relief sought in the writ petition would render the Tribunal proceeding infructuous. It is therefore not proper for the writ court to entertain the petition and permit the petitioner to pursue simultaneous proceedings for the same relief. On that basis the writ petition was refused.

Writ petition dismissed as not maintainable while parallel Tribunal proceedings are pending.

Final Conclusion: The writ petition was dismissed because a parallel proceeding before the West Bengal Taxation Tribunal seeking the same relief was pending and had not been withdrawn, and entertaining the writ would have rendered the Tribunal proceedings infructuous.

Anticipatory bail - custodial interrogation not required - joining investigation - conditions under Section 438(2) Cr.P.C.

Anticipatory bail - custodial interrogation not required - joining investigation - Grant of anticipatory bail to the petitioner where he has joined investigation and custodial interrogation is not required. - HELD THAT: - The Court noted that the petitioner has joined the investigation pursuant to an earlier interim order and that the investigating officer (ASI Kushal Kumar), through the State counsel, confirmed that custodial interrogation of the petitioner is not necessary for further investigation. In view of the petitioner having made himself available to the investigation and the prosecution conceding that custody is not required, the Court concluded that continuation of the interim protection is justified. The Court therefore made the earlier interim order absolute while emphasising that the petitioner must continue to join the investigation as and when required and comply with the conditions applicable to anticipatory bail under Section 438(2) Cr.P.C.

Interim order dated 05.04.2022 made absolute; anticipatory bail granted subject to the petitioner joining investigation as required and abiding by the conditions under Section 438(2) Cr.P.C.

Final Conclusion: The petition for anticipatory bail is allowed; interim protection is made absolute on the ground that the petitioner has joined investigation and custodial interrogation is not required, subject to continued cooperation with the investigation and compliance with the conditions of Section 438(2) Cr.P.C.