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2026 (2) TMI 791 - CESTAT NEW DELHI Customs

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Penalty under Section 114A unjustified where bona fide self-assessment and voluntary payment defeated allegation of collusion or suppression.
Where penalty under Section 114A of the Customs Act was imposed for alleged non-levy/short-levy of duty, the analysis applies the statutory test for collusion, wilful mis-statement or suppression and for availability of reduced penalty on timely payment. The appellant had made a bona fide self-assessment claiming exemption under the notified exemption and, although the department contested entitlement, voluntarily paid the demanded duty with interest before issuance of show cause notice and did not conceal facts. Absent any finding of deliberate concealment or fraud, the penalty under Section 114A was held unjustified and set aside in favour of the assessee.

2026 (2) TMI 750 - APPELLATE TRIBUNAL UNDER SAFEMA, NEW DELHI Benami Property

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Issues: (i) Whether the impugned properties were benami properties purchased through the funds of the beneficial owner. (ii) Whether the transaction was protected by the fiduciary-capacity exception under Section 2(9)(A)(ii) of the Prohibition of Benami Property Transactions Act, 1988.

Issue (i): Whether the impugned properties were benami properties purchased through the funds of the beneficial owner.

Analysis: The record showed that the properties stood in the name of the benamidar, while the consideration was supplied by the other appellant, and the bank entries reflected fund movements from the beneficial owner's side before payments were made to the sellers. The purchase period, the financial profile of the benamidar, and the absence of independent means to acquire the lands supported the inference that the benamidar was only a name-lender and that the real purchaser was the beneficial owner.

Conclusion: The properties were benami in nature and were rightly proceeded against under the Act.

Issue (ii): Whether the transaction was protected by the fiduciary-capacity exception under Section 2(9)(A)(ii) of the Prohibition of Benami Property Transactions Act, 1988.

Analysis: The claimed exception was rejected because the benamidar was an employee-labourer and not shown to have held the property in a legally cognisable fiduciary capacity akin to trustee, agent, or similar notified relationship. There was no power of attorney, no clear recital in the sale deeds that the purchase was for the beneficial owner, and the transaction was used to avoid the restrictions governing transfer of tribal land. A broad reading of fiduciary capacity was held incapable of defeating the object of the statute.

Conclusion: The fiduciary-capacity exception did not apply and the appellants were not entitled to exemption.

Final Conclusion: The attachments and the adjudication confirming benami character were sustained, and the appeals failed on merits.

Ratio Decidendi: A purchase made in the name of another with the real consideration supplied by the alleged beneficial owner is benami unless the claimant establishes a genuine fiduciary relationship falling within the statutory exception; a mere employer-employee or trusted-person arrangement, especially when used to bypass another law, does not by itself attract the fiduciary-capacity exclusion.

Benami property and fiduciary exception: real consideration from another party sustained benami character, and the statutory exemption failed.
Properties standing in the name of one person were treated as benami where the consideration was shown to have come from another, the bank trail reflected fund movement from the alleged beneficial owner, and the benamidar had no independent means to acquire the lands. The claimed fiduciary-capacity exception under the benami law was rejected because the relationship was only that of employee and labourer, with no trustee-like or agent-like legal basis, no power of attorney, and no clear recital that the purchase was for the beneficial owner. The tribunal held that a broad reading of fiduciary capacity cannot defeat the statute, especially where the arrangement was used to bypass restrictions on transfer of tribal land.

Benami transaction - definition of ‘Benami Transaction’, subject to the exemption (ii) to Section 2(9)(A) - fiduciary exemption under clause (ii) of Section 2(9)(A) - transactions for purchasing of lands - Section 165(6) Chhattisgarh Land Revenue Code - Relationship between the benamidar and the alleged beneficial owner - prohibition on non tribal acquisition of tribal land - Provisional attachment u/s 24(4) and confirmation u/s 26(3) of PBPT Act - Application of Section 88, Indian Trusts Act - fiduciary/trust relationship - HELD THAT:- The present case does not fall under the ‘fiduciary relation’ and is thus not liable to be exempted under clause (ii) of Section 2(9)(A) of the PBPT Act. There was no Special or General Power of Attorney executed by Sh. Dwarika Gupta in his favour. Hence, in absence of the same, question of execution of the sale deed in favour of Sh. Dwarika Gupta was not possible. The impugned sale deed is silent that Vendee Laxmi Chand Maravi purchased the land for the benefit of Sh. Dwarika Gupta or tendered the sale consideration on his behalf. Also, the appellant no.2 should have been present in-person at the time of execution of sale-deed, in absence of Power of Attorney, however, he was not present. No permission from competent authority was taken before execution of said sale deed for granting permission in favour of Sh. Dwarika Gupta i.e., by a tribal in favour of non-tribal. Further, the details of the transactions in the bank account of the benamidar made by the beneficial owner and subsequent transfer made by the benamidar, to various sellers/ vendors of the tribal lands is clearly evident. Also, it is on record that only the appellant Late Laxmi Chand Maravi, had moved an application on 29.09.2021 seeking permission of the District Collector, Janjgir Champa (C.G.) for sale of certain parcels of lands in the name of Sh. Dwarika Gupta, a non-tribal person. Thus, it fortifies our view that the matter is that of benami transaction and is covered under ‘Benami Transaction’ as the appellant Sh. Dwarika Gupta purchased the land through Benamidar with an end view to ultimately transfer it in the name of Dwarika Gupta, the beneficial owner for his future business use. Further, the appellant no.1 cannot be considered as a trustee because he was an employee working as labourer with the beneficial owner. He was merely used for the task of purchasing the property on his behalf, to circumvent the stringent provisions of Section 165(6) under the Chhattisgarh Land Revenue Code for taking prior permission for purchasing the land of a tribal by a non-tribal. Mere entrustment of sale consideration does not give rise to the ‘trust’ and cannot be protected by invoking Section 88 of the Indian Trusts Act. Moreover, if the fiduciary capacity is taken to mean and include all persons who trust each other or hold a position of trust, all benami transactions would come into the ambit of exception (ii) to section 2(9)(A) of the Act. Hence, the term fiduciary relationship cannot be interpreted in a manner to frustrate the very purpose of the Act. Moreover, the nature of said relation the fiduciary relationship was not notified by the Central Government and its nature is not akin to the relationship included in the statute. Further, section 56(1) of the PBPT Act, specifically states that Sections 81, 82 & 94 of the Indian Trusts Act, 1882, section 66 of the Code of Civil Procedure, 1908 and section 281A of the Income Tax Act, 1961 are hereby repealed. The repeal of the provisions vide section 56(1) is aimed at ensuring that trust relationships, even though property may appear to be held in a fiduciary capacity does not provide an automatic exemption from the provisions concerning benami transactions. The object behind incorporating Section 165(6) under the Chhattisgarh Land Revenue Code is to provide social justice to the members of the backward tribe and save them from the harsh clutches of the socially and economically well-off persons. Further, sections 170A of the CLR Code provides for setting aside transfers made in violation of section 165(6) of the CLR Code, meaning thereby that the sale which is violative of section 165(6) of the code is absolutely barred under the law. In support of this contention, the Respondent has cited Pooran Singh [2015 (2) TMI 1425 - CHHATTISGARH HIGH COURT] decided by the High Court of Chhattisgarh which held that section 170 of the CLR Code provides for avoidance of transfer in contravention of Section 165 of the CLR Code. Thus, we are of the view that the present appeals need to be dismissed on merits, as the appellants do not fall within the exemption clause of the Section 2(9)(A) of the PBPT Act. Further, since the matter already falls under Section 2(9)(A) of PBPT Act, the properties are rightly attached given that the same are benami properties, which the appellant (benamidar) has bought using the money given by the beneficial owner, Mr. Dwarika Gupta to defeat the provisions of the Chhattisgarh Land Revenue Code. Thus, the present appeals are hereby dismissed being devoid of any merits and thereby the Provisional Attachment Order dated 28.12.2023 passed by the Initiating Officer and confirmation order dated 24.10.2024 passed by the Adjudicating Authority, qua the properties mentioned in para no.1 above, is hereby upheld.

2026 (2) TMI 721 - TELANGANA HIGH COURT GST

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Alternative Remedy Principle: petitioner relegated to appeal under Section 107(1); file appeal with delay condonation for consideration.
Whether a writ challenging a refund rejection and the vires of an administrative circular can be entertained was resolved by applying the alternative-remedy principle: because an appeal under Section 107(1) was available and not pursued, and the refund order followed a show cause notice, the petitioner is relegated to the statutory appellate remedy. The court required the petitioner to prefer the appeal with a delay-condonation application and directed the appellate authority to consider all factual and legal grounds, including the challenge to the circular, in accordance with law and within a reasonable time.

2026 (2) TMI 652 - TELANGANA HIGH COURT GST

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Availability of statutory appeal under CGST Act requires petitioner to pursue appeal with pre deposit; writ dismissed
Availability of an efficacious alternate remedy by way of appeal under the Central Goods and Services Tax Act was held to render the writ petition non maintainable because the appellate route permits all lawful grounds of challenge; procedural issues with GST portal filing can be addressed using the reference number in Form GST DRC 07 and relevant circular guidance. Consequentially the petitioner was granted liberty to file the statutory appeal with the required pre deposit within the limitation period and the writ petition was dismissed without adjudication on the merits.

2026 (2) TMI 608 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI IBC

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Condonation of delay under the Insolvency Code denied where statutory outer limit exceeded and service record upheld.
Condonation of delay under the Insolvency and Bankruptcy Code was refused because the statutory scheme fixes a 30-day period with a non-extendable 15-day proviso, and the Tribunal lacks power to enlarge that outer limit; limitation begins the day after pronouncement of the impugned order and delayed personal knowledge does not reset computation. The Adjudicating Authority's service record and proof of delivery were accepted and the appellant failed to place sufficient material to displace that finding. Consequence: the application for condonation was rejected and the appeal could not be entertained.

Computation of limitation from date of pronouncement of order - statutory limit on condonation of delay u/s 61(2) of the IBC for filing of Appeal - effectiveness of service and its bearing on limitation - absence of jurisdiction to condone delay beyond thirty plus fifteen days - Validity of service of notice of the Section 7 proceedings and whether the Appellant's plea of non-service justified computation of limitation from date of knowledge - HELD THAT:- Mere mechanical dispatch of notices or postal tracking entries by them, without proof of actual and effective delivery, did not satisfy the requirement of service in law. This denied the Appellant the opportunity to contest the Section 7 proceedings. The Corporate Debtor eventually became aware of the impugned order only after the Interim Resolution Professional had contacted an ex- auditor of the Corporate Debtor’s team. In such peculiar circumstances, where the Appellant remained thoroughly unaware of the Section 7 proceedings even after the pronouncement of the ex-parte order, hence, the limitation period should be counted from the date of acquiring knowledge of the impugned order by them. Any denial of condonation of delay in such circumstances would amount to giving precedence to procedural limitation over substantive justice. It is the case of the Respondent No.1 that the limitation period commences from the date of pronouncement of the impugned order and that any delay beyond the statutory outer limit of 45 days cannot be condoned under Section 61(2) of the IBC. There is no material placed on record by the Appellant to show that the registered address and email id of the Corporate Debtor as available on the MCA portal had undergone any change. Though an assertion was made by the Appellant before us that they were in the process of changing such information, the Appellant had no clear answer to the fact as to why and how the MCA database still reflected the same registered address and email- id even after the passing of the impugned order which the Respondent No. 1 has placed at Annexure R-3 in their reply to the delay condonation application filed by the Appellant. We therefore find the stand of the Appellant on change in their address and email to be rather nebulous and do not feel convinced with the credibility of their argument. Statutory construct of the IBC - condonation of delay under Section 61(2) - HELD THAT:- The impugned order was passed on 21.08.2025. For counting the statutory period of 30 days for filing the appeal, the same is to be counted from the day after the date of pronouncement of the impugned order. The date of knowledge of impugned order is immaterial for limitation computation. Calculated accordingly, the statutory period of 30 days for filing the appeal in the present case came to an end on 20.09.2025. The further extendable period of 15 days in terms of proviso to Section 60(2) of the IBC ended on 05.10.2025. However, the present appeal has been e-filed by the Appellant on 17.11.2025 which date prima facie lies beyond the outer limit of thirty plus fifteen days provided under Section 61(2) of the IBC and therefore beyond the condonable jurisdiction of this Appellate Tribunal as held by the Hon’ble Apex Court in Tata Steel [2025 (5) TMI 661 - SUPREME COURT] Thus, we are of the considered view that the Appeal has been filed beyond the condonable period of 15 days. The jurisdiction of this Appellate Tribunal to condone delay being strictly limited by statute, we are unable to condone the delay in the filing of this Appeal. Accordingly, the delay condonation application is dismissed.

2026 (2) TMI 591 - JHARKHAND HIGH COURT GST

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Anticipatory bail in GST fraud may be refused where the accused repeatedly evades summons, absconds, and cannot claim parity with a cooperating co-accused.
Anticipatory bail may be declined in a serious GST-linked fraud case where the accused is alleged to have acted as the principal operator of a bogus firm and the record shows repeated non-cooperation, failure to appear on summons, and absconding. The court treated the petitioner's evasive conduct as decisive, and held that parity with a co-accused who had cooperated was unavailable because the factual position was materially different. The principle that post-charge-sheet custody may not be necessary for a cooperative accused was found inapplicable on these facts. Pre-arrest protection was therefore refused.

2026 (2) TMI 557 - ITAT RAIPUR Income Tax

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Political donations and 80GGC deduction challenged over alleged accommodation entries; lack of nexus or evidence led to decision against revenue.
Deduction under section 80GGC for a political donation was challenged on grounds that the recipient party participated in providing accommodation entries; the Assessing Officer alleged the donation was bogus but produced no evidence showing commission or money returned to the donor. The onus to substantiate the deduction remained on the revenue to establish a direct nexus between the donation and any benefit to the assessee; absent such proof and with the appellate authority having deleted the addition, the decision went against the revenue and the deduction claim stood unproven for disallowance.

2026 (2) TMI 533 - APPELLATE TRIBUNAL UNDER SAFEMA, NEW DELHI Money Laundering

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Issues: (i) Whether the provisional attachment and its confirmation in respect of 50% share in the residential property were sustainable under the Prevention of Money Laundering Act, 2002; (ii) Whether the appellants' financial contributions, residence in the property, alleged lack of enquiry, and the plea that the matter lay only in the domain of income-tax law vitiated the attachment.

Issue (i): Whether the provisional attachment and its confirmation in respect of 50% share in the residential property were sustainable under the Prevention of Money Laundering Act, 2002.

Analysis: The material on record showed that the scheduled offence had led to an ECIR and that statements and documentary evidence disclosed a prima facie case of collection and conversion of demonetised currency through intermediaries into gold and diamonds, yielding illegal gain. At the stage of provisional attachment and confirmation, the statutory inquiry is confined to whether there is a prima facie nexus between the property and the proceeds of crime. The property was attached only to the extent of the share reflected in the title documents, and attachment of an undivided share in immovable property is permissible under the statutory scheme.

Conclusion: The attachment and its confirmation were held to be valid and sustainable.

Issue (ii): Whether the appellants' financial contributions, residence in the property, alleged lack of enquiry, and the plea that the matter lay only in the domain of income-tax law vitiated the attachment.

Analysis: The claimed payment of purchase consideration, loan instalments, and household expenses did not by itself confer legal ownership or displace the statutory nexus with proceeds of crime. The Act did not require recording of statements of every co-owner as a precondition for confirmation of attachment, and no material prejudice from the alleged want of enquiry was shown. The plea that the transactions concerned only unaccounted income assessable under income-tax law was rejected because the facts disclosed a process connected with laundering of proceeds of crime. The burden to establish that the attached share was untainted was not discharged.

Conclusion: The challenge to the attachment on these grounds failed.

Final Conclusion: The confirmation of provisional attachment suffered from no illegality, perversity, or procedural infirmity, and the appeals were rejected.

Ratio Decidendi: Under the Prevention of Money Laundering Act, 2002, provisional attachment may be confirmed on the basis of a prima facie nexus between property and proceeds of crime, including attachment of an undivided share in immovable property, and equitable claims, residence, or payments without legal title do not defeat such attachment absent proof that the attached interest is untainted.

PMLA provisional attachment of an undivided property share upheld where prima facie nexus with proceeds of crime was shown.
Under the Prevention of Money Laundering Act, provisional attachment of an undivided 50% share in residential property was sustained because the record showed a prima facie nexus between the asset and proceeds of crime arising from the scheduled offence. The tribunal held that, at the attachment stage, the inquiry is limited to prima facie linkage, and attachment of an undivided share in immovable property is permissible. Claims based on financial contributions, residence, household expenses, alleged lack of enquiry, and the argument that the matter fell only within income-tax law did not displace the statutory nexus, and the appellants failed to show that the attached interest was untainted.

Provisional attachment - confirmation of attachment under PMLA - prima facie nexus with proceeds of crime - attachment of an undivided share in immovable property - proceeds of crime includes value equivalent - collection of demonetized currency, and its conversion into gold through intermediaries - burden to prove attached portion untainted - non-requirement of recording statements of all co-owners - mere payment of EMIs does not confer title for PMLA purposes - Whether the provisional attachment and its confirmation in respect of the residential property bearing No. B-20, Moonlight Apartments, 70 IP Extension, Patparganj, Delhi-110092, to the extent of 50%, is sustainable in law under the provisions of the PMLA. HELD THAT:- The alleged conversion of demonetized currency into bullion through fictitious entities and banking channels, followed by sale at a premium of gold and diamond, prima facie discloses a process or activity connected with the proceeds of crime, which squarely attracts the provisions of Section 3 of the PMLA. The existence of the Scheduled Offences and the investigations conducted by the Respondent Directorate provided the reasons to believe for action under Section 5(1) of PMLA, as has been found by the Ld. AA. The PMLA recognizes attachment of an undivided share in immovable property, and there is no requirement under the Act that the property must be physically divisible or that other occupants must be evicted at the stage of attachment. The plea of indivisibility of the flat or hardship to family members, cannot override the statutory scheme. It is pertinent to state that the commission which is found to have been earned by the Appellant Shri Prateek Bansal, during the course of investigations is Rs. 37,00,000/-. This amount is estimated to be the proceeds of crime qua the Appellant Shri Prateek Bansal because the said amount has been earned by him by indulging in procuring demonetized currency and thereafter laundering it through transactions in gold and diamonds. The property which has thus been attached as value thereof of the proceeds of crime is only to the extent of Rs. 27,70,157/- (i.e. 50% of the value). It is therefore obvious that the attached property is much less than the proceeds of crime. It is an admitted fact that the attached property is registered jointly in the name of Sh. Prateek Bansal and Smt. Anita Bansal. We therefore do not find that any impropriety has been indulged in the attachment order. The burden to establish that the attached portion is untainted lies upon the person claiming such exemption, which burden has not been discharged in the present case. We also find no merit in the contention that the impugned proceedings are vitiated on account of non-recording of statements of every co- owner. The Act does not mandate recording of statements of all persons claiming interest in the property as a condition precedent for confirmation of attachment. Adequate opportunity of hearing was afforded, and no material prejudice has been demonstrated. With regard to the rejection of the impleadment application filed by Shri Ravinder Nath Bansal, we find that the Ld. Adjudicating Authority has correctly held that mere financial contribution, in the absence of title or registered interest, does not entitle a person to be treated as an owner for the purpose of attachment proceedings under the PMLA. We are of the considered opinion that the Ld. Adjudicating Authority has correctly exercised its jurisdiction under Section 8 of the PMLA and has passed the Impugned Order upon due consideration of the material available on record. We do not find any illegality, perversity or infirmity in the confirmation of the provisional attachment. We dismiss the Appeal Nos. FPA-PMLA-2315/DLI/2018 filed by Smt. Anita Bansal, FPA-PMLA-2316/DLI/2018 filed by Shri Ravinder Nath Bansal and FPA-PMLA-2306/DLI/2018 filed by Shri Prateek Bansal. The Applications pending, if any, are disposed of accordingly.

2026 (2) TMI 532 - BOMBAY HIGH COURT Service Tax

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Issues: (i) Whether service tax liability could be imposed on an individual advocate for legal services provided to a partnership firm of advocates in view of Notification No. 25/2012-Service Tax and Notification No. 30/2012-Service Tax; (ii) Whether the impugned proceedings and consequential recovery (including creation of lien on bank accounts under Section 87 of the Finance Act, 1994) are vitiated by breach of principles of natural justice and/or jurisdictional error.

Issue (i): Whether service tax is leviable on an individual advocate for legal services rendered to a partnership firm of advocates in light of the cited notifications.

Analysis: Notification No. 25/2012-Service Tax exempts specified taxable services including services by an individual as an advocate or a partnership firm of advocates by way of legal services to an advocate or partnership firm of advocates. Notification No. 30/2012-Service Tax sets the extent of service tax payable and records that in respect of services provided by an individual advocate or firm of advocates by way of legal services, the percentage payable by the provider is Nil and by the receiver is 100%. The impugned order proceeded to confirm service tax liability without addressing or applying the exemption/notification position, thereby proceeding despite the notifications that remove levy on the individual advocate for services to an advocate or firm of advocates.

Conclusion: The notifications operate to preclude levy of service tax on the individual advocate for services to a partnership firm of advocates; the impugned order imposing service tax on the petitioner is without jurisdiction and is quashed.

Issue (ii): Whether the impugned proceedings and the recovery actions (including lien on bank accounts) suffered from breach of principles of natural justice and/or were otherwise unsustainable.

Analysis: The record discloses that the show cause notice and personal hearing notices were dispatched to an old address and were not received by the petitioner; no reply was filed for reasons recorded. The recovery notice under Section 87 of the Finance Act, 1994 and the creation of liens on bank accounts occurred without effective notice to the petitioner and flowed from an order which failed to consider the exemption notifications, rendering the enforcement steps consequent to that order tainted by the jurisdictional error.

Conclusion: The recovery action and lien creation based on the impugned order cannot stand and are set aside; the procedural defects and lack of jurisdiction vitiate the enforcement steps.

Final Conclusion: The petition is allowed; the impugned order imposing service tax on the petitioner and consequential recovery actions are quashed and set aside in view of the exemption notifications and the jurisdictional and procedural defects, and the reliefs claimed in prayer clauses (a), (b) and (c) are granted.

Ratio Decidendi: Where a statutory notification exempts the service in question, adjudicatory action and consequential recovery taken without addressing or applying that exemption constitute jurisdictional error warranting quashment of the order and annulment of consequent recovery steps.

Exemption of legal services under Notifications 25/2012 and 30/2012: Designated Officer lacked jurisdiction, reverse charge and recovery set aside.
Exemption for legal services under Notification No. 25/2012 and No. 30/2012 was central, with the court treating the Designated Officer as lacking jurisdiction to pursue service tax where those notifications applied; that finding disposed of the challenge to recovery based on alleged evasion for 2016-17. The judgment relied on prior Bombay HC authority in similar circumstances, noted non filing of a reply to the show cause notice and criticised creation of a lien and recovery without proper jurisdictional basis, emphasizing compliance with principles of natural justice.

Exemption of legal services provided by an individual advocate or a partnership firm of advocates to an advocate or partnership firm of advocates under Notification No. 25/2012 and Notification No. 30/2012 - jurisdiction of the Designated Officer in service tax proceedings where exemption is claimed - reverse charge mechanism for legal services - validity of recovery proceedings and creation of lien without notice - compliance with principles of natural justice in tax adjudication - HELD THAT:- From the order-in-original, it appears that the genesis of said action taken against the petitioner is on the verification of third party data received by the Income Tax Department for the period 2016-17, when it was observed that there was an apparent mismatch on the payment of service tax and the turnover of the petitioner. It is observed that the petitioner had not discharged/declared her service tax liability correctly for the period 2016-17 which has resulted in evasion of service tax payment and accordingly a show cause notice is stated to have been issued to the petitioner calling upon the petitioner to discharge the service tax liability which was stated to be of Rs. 26,81,250/-. Admittedly, no reply to the show cause notice was filed, for the reasons which we have recorded hereinabove. It is accepted that the proceedings would stand covered by the decision of this Court in Advocate Pooja Patil Vs. Deputy Commissioner, CGST And CX Division VI [2024 (2) TMI 355 - BOMBAY HIGH COURT] wherein in similar circumstances, considering the Notification No. 25/2012 issued by the Ministry of Finance (Department of Revenue) as also Notification No. 30/2012 issued by the Ministry of Finance (Department of Revenue), the Court accepted the case of the said petitioner that the Designated Officer would not have jurisdiction to take forward the proceedings inasmuch as the service tax was not leviable on the individual advocate as per the said notifications. The present proceedings also would stand covered by such notifications and the position in law as held by this Court in Advocate Pooja Patil (supra). The petition accordingly needs to succeed.

2026 (2) TMI 517 - CESTAT CHENNAI Central Excise

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Issues: (i) Whether CENVAT credit of service tax paid on Goods Transport Agency services for the period April 2008 to August 2012 is admissible; (ii) Whether invocation of the extended period of limitation and imposition of penalty is sustainable.

Issue (i): Admissibility of CENVAT credit of service tax paid on GTA services for April 2008 to August 2012.

Analysis: The amendment to Rule 2(p) w.e.f. 01.03.2008 withdrew only the limited facility of treating certain reverse-charge liabilities as "output service" for utilisation purposes; it did not amend Rule 2(l) which defines "input service". Rule 2(l) continued to include inward transportation of inputs/capital goods and outward transportation up to the place of removal. Abatement notifications imposing a condition of non-availment of credit apply to the GTA provider to prevent double benefit and do not prohibit the recipient who pays tax under reverse charge from availing credit. Binding judicial and administrative authorities require determination of the correct "place of removal" based on contractual terms (transfer of property, allocation of risk) before admissibility of outward transportation credit can be conclusively decided. In the present record, contractual terms and documentary evidence regarding place of removal were not examined, and the adjudicating authority proceeded solely on the basis of Rule 2(p) amendment and abatement conditions without verifying contractual place of removal.

Conclusion: Denial of CENVAT credit solely on the basis of amendment to Rule 2(p) and abatement notifications is unsustainable. The matter is remanded to the adjudicating authority for limited verification of contractual place of removal and fresh decision on admissibility strictly in terms of Rule 2(l) and binding precedents.

Issue (ii): Whether invocation of the extended period of limitation and imposition of penalty is sustainable.

Analysis: The availment of credit was disclosed in statutory returns and was within departmental knowledge. Proceedings arose from successive show cause notices on the same issue; once the Department initiated proceedings earlier on identical facts, subsequent invocation of extended limitation alleging suppression cannot be sustained. The dispute arises from an interpretational controversy extensively litigated; mere audit objection or difference of opinion does not establish suppression, fraud or wilful misstatement required to invoke extended period or mandatory penalty under Rule 15(2)/Section 11AC. Any penalty, interest or demand must be limited to the normal period and be consequential only upon final adjudication after remand, and penalty, if any, can only be under Rule 15(1) for civil consequence where mens rea is not established.

Conclusion: Extended period under the proviso to Section 11A(4) is not invocable; demand is restricted to the normal period; penalty under Rule 15(2)/Section 11AC is set aside; penalty, if any after remand, shall be confined to Rule 15(1); interest and penalty shall be re-determined only consequentially after fresh adjudication and verification of utilisation of disputed credit.

Final Conclusion: The impugned orders are set aside to the extent indicated and the matter is remanded for limited verification of contractual place of removal and fresh adjudication on admissibility of GTA credit in accordance with Rule 2(l) and binding precedents; the demand, if any, shall be restricted to the normal period and penalties under Rule 15(2)/Section 11AC are set aside.

Ratio Decidendi: Amendment to Rule 2(p) withdrawing the facility of treating reverse-charge liabilities as "output service" does not, by itself, bar eligibility of CENVAT credit where the service continues to qualify as an "input service" under Rule 2(l); admissibility of outward transportation credit depends on the contractual determination of the place of removal and abatement conditions apply to the service provider, not the recipient.

Admissibility of CENVAT credit on GTA services remanded for contractual place of removal verification; extended limitation and penalty set aside
Denial of CENVAT credit on GTA services cannot rest solely on the amendment withdrawing reverse charge utilisation; where the service remains an "input service" under Rule 2(l) credit may be availed. Abatement restrictions apply to the GTA provider not the recipient. Admissibility hinges on contractual place of removal (FOR destination clauses, risk transfer) and is remanded for limited factual verification. Extended limitation under the proviso to Section 11A(4) is held inapplicable where facts were within departmental knowledge; consequentially, enhanced penalty is set aside and any penalty on re adjudication is confined to the ordinary penalty, with interest and utilisation to be re determined.

Admissibility of CENVAT credit on Goods Transport Agency (GTA) services - definition of "input service" under Rule 2(l) - effect of amendment to "output service" under Rule 2(p) (01.03.2008) - abatement notifications and restriction applicable to GTA service provider (not recipient) - determination of "place of removal" and FOR destination contracts - limited remand for verification of contractual place of removal - extended period of limitation under proviso to Section 11A(4) - requirement of suppression/fraud for invoking extended limitation - penalty under Rule 15(2)/Section 11AC vis-a-vis Rule 15(1) - Admissibility of CENVAT Credit on GTA Services - HELD THAT:- We hold that the denial of CENVAT credit on GTA services solely on the basis of the amendment to Rule 2(p) of the CENVAT Credit Rules, 2004 and the conditions contained in the abatement notifications is legally unsustainable. We have found that the amendment to Rule 2(p) w.e.f. 01.03.2008 only withdrew the facility of utilisation of credit for payment of service tax on GTA services under reverse charge, and did not operate as a substantive bar on availment of credit where the service continues to fall within the definition of “input service” under Rule 2(l). We have further held that the restriction in abatement notifications such as Notification No. 32/2004-ST and Notification No. 13/2008-ST applies only to the GTA service provider and not to the service recipient, as clarified by CBEC Circular F. No. 166/1/2006-CX.4 dated 03.10.2007 and Circular No. 354/15/2014-TRU dated 10.07.2014. The Larger Bench decision of this Tribunal in M/s. The Ramco Cements Ltd. v. CCE, [2023 (12) TMI 1332 - CESTAT CHENNAI-LB] has underscored that admissibility of outward GTA credit depends upon determination of the correct “place of removal” based on contractual terms, applying the binding principles laid down by the Hon’ble Supreme Court in Roofit Industries Ltd. [2015 (4) TMI 857 - SUPREME COURT], read with CBIC Circulars dated 20.10.2014 and 08.06.2018. Since the relevant purchase orders, FOR destination clauses, risk transfer conditions and documentary evidence have not been examined, the issue cannot be conclusively decided at this stage. Accordingly, the matter is remanded to the adjudicating authority for the limited purpose of verifying the contractual place of removal and thereafter deciding admissibility of GTA credit strictly in accordance with Rule 2(l) and the binding precedents noted above. Limitation, extended period and penalty - HELD THAT:- We find that the proceedings arise out of two Show Cause Notices issued on the very same issue of availment of CENVAT credit on GTA services. The availment of credit was consistently disclosed in statutory ER-1 returns and was therefore within the knowledge of the Department. Once the Department had issued the first notice on the same facts, invocation of suppression or fraud again in the second notice is impermissible. The Hon’ble Supreme Court in Nizam Sugar Factory v. CCE, [2006 (4) TMI 127 - SUPREME COURT] has categorically held that where the facts are already in the knowledge of the Department, the extended period cannot be repeatedly invoked in subsequent notices on the same issue. Accordingly, we hold that the extended period under the proviso to Section 11A(4) is not invocable. The first SCN, to the extent it travels beyond the normal period, is hit by limitation, and the second SCN is necessarily restricted to the normal period alone. Consequently, penalty under Rule 15(2) read with Section 11AC cannot be sustained. At best, if any inadmissible credit is determined after remand, penalty, if at all imposable, can only fall under Rule 15(1). Interest and penalty shall therefore be purely consequential and shall be re-determined only after fresh adjudication on remand, limited only to such credit as may ultimately be held inadmissible, and subject to verification of actual utilisation of credit in terms of Rule 14. Accordingly, the impugned Order-in-Original Nos. 32 & 33/2022-C.Ex. (Commr.) dated 25.03.2022 are set aside to the extent indicated above. The matter is remanded to the adjudicating authority for limited verification and fresh decision on admissibility of GTA credit strictly in terms of Rule 2(l), contractual place of removal and the binding judicial precedents. The demand, if any, shall remain restricted to the normal period alone. Penalty under Rule 15(2) read with Section 11AC is set aside, and penalty, if any, shall be confined only to Rule 15(1) on re-adjudication. Interest shall also be re-determined consequentially only upon final outcome and subject to verification of utilization of the disputed credit. Appeal is thus allowed by way of remand in the above terms, with consequential relief in accordance with law.

2026 (2) TMI 506 - ALLAHABAD HIGH COURT GST

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Issues: Whether the writ petition seeking quashment of the termination notice and mandamus to grant time to deposit outstanding license fee (including GST) should be entertained and relief granted, or whether the termination effected for persistent breach of contractual payment obligations should be left to contractual remedies.

Analysis: The License Agreement is a binding contractual instrument containing clear payment obligations, including liability for GST and interest on delayed payments, and providing a contractual dispute-resolution/alternative remedy mechanism. The petitioner admitted failure to comply with the stipulated payment schedule, resulting in substantial arrears. The contention of confusion regarding GST liability is unsupported where the agreement does not exclude applicability of GST and GST is a statutory levy. Given the existence of a material and persistent breach of express contractual terms and an available contractual remedy, extraordinary writ relief under Article 226 is not appropriate to substitute contractual remedies or to re-write agreed terms. The petitioner is therefore permitted to invoke the alternative remedy provided under the agreement.

Conclusion: Writ relief is refused and the petition is dismissed; the decision to terminate the license for persistent breach is sustained and the petitioner is left to pursue the contractual remedy provided in the agreement (decision in favour of the respondent).

Final Conclusion: The Court will not exercise extraordinary writ jurisdiction to interfere with a lawfully terminated contract where there is clear contractual default and an alternative remedy is available under the contract.

Ratio Decidendi: Where parties have expressly agreed contractual payment obligations and an alternative contractual remedy, and where there is a material breach of those obligations including statutory dues, courts will not ordinarily exercise Article 226 writ jurisdiction to set aside a termination grounded on such breach.

License agreement breach and GST liability upheld; court declines writ relief but permits contractual remedies.
The High Court finds the license agreement to be a binding contract and that the petitioner breached express payment obligations, producing substantial arrears; consequence: termination for breach was upheld and the writ petition was dismissed. The court also held that GST is a statutory levy not excluded by the agreement; consequence: GST and interest on delayed payments remain payable. The presence of a contractual dispute resolution clause and availability of an alternative contractual remedy led the court to refuse exercise of extraordinary writ jurisdiction under Article 226; consequence: petitioner may pursue remedies under the contract instead.

2026 (2) TMI 486 - SC Order Customs

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Dismissal for non-prosecution follows where an Official Liquidator ignores appearance directions and leaves an appeal unprosecuted.
Dismissal for non-prosecution may follow where an appellant in liquidation repeatedly fails to secure appearance by the Official Liquidator despite express court directions and an opportunity to comply. Continued non-appearance and failure to prosecute can justify procedural dismissal to avoid prejudice to the respondent and undue delay in the administration of justice. On the stated facts, the absence of representation after prior directions met the threshold for dismissal in default, resulting in dismissal of the appeal in favour of the respondent.

2026 (2) TMI 485 - DELHI HIGH COURT Customs

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Entitlement under Duty Free Credit Entitlement Scheme rejected due to misuse; Supreme Court precedent precludes relief.
Entitlement to benefits under the Duty Free Credit Entitlement (DFCE) Scheme was denied because the claimant's export transactions constituted misuse and fraud, so no vested right ever accrued; the Supreme Court in Director General of Foreign Trade v. Kanak Exports conclusively held such exporters were not entitled, and a review petition was dismissed, removing any basis for reconsideration. As a result, the High Court declined to re-examine entitlement or grant relief, holding the Supreme Court precedent binding and dismissing the appeal.

2026 (2) TMI 477 - BOMBAY HIGH COURT IBC

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Applicability of insolvency code provisions to pending wage recovery suits - pre liquidation suits maintainable and liquidator may defend.
Section 33(5) of the insolvency legislation does not apply to suits instituted before liquidation, and the liquidator may be impleaded and may defend pending proceedings under his statutory powers; therefore the statutory bar on civil courts under the insolvency code (section 63) was not attracted to a pre-liquidation wage recovery suit and the trial court erred in holding it lacked jurisdiction. Priority under section 53 gives 24 months of workmen dues precedence but does not extinguish wages beyond that period nor bar civil adjudication of excess claims. The trial court's refusal to permit impleadment and its maintainability ruling were set aside.

Applicability of Section 33(5) of the IBC to pending suits - Power of the liquidator to institute or defend proceedings u/s 35(1)(k) - Scope of Section 63 of the IBC - bar on Civil Courts - Priority of claims u/s 53 of the IBC and effect on wage claims - Principle that amendment applications should not decide merits of the proposed amendment - HELD THAT:- In the present case, the Trial Court has decided not just merits of the averments sought to be added in the Plaint but also the issue of maintainability of suit and has ruled that the suit itself is not maintainable. Permissibility to implead the Liquidator to the Suit - In the present case, the Suit has been instituted by the Plaintiff on 4 October 2017, whereas the liquidation order is passed on 19 June 2019. This Court in Urban Infrastructure Trustees Ltd. [2018 (12) TMI 2032 - BOMBAY HIGH COURT] in which Respondent No.5 therein was ordered to be wound up by NCLT. The Applicant therein had filed application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of Arbitrator. The Applicant therein applied for amendment of Section 11 Application for its substitution with the Liquidator. The Respondent therein opposed substitution by referring to Section 33(5) of the IBC. There is no embargo on liquidator defending the Suit under Section 33(5) of the IBC. More importantly, Section 33(5) does not apply to pending Suits. In the present case, the Suit has been instituted well before liquidation of Respondent No. 1. Thus, bar under Section 63 of the IBC is not attracted to the present Suit, which is filed for recovery of unpaid salary, which issue cannot be adjudicated by NCLT or NCLAT. Section 53 is only the priority of debts. Respondent No. 2 is not right in contending that workmen’s dues only for the period of 24 months can be paid from assets by the Liquidator. It is just that the said dues of the workmen for a period of 24 months have priority over other debts. Therefore, provisions of Section 53(1)(b)(i) cannot be read to mean that the wages beyond 24 months get obliterated. Also, the said provision does not mean an embargo on jurisdiction of Civil Court in adjudicating claims towards unpaid salary in excess of period of 24 months. The learned Trial Judge has erred in rejecting the Chamber Summons for impleadment of the Liquidator. It has erred in holding that it has no jurisdiction to try the Suit or that Plaintiff must appear before the Liquidator to seek his claim. Impugned order dated 17 October 2022 is thus indefensible and liable to be set aside.

2026 (2) TMI 463 - BOMBAY HIGH COURT GST

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Attendance under Section 70 CGST summons found not to be illegal detention, compensation claim dismissed by court
Attendance pursuant to a summons under the Central Goods and Services Tax regime does not, by itself, amount to illegal detention where statutory summons power is exercised by an authorised officer and statutory safeguards are observed; Order XVI C.P.C. witness list procedures do not impose a seven day notice requirement on administrative inquiries under that statutory power. The material showed acknowledged service, voluntary attendance, possession of personal items, absence of contemporaneous objection, and subsequent production before a Magistrate, and on that basis the claim for compensation for detention during the inquiry period was rejected.

Power to summon u/s 70 - summons for inquiry does not amount to arrest or detention - no requirement of seven day's notice for summons u/s 70 - illegal detention and claim for compensation - fraudulent utilization of Input Tax Credit - limited judicial review of arrests under special statutes - Whether the petitioner was under illegal detention for the aforesaid period when he was summoned for recording statement under Section 70 of the CGST Act - HELD THAT:- Admittedly, from the record it is disclosed that when Anti-evasion Wing of CGST, Aurangabad generated a system generated intelligence indicating fraudulent utilization of ITC (Input Tax Credit) by Kabsan and passing on of GST without any supply of goods or services or both, an inquiry was commenced. On going through the copies of the summonses, it is clearly evident that they are received by the petitioner as well as these two persons without raising any objection by acknowledging them under their respective signatures. Further, after attending GST Bhavan at Aurangabad, the petitioner and Bhavik Mehta were again issued with similar summonses for attending GST Bhavan on 19.06.2025 for further inquiry. Thereafter on 19.06.2025 also the petitioner was called for inquiry on 20.06.2025. It is to be noted that the petitioner did not raise any objection for such attendance during period from 17.06.2025 to 20.06.2025. Thereafter on ascertaining the involvement of the petitioner he was arrested on 21.06.2025 and without any delay, produced concerned Magistrate, who granted him custody. Admittedly, on going through Section 70, it has been provided that the summons must be issued as provided in the case of Civil Court under the provisions of the Code of Civil Procedure, 1908 (5 of 1908). However, nowhere in this Section there is reference of 7 days prior notice. Learned counsel for the petitioner, for that purpose, relied on Order XVI of the C.P.C. which relates to summoning and attendance of witnesses. Though in the case of FSM Education Pvt. Ltd vs Union of India [2022 (1) TMI 551 - BOMBAY HIGH COURT] this Court had held that if any summons is required to be issued by the respondent, then it shall indicate the purpose of issuance of summoned with clear 7 days notice, however, this observation had come in the peculiar circumstances of that case only and this cannot be made directly applicable in the instant matter, considering the mandate of Section 70 of CGST Act. In the instant case, it appears that the petitioner had readily accepted the summons issued to him from 17.06.2025 to 19.06.2025. He readily acknowledged the summons by putting his signatures thereon and also attending on the dates. Further, during that period he did not make any complaint about his alleged illegal detention. Further, the record shows that he was kept in GST Bhavan at Aurangabad as per his own wish and he was also allowed to use his four mobile handsets from which he could have easily made contact with his family members. Under such circumstances, by no stretch of imagination, it can be held that the petitioner was under illegal detention at the hands of respondent Nos. 1 to 4 during the said period. Therefore, no question arises of awarding compensation to the petitioner, as claimed by him. With these observation, we find no substance in the present petition and accordingly it stands dismissed.

2026 (2) TMI 447 - ITAT MUMBAI Income Tax

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Issues: (i) Whether the assessment order was erroneous and prejudicial to the interests of Revenue for failing to examine and verify the correctness and computation of disallowance under section 14A read with Rule 8D (strategic investments and methodology); (ii) Whether the assessment order was erroneous and prejudicial to the interests of Revenue for failure to examine information suggesting receipt of accommodation entries (Insight Portal / Sankalp Group) and whether the revision under section 263 directing further enquiry was valid.

Issue (i): Whether the AO failed to make inquiries or verification required for determining disallowance under section 14A read with Rule 8D, making the assessment order erroneous and prejudicial to Revenue.

Analysis: The deeming provisions of Explanation 2(a) to section 263 treat an order as erroneous and prejudicial where it is passed without making inquiries or verification which should have been made. The record shows the assessee offered a suo motu disallowance backed by an expert report and the AO accepted the offered figure without further queries or independent application of the Rule 8D methodology, despite large strategic investments and substantial exempt income. Relevant judicial precedent establishes that absence of meaningful inquiry or verification attracts Explanation 2(a).

Conclusion: The AO did not conduct necessary verification of the Rule 8D computation and the assessment order is erroneous and prejudicial to the interests of Revenue on this issue; the revision under section 263 in respect of disallowance is justified.

Issue (ii): Whether the AO failed to examine information indicating receipt of accommodation entries and whether setting aside the assessment for further enquiry under section 263 was permissible.

Analysis: Explanation 2(a) applies where the AO omitted inquiries or verifications which should have been made. Departmental information (Insight Portal / investigation material) identifying potential accommodation entries was available in the record and was not addressed in the assessment. The revisionary direction restores the matter to the AO to examine and verify that material, affording the assessee opportunity of hearing; remand for proper inquiry is an accepted remedy where absence of inquiry precludes a conclusive finding.

Conclusion: The AO failed to make requisite inquiries regarding alleged accommodation entries; the setting aside of the assessment and direction for fresh enquiry under section 263 is valid.

Final Conclusion: Both issues involve lack of requisite inquiry or verification by the AO such that the assessment order is deemed erroneous and prejudicial to Revenue under Explanation 2(a) to section 263; the revisionary order under section 263 is confirmed and the appeal is dismissed, while the matters are remitted to the AO for fresh verification and decision after affording opportunity of hearing to the assessee.

Ratio Decidendi: Where the Assessing Officer accepts the assessee's claim or computation without conducting inquiries or verifications which ought to have been made-particularly regarding Rule 8D computations for strategic investments or available investigative information-Explanation 2(a) to section 263 renders the assessment order erroneous and prejudicial, authorising the Commissioner to set aside the order and direct the AO to conduct fresh enquiries.

Disallowance of expenditure attributable to exempt income and strategic investment exclusion required verification; revisionary powers upheld against taxpayer.
Revision under the tax code challenged an assessing officer's acceptance of an assessee's self computed disallowance for exempt income without testing the computation method or excluding strategic investments; reliance on the Apex Court principle in Maxopp required the AO to verify a third party report, and failure to do so activated deeming provisions, making the disallowance unsustainable. The AO also ignored intelligence indicating receipt of accommodation entries, which mandated inquiry under established precedents requiring meaningful enquiries. Consequence: the revisionary authority's invocation of revisionary powers was upheld and the taxpayer's position was overturned.

Revision u/s 263 - as per PCIT AO failed to consider the necessity of revisiting the method of disallowance under Rule 8D read with Section 14A - AO accepting the suo motu disallowance offered by the assessee - HELD THAT:- CIT has rightly pointed out the disallowance offered by the assessee, without taking into account its claim for excluding Strategic Investment, needed proper verification by the AO. His observations are in sync with the landmark decision of Maxopp Investment Ltd. [2018 (3) TMI 805 - SUPREME COURT] in which similar issue of strategic investment was decided in favour of the Revenue for the purposes of computation of disallowance under section 14A r.w. Rule 8D.We are of the considered opinion that it was incumbent on the AO to examine a third party report especially in the light of the Apex Court ruling and the provisions of the Act in this regard and more so, in the light of suo motu disallowance of mere Rs. 1.82 cr. on exempt income exceeding Rs. 274 cr., against investments of Rs. 11,813 cr., without testing the computation method under Rule 8D, which demonstrates clear case of lack of any inquiry worth the name. Therefore, on the facts and the circumstances of the case, the deeming provisions of Explanation 2,clause(a) are clearly applicable. Accommodation entries as AO did not examine the issue at all -Information was already available to the AO on Insight Portal which he completely overlooked although the information revealed that the assessee was recipient of accommodation of accommodation entries as a consequence of search action on Sankalp Group. This fact has not been controverted by the ld.AR who kept on stressing that the ld.PCIT did not make available the said information to it during revision proceedings without taking due cognizance of the fact that the assessment order has been set aside for necessary verification and enquiry allowing adequate opportunity of hearing to the assessee. This contention of the assessee cannot take away the fact on record that the AO failed to take any note of such vital piece of information which was very much available with him at the time of assessment proceedings. It is also clearly a case of no inquiry, hit by the deeming provisions of Explanation 2. In so far as the requirement of due enquiry to be conducted by the Assessing Officer while scrutinising any case in the course of assessment order is concerned, it would be relevant to quote certain landmark decisions of Ram Pyari Devi Saraogi [1967 (5) TMI 10 - SUPREME COURT] and Tara Devi Aggarwal [1972 (11) TMI 2 - SUPREME COURT] holding that in a stereo-typed order which simply accepts what the assessee has stated and fails to make enquiries which are called for in the circumstances, is erroneous. Thus, the issuance of notice u/s 263 of the Act and impugned order passed by the PCIT u/s 263 of the Act is validly assumed jurisdiction of Revisionary powers which cannot be alleged as invalid assumption of jurisdiction or bad in law and we confirm the same. Decided against assessee.

2026 (2) TMI 442 - BOMBAY HIGH COURT Companies Law

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Issues: Whether the company respondent No.3 was fraudulently incorporated under a name too nearly resembling the petitioner company and whether its registration should be cancelled and the balance funds in respondent No.3's bank account remitted to the petitioner's liquidation account.

Analysis: The Court examined the application of Section 4(2)(a) of the Companies Act, 2013 read with Rule 8 of the Companies (Incorporation) Rules, 2014 concerning names which resemble too nearly the name of an existing company. The Court compared the names and noted that the only material difference was deletion of the terminal 's' in 'services', rendering the names strikingly similar when disregarding matters set out in Rule 8(2). The Court considered documentary evidence including identical registered addresses, use of a common domain in e-mail IDs, replication of company letterhead, vendor submissions bearing the suspended director's signature, and bank transaction records showing payments receivable by the petitioner being diverted into respondent No.3's account. The Court also evaluated respondent No.1's reliance on its automated SPICe+ system and an erroneously quoted version of Rule 8 in its affidavit, finding the quoted Rule to be incorrect and the registrar's explanation inadequate. On this factual and legal matrix, the Court found that respondent No.3 was registered in a manner inconsistent with Section 4(2)(a) and Rule 8 and that the fraudulent registration facilitated diversion of funds from the petitioner.

Conclusion: The Court concludes that respondent No.3 was fraudulently incorporated with a name too nearly resembling the petitioner's name; respondent No.3's registration is cancelled and respondent No.4 (bank) is directed to remit the balance standing in respondent No.3's account to the petitioner's liquidation account.

Ratio Decidendi: A company shall not be registered with a name that resembles too nearly an existing company's name; where Section 4(2)(a) of the Companies Act, 2013 read with Rule 8 of the Companies (Incorporation) Rules, 2014 shows striking similarity in names and documentary evidence establishes misuse of the similar name to divert the existing company's receivables, registration is impermissible and cancellation with remedial remittance to the aggrieved company's liquidation account is appropriate.

Company name similarity and fraudulent incorporation: registration cancelled and funds ordered remitted to liquidation account.
A company was found to be fraudulently incorporated using a name strikingly similar to an existing corporate debtor, breaching the prohibition on confusingly similar names under the name-similarity test; registration of the respondent company is cancelled. The court relied on identical registered addresses, replicated letterhead and shared domain use to conclude bad faith, and ordered the bank to remit remaining funds in the fraudulently incorporated company's account to the petitioner's liquidation account. The Registrar's SPICe+ automated name-checking and officers' conduct will be further examined; the Registrar may file an additional affidavit within four weeks.

Names which resemble too nearly - fraudulent incorporation - name similarity test - Section 4(2)(a) prohibition on similar names - cancellation of registration - remittance of funds to liquidation account - Corporate Insolvency Resolution Process (CIRP) - SPICe+ automated name-checking - writ remedy for wrongful incorporation - No Objection Certificate (NOC) misuse - HELD THAT:- We find substance in the contention of the petitioner that on a proper application of Rule 8 of the aforesaid Rules, respondent No. 3 could not have been registered as a company bearing the name ‘Sangeeta Aviation Service Private Limited’ as it was clearly and strikingly similar to the name of the petitioner corporate debtor i.e. ‘Sangeeta Aviation Services Private Limited’. The only difference being deletion of alphabet ‘s’ from the word ‘services’ clearly demonstrated that the respondent No. 1 could not have registered and incorporated respondent No. 3 with the name ‘Sangeeta Aviation Service Private Limited’. Apart from this, we find that the registered address of both the companies was shown as ‘Akshay Mittal Estate, Andheri (East), Mumbai’. We also find that common domain name viz. supremeaviation.com was used in the registered e-mail ID of respondent No. 3, when the said domain name was already being used by the suspended director of the petitioner corporate debtor. Even the company letterhead was replicated by the respondent No. 3 when compared with the letterhead of the petitioner corporate debtor. It is simply stated that the said system approved the name ‘Sangeeta Aviation Service Private Limited’, and therefore, registration and incorporation of respondent No. 3 was undertaken. We find that the stand taken in the reply affidavit of respondent No. 1 makes matters worse for the said respondent. An impression is sought to be given that due to lack of human interface and in the light of the functioning of the ‘SPICe+ system', such registration of the respondent No. 3 was undertaken. This is another reason why we are of the opinion that the respondent No. 1 is seeking to justify the fraudulent manner in which the respondent No. 3 was registered and incorporated as ‘Sangeeta Aviation Service Private Limited’. If the aforesaid ‘SPICe+ system' is so inadequate and incompetent, there is no reason why the officers of respondent No. 1 - Registrar of Companies should have used such a system in the first place and in any case, we find that a detailed enquiry into the matter is justified. We have come to the considered conclusion that in this case, respondent No. 3 company was fraudulently incorporated in the name of ‘Sangeeta Aviation Service Private Limited’ although its name was strikingly and too nearly similar to the name of the already registered company ‘M/s. Sangeeta Aviation Services Private Limited’, which is the corporate debtor petitioner. It is of no consequence that when the fraud was discovered, the name of respondent No. 3 was subsequently changed to ‘M/s. S4 Aviation Service Limited’. We also find that the petitioner has suffered considerable financial loss due to significant amounts being diverted because of the fraud committed by respondent No. 3, for which separate proceedings have already been initiated. The record also shows that the respondent No.4 Bank had taken steps to debit-freeze the account of respondent No. 3. Considering the conclusions that we have reached hereinabove, we find that an appropriate direction ought to be issued to respondent No.4 to remit the balance amount lying in the account of the fraudulently registered and incorporated respondent No. 3 to the liquidation account of the petitioner corporate debtor (under liquidation). Accordingly, we grant reliefs to the petitioner in terms of prayer clauses (A), (B) and (D). - Consequently, the registration and incorporation of respondent No. 3 stands cancelled. As regards prayer clauses (C), (E) and (F) pertaining to directions for instituting inquiry and investigation against the officers of the respondent No. 1 and considering directions for imposing penalty on respondent No. 1 and also directing the said respondent to pay compensation / damages to the petitioner, the respondent No. 1 is granted time of four weeks to file an additional affidavit. Rejoinder, if any, shall be filed within two weeks thereafter.

2026 (2) TMI 432 - CESTAT NEW DELHI Service Tax

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Rectification of mistake is limited to patent errors; factual reappraisal of penalty and bridge claims is impermissible.
Rectification under Section 35C(2) was confined to a patent mistake apparent from the record, not re-appreciation of evidence or reconsideration of factual findings. The challenge to penalty under Section 78 failed because the final order had already stated that penalty would be re-determined by reference to the demand sustained in remand, so no apparent error was shown. The objections concerning the RCC bridge and ash bund findings also required fresh assessment of work orders, clauses, photographs, and facts, which lay outside the limited rectification jurisdiction. No mistake apparent from the record was established, and the rectification request was held not maintainable.

Rectification of mistake - mistake apparent on the record - limited scope of Section 35C(2) - re-appreciation of evidence not permissible in rectification - penalty u/s 78 limited to confirmed demand - contractual inclusion of service tax in work-order price - distinction between factual findings and rectifiable patent error - HELD THAT:- We find that it is now well settled law that the application for rectification of mistake is maintainable only in cases where it can be pointed out that there is an error apparent on record. An error which has crept in while passing the order could have been subject matter for rectification. It is finding recorded even if erroneous could not be rectified by resorting to these provisions for which a provision of appeal has been made in the statute. We find that in respect of Section 78, we find that the applicant has sought to state para 4.9 (7) is upholding the penalty in respect of the demands set aside by the impugned order. We do not find any merits in the said submission, para 4.9 (7) is summarization of the findings recorded earlier and is to be read along with the para 4.8 of the order. We have clearly stated that the penalty under section 78 will be re-determined and will be equal to the demand upheld in the remand proceedings. Thus there is no error apparent in the this regrds. Even otherwise, as per provisions of Section 78, penalty under Section 78 could not be in excess of the total demand confirmed. We find that applicant has made an attempt to find out as looking through a magnifying glass to search for certain mistakes in the order to justify his application. We are very clear in our view that in respect of the amount dropped or remanded there cannot be any penalty under Section 78 more than the amounts confirmed in the remand proceedings. We do not find any justification in this ground. The demand confirmed in respect of RCC Bridge over the Baishaha Nala in the mining area of SECL, we do not find any merit in the submission by which I cannot be said that an error crept in our findings. Our findings are based on the available documents on record including work order signed between applicant and service recipient. Para 9 of the work order provides that value of work order is inclusive calculated @4.944% of quoted value then we do not find anything further to be considered while considering this application. As per the stipulations made in the work order issued by M/s South Eastern Coalfields Ltd. dated 19.11.2014, the total value of the work order has been determined after taking into exercise the service tax payable on the work value and this is as per the norms of the company i.e. SECL. Reliance which appellant sought to be placed would not held the case of the applicant either at the time of argument or now. We do not find any merits in this ground also. Thus, we do not find any merits in this application for rectification of mistake. Application is dismissed.

2026 (2) TMI 431 - CESTAT KOLKATA Service Tax

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Issues: (i) Whether the services rendered by the appellant in undertaking fabrication/job work on materials supplied by the principal constitute job work exempt from service tax under Notification No. 25/2012-S.T. dated 20.06.2012 read with Section 66D/Section 66B of the Finance Act, 1994; (ii) Whether the invoking of the extended period of limitation for recovery of service tax is justified in absence of intent to evade.

Issue (i): Whether the services rendered by the appellant are classifiable as job work and exempt under Notification No. 25/2012-S.T. dated 20.06.2012.

Analysis: The appellant performed fabrication/job work on materials supplied by the principal manufacturer at the principal's premises, with labour engaged directly in the manufacturing process and consideration fixed on per-piece basis. The Tribunal examined the nature of the activity against Sl. No. 30(c) of Notification No. 25/2012-S.T. dated 20.06.2012 and the Negative List concept under Section 66D and the exemption provision under Section 66B of the Finance Act, 1994.

Conclusion: The services are held to be job work falling within Sl. No. 30(c) of Notification No. 25/2012-S.T. dated 20.06.2012 and are exempt from service tax. The conclusion is in favour of the assessee.

Issue (ii): Whether the extended period of limitation can be invoked where there is no evidence of suppression or intent to evade payment of service tax.

Analysis: The Tribunal noted that the appellant regularly filed ST-3 returns and the demand arose from differences between ITR and ST-3 figures. There was no evidence establishing suppression of facts or intent to evade payment of service tax, facts necessary to invoke the extended period of limitation under the relevant law.

Conclusion: The invocation of the extended period of limitation is not justified in the absence of evidence of intent to evade; this conclusion is in favour of the assessee.

Final Conclusion: The demand confirmed in the impugned order is not sustainable both on merits (services are exempt as job work under Notification No. 25/2012-S.T. dated 20.06.2012 read with Section 66D/66B of the Finance Act, 1994) and on limitation (extended period not invocable for lack of intent to evade); consequential demands of interest and penalty under Section 78 of the Finance Act, 1994 also do not arise. The appeal is allowed.

Ratio Decidendi: Services consisting of fabrication/job work performed on materials supplied by the principal, directly contributing to manufacture at the principal's premises with consideration on per-piece basis, fall within Sl. No. 30(c) of Notification No. 25/2012-S.T. dated 20.06.2012 and are exempt from service tax; further, the extended period of limitation for service tax recovery requires proof of suppression or intent to evade which was not established.

Job work exemption for manpower-supplied services in manufacturing upheld, extended limitation and penalty demands quashed
Services characterised as supply of labour/manpower were held to constitute job work/fabrication when labour worked within the manufacturing premises and the work resulted in manufacture of excisable goods; such services therefore fall under the exemption at Sl. No. 30(c) of Notification No. 25/2012 and the service tax demand on those services was set aside. Separately, the tribunal found no evidence of concealment or intent to evade tax and declined to invoke the extended period of limitation; accordingly the extended-period demand, and consequential interest and penalty, were also quashed. Appeal allowed with consequential relief.

Negative List of Services - job work - exemption under Notification No. 25/2012-S.T., Sl. No. 30(c) - manpower supply services - service tax liability - extended period of limitation - interest and penalty u/s 78 - HELD THAT:- We find that during the impugned period, the appellant was engaged in providing different services to the service recipient viz., M/s. Exide Industries Ltd., against different work orders were awarded to them. As far as the first type of work orders are concerned, for which services were rendered by way of supply of labour / manpower, against which bills were raised on per-day / per-hour basis, in the form of daily paid canteen workers, dispatch of company documents as courier boy, fixing stickers in bottles, etc., the appellant has admitted their liability to Service Tax under the category of manpower supply services and claims to have discharged their Service Tax liability in this regard. We find that the labourers were engaged directly in the process of manufacture of battery by M/s. Exide Industries Ltd and the consideration was fixed on the basis of work accomplished by counting in ‘piece’. Hence, we agree with the submission of the appellant that such services were provided by way of carrying out job work / fabrication for manufacture of excisable goods in the premises of M/s. Exide Industries Limited. As the activity undertaken by the appellant resulted in ‘manufacture’ of excisable goods, on which M/s. Exide Industries Limited has discharged Service Tax, we are of the view that such services are exempted from payment of Service Tax. We find that the above activity undertaken by the appellant is squarely covered within the ambit of Sl. No. 30(c) of Notification No. 25/2012-S.T. dated 20.06.2012. Accordingly, we find that the demand of Service Tax confirmed in the impugned order, on the above services rendered by the appellant, is not sustainable, on merits. Limitation - We find that the appellant were regular in filing their ST-3 Returns and that the impugned demand has been raised solely on the basis of the difference found between the Income Tax Return (ITR) and Service Tax Return (ST-3) filed by them for the Financial Year 2014-15. As the appellant have not suppressed any material fact from the Department, we observe that the intent to evade payment of Service Tax has not been established in this case. In the absence of any evidence to the contrary, we are of the view that the ingredients for invoking the extended period of limitation are not satisfied in this case. Accordingly, we hold that the confirmation of the said demand by invoking the extended period of limitation is not sustainable. Thus, we hold that the demand confirmed in the impugned order is not sustainable, on merits as well as on limitation and hence, the same is set aside. Since the impugned demand against the appellant cannot be sustained, the question of demanding interest or imposing penalty thereon under Section 78 of the Act does not arise. Accordingly, the said demands are also set aside. In the result, the appeal filed by the appellant is allowed, with consequential relief, if any, as per law.

2026 (2) TMI 416 - ITAT RAIPUR Income Tax

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Issues: (i) Whether, for computation of capital gains under section 50C, the sale consideration had to be taken as the stamp valuation finally determined by the Collector of Stamps instead of the higher value initially adopted by the stamp authority. (ii) Whether the deeming fiction under section 50C could be imported into section 54F so as to deny full exemption when the entire actual sale consideration was reinvested in the eligible residential house.

Issue (i): Whether, for computation of capital gains under section 50C, the sale consideration had to be taken as the stamp valuation finally determined by the Collector of Stamps instead of the higher value initially adopted by the stamp authority.

Analysis: Section 50C creates a deeming fiction only for substituting the consideration for the purpose of section 48 where the declared consideration is lower than the value adopted or assessable by the stamp valuation authority. The valuation in the present case had ultimately attained finality at the lower figure fixed by the Collector of Stamps pursuant to the judicial order, and that assessable value had to govern the computation. The fiction under section 50C was therefore required to operate on the final stamp value and not on the earlier provisional valuation.

Conclusion: The lower final stamp valuation had to be adopted for computing capital gains under section 50C, and the assessee was entitled to consequential relief.

Issue (ii): Whether the deeming fiction under section 50C could be imported into section 54F so as to deny full exemption when the entire actual sale consideration was reinvested in the eligible residential house.

Analysis: Section 54F grants exemption with reference to the net consideration actually received and reinvested in the new residential house. The legal fiction created by section 50C is confined to computation of capital gains and cannot be extended beyond its limited purpose. A deeming value cannot be treated as the actual net consideration for the separate exemption provision, because that would require the assessee to do something impossible, namely reinvest more than what was actually received. The exemption had therefore to be examined on the basis of the real consideration and actual reinvestment.

Conclusion: The assessee was entitled to full exemption under section 54F on the basis of the actual net consideration reinvested.

Final Conclusion: The additions sustained in assessment were deleted, the capital gains computation was required to be redone on the basis of the finally determined stamp value, and the assessee was held entitled to complete relief under the exemption provision.

Ratio Decidendi: A deeming fiction under section 50C is limited to capital gains computation and cannot be extended to restrict exemption under section 54F, which must be applied on the basis of the actual net consideration received and reinvested.

Section 50C deeming fiction is confined to capital gains; full section 54F exemption depends on actual reinvestment.
Section 50C applies only to substitute consideration for capital gains computation on the basis of the final stamp valuation, so the lower value finally determined by the Collector of Stamps had to be used and the assessment recomputed accordingly. The deeming fiction in section 50C could not be carried into section 54F, because exemption under that provision depends on the actual net consideration received and reinvested in a residential house. Since the entire actual sale consideration was reinvested, the assessee was entitled to full exemption under section 54F and consequential relief.

Addition of Long Term Capital Gain by invoking Section 50C - addition based on value adopted for stamp duty purposes (assessee’s 1/6th share) - whether the value of said land determined by the Collector of Stamps, Raipur in pursuance of the order of Hon’ble Chhattisgarh High Court (supra) instead of the value determined by the Stamp Valuation Authority/Sub-Registrar has to be taken for working out capital gains under section 50C of the Act - HELD THAT:- Only if a capital asset being land or building or both is transferred and the consideration received or accruing as a result of such transfer is less than the value adopted or assessed or assessable by the stamp valuation authority, the deeming fiction under sub-sec. (1) of Section 50C of the Act shall be activated to substitute such adopted or assessed or assessable value as full value of consideration received or accruing as a result of such transfer in the given situation. Explanation 2 of section 50C of the Act clearly provides that the value so determined on reference to any Authority under the law has to be taken as sale value for stamp purposes. In the case in hand, the Sub-registrar/Stamp Valuation Authority, at the time of registration of the said property, referred the stamp valuation matter to the Collector of Stamps, Raipur under section 47-A(2) of the Indian Stamp Act, 1899. The said valuation, after prolonged litigation as detailed above in para 4 of this order, attained finality at Rs.1,60,31,000/-, which was determined by the Collector of Stamps, Raipur in pursuance of the order of Hon’ble Chhattisgarh High Court. For applicability of Explanation 2 of section 50C of the Act, there is no need to invoke section 50C(2) of the Act. The use of word ‘assessable’ in section 50C of the Act takes care of all situation where purchaser/seller and or the Sub-registrar/Stamp Valuation Authority has challenged/referred the valuation of the property for stamp purposes to the Hon’ble Court/any authority. Here, the value of said land for stamp purposes has attained finality at Rs.1,60,31,000/- instead of Rs.5,75,11,000/-. Thus, value of said property at Rs.1,60,31,000/- has to be taken for computing capital gains under section 50C of the Act. Exemption u/s 54F allowed on deeming capital gains - impossible for the assessee to fulfil the conditions for availing the full exemption in spite of investing the entire net consideration in the eligible asset/residential house - HELD THAT:- We are of the considered view that deeming sale consideration as per the provisions of Section 50C of the Act is not applicable for exemption under section 50F of the Act. The rationale is that one cannot expect a person to perform impossible things. When the person receives a particular sum, he cannot be expected to invest any amount over and above the amount of consideration received for transfer of property. The legal maxim "lex non cogitadimpossibilia", which means that the law cannot possibly compel a person to do something which is impossible to perform. The Hon'ble Supreme Court in the case of Krishnasamy S. Pd v. Union of India [2006 (2) TMI 75 - SUPREME COURT] has upheld this maxim. Thus, if provisions of section 50C of the Act is applied in section 54F of the Act, then it is impossible for the assessee to fulfil the conditions for availing the full exemption in spite of investing the entire net consideration in a new residential house. Accordingly, we hold that where the assessee claims exemption under section 54F of the Act, the net consideration when deployed in acquisition or construction of residential house, it should be eligible for exemption and the provisions of section 50C should not be imported for such computation. Value adopted for computing capital gains under section 50C of the Act can not be treated as net consideration in respect of the original asset which was transferred. We, therefore, direct the Ld. AO to allow the complete exemption u/s 54F of the Act as the cost of new asset is not less than the net consideration in respect of the original asset. Assessee appeal allowed.

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2021 (11) TMI 376 - AT - Income Tax

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Tribunal upholds capitalization of NTPC project expenses, citing consistency with prior judgments.
The Tribunal dismissed the Revenue's appeal, upholding the Ld. CIT(A)'s decision to allow expenses related to the NTPC project to be capitalized. The ... Summary

Tribunal upholds capitalization of NTPC project expenses, citing consistency with prior judgments.

The Tribunal dismissed the Revenue's appeal, upholding the Ld. CIT(A)'s decision to allow expenses related to the NTPC project to be capitalized. The Tribunal's ruling was based on consistency with previous judgments in the assessee's own case for A.Y. 2012-13 and 2013-14, where similar issues were addressed and decided in favor of capitalization of project-related expenses.

Issues:
1. Dismissal of general ground in appeal
2. Allowing adjustment of carry forward business losses with current year income
3. Allowing expenses related to NTPC project incurred prior to business setup

Analysis:

Issue 1: Dismissal of General Ground in Appeal
The Revenue appealed against the order of the Ld. CIT(A)-18, Kolkata for A.Y. 2014-15. The Tribunal noted that while the Revenue raised three grounds of appeal, Ground No. 3 was a general ground and thus needed to be dismissed.

Issue 2: Allowing Adjustment of Carry Forward Business Losses
Regarding Ground No. 2, the Tribunal observed that the appeal against allowing adjustment of carry forward business losses with current year income did not stem from the Ld. CIT(A)'s order. The Tribunal dismissed this ground as the Revenue failed to provide sufficient evidence to support their claim.

Issue 3: Allowing Expenses Related to NTPC Project
The primary issue revolved around the action of the Ld. CIT(A) in allowing expenses related to the NTPC project, which the Assessing Officer (A.O.) deemed as pre-operative expenses. The A.O. contended that the business had not commenced, and thus, the expenses were not considered as revenue expenditures. The Ld. CIT(A) partially allowed the assessee's appeal, holding that expenses directly related to the NTPC project should be capitalized. The Tribunal upheld this decision based on previous rulings for A.Y. 2012-13 and 2013-14, where the Ld. CIT(A) directed the capitalization of expenses related to the NTPC project. As the assessee did not challenge this decision, the Tribunal confirmed the partial relief granted by the Ld. CIT(A) in this case as well.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the Ld. CIT(A)'s decision to allow expenses related to the NTPC project to be capitalized. The Tribunal's ruling was based on consistency with previous judgments in the assessee's own case for A.Y. 2012-13 and 2013-14, where similar issues were addressed and decided in favor of capitalization of project-related expenses.

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Tribunal upholds capitalization of NTPC project expenses, citing consistency with prior judgments.

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