ISSUES:

Whether penalty under Section 117 of the Customs Act, 1962 can be imposed for mis-declaration in the Airway Bills when correct description is provided in shipping bills, invoices, and packing lists.Whether Section 117 of the Customs Act, 1962 applies to contraventions of provisions of the Foreign Trade Policy or only to contraventions of the Customs Act itself.Whether the penalty under Section 117 can be sustained without the appellant being put on notice as to the exact nature of the contravention.Whether the provisions of Section 50(3)(b) of the Customs Act, 1962 (introduced in 2018) relating to authority and validity of documents apply to ensuring accuracy and correctness of information in the Bill of Export.

RULINGS / HOLDINGS:

The penalty under Section 117 of the Customs Act, 1962 cannot be imposed for mis-declaration in Airway Bills when the shipping bills, invoices, and packing lists contain the correct description of goods, as the Airway Bills are not governed under the Customs Act but under Foreign Trade Policy provisions.Section 117 is "restricted to imposition of penalties for contravention of provisions of Customs Act only" and does not extend to violations of the Foreign Trade Policy; hence, no penalty under Section 117 is sustainable for such contravention.The penalty is not sustainable without the appellant being "put on notice as to the exact nature of contravention" for which it is liable, consistent with the Supreme Court precedent relied upon.The learned Commissioner (Appeals) erred in applying Section 50(3)(b) of the Customs Act, which relates to authority and validity of documents, rather than provisions ensuring accuracy of information in the Bill of Export; thus, this section is not applicable for imposing penalty in the present facts.

RATIONALE:

The Court applied the statutory framework of Section 117 of the Customs Act, 1962, which prescribes penalty only for contraventions of the Customs Act or abetment thereof, where no express penalty is provided elsewhere.The Court distinguished violations under the Foreign Trade Policy, which do not attract penalties under Section 117, emphasizing the requirement of statutory authority for penalty imposition.The Court relied on the precedent that penalty imposition requires clear notice to the party of the contravention alleged, citing the Supreme Court decision in M/s. Amrit Foods Vs. Commissioner of Central Excise.The Court noted a misapplication of Section 50(3)(b) of the Customs Act, introduced in 2018, clarifying that this provision concerns "authority and validity of documents" and not the correctness of information in export documentation.

ISSUES:

Whether the accused is entitled to an opportunity of hearing before taking cognizance of offences under the proviso to Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS).Whether the presentation/filing of a prosecution complaint before the enforcement of BNSS amounts to commencement of an "inquiry" under Section 2(g) of the Code of Criminal Procedure, 1973 (Cr.P.C.) for the purpose of applying the savings clause under Section 531(2)(a) BNSS.Whether the provisions of Section 223 BNSS, which require prior hearing before taking cognizance, apply retrospectively or only prospectively to complaints filed before the BNSS came into force.

RULINGS / HOLDINGS:

The accused is entitled to an opportunity of hearing before taking cognizance of offences under the proviso to Section 223 BNSS, and this right must be complied with even if the complaint was technically filed before the BNSS came into force.Mere presentation or filing of a prosecution complaint before the enforcement of BNSS does not constitute commencement of an "inquiry" under Section 2(g) Cr.P.C., as judicial mind was not applied at that stage; hence, the savings clause under Section 531(2)(a) BNSS does not apply.The varied procedure under Section 223 BNSS, providing the accused a right of hearing before taking cognizance, applies to the instant complaint by operation of the rule of beneficial construction of statutes, ensuring the accused's right to a fair trial and natural justice.

RATIONALE:

The Court relied on Section 531(2)(a) BNSS, which preserves proceedings pending immediately before the BNSS enforcement to continue under the Cr.P.C., but held that "inquiry" under Section 2(g) Cr.P.C. requires judicial application of mind by a Magistrate or Court, which was absent at the complaint filing stage.Sections 200 and 202 Cr.P.C. were examined to clarify that cognizance and inquiry involve examination and judicial consideration, not mere administrative filing or registration of complaints.The Court applied the "rule of beneficial construction" of statutes, referencing precedent where ex post facto laws that mitigate punishment or enhance procedural rights are applied to pending cases to uphold principles of natural justice and fair trial under Articles 14 and 21 of the Constitution.Distinguishing the present case from precedent where the complaint was filed after BNSS enforcement, the Court emphasized that the right to hearing under Section 223 BNSS should be extended even when the complaint was filed prior to BNSS but cognizance was taken after its enforcement.

ISSUES:

Whether cancellation of GST registration for failure to submit returns within the prescribed time under the Central Goods and Services Tax Act, 2017 is sustainable when the appeal period under Section 107(4) has expired.Whether a writ petition can be entertained to set aside an order of cancellation of GST registration to allow filing of returns and payment of dues despite the lapse of the appeal period.Whether revival of GST registration after cancellation benefits the revenue authorities under the said Act.Whether the adjudicating authority or the Court can grant a grace period for filing returns and payment of tax, interest, fine, and penalty after cancellation of registration.

RULINGS / HOLDINGS:

The Court held that although the appeal period under Section 107(4) of the Central Goods and Services Tax Act, 2017 has expired, the writ petition can be entertained to set aside the cancellation order dated 31st July, 2024, to permit filing of returns within a stipulated time.The order of cancellation of GST registration was set aside subject to the condition that the petitioner files returns for the entire period of default and pays the requisite amount of tax, interest, fine, and penalty within four weeks, failing which the writ petition shall stand dismissed automatically.The Court recognized that cancellation of GST registration effectively puts the petitioner out of the purview of the Act, which is "not beneficial to the respondent authorities in terms of generating revenue."The Court directed the concerned authorities to open the portal for the petitioner to enable filing of returns and payment of dues for the entire period of default as per the Court's order.

RATIONALE:

The Court relied on the statutory appeal provisions under Section 107 of the Central Goods and Services Tax Act, 2017, noting the prescribed limitation period and the grace period under Section 107(4).The Court applied precedents from the Hon'ble Madras High Court and the Division Bench of the same High Court, specifically referencing judgments that support granting an opportunity to file returns post cancellation to protect revenue interests (Tvl. Suguna Cutpiece Centre and Subhankar Golder cases).The Court emphasized the principle that cancellation of registration should not be allowed to defeat revenue collection, thereby justifying the revival of registration upon compliance with filing and payment obligations.No dissent or doctrinal shift was noted; the decision follows established judicial approach to balancing procedural compliance with substantive revenue protection.

The Calcutta High Court, through Justice Saugata Bhattacharyya, addressed a writ petition challenging the dismissal of an appeal by the Appellate Authority dated 25th November 2024, which was rejected on the ground of delay under Section 107 of the Central Goods and Services Tax Act, 2017. The petitioner filed the appeal 19 days beyond the prescribed period following the Adjudicating Authority's order dated 6th February 2024. The Court noted that the Appellate Authority computed delay from the date of the order (6th February 2024), not from its communication to the petitioner, and did not consider the petitioner's explanation for the delay. The CGST Authorities' contention that the delay was longer if reckoned from communication was found inconsistent with the Appellate Authority's reasoning. The Court held that the 19-day delay was condonable and set aside the impugned order, thereby reviving the appeal. The Appellate Authority was directed to decide the appeal on merits "without raising the point of delay" within three months. The writ petition was disposed of with no order as to costs.

The Appellate Tribunal (ITAT Kolkata) allowed the assessee's appeal against the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for AY 2011-12. The penalty was based on a notice issued under section 274 read with section 271(1)(c). The key issue was the validity of the penalty notice, which did not strike off irrelevant limbs nor specify the relevant limb of section 271(1)(c), thereby failing to indicate whether the charge was for concealment of income or furnishing inaccurate particulars. Relying on the Hon'ble Kolkata High Court's decision in *KPC Medical College and Hospital v. PCIT* [2025] 173 taxmann.com 581 (Cal HC), the Tribunal held that such a mechanically issued notice "without application of mind" is invalid and "goes to the root of the matter." Consequently, the penalty order based on this invalid notice was quashed. The Tribunal concluded: "the order passed by the ld. AO u/s 271(1)(c) of the Act is also invalid and cannot be sustained," and allowed the appeal.

The Appellate Tribunal (ITAT Kolkata) heard the assessee's appeal against the National Faceless Appeal Centre, Delhi's order dated 21.01.2025 for AY 2016-17, upholding a disallowance under section 14A of Rs.53,53,375/- in the assessment framed u/s 143(3). The issue concerned the disallowance of expenses related to exempt dividend income of Rs.76,30,220/-, with investments totaling Rs.107.47 crore. The AO applied section 14A read with Rule 8D to compute the disallowance, rejecting the assessee's offered disallowance of Rs.1,96,311/-. The Tribunal held that the AO failed to record any satisfaction explaining why the assessee's calculation was incorrect, a prerequisite for invoking section 14A read with Rule 8D. Citing precedents including TIL Ltd. v. DCIT (ITA No. 558/KOL/2022), REI Agro Ltd. (Calcutta HC), and ACB India Ltd. v. ACIT (Delhi HC), the Tribunal ruled that "in absence of any satisfaction the provisions of section 14A cannot be invoked and no disallowance can be made u/s 14A read with section 8D of the Rules." Accordingly, the Tribunal set aside the CIT(A)'s order, directed deletion of the disallowance of Rs.53,53,375/-, but upheld the assessee's own offered disallowance of Rs.1,96,311/-. The appeal was therefore partly allowed.

ISSUES:

Whether disallowance under Section 14A of the Income Tax Act is justified when no exempt income has accrued, arisen, or been received during the relevant previous year.Whether the Explanation inserted by the Finance Act, 2022 to Section 14A applies retrospectively to assessment years prior to its insertion.Whether reliance on CBDT Circular No. 5 of 2014 and Rule 8D(2)(ii) of the Income Tax Rules, 1962 is appropriate in cases where no exempt income is earned.Whether the Assessing Officer is required to record satisfaction regarding expenditure incurred in relation to exempt income before making disallowance under Section 14A.Whether judicial precedents prior to the Finance Act, 2022 amendment continue to hold relevance for assessment years before the amendment.

RULINGS / HOLDINGS:

The Tribunal held that the Explanation to Section 14A inserted by the Finance Act, 2022 "cannot be presumed to be retrospective even where such language is used, if it alters or changes the law as it earlier stood," and therefore does not apply to the assessment year 2017-18.It was held that in the absence of any exempt income, no disallowance under Section 14A is warranted, as supported by binding judicial precedents including the Hon'ble Delhi High Court in PCIT (Central) vs Era Infrastructure (India) Ltd.The Tribunal found that the lower authorities erred in sustaining disallowance under Section 14A by relying on CBDT Circular No. 5 of 2014 and Rule 8D(2)(ii), which are not applicable where no exempt income has accrued or arisen.The Assessing Officer failed to record satisfaction regarding expenditure incurred in relation to exempt income, a mandatory precondition for disallowance under Section 14A, and thus the disallowance was not justified.The Tribunal directed deletion of the disallowance made under Section 14A for the assessment year 2017-18, following binding precedents and rejecting the applicability of the post-2022 Explanation.

RATIONALE:

The Tribunal applied the legal framework of Section 14A of the Income Tax Act and Rule 8D of the Income Tax Rules, 1962, alongside judicial precedents interpreting the scope of disallowance of expenditure related to exempt income.The Tribunal relied heavily on the principle that retrospective operation of an Explanation that changes the law is not presumed, citing authoritative Supreme Court decisions emphasizing that the law applicable is that in force during the relevant assessment year.The Tribunal followed the binding decision of the Hon'ble Delhi High Court in PCIT (Central) vs Era Infrastructure (India) Ltd, which clarified that no disallowance under Section 14A is called for where no exempt income is earned, and that the Explanation inserted in 2022 does not apply retrospectively.The Tribunal noted that the lower authorities failed to consider binding precedents and did not provide reasons for rejecting them, leading to an erroneous conclusion sustaining disallowance.The Tribunal acknowledged that the Explanation to Section 14A inserted by Finance Act, 2022 is clarificatory but alters the law, and hence cannot be applied retrospectively to the assessment year 2017-18.

ISSUES:

Whether penalty under section 271(1)(c) can be sustained where income is determined on an estimated basis after rejection of books of account.Whether imposition of penalty under section 271(1)(c) is justified when additions are reduced on appeal and the estimation is modified by the Commissioner of Income Tax (Appeals).Whether Explanation 5A to section 271(1)(c) applies to cases where income is assessed on an estimate basis.Whether invoking provisions of Section 106 of the Evidence Act is appropriate in penalty proceedings under the Income Tax Act, which are guided by preponderance of probability.Whether acceptance of additions by the assessee or sustenance of additions by the appellate authority amounts to concealment or furnishing of inaccurate particulars of income.

RULINGS / HOLDINGS:

The penalty under section 271(1)(c) based on estimated income cannot be sustained where the addition is made on an estimate basis and is subsequently reduced by the Commissioner of Income Tax (Appeals), as the estimated rate of profit applied on turnover "does not amount to concealment or furnishing of inaccurate particulars."The imposition of penalty by the Assessing Officer and its affirmation by the Commissioner of Income Tax (Appeals) without due application of mind and relying solely on Explanation 5A is erroneous and not in accordance with law.Explanation 5A to section 271(1)(c) is not applicable in cases where income has been determined on an estimate basis rather than on concrete incriminating evidence.The provisions of Section 106 of the Evidence Act are not strictly applicable in fiscal proceedings, which are governed by the "preponderance of probability" standard.The mere sustenance of additions by the appellate authority and acceptance by the assessee does not constitute concealment of income or furnishing of inaccurate particulars to justify penalty under section 271(1)(c).

RATIONALE:

The legal framework involves the interpretation of section 271(1)(c) of the Income Tax Act, which penalizes concealment of income or furnishing of inaccurate particulars.Judicial precedents from the Hon'ble High Courts and Coordinate Benches of the Tribunal emphasize that penalty under section 271(1)(c) is not sustainable solely on the basis of estimation of income or profit, particularly when additions are reduced on appeal.The Court relied on authoritative decisions holding that estimated profit rates applied to turnover do not amount to concealment or furnishing inaccurate particulars, reinforcing that penalty requires a higher threshold of proof than mere estimation.The Court rejected the application of Explanation 5A in estimation cases, noting that this Explanation is intended for cases where income is determined based on incriminating documents or evidence discovered during search and seizure operations.The Court recognized that fiscal proceedings are governed by the preponderance of probability, not the strict rules of evidence under the Evidence Act, and thus reliance on Section 106 of the Evidence Act was misplaced.Accordingly, the Court directed deletion of the penalty under section 271(1)(c), aligning with the principle that penalty cannot be levied for differences arising purely from estimation without concrete evidence of concealment or inaccuracy.

The Appellate Tribunal (ITAT Kolkata) dismissed the assessee's appeals against the Commissioner of Income-tax (Appeals) order for AYs 2017-18 and 2018-19 concerning the applicability of Double Taxation Avoidance Agreement (DTAA) rates on Dividend Distribution Tax (DDT) under section 115-O of the Income Tax Act. The key issue was whether a domestic company's tax liability on dividends paid to non-resident shareholders should be governed by the DTAA rate if more beneficial than the rate under section 115-O. The assessee, a joint venture company, paid DDT at 20.3576% on dividends including those to a Malaysian resident shareholder, claiming entitlement to the DTAA rate of 5% and sought refund of excess DDT paid. The Assessing Officer rejected the claim without adjudication, and the CIT(A) upheld the rejection relying on the Special Bench decision in DCIT vs. Total Oil India Pvt. Ltd. (2023) 104 ITR (Trib) 1, which held that DDT under section 115-O is a tax on the company's income, not on the shareholder, and thus the DTAA does not apply to DDT liability. The ITAT affirmed that "the domestic company u/s 115O does not enter the domain of Double Taxation Avoidance Agreement (DTAA) at all," and there is no double taxation involved. Consequently, the tribunal found no infirmity in the CIT(A)'s order and dismissed the appeals.

ISSUES:

Whether the application of Gross Profit (GP) rate @ 20% on bogus purchases is justified.Whether the GP rate of 12.5% or a different rate should be applied to determine taxable income from accommodation entries.Whether the entire amount of bogus purchases should be disallowed or only the profit element should be added to income.

RULINGS / HOLDINGS:

The application of GP @ 20% on bogus purchases is justified as a reasonable estimate of profit embedded in accommodation entries, considering the high GST rate of 28% on cement and additional costs such as commissions and logistics.The entire amount of bogus purchases cannot be disallowed; only the profit element should be taxed, consistent with the principle that additions must reflect a "fair estimate of the profit element."The GP rate of 18% is more appropriate than 20% or 12.5% in the present case, balancing the evidence and industry norms, and thus the addition is restricted to 18% of the bogus purchases.

RATIONALE:

The legal framework involves the disallowance of accommodation entries under the Income Tax Act, 1961, supported by evidence from search and seizure operations under section 132.Precedent in CIT vs. Simit P. Sheth upheld a 12.5% GP addition; however, the court recognized that higher GST rates and industry-specific factors justify a higher GP rate.The approach aligns with the principle that additions for bogus purchases must reflect a reasonable and fair estimate of the profit element rather than the entire purchase amount.The tribunal exercised discretion to modify the GP rate to 18% to reflect the cost of accommodation entries and the income derived, ensuring equitable treatment in the interest of justice.

ISSUES:

Whether the order passed by the Assessing Officer under Section 147 read with Section 144 of the Income Tax Act, 1961 was erroneous and prejudicial to the interest of revenue for not including contract income as per Form 26AS.Whether the Principal Commissioner of Income Tax (PCIT) correctly exercised revisional jurisdiction under Section 263 of the Act by directing modification of the assessment order to add contract income not offered for taxation.Whether the Assessing Officer was obligated to independently verify the denial of contract receipt from a third party (Social Forestry Division, Jaunpur) when such receipt appeared in Form 26AS but was denied by the assessee.Whether acceptance by the Assessing Officer of the assessee's explanation without third-party verification constitutes an erroneous order prejudicial to the revenue under Explanation 2 to Section 263 of the Act.

RULINGS / HOLDINGS:

The order of the Assessing Officer was held to be "erroneous and prejudicial to the interest of revenue" only in respect of the contract receipt of Rs. 49,76,868/- from Social Forestry Division, Jaunpur, which was denied by the assessee but accepted by the AO without requisite verification.The revisional jurisdiction under Section 263 was validly invoked by the PCIT to the extent that the AO failed to make necessary enquiries or verifications regarding the disputed contract receipt, as per Explanation 2 to Section 263 of the Act.The direction to the AO to add the entire contract income of Rs. 66,22,032/- as per Form 26AS was modified; only the disputed portion relating to Social Forestry Division, Jaunpur requires verification and re-adjudication.The Assessing Officer's acceptance of the assessee's denial without independent third-party verification was insufficient and rendered the assessment order erroneous and prejudicial to revenue in that respect.

RATIONALE:

The Court applied the framework under Section 263 of the Income Tax Act, 1961, particularly Explanation 2, which states that if an assessment order is passed without making inquiries or verifications which should have been made, the order shall be deemed erroneous and prejudicial to the interests of the revenue.The Court emphasized the necessity of independent verification when the assessee denies a transaction that appears in Form 26AS, to safeguard revenue interests and ensure correctness of assessment.The Court recognized that the Assessing Officer had duly examined and accounted for other contract receipts (tyre retreading and tanker rent income), and thus the error was confined to the unverified denial of receipt from Social Forestry Division, Jaunpur.No doctrinal shift or dissent was noted; the judgment aligns with established principles requiring proper verification before acceptance of explanations in tax assessments.

ISSUES:

Whether the brought forward unabsorbed depreciation can be set off against the current year's total income despite no business activity being carried out during the relevant assessment year.Whether the absence of business activity disentitles the assessee from claiming set-off of unabsorbed depreciation under section 32(2) of the Income-tax Act, 1961.Interpretation and application of sections 32(2) and 72(2) concerning carry forward and set-off of unabsorbed depreciation and business losses.

RULINGS / HOLDINGS:

The Court held that unabsorbed depreciation "becomes part of the current year's depreciation" by virtue of the statutory fiction under section 32(2), and its set-off is not conditional upon carrying on business during the year of set-off.The Court rejected the view that the absence of business activity disentitles the assessee from claiming set-off of unabsorbed depreciation, holding such interpretation as "contrary to the scheme of the Act and judicially settled law."Section 72(2) mandates that business loss shall be set off first against business income, but does not restrict the operation of section 32(2) which allows unabsorbed depreciation to be set off against income under any head, including "income from other sources."The order denying set-off of brought forward unabsorbed depreciation was set aside, and the Assessing Officer was directed to allow the set-off of Rs. 2,46,533/- against the total income assessed for the year under appeal.

RATIONALE:

The Court applied the statutory framework of sections 32(2) and 72(2) of the Income-tax Act, 1961, which respectively govern the carry forward and set-off of unabsorbed depreciation and business losses.Section 32(2) creates a legal fiction that unabsorbed depreciation from an earlier year "shall be added to the depreciation allowance of the following year and deemed to be part of that year's depreciation."The Court relied on binding Supreme Court precedents, including CIT v. Virmani Industries Pvt. Ltd. and CIT v. Jaipuria China Clay Mines (P) Ltd., which unequivocally held that unabsorbed depreciation can be set off against total income regardless of business activity in the year of set-off.The Court also referred to the Madras High Court decision in CIT v. SPEL Semiconductor Ltd., which affirmed that unabsorbed depreciation assumes the character of current year's depreciation and can be set off against income under any head, even in the absence of business activity, and clarified the interplay between sections 32(2) and 72(2).The Court rejected the Revenue's contention that section 72(2) restricts the set-off of unabsorbed depreciation against income from other sources, emphasizing that section 72(2) applies only to the sequence of set-off between business loss and unabsorbed depreciation against business income.

ISSUES:

Whether the reopening of assessment under Section 148 of the Income-tax Act, 1961 was justified based on the material available.Whether the Assessing Officer was justified in rejecting the books of accounts under Section 145(3) of the Act without identifying specific defects.Whether the estimation of commission income at 2% of alleged bogus transactions is legally sustainable.Whether principles of natural justice were violated by not allowing cross-examination of the Commercial Tax Officer and Income Tax Officer despite specific requests.

RULINGS / HOLDINGS:

The reopening of assessment was based solely on third-party information without independent verification and thus was not fully justified.The rejection of books of accounts under Section 145(3) was unwarranted as the Assessing Officer failed to point out any specific defects or inconsistencies in the accounting method consistently followed by the assessee.The estimation of income at 2% of the total alleged purchases and sales was excessive; a reduced estimation of 1% was considered "fair and reasonable" in the circumstances.The failure to allow cross-examination of the Commercial Tax Officer and Investigation Wing officer amounted to a violation of the "principles of natural justice".

RATIONALE:

The Court applied the provisions of the Income-tax Act, 1961, particularly Sections 145(3) and 148, examining the statutory requirements for reopening assessments and rejecting books of accounts.The Court emphasized the necessity of independent verification beyond third-party information before reopening an assessment.The Court recognized that estimation of income is permissible when books are rejected but must be reasonable and based on material; here, the Court reduced the estimation from 2% to 1% to balance the absence of direct evidence and the presence of suspicious transactions.The Court underscored the importance of "principles of natural justice," requiring that the assessee be given an opportunity to cross-examine witnesses whose statements form the basis of adverse findings.No dissent or doctrinal shift was noted; the decision reflects a balanced approach to estimation and procedural fairness in tax assessments.

ISSUES:

Whether the imported goods described as 'PVC Resin SP 660 Suspension Grade' are classifiable under Customs Tariff Heading (CTH) 3904 2110 or under CTH 3904 1090.Whether the benefit under Notification No. 46/2011-Cus dated 1.6.2011 is applicable to the imported goods.Whether classification should be determined primarily based on test reports describing the goods as compound or prime material.Application and interpretation of General Rules for the Interpretation (GRI) of the Customs Tariff Schedule, specifically Rule 1 and Rule 3(a), in classifying the goods.Whether a specific tariff heading should be preferred over a residual or general heading in classification disputes.Whether the presence or absence of additives such as plasticizers affects the classification of PVC resin under the relevant tariff headings.Whether prior decisions and test reports on similar goods are binding or persuasive in the present classification dispute.Whether delay and procedural lapses in reassessment affect the validity of classification and demand of duty.

RULINGS / HOLDINGS:

The imported goods 'PVC Resin SP 660 Suspension Grade' are correctly classifiable under CTH 3904 2110, which is a specific heading for Poly (vinyl chloride) resins, rather than under CTH 3904 1090, a residual heading for other Poly (vinyl chloride) not mixed with any other substances.The benefit under Notification No. 46/2011-Cus dated 1.6.2011 applies to the goods when classified under CTH 3904 2110.Test reports from CIPET stating that the goods "may be considered as polyvinyl chloride (PVC) resin, which is a single thermoplastic material in powder form" and "may not be considered as compound since it is not mixed with any other substances" support classification under CTH 3904 2110.Rule 3(a) of the General Rules for the Interpretation of Import Tariff mandates that "the heading which provides the more specific description shall be preferred to headings providing a more general description," thereby ruling out the residual entry CTH 3904 1090 in favor of the specific entry CTH 3904 2110.The presence or absence of additives such as plasticizers is material; goods without plasticizers fall under CTH 3904 2110 (non-plasticized PVC resins), whereas plasticized PVC resins fall under a different heading (CTH 3904 2210).Prior decisions and test reports on identical or similar goods, including those by coordinate benches and the same tribunal, are persuasive and support classification under CTH 3904 2110.Procedural irregularities such as delay in reassessment and failure to issue a speaking order under Section 17(5) of the Customs Act, 1962, were noted but did not override the substantive classification ruling.

RATIONALE:

The Court applied the Customs Tariff Act, 1975, and the General Rules for the Interpretation of the First Schedule to the Customs Tariff Act, 1975, particularly Rules 1 and 3(a), which require classification according to the terms of headings and preference for the most specific description.The Court relied heavily on expert technical evidence from CIPET, which clarified that the goods are prime PVC resin not mixed with additives or plasticizers, thus not constituting a compound.The Court noted that the tariff schedule contains specific eight-digit subheadings distinguishing non-plasticized and plasticized PVC resins, supporting classification under the more specific heading 3904 2110.The Court emphasized settled legal principles from Supreme Court precedents that a specific tariff entry prevails over a general or residual one, and that classification should not be disturbed without sufficient justification.The Court rejected semantic distinctions made by the Commissioner (Appeals) that altered classification based on the phrase "may not be considered as compound" versus "not containing any other substances like plasticizer," holding that such nuances should not override the established classification principles.The Court also referred to prior coordinate bench decisions and consistent application of tariff headings to identical goods, reinforcing the principle of consistency and predictability in classification.The Court acknowledged the inherent limitations of language in conveying technical product descriptions and endorsed interpreting legislative intent by examining the subject and object of the law when ambiguity exists.The Court noted procedural lapses but focused on substantive correctness of classification, setting aside the impugned order and allowing the appeal accordingly.

ISSUES:

Whether the invoice value declared by the importer can be disregarded and replaced by an enhanced value based on Customs National Import Database (NIDB) data without specific evidence that the declared value does not represent the true transaction value under Section 14 of the Customs Act, 1962.Whether the reassessment of value under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 was conducted in accordance with the prescribed procedure, including providing the importer with relevant data and an opportunity to defend the declared value.Whether the burden of proof lies on the importer to establish the correctness of the declared value or on the revenue to justify enhancement of value.Whether the concept of "deemed price" under Section 14 of the Customs Act, 1962 applies post-amendment w.e.f. 10-10-2007.Whether reliance on DRI Alert Circulars and NIDB data alone is sufficient to reject declared transaction value without corroborative evidence.

RULINGS / HOLDINGS:

The invoice value declared by the importer cannot be disregarded and replaced solely on the basis of NIDB data without specific evidence indicating that the invoice values do not represent the actual transaction value; the NIDB data "would not be determinative of the transaction value" but may be used to "verify whether the values declared by the importer were commensurate with contemporaneous import prices."The reassessment of value must follow the prescribed procedure under the Valuation Rules, including providing the importer with the specific Bills of Entry data and the rule under which reassessment is sought, which was not done; hence, the reassessment was flawed.The burden of proof lies on the revenue to establish the necessity and veracity of the alternate value adopted; there should not be a reverse burden on the importer to prove the negative.The concept of "deemed price" under Section 14 of the Customs Act, 1962 "had been given up subsequent to the amendment made to section 14... w.e.f. 10-10-2007," and thus the value declared is to be the "transaction value" or "price actually paid or payable" without deeming it to be the price at which like goods are ordinarily sold.Reliance solely on DRI Alert Circulars and NIDB data without tangible material or specific evidence is insufficient to reject the declared transaction value; mere suspicion, conjectures or perceptions cannot constitute substantial evidence under Section 14 of the Customs Act, 1962.The impugned order is set aside due to the flawed valuation process and violation of the principles of natural justice and statutory procedure, and the appeal is allowed with consequential relief to the importer.

RATIONALE:

The Court applied the statutory framework under Section 14 of the Customs Act, 1962 and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, emphasizing that "the value of the imported goods... shall be the transaction value," defined as "the price actually paid or payable."The Court relied on precedent that the transaction value must be determined based on concrete evidence, not on "mere suspicion, conjectures or perceptions," and that the burden of proof rests on the revenue to justify any value enhancement.The Court noted the amendment to Section 14 of the Customs Act, 1962 effective from 10-10-2007, which eliminated the concept of "deemed price," thereby requiring strict adherence to the transaction value principle.The Court highlighted procedural defects, including failure to share NIDB data and relevant Bills of Entry with the importer before reassessment and failure to provide an opportunity to rebut, violating principles of natural justice and the prescribed valuation procedure.The Court distinguished the reliance on DRI Alert Circulars and NIDB data as mere guides rather than determinative evidence, underscoring that reassessment must be supported by tangible material and proper procedural compliance.There was no dissenting or concurring opinion recorded.

ISSUES:

Whether the phrase "for use in manufacture" in a customs notification implies intent to use or actual usage of imported goods.Whether duty can be demanded when imported goods intended for manufacture are destroyed by an unavoidable accident such as fire before usage.Whether claiming insurance for goods lost in fire constitutes obtaining double benefit and affects eligibility for concessional duty.Whether failure to produce an end-use certificate due to destruction of goods violates the conditions of the concessional duty notification.Whether the department's demand for differential duty is sustainable in the absence of proof of diversion or misuse of imported goods.

RULINGS / HOLDINGS:

The phrase "for use in manufacture" as appearing in Notification No. 21/2002-Cus. means "intended for use" rather than actual usage, consistent with the Hon'ble Supreme Court's interpretation in State of Haryana Vs Dalmia Dadri Cement Ltd.Imported goods destroyed by fire, an unavoidable accident beyond the control of the importer, do not attract duty demand as the intention to use suffices; actual use is not mandatory under the notification conditions.Claiming insurance for the loss of goods does not amount to obtaining double benefit unless proven otherwise by documentary evidence; assumptions or allegations without proof are insufficient to sustain duty demand.Failure to produce an end-use certificate due to destruction of goods by fire does not violate the undertaking condition, given the statutory provisions for remission of duty on lost or destroyed goods under Rule 21 of the Central Excise Rules and Section 23 of the Customs Act.The department's demand for differential duty is unsustainable in absence of evidence showing diversion of goods or misuse; mere non-use due to destruction does not constitute breach of notification conditions.

RATIONALE:

The Court applied the legal framework established by Notification No. 21/2002-Cus. and Condition No. 20 therein, which requires an undertaking and end-use certificate but does not explicitly mandate actual usage if goods are lost by unavoidable accident.Precedents from the Hon'ble Supreme Court (State of Haryana Vs Dalmia Dadri Cement Ltd., BPL Display Devices Ltd. Vs Commissioner of Central Excise) were relied upon to construe "for use" as "intended for use."Tribunal precedents (Sennar Paper and Boards Ltd., Vamsadhara Paper Mills Ltd.) were cited to support the principle that loss of goods due to fire does not attract duty demand and that remission provisions under Rule 21 and Section 23 apply.The Court emphasized that statutory provisions for remission of duty on lost or destroyed goods cannot be rendered otiose by a narrow interpretation of "use" and that the department must substantiate allegations of double benefit or diversion with documentary proof.No dissenting or differing opinion was recorded; the Court followed established doctrine and coordinate bench decisions without modification.

ISSUES:

Whether the delay of 152 days in refiling the company appeal qualifies for condonation under the applicable legal principles.Whether the explanation offered by the applicant regarding defects in the appeal documents and holidays constitutes "sufficient cause" for condonation of delay.Whether the applicant demonstrated bona fide and earnest efforts to remove the defects within the prescribed time frame under the National Company Law Appellate Tribunal Rules, 2016.Whether the principles of time-bound proceedings under the Insolvency and Bankruptcy Code (IBC) preclude condonation of unjustified delays in filing appeals during Corporate Insolvency Resolution Process (CIRP).

RULINGS / HOLDINGS:

The court held that the applicant failed to demonstrate "reasonable and genuine ground" to explain the 152 days delay in refiling the appeal, and therefore, the delay cannot be condoned.The explanation based on defects in dim/illegible pages and holiday periods was found to be "bald," "feeble and frivolous," and lacking in substantiation or details regarding efforts made to cure defects.The applicant's filing of an interlocutory application seeking exemption from filing legible copies after the delay undermined the credibility of their explanation for the delay.The court emphasized that "time is of essence in insolvency proceedings" and that condonation of delay on unsound and implausible grounds "cannot be encouraged."The application for condonation of delay was rejected, and consequently, the appeal and all related interlocutory applications were dismissed.

RATIONALE:

The court applied the settled legal principle that "there should be sufficient cause for condoning the delay," referencing the National Company Law Appellate Tribunal Rules, 2016, specifically clause 26(4), which empowers the Registrar to decline registration of appeals where defects are not cured within the fixed time.The court relied on precedents emphasizing the need for clear, substantiated explanations and bona fide efforts to remove defects in time-bound insolvency proceedings under the Insolvency and Bankruptcy Code.The court rejected the applicant's reliance on festive holidays as a justification for the majority of the delay, finding that the registry remained operational and the applicant did not explain the delay during non-holiday periods.The decision reflects a strict adherence to the time-bound nature of CIRP proceedings, underscoring that procedural delays without sufficient cause are detrimental to the insolvency resolution process.

The Allahabad High Court, through Hon'ble Justices Shekhar B. Saraf and Praveen Kumar Giri, entertained an amended writ petition challenging impugned orders passed under section 74 of the Uttar Pradesh GST Act, 2017, directed against the Interim Resolution Professional and Ex-Directors of companies undergoing insolvency. The resolution plans had been approved by the NCLT under section 13(6) of the Insolvency and Bankruptcy Code, 2016 (IBC) in late 2020 and early 2021. Show cause notices issued in 2024 form the basis of the challenge. The Court noted the absence of a counter affidavit despite prior directions and granted an extension of eight weeks for filing the counter affidavit and four weeks for any rejoinder. Importantly, the Court, prima facie relying on the Supreme Court's decision in *Ghanshyam Mishra and Sons (P.) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd.*, [2021] 91 GSTR 28 (SC), and a coordinate Bench's ruling in *M/S N.S. Papers Ltd. and another v. Union of India*, 2024: AHC: 194238-DB, stayed the impugned orders under section 74 "in as much as it relates to the demand upon the petitioners" until further orders. The petitioners were also directed to add the Additional Commissioner, Central GST Commissionerate, Meerut, as a respondent. Key holdings: - The impugned orders under section 74 of the UP GST Act are stayed pending further orders. - The stay is grounded on the Supreme Court precedent in *Ghanshyam Mishra* and coordinate High Court authority. - Procedural directions for affidavits and party addition were issued.

ISSUES:

Whether the impugned order under Section 74 of the TNGST / CGST Act, 2017, passed for the Assessment Year 2017-2018, is barred by limitation under Section 74(10) of the GST enactments.Whether tax liability can be fastened on a deceased individual in respect of the proprietary concern operated by the deceased.Whether the petitioner was afforded adequate opportunity to respond to the show cause notice and whether procedural requirements were complied with.Whether the petitioner is entitled to file a statutory appeal under Section 107 of the GST Act against the impugned order.

RULINGS / HOLDINGS:

The contention that the impugned order is barred by limitation under Section 74(10) is rejected because, applying Section 9 of the General Clauses Act, 1897, the limitation period commenced from 06.02.2020, making the order dated 05.02.2025 within the permissible period.The tax liability was validly fastened on the deceased individual's proprietary concern since inward supplies continued post demise, and the business was operated by the manager without formal closure.The petitioner was afforded sufficient opportunity to respond, including service of notice in Form DRC-01 via RPAD and upload on the GST portal, and the reply was duly considered before passing the order.The petitioner is granted liberty to file a statutory appeal under Section 107 of the GST Act within 30 days, which the Appellate Authority shall entertain and dispose of on merits within three months, subject to mandatory pre-deposit.

RATIONALE:

The Court applied Section 74(10) of the GST enactments in conjunction with Section 9 of the General Clauses Act, 1897, to determine the correct commencement of the limitation period for passing assessment orders.The Court relied on the principle that tax liability under GST can extend to proprietary concerns operated by deceased persons if business operations continue post demise without proper closure.Procedural fairness was ensured by adherence to service requirements, including notice issuance through Registered Post Acknowledgement Due (RPAD) and electronic communication via the GST portal.The Court recognized the statutory right of appeal under Section 107 of the GST Act and emphasized the requirement of mandatory pre-deposit for appellate consideration, ensuring compliance with procedural safeguards.

ISSUES:

Whether the applicant is entitled to regular bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 in connection with alleged wrongful availing of Input Tax Credit under the GST Act.Whether the nature and gravity of the offence, including alleged wrongful availing of Input Tax Credit and the amount involved, justify denial of bail.Whether the applicant's custodial presence is necessary for the investigation.What conditions should be imposed upon granting bail in cases involving economic offences under the GST Act.

RULINGS / HOLDINGS:

The application for bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 is allowed as the investigation is complete and "the presence of the applicant in the custody is no more required for the purpose of investigation."Considering the offence alleged is punishable with imprisonment "which may extend to 5 years," and the applicant's willingness to deposit Rs.25 lakhs with the GST authorities, bail is granted subject to stringent conditions.The Court emphasized the three factors from Supreme Court jurisprudence-prima facie case, availability of the accused at trial, and tampering with witnesses-and found that the applicant is not likely to flee and there is no sufficient ground to deny bail.Bail is granted on executing a personal bond of Rs.10,000 with one surety of the like amount, subject to conditions including non-tampering with evidence, monthly police station attendance, surrender of passport, and deposit of Rs.25 lakhs with GST authorities within six weeks.

RATIONALE:

The Court applied the legal framework under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 and relevant provisions of the GST Act, specifically Sections 122 and 132, which prescribe punishment up to 5 years imprisonment for the alleged offences.The Court relied on the Supreme Court precedent in Sanjay Chandra v. C.B.I., which directs consideration of prima facie case, risk of flight, and tampering with evidence when deciding bail applications.The Court recognized that while the alleged wrongful availing of Input Tax Credit involves a substantial amount, the GST authorities retain the right to initiate appropriate recovery proceedings, and that custodial detention was no longer necessary for investigation.The Court imposed comprehensive bail conditions to mitigate risks of tampering with evidence and ensure the applicant's presence at trial, reflecting a balance between individual liberty and safeguarding the investigation and trial process.