Issues: Whether the Revenue could, for the first time before the Tribunal, seek exclusion of Onward Technologies Ltd. as a comparable although it had been accepted by the Transfer Pricing Officer and confirmed by the Commissioner (Appeals).

Analysis: The comparable in question was part of the assessee's transfer pricing study and had been accepted by the Transfer Pricing Officer for benchmarking the engineering, technical and inspection segment. The Commissioner (Appeals) also retained it as a comparable. The Revenue's challenge before the Tribunal was raised for the first time on the ground of functional dissimilarity. The Tribunal held that the Revenue could not agitate before it a comparable that had not formed the subject matter of challenge before the lower appellate authority, and that the exclusion made in the earlier round was misconceived because the segmental results of the comparable had already been used for benchmarking by the transfer pricing authorities.

Conclusion: The Revenue's ground seeking exclusion of Onward Technologies Ltd. was rejected and the issue was decided in favour of the assessee.

Issues: (i) Whether the transfer pricing adjustment on account of advertisement, marketing and publicity expenses and the alleged short charge for ticketing and tour management services was sustainable. (ii) Whether disallowance under section 40(a)(ia) was warranted in respect of payment gateway charges and the cost of air tickets paid through MMT US. (iii) Whether the deferred revenue receipts from the Amadeus and Apollo DKV agreements were taxable in full in the year of receipt. (iv) Whether ESOP-related expenditure and depreciation on certain computer peripherals were allowable as claimed.

Issue (i): Whether the transfer pricing adjustment on account of advertisement, marketing and publicity expenses and the alleged short charge for ticketing and tour management services was sustainable.

Analysis: The adjustment on AMP expenditure was deleted because the brand was found to belong to the assessee, the bright line test was held inapplicable on those facts, and the expenditure was treated as incurred wholly and exclusively for business purposes and not as capital in nature. For ticketing and tour management services, the lower authorities' restricted adjustment was upheld because the comparison adopted by the Revenue was not accepted without factoring in the corresponding functions, expenses and risks of the AE. The Tribunal also noted that the Revenue itself had not treated similar AMP expenditure as an international transaction in later years.

Conclusion: The transfer pricing addition on AMP expenditure was deleted, and the restricted addition for ticketing and tour management services was sustained.

Issue (ii): Whether disallowance under section 40(a)(ia) was warranted in respect of payment gateway charges and the cost of air tickets paid through MMT US.

Analysis: The payment gateway charges were held not to attract disallowance because the banking facility did not amount to taxable technical or commission service in the hands of the recipient on the facts found. Likewise, the cost of air tickets paid to MMT US was held not to be fees for technical services or fees for included services, since the transaction was only a purchase on cost basis, involved no managerial, technical or consultancy element, and did not satisfy the make available requirement under the treaty.

Conclusion: The disallowance under section 40(a)(ia) was deleted for both categories of payments.

Issue (iii): Whether the deferred revenue receipts from the Amadeus and Apollo DKV agreements were taxable in full in the year of receipt.

Analysis: The receipts were held not to have accrued in full in the year of receipt because they were contingent on exclusive and continued performance over the contractual term and were refundable pro rata or in full on breach or termination. The Tribunal accepted the matching and accrual-based treatment adopted in the accounts and held that only the proportionate income relating to the year had accrued, while the balance was taxable in later years over the life of the agreements.

Conclusion: The additions on account of deferred revenue income were deleted.

Issue (iv): Whether ESOP-related expenditure and depreciation on certain computer peripherals were allowable as claimed.

Analysis: ESOP expenditure was held to be an allowable business expenditure incurred to retain and compensate employees, following the settled view that such cost is revenue in nature. The partial disallowance of depreciation on computer peripherals was not interfered with, while the assessee's challenge to the advertisement and publicity disallowance for the relevant year was accepted in line with the earlier finding that such expenditure was revenue expenditure.

Conclusion: ESOP expenditure and the assessee's claim on advertisement and publicity expenditure were allowed, while the depreciation issue did not result in further relief.

Final Conclusion: The Revenue's appeals were dismissed, and the assessee obtained partial relief on the disputed additions, resulting in a partly favourable outcome for the assessee overall.

Ratio Decidendi: An expenditure or receipt is to be taxed or disallowed according to its real legal character, and contingent receipts are taxable only when they accrue, while business expenditure is allowable where it is incurred wholly and exclusively for business and does not constitute capital outlay; transfer pricing and withholding consequences cannot be sustained where the underlying transaction is not shown to involve a taxable service or an international transaction on the proved facts.

Issues: Disallowance of contract expenses and deletion of the addition made by the Assessing Officer.

Analysis: The assessee furnished the underlying work orders, bank statements, TDS records, confirmations from the contractors, ledger accounts, master data, and audited financial statements of the subcontractors to show that the work relating to the airport project had been executed through the stated contractual chain and that payments were actually made. The evidence remained uncontroverted in remand proceedings, and no independent verification was carried out with the subcontractors to discredit the claim. The addition was based substantially on adverse inference from MCA website data, without meeting the documentary record produced by the assessee.

Conclusion: The assessee had discharged the onus of proving the contract expenditure, and the disallowance was unsustainable. The addition was directed to be deleted, in favour of the assessee.

Ratio Decidendi: Where an assessee produces cogent documentary evidence establishing receipt of contractual income and actual payment of subcontract expenses, and the revenue does not controvert or independently disprove that evidence, the expenditure cannot be disallowed merely on suspicion or adverse inference.

Issues: Whether disallowance of interest expenditure under section 36(1)(iii) was justified where the assessee borrowed funds from its holding company, advanced a foreign currency loan to an overseas subsidiary at 5% interest, and earned foreign exchange gain on the transaction.

Analysis: The loan to the overseas subsidiary was advanced in foreign currency, while the borrowings from the holding company were in Indian rupees. The comparable interest rate in the borrower's jurisdiction was about 3% to 4%, and the assessee charged 5%, which was found to be within the arm's length range. The transfer pricing order accepted the international transaction as arm's length. The loan arrangement also yielded substantial foreign exchange gain, which was offered to tax, and the record did not establish absence of commercial expediency. In these circumstances, the Assessing Officer could not substitute the borrowing rate and disallow a part of the interest expenditure merely because the assessee had paid 15% on its own borrowings.

Conclusion: The disallowance under section 36(1)(iii) was not sustainable and was rightly deleted; the decision was in favour of the assessee.

Ratio Decidendi: Where a foreign currency lending transaction is accepted at arm's length and the borrowing and lending are commercially connected, interest expenditure cannot be disallowed merely by comparing the assessee's borrowing cost with the lower lending rate charged to the overseas subsidiary.

Issues: Whether the final assessment order was invalid and liable to be quashed for want of a draft assessment order under section 144C(1) of the Income-tax Act, 1961.

Analysis: The assessee was an eligible assessee within the meaning of section 144C(15), and the assessment was completed without first issuing a draft assessment order. The absence of the draft assessment order was not disputed. The mandatory character of section 144C(1) required prior issuance of a draft assessment order before finalisation, and failure to follow that procedure constituted a jurisdictional defect. The defect could not be cured by section 292B. Accordingly, the final assessment order could not be sustained.

Conclusion: The final assessment order was held to be without jurisdiction, null and void, and was quashed. The additional ground was allowed.

Outcome: The appeal was dismissed as barred by delay, as the delay exceeded the condonable period under the Insolvency and Bankruptcy Code, 2016.

Issues: (i) Whether the appellant's activity was classifiable as works contract service and whether the demands raised under commercial or industrial construction service and construction of complex service were sustainable. (ii) Whether the value of free supplies and the value of goods on which VAT was paid were includible in the taxable value, and whether abatement under Notification No. 01/2006-ST was available.

Issue (i): Whether the appellant's activity was classifiable as works contract service and whether the demands raised under commercial or industrial construction service and construction of complex service were sustainable.

Analysis: The activity involved execution of contracts comprising both supply of goods and provision of construction services. Such contracts fall within the statutory concept of works contract introduced in section 65(105)(zzzza) of the Finance Act, 1994. For composite contracts, classification is governed by section 65A of the Finance Act, 1994, and the specific taxable entry must prevail over a general service description. The demand was nevertheless raised under commercial or industrial construction and construction of complex despite the composite nature of the contracts and the introduction of works contract service during the relevant period.

Conclusion: The demand could not be sustained under the heads invoked by the department, and the appellant's activity was to be treated as works contract service.

Issue (ii): Whether the value of free supplies and the value of goods on which VAT was paid were includible in the taxable value, and whether abatement under Notification No. 01/2006-ST was available.

Analysis: The value of cement and steel supplied free of cost by customers was not consideration flowing to the service provider and was therefore outside the taxable value. The gross amount charged for service could not be expanded to include such free supplies. The appellant was also entitled to abatement under Notification No. 01/2006-ST, and the demand could not be computed by denying abatement on the entire receipt or by including the value of goods on which VAT had already been discharged. The valuation adopted by the department was inconsistent with the principles affirmed in the cited authorities on free supplies and on segregation of the service portion from the goods portion in composite contracts.

Conclusion: Free supplies were not includible in the taxable value, abatement was available, and the valuation adopted by the department was unsustainable.

Final Conclusion: The impugned demands and penalties could not survive, and the appeals succeeded with consequential relief.

Ratio Decidendi: A composite construction contract involving transfer of property in goods and provision of service is to be assessed as works contract service under the specific statutory entry, and free supplies by the customer do not form part of the taxable value or gross amount charged for service tax valuation.

Issues: (i) Whether the appellant, a 100% EOU, was entitled to exemption from basic customs duty on DTA clearances under the relevant exemption notification. (ii) Whether the demand based on alleged undervaluation of granite slabs cleared to DTA was sustainable.

Issue (i): Whether the appellant, a 100% EOU, was entitled to exemption from basic customs duty on DTA clearances under the relevant exemption notification.

Analysis: The appellant established that the DTA clearances were made under the EOU regime, that marble clearances were supported by the directions of the Supreme Court and the Development Commissioner, and that the Department produced no admissible evidence to show that the granite slabs cleared to DTA were manufactured from imported granite blocks. The condition requiring intimation to the proper officer was treated as directory in the context of supervised DTA clearances by the EOU authorities. The appellant was also found to have complied with export obligation, and the benefit of the exemption notification was held available.

Conclusion: The appellant was entitled to the exemption, and the demand of basic customs duty was unsustainable.

Issue (ii): Whether the demand based on alleged undervaluation of granite slabs cleared to DTA was sustainable.

Analysis: The clearances were assessed by the proper customs officer, duty was paid on the declared invoice value, and ER-2 returns were regularly filed. The Department relied on contemporaneous import data and residual valuation, but did not establish a reliable comparison between the appellant's DTA clearances and the alleged comparable imports. The record also showed that the related unit's purchases from the appellant formed only a small part of its turnover, and the evidence was insufficient to reject the declared value.

Conclusion: The allegation of undervaluation was not proved and the valuation-based demand failed.

Final Conclusion: The impugned orders were set aside and the appeals succeeded with consequential relief under law.

Ratio Decidendi: In a supervised EOU DTA-clearance regime, a procedural intimation condition in a beneficial exemption cannot be treated as mandatory in the absence of contrary evidence, and a demand based on undervaluation cannot stand without admissible evidence establishing rejection of the declared value and a proper comparative basis.

Issues: Whether ad-interim stay should be granted against the show cause notice, the impugned reference to the Transfer Pricing Officer, and the assessment proceedings pending the writ petition.

Analysis: The petition raised a challenge to the reference made under Chapter X on the ground that income chargeable to tax in India had not first been established, particularly in the context of the DTAA and the alleged absence of a taxable income arising from the transaction. The respondents sought time to file a reply. Pending further hearing, the Court directed filing of an affidavit in reply and listed the matter for ad-interim consideration. In the meantime, the Court granted ad-interim protection in terms of the prayer seeking stay of the impugned notice, the impugned order, and the reference to the Transfer Pricing Officer, and also stayed the assessment proceedings.

Conclusion: Interim relief was granted in favour of the petitioner by staying the impugned notice, the reference under section 92CA(1), and the assessment proceedings until further orders.

Issues: Whether ad interim stay of the impugned judgment should be granted in the appeal, and whether the objections based on jurisdiction, delay, and applicability of insolvency law justified interference at the interlocutory stage.

Analysis: The challenge to jurisdiction was held to be prima facie untenable because the winding-up proceedings had already reached an advanced and effectively irreversible stage, and the Company Court retained control over the proceedings and related assets under the statutory scheme. The consent orders and subsequent directions had shifted control away from the Official Liquidator to Special Officers and a Board of Management, making the Company Court's scrutiny of those orders maintainable. The objection based on delay was treated as of limited force because the impugned acts were said to form part of a continuing course of conduct and the underlying allegations were of fraud. The plea based on the Insolvency and Bankruptcy Code was also not accepted at this stage, since no separate insolvency resolution process had been initiated and the Company Court was exercising its own powers to correct alleged abuse and mismanagement. On balance of convenience, the Court found that granting stay would effectively preserve the very state of affairs under challenge and would amount to premature interference with the impugned judgment.

Conclusion: Ad interim stay was refused.

Ratio Decidendi: A Company Court may, in an appropriate case, retain and exercise jurisdiction to examine and correct post-winding-up orders and actions affecting the liquidation estate where the proceedings have advanced to a stage that is not practically reversible, and interlocutory stay should not be granted when it would preserve the challenged arrangement and pre-empt the appeal.

Issues: Whether recovery by debiting the electronic credit ledger could be undertaken before expiry of the appeal period and without recorded reasons justifying departure from the statutory waiting period under Section 78 of the Central Goods and Services Tax Act, 2017.

Analysis: The challenge was treated as similar to pending matters in which interim protection had already been granted. The Court accepted that recovery action was taken before the prescribed appeal period had expired and that the statutory scheme under Section 78 of the Central Goods and Services Tax Act, 2017 contemplates a three-month period from service of the order before recovery proceedings may be initiated, save where reasons are recorded for an earlier action. In the absence of shown reasons to depart from that period, the debit of the electronic credit ledger and allied recovery steps were found to warrant interim protection.

Conclusion: Interim relief was granted in favour of the petitioner, including stay of the impugned appellate order and direction for re-credit of the amount debited in the electronic credit ledger.

Issues: Whether the blocking of the electronic credit ledger could continue beyond the one-year period prescribed under Rule 86A(3) of the Central Goods and Services Tax Rules, 2017, and whether the blocked credit was required to be unblocked.

Analysis: Rule 86A(3) expressly limits the operation of a restriction on the electronic credit ledger to one year from the date of imposition. The restriction in question was imposed on 16 February 2024, and the statutory period had expired by February 2025. Once that period elapsed, the restriction could not continue in law. The entitlement to restoration of credit followed directly from the rule, and the departmental affidavit also acknowledged the same legal position. Consequences arising from cancellation of registration and any further action under the Act and Rules were left open.

Conclusion: The blocking of the credit ledger had ceased to operate by efflux of time, and the impugned attachment was liable to be set aside with the credit unblocked.

Issues: (i) Whether the writ petition was maintainable despite the contractual nature of the dispute and the availability of the statutory dispute-redressal mechanism under the procurement law; (ii) Whether the order dated 07.01.2021 inserting Clause 36E in the Public Works Financial & Accounts Rules, Part-II applied to the respondent corporation; (iii) Whether denial of refund of the differential 6% GST was arbitrary and discriminatory, and whether the petitioner was entitled to refund with interest.

Issue (i): Whether the writ petition was maintainable despite the contractual nature of the dispute and the availability of the statutory dispute-redressal mechanism under the procurement law?

Analysis: The dispute arose from a government-linked contract, but the relief claimed involved interpretation of a State-issued amendment affecting contractual tax liability. The Court held that writ jurisdiction is not barred merely because the matter arises from contract, especially where the challenge is to State action said to be arbitrary or discriminatory. The Court also held that the internal dispute-redressal mechanism under the procurement framework did not oust writ jurisdiction in the facts of the case.

Conclusion: The writ petition was held to be maintainable.

Issue (ii): Whether the order dated 07.01.2021 inserting Clause 36E in the Public Works Financial & Accounts Rules, Part-II applied to the respondent corporation?

Analysis: The Court found that the respondent corporation was a Government of Rajasthan undertaking under substantial governmental control, that its contracts were governed by the Public Works Financial & Accounts Rules and related governmental circulars, and that no separate contractual regime excluding those rules had been shown. On that basis, the Court concluded that the amendment introducing Clause 36E governed the respondent corporation as well.

Conclusion: The order dated 07.01.2021 and Clause 36E were held applicable to the respondent corporation.

Issue (iii): Whether denial of refund of the differential 6% GST was arbitrary and discriminatory, and whether the petitioner was entitled to refund with interest?

Analysis: The Court held that Clause 45.1 did not deal with tax revision during performance of the contract, whereas Clause 36E expressly provided equitable adjustment where tax rates changed during performance. Since the GST rate increased while the work was ongoing, and similar benefit was being extended in comparable government contracts, refusal to extend the same benefit to the petitioner was held to be discriminatory and contrary to Article 14. The Court also rejected the estoppel objection.

Conclusion: The petitioner was held entitled to refund of the differential 6% GST with interest.

Final Conclusion: The petition succeeded on the footing that the State-issued amendment governing tax escalation applied to the contract, and the refusal to extend the corresponding GST adjustment was unlawful.

Ratio Decidendi: A State instrumentality engaged in contractual dealings remains bound by Article 14, and where a later governmental amendment expressly provides equitable tax adjustment during performance of the contract, denial of that adjustment to similarly situated contractors is arbitrary and unsustainable.

Outcome: Delay condoned. Special Leave Petition dismissed. Pending application(s), if any, disposed of.

Outcome: Delay condoned. Civil appeal dismissed and the interlocutory application(s), if any, disposed of.

Issues: (i) Whether the extended period of limitation could be invoked on the basis of a mismatch between Form 26AS / Income Tax Returns and ST-3 Returns without independent verification and proof of suppression or wilful misstatement; (ii) Whether the second show cause notice for a subsequent period on the same issue was maintainable after the first notice had already invoked the extended period.

Issue (i): Whether the extended period of limitation could be invoked on the basis of a mismatch between Form 26AS / Income Tax Returns and ST-3 Returns without independent verification and proof of suppression or wilful misstatement.

Analysis: The demand was founded only on comparison of departmental data with the returns filed by the appellant. The records showed that the appellant was registered, filing ST-3 returns regularly, and had produced books of account and related documents during audit. No independent inquiry was made to ascertain the taxability of the differential amounts, and no material was brought on record to establish fraud, suppression, or wilful misstatement with intent to evade tax. In such circumstances, the ingredients necessary to trigger the extended period under Section 73 of the Finance Act, 1994 were absent.

Conclusion: The extended period of limitation was not invocable, and the demand was barred by limitation.

Issue (ii): Whether the second show cause notice for a subsequent period on the same issue was maintainable after the first notice had already invoked the extended period.

Analysis: The material facts were already within the knowledge of the department when the first show cause notice was issued. Once the department had raised a demand by invoking the extended period on the same issue, a further demand for the subsequent period could not again be sustained by resorting to the extended period on identical facts. The later notice was therefore legally impermissible.

Conclusion: The proceedings initiated by the second show cause notice were not maintainable.

Final Conclusion: The demands of service tax, interest, and penalties could not survive, and the impugned orders were set aside with consequential relief.

Ratio Decidendi: The extended period under Section 73 of the Finance Act, 1994 cannot be invoked unless suppression, fraud, or wilful misstatement is established by substantive evidence, and a subsequent notice on the same issue cannot again rely on the extended period when the material facts were already known to the department.

Issues: Whether goods imported into a unit situated in a Special Economic Zone for authorised operations were entitled to exemption from entry tax under the West Bengal Special Economic Zone Act, 2003, and whether the assessment order and demand notices could survive after the administrative decision granting such exemption.

Analysis: The competent authority, in compliance with the earlier direction, determined that the goods imported into the unit located in the Falta Special Economic Zone for authorised operations were eligible for exemption from entry tax under Section 27(i) read with Section 30 of the West Bengal Special Economic Zone Act, 2003. Once that decision was taken, there remained no live controversy requiring further adjudication on the levy. The Court also noted that any future inquiry by the department regarding goods not entering the SEZ would be a matter for the department to examine in appropriate proceedings.

Conclusion: The exemption claim was accepted and the assessment order ceased to survive, along with the demand notices.

Issues: Whether coercive recovery could be continued pending consideration of the petitioner's application before the appellate authority on compliance with the pre-deposit requirement under the Maharashtra Value Added Tax Act.

Analysis: The petitioner had already filed an appeal and a stay application before the appellate authority and had also moved a separate application asserting compliance with the pre-deposit requirement. That application had not yet been decided. In these circumstances, the Court considered it appropriate that the appellate authority first decide the application expeditiously and in accordance with law, and granted interim protection against coercive recovery till such decision.

Conclusion: Coercive recovery was restrained until the appellate authority decided the pending application, and the petitioner obtained interim relief.

Issues: Whether anticipatory bail should be granted where the alleged GST offence was found to relate to a liability below the statutory monetary threshold and was therefore treated as a non-cognizable and bailable offence.

Analysis: The application was moved under Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023 on the basis of an apprehension of arrest in GST proceedings. On the material placed before the Court, the total GST liability was found to be Rs. 1,16,22,215/-, with the recoverable amount from the applicant's firm being Rs. 74,89,846/-. The Court treated the case as relating to an amount below Rs. 5 crore and applied the statutory position under Section 132 of the GST law that offences involving an amount below that threshold are non-cognizable and bailable. In that view, the apprehension of arrest did not justify invocation of anticipatory bail.

Conclusion: Anticipatory bail was declined and the application was rejected.

Ratio Decidendi: Where the alleged GST offence, on the Court's assessment, falls below the monetary threshold that makes it non-cognizable and bailable, anticipatory bail on the basis of apprehended arrest is not maintainable on merits.