Issues: Whether continued detention of the seized machines and spare parts was lawful where no notice was issued within the period prescribed for seizure and no provisional-release order covered those goods.

Analysis: Section 110(2) mandates return of seized goods where notice under Section 124(a) is not issued within six months, subject only to a valid extension for a further period not exceeding six months. The statutory consequence remains operative notwithstanding provisional release under Section 110A. The machines and spare parts were not covered by the provisional-release order, and the notice issued on 21.02.2025 was beyond one year from their seizure on 15.09.2022.

Conclusion: Detention of the 14 machines and spare parts beyond 15.09.2023 was illegal and unsustainable. Their release was directed upon execution of a bond equivalent to their value.

Issues: Whether the penalty for alleged abetment of gold smuggling was sustainable on the statements, electronic communications, and the alleged failure to act at airport screening.

Analysis: A statement recorded under Section 108 of the Customs Act, 1962 could be relied upon in adjudication only after compliance with the procedure under Section 138B, including examination of the maker, a determination of admissibility, and an effective opportunity of cross-examination, unless a statutory exception applied. Those safeguards were not followed for the appellant's statement or the material witness statements. The call records and WhatsApp chats also lacked the certification required for electronic evidence. The DFMD was faulty, the appellant was not assigned screening duties as a proper officer, and no independent corroborative evidence connected the appellant with possession, handling, or dealing with the smuggled gold.

Conclusion: The statements and electronic material could not validly sustain the allegation, and the penalty under Section 112(b) of the Customs Act, 1962 was unsustainable.

Issues: Whether a successful liquidation-auction bidder who failed to pay the balance sale consideration within the stipulated period was entitled to refund of the deposited amount despite an express forfeiture clause in the auction notice and the ceiling on earnest money deposit under Schedule I.

Analysis: Schedule I of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 limited the earnest money deposit to 10% of the reserve price but did not displace an express auction condition permitting forfeiture of the entire amount deposited upon a successful bidder's failure to pay the balance consideration. The bidder accepted the sale on an as-is-where-is basis, with prior disclosure of the title-related issue, and voluntarily deposited the stipulated amount comprising the earnest money deposit and part of the sale consideration. The asserted need for prior title deeds arose only near the payment deadline and could not justify non-payment. The triple test did not assist the bidder: repeated assurances did not establish financial capacity, and the proceedings initiated by another entity did not constitute an extraneous impediment preventing payment. The allegation of unequal treatment was raised belatedly and without supporting material.

Conclusion: The forfeiture of the entire deposited amount, including the earnest money deposit and part sale consideration, was valid, and no refund was due.

Issues: (i) Whether an OTS between a personal guarantor and the sole financial creditor can bring the corporate debtor out of liquidation; (ii) Whether forfeited earnest money deposit previously received by the financial creditor must revert to the liquidation estate after its debt is settled; (iii) Whether payment of remuneration to the erstwhile liquidator from the liquidation estate is valid; and (iv) Whether the admitted operational creditor is entitled to distribution and the personal guarantor can claim priority as a financial creditor.

Issue (i): Whether an OTS between a personal guarantor and the sole financial creditor can bring the corporate debtor out of liquidation.

Analysis: A bilateral settlement with a financial creditor does not displace the statutory liquidation process. Exit from liquidation is available only through the legally recognised routes, including a scheme under Section 230 of the Companies Act, 2013, or sale of the corporate debtor as a going concern. The separately ratified transfer of assets, treated as a private sale after unsuccessful auctions and on value-maximisation considerations, was left undisturbed.

Conclusion: The OTS did not terminate or alter the liquidation process, and no interference was warranted with the ratified asset transfer.

Issue (ii): Whether forfeited earnest money deposit previously received by the financial creditor must revert to the liquidation estate after its debt is settled.

Analysis: The forfeited earnest money deposit constituted an asset of the liquidation estate. Once the financial creditor accepted the OTS amount and issued an account-closure certificate, its claim stood satisfied and it retained no entitlement to the forfeited amount. The amount was consequently required to be restored to the liquidation estate for distribution under Section 53 of the Insolvency and Bankruptcy Code, 2016.

Conclusion: The forfeited earnest money deposit was required to be returned to the liquidation estate and could not be retained by the financial creditor.

Issue (iii): Whether payment of remuneration to the erstwhile liquidator from the liquidation estate is valid.

Analysis: The erstwhile liquidator had undertaken claim processing, conducted auctions, pursued applications, and represented the corporate debtor in connected proceedings. The monthly remuneration had been fixed during the insolvency process and continued during liquidation; the reduced amount allowed was supported by the unchallenged computation and work performed.

Conclusion: Payment of the approved remuneration to the erstwhile liquidator from the liquidation estate was valid.

Issue (iv): Whether the admitted operational creditor is entitled to distribution and the personal guarantor can claim priority as a financial creditor.

Analysis: The operational creditor's claim had been lodged during the insolvency process, updated after liquidation commenced, admitted by the liquidator, and reported to the relevant authorities. Payment by the personal guarantor to settle the financial creditor's dues did not effect an assignment of debt or substitute the guarantor as a financial creditor. As purchaser of assets or promoter, the guarantor had no priority claim over the liquidation estate and could receive any surplus only after statutory claims were satisfied under Section 53 of the Insolvency and Bankruptcy Code, 2016.

Conclusion: The admitted operational creditor was entitled to distribution under the statutory waterfall, and the personal guarantor had no priority entitlement as a financial creditor.

Final Conclusion: The liquidation estate, including forfeited earnest money deposit, remains available for settlement of liquidation costs and admitted stakeholder claims in accordance with the statutory waterfall.

Ratio Decidendi: A personal guarantor who settles the corporate debtor's financial debt under an OTS does not, absent assignment or substitution, become a financial creditor entitled to liquidation-estate proceeds, which must be distributed under the statutory waterfall after the financial creditor's claim is satisfied.

Issues: Whether the extended period of limitation for recovery of service tax could be invoked for the period 2015-16.

Analysis: Section 73 of the Finance Act, 1994 permits invocation of the extended limitation period only where suppression, wilful misstatement, fraud or like conduct is established. The relevant receipts and taxable transactions had been disclosed through VAT returns and ST-3 returns, and the original adjudicating authority had evaluated those records while dropping the proposed demand. The material did not establish suppression of facts, wilful misstatement or fraud. Therefore, any demand could only fall within the normal limitation period. The show cause notice dated 24.12.2020 for the period 2015-16 was wholly time-barred.

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

Issues: (i) Whether the project-level anti-profiteering methodology, using purchase value to quantify additional input tax credit and allocating savings per square foot, complied with the remand directions; (ii) Whether unavailed pre-GST CENVAT credit on input services could be notionally set off against post-GST input tax credit; and (iii) Whether GST on the additional realisation and interest were validly included in the recoverable amount.

Issue (i): Whether the project-level anti-profiteering methodology, using purchase value to quantify additional input tax credit and allocating savings per square foot, complied with the remand directions.

Analysis: The governing methodology for real-estate projects rejects a comparison of input tax credit with turnover because construction expenditure, credit accrual and buyer collections do not have a direct correlation throughout a project. It requires the total GST-related saving for the project to be determined and allocated over the total project area to derive a uniform per square foot benefit. The revised computation quantified the additional input tax credit against project purchase value, determined the project-level saving, divided it by total area, and applied the resulting per square foot figure to the sold area. Purchase value was used to measure credit against project expenditure, not as a substitute for turnover or for allocating benefit according to buyer collections. Judicial review under Articles 226 and 227 does not permit replacement of a fair and reasonable factual computation accepted by the specialised Tribunal absent jurisdictional error, manifest illegality or non-compliance with the binding remand directions.

Conclusion: The methodology was consistent with the remand directions and was validly sustained, against the assessee.

Issue (ii): Whether unavailed pre-GST CENVAT credit on input services could be notionally set off against post-GST input tax credit.

Analysis: Section 171 of the Central Goods and Services Tax Act, 2017 concerns the benefit of input tax credit actually accruing to the supplier and its passing on to recipients. The pre-GST returns recorded nil CENVAT credit actually availed, while substantial GST input tax credit was availed after GST. A credit that was only legally available but remained unclaimed cannot be treated as having reduced the pre-GST tax incidence, since that would compare actual post-GST benefit with a hypothetical pre-GST benefit. The benefit was not restricted to credit on goods, as the post-GST credit on input services was also actually availed.

Conclusion: Unavailed pre-GST CENVAT credit could not be notionally set off against the post-GST input tax credit; the determination based on actual availment was upheld, against the assessee.

Issue (iii): Whether GST on the additional realisation and interest were validly included in the recoverable amount.

Analysis: GST collected on the enhanced consideration resulting from non-passing of the tax benefit forms part of the profiteered amount because it represents tax collected on the additional realisation. The direction to pay interest at 18% was part of the statutory anti-profiteering consequence, and no independent jurisdictional infirmity was established.

Conclusion: Addition of GST at 12% to the profiteered amount and the direction for interest at 18% were valid, against the assessee.

Final Conclusion: The project-specific calculation founded on actually availed incremental input tax credit, allocated on a per square foot basis and inclusive of GST collected on the excess realisation, remains enforceable with interest payable to the affected recipients.

Ratio Decidendi: In real-estate anti-profiteering proceedings, incremental input tax credit actually availed after GST must be determined as project-level savings and allocated by area; unavailed pre-GST credit cannot be imputed as a notional offset.

Issues: Whether imposition of tax and penalty under Section 129 of the Central Goods and Services Tax Act, 2017 was justified where the e-way bills had expired and their validity was not extended under Rule 138 of the Central Goods and Services Tax Rules, 2017.

Analysis: Section 129 permits demand of tax and penalty for contraventions during transportation, while Rule 138(10) prescribes the validity period of an e-way bill. Circular No. 64/38/2018-GST distinguishes serious and substantive contraventions from minor or procedural lapses. The consignment was accompanied by invoices, lorry receipt, e-way bills and a test certificate; the invoices charged integrated tax and physical verification disclosed no discrepancy in the goods. Expiry of the e-way bills was the sole defect, and no tax evasion or intention to evade tax was established. The explanation for the incorrect destination entry and consequential validity period was relevant while deciding whether Section 129 could be invoked.

Conclusion: Invocation of Section 129 of the Central Goods and Services Tax Act, 2017 for the expired e-way bills was invalid and unjustified; the levy of integrated tax and penalty was set aside.

Issues: Whether statutory interest consequential to confiscation and redemption of imported goods may be computed from the original assessment of the Bill of Entry when the liability arising from the confiscation proceedings was determined only by a subsequent adjudication order.

Analysis: Under Section 125(2) of the Customs Act, 1962, the obligation to pay duty and charges consequent upon redemption arises in the context of exercise and acceptance of the redemption option. The resulting duty liability is required to be assessed and determined through the machinery of Section 28 of the Customs Act, 1962, after which statutory interest may apply in accordance with law. The original assessment was based on the declared description of the goods, whereas the goods were seized and the description, classification, confiscation consequences, redemption fine, penalties and duty consequences were determined only through the adjudication order dated 28.02.2023. Delay in adjudication does not by itself extinguish statutory interest; however, a liability that had not yet been determined cannot be treated as an amount in delayed payment for the preceding period.

Conclusion: Interest could not be computed for the period from the original assessment in May 2015 until 28.02.2023. The interest liability must be recomputed from the date of determination under the adjudication order, after accounting for the subsequent reassessment and payments or appropriations already made; interest for the subsequent period remains payable if attracted under the applicable law.

Issues: Whether penalty upon a director under Section 112(a) of the Customs Act, 1962 was sustainable where the imported goods were not available for confiscation or imposition of redemption fine, and the duty demand against the importer arising from the same order had already been set aside.

Analysis: Penalty under Section 112(a) requires an act or omission rendering goods liable to confiscation under Section 111. Although the adjudication order recorded that the goods were liable to confiscation under Section 111(m), no redemption fine under Section 125 was imposed because the goods were not physically available. The duty demand and penalties against the importer, founded on the same reclassification, had also been set aside in the importer's appeal. These circumstances left no legal basis for fastening penal liability upon the director.

Conclusion: The penalty imposed upon the appellant under Section 112(a) of the Customs Act, 1962 was unsustainable.

Issues: (i) Whether AED (GSI) credit paid on unprocessed nylon tyre cord fabric could be availed and utilised towards basic excise duty where the intermediate TCWS was exempt from AED (GSI) and tyres were not chargeable to AED (GSI); (ii) Whether refund of AED (GSI) credit was available for inputs used in exported tyres.

Issue (i): Whether AED (GSI) credit paid on unprocessed nylon tyre cord fabric could be availed and utilised towards basic excise duty where the intermediate TCWS was exempt from AED (GSI) and tyres were not chargeable to AED (GSI).

Analysis: Rule 57C of the Central Excise Rules, 1944 denied credit on inputs used in manufacture of exempt or nil-rated final products. The second proviso to Notification No. 5/94-C.E. (N.T.) dated 01.03.1994 confined AED (GSI) credit to payment of excise duty leviable under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, on final products. TCWS was exempt from AED (GSI), while tyres were not chargeable to AED (GSI); consequently, no dutiable final product under that enactment existed against which the credit could be utilised. The subsequent CENVAT amendment and circular could not apply to the 1998-99 period. The retrospective amendment under Section 88 of the Finance Act, 2004 applied only to AED (GSI) paid on or after 1 April 2000.

Conclusion: The assessee was not eligible to avail or utilise AED (GSI) credit towards basic excise duty. The issue is decided against the assessee.

Issue (ii): Whether refund of AED (GSI) credit was available for inputs used in exported tyres.

Analysis: Refund under Rule 57F(13) depended upon valid entitlement to the underlying AED (GSI) credit. Since the credit itself was unavailable under Rule 57C and Notification No. 5/94-C.E. (N.T.) dated 01.03.1994, export of the tyres did not create entitlement to refund of that credit.

Conclusion: The assessee was not entitled to refund of the disputed AED (GSI) credit. The issue is decided against the assessee.

Final Conclusion: AED (GSI) credit under the MODVAT regime could be used only against liability under the same additional-excise-duty enactment; later CENVAT provisions did not alter the position for the earlier disputed period.

Ratio Decidendi: Credit of a specified additional excise duty is unavailable where no final product is liable to that duty, and cannot be diverted towards payment of a different excise duty unless the governing credit scheme expressly permits it.

Issues: (i) Whether the advance-ruling application concerning the proposed imports was maintainable; (ii) Whether MILDS F SUOF Lens, Front End (M2FE), and MILDS F SUII Coupled units were eligible for exemption under Sl. No. 60 of Table II to Notification No. 45/2025-Customs dated 24.10.2025.

Issue (i): Whether the advance-ruling application concerning the proposed imports was maintainable.

Analysis: The applicant held a valid Importer-Exporter Code, the question concerned the applicability of an exemption notification to goods proposed to be imported, and no identical question was pending or had been decided in the applicant's case. The imports had not occurred and the prescribed fee had been paid.

Conclusion: The application was maintainable and admitted for a ruling.

Issue (ii): Whether MILDS F SUOF Lens, Front End (M2FE), and MILDS F SUII Coupled units were eligible for exemption under Sl. No. 60 of Table II to Notification No. 45/2025-Customs dated 24.10.2025.

Analysis: Sl. No. 60 is a functional and end-use based exemption covering parts, sub-assemblies and accessories for specified defence equipment, including aircraft, across any tariff chapter. Individual tariff classification does not determine eligibility, but a demonstrable nexus with the qualifying end-use aircraft and fulfilment of Condition No. 17 are necessary.

Analysis: The imported units are separately manufactured, prefabricated components engineered to form the missile-warning system, which is fitted as part of the electronic-warfare suite of military helicopters. They accordingly qualify as sub-assemblies and, alternatively, accessories for aircraft. The end-use documentation established the exclusive defence nexus, but could not substitute the certificate prescribed under Condition No. 17 for exemption at the time of import.

Conclusion: The goods qualify for the exemption under Sl. No. 60, subject to compliance with Condition No. 17 and verification at importation, in favour of the assessee.

Final Conclusion: The ruling confines notification coverage to the described goods; tariff classification and consignment-level certification and verification remain for assessment at the time of import.

Ratio Decidendi: A functional, end-use based customs exemption applies where imported components have a demonstrable nexus with the specified defence end-product, irrespective of their individual tariff headings, provided the notification's mandatory certification condition is fulfilled.

Issues: (i) Whether a composite reverse-charge demand on overseas expenses, including foreign-bank charges and commission, could be sustained without establishing that the exporter was the recipient of the alleged taxable services; and (ii) Whether the extended period of limitation and equal penalty could be sustained.

Issue (i): Whether a composite reverse-charge demand on overseas expenses, including foreign-bank charges and commission, could be sustained without establishing that the exporter was the recipient of the alleged taxable services.

Analysis: Rule 2(1)(d)(i)(G) of the Service Tax Rules, 1994 and Section 68(2) of the Finance Act, 1994 place reverse charge mechanism liability upon the service recipient. The material did not establish privity of contract between the exporter and foreign banks, any direct charge by the foreign banks, or a service relationship under which the exporter received the alleged taxable service. For collection of export proceeds, the Indian bank was the service recipient of the foreign bank's services. The show-cause notice and the lower orders also failed to bifurcate the overseas commission from banking and financial service expenses, while treating the entire composite amount as foreign-bank services.

Conclusion: The exporter was not proved to be the service recipient for the disputed charges, and the undifferentiated composite reverse-charge demand was unsustainable, in favour of the assessee.

Issue (ii): Whether the extended period of limitation and equal penalty could be sustained.

Analysis: The demand arose from audit of the exporter's own records, with no evidence of mala fide intent or suppression of facts. Revenue neutrality also existed because any service tax paid would have been available as input tax credit. The conditions for invoking the extended period of limitation were therefore absent.

Conclusion: The extended period of limitation and the equal penalty were unsustainable, in favour of the assessee.

Final Conclusion: The confirmed service-tax, interest, and penalty liabilities lacked legal foundation.

Ratio Decidendi: Reverse charge mechanism liability for foreign-bank charges requires proof that the Indian exporter was the recipient of an identified taxable service under a privity of contract or equivalent service relationship; such recipient status cannot be presumed merely because charges are ultimately borne by the exporter.

Issues: (i) Whether a final assessment order that inadvertently omitted effect to DRP directions could be rectified under Section 154; (ii) Whether the Indian subsidiary constituted a permanent establishment of the assessee in India and whether business profits were attributable to it; (iii) Whether back-to-back reimbursements of expenses without mark-up were taxable as fees for included services; (iv) Whether the arm's length price of corporate guarantee commission could be fixed without evaluating the assessee's benchmarking.

Issue (i): Whether a final assessment order that inadvertently omitted effect to DRP directions could be rectified under Section 154.

Analysis: Section 144C(10) and Section 144C(13) require the Assessing Officer to comply with binding DRP directions while passing the final assessment order. Neither Section 144C nor Section 154 restricts rectification of a patent and obvious error in such an order. The directions had been reproduced in the assessment order, but their effect was inadvertently omitted from the computation; the error was therefore a mistake apparent on the face of the record. The rectification was also made within the limitation prescribed by Section 154(7).

Conclusion: Against the assessee: the final assessment order was validly rectified under Section 154 and was not rendered void for the inadvertent omission to implement the DRP directions.

Issue (ii): Whether the Indian subsidiary constituted a permanent establishment of the assessee in India and whether business profits were attributable to it.

Analysis: Under Article 5 of the India-USA Double Taxation Avoidance Agreement, the existence of a permanent establishment was not established on the facts. The issue had consistently been decided for the assessee in earlier assessment years on identical facts, and no distinguishing factual circumstance was identified for the relevant year. In the absence of a permanent establishment, no business profits could be attributed to India.

Conclusion: In favour of the assessee: the Indian subsidiary was not a permanent establishment, and the addition of business profits attributed to it was directed to be deleted.

Issue (iii): Whether back-to-back reimbursements of expenses without mark-up were taxable as fees for included services.

Analysis: The evidence and remand report established that the assessee acted only as an intermediary between the service providers and its Indian associated enterprise, receiving reimbursement equal to the amounts paid, without profit or mark-up. Further, Article 12(4)(b) of the India-USA Double Taxation Avoidance Agreement requires technical knowledge, skill, know-how, process, plan, or design to be made available so that the recipient can independently apply it. Neither the nature of qualifying technical or consultancy services nor satisfaction of the make available test was established.

Conclusion: In favour of the assessee: the reimbursements were not taxable as fees for included services, and the addition was directed to be deleted.

Issue (iv): Whether the arm's length price of corporate guarantee commission could be fixed without evaluating the assessee's benchmarking.

Analysis: The assessee had benchmarked the corporate-guarantee transaction in its transfer-pricing study, but the benchmarking was not evaluated. Fixing the commission rate on an estimated basis without examining the relevant facts and the assessee's benchmarking was not sustainable.

Conclusion: In favour of the assessee: the corporate-guarantee arm's length price issue was restored for fresh adjudication after examining the assessee's benchmarking.

Final Conclusion: The permanent-establishment and fees-for-included-services additions do not survive; the corporate-guarantee adjustment requires fresh determination, while the challenge to rectification of the assessment order fails.

Issues: (i) Whether scholarships remitted in India in Indian currency to Indian students pursuing education abroad constitute an application of income outside India or activity beyond the trust's charitable objects? (ii) Whether the CIT(E) may deny registration under section 12AB and approval under section 80G by examining alleged violations of sections 11(1)(c) and 13(1)(c)?

Issue (i): Whether scholarships remitted in India in Indian currency to Indian students pursuing education abroad constitute an application of income outside India or activity beyond the trust's charitable objects?

Analysis: Section 11(1)(c) concerns income applied for purposes outside India. The scholarships were paid through Indian banks in Indian currency to Indian students, with no payment remitted to a foreign university or institution. A student's subsequent use of the scholarship for education abroad does not convert the domestic disbursement into an overseas application of income. The educational scholarships fell within the stated charitable objects, had been accepted under earlier registrations, and no material showed that the activity was non-genuine or outside those objects.

Conclusion: Scholarships paid in India to Indian students for overseas education do not violate section 11(1)(c) and remain charitable educational activity within the trust's objects. The issue is decided in favour of the assessee.

Issue (ii): Whether the CIT(E) may deny registration under section 12AB and approval under section 80G by examining alleged violations of sections 11(1)(c) and 13(1)(c)?

Analysis: The inquiry at the registration stage is confined to the charitable objects, genuineness of activities, and compliance with laws material to achieving those objects. Questions concerning application or alleged misapplication of income, including benefits to specified persons under section 13(1)(c), concern computation of exemption and are to be examined in assessment proceedings. No material established that the trust's activities were non-genuine or that its objects were non-charitable. The prior grant of registration on the same objects and activities also supported continuity.

Conclusion: Alleged violations of sections 11(1)(c) and 13(1)(c) cannot be used at the registration stage to deny registration under section 12AB or consequential approval under section 80G. The issue is decided in favour of the assessee.

Final Conclusion: The refusal of charitable registration and consequential donor-benefit approval was unsustainable; registration and consequential approval are required to be granted.

Ratio Decidendi: At the registration stage, the authority's inquiry is confined to the charitable objects and genuineness of activities; domestic scholarship payments to Indian students do not become an application of income outside India merely because the students pursue education abroad.

Issues: Whether the detained personal jewellery could be returned to the petitioners for re-export to Saudi Arabia.

Analysis: The jewellery was stated to be personal jewellery intended to be taken back to Saudi Arabia and not sold in India. The order directed adjudication of a representation or application seeking its return, while contemplating a minor penalty for the customs infraction upon the petitioners' consent. No final adjudication on return of the jewellery was made.

Outcome: The petitioners were permitted to submit a representation or application for adjudication of return of the seized jewellery.

Outcome: The company appeal was allowed by consent and the impugned order was quashed.

Issues: Whether outstanding Central Sales Tax dues could be treated as secured debt, and the State Tax Department as a secured creditor, by reading Section 9(2) of the Central Sales Tax Act, 1956 with Section 48 of the Gujarat Value Added Tax Act, 2003.

Analysis: Section 9(2) of the Central Sales Tax Act, 1956 is a machinery provision enabling State authorities to assess, collect and recover Central Sales Tax by using the procedural machinery of the applicable State sales-tax law. It does not create a statutory first charge over the dealer's property or impliedly incorporate the substantive first charge under Section 48 of the Gujarat Value Added Tax Act, 2003. A security interest cannot arise merely from the recovery machinery under Section 9(2).

Analysis: The Explanation to Section 3(31) of the Insolvency and Bankruptcy Code, 2016 is clarificatory and operates retrospectively; it excludes a security interest created merely by operation of law unless it arises from an agreement or arrangement between parties. The absence of any contractual security interest independently precludes secured status for the Central Sales Tax claim.

Conclusion: The admitted Central Sales Tax dues cannot be treated as secured debt, and the State Tax Department cannot claim the status of a secured creditor or priority under Section 53(1)(b)(ii) of the Insolvency and Bankruptcy Code, 2016.

Outcome: Special leave petition dismissed; all relevant issues and contentions were left open for trial.

Issues: (i) Whether the service-tax demand based on the departmental computation of the assessee's sales turnover was sustainable; (ii) Whether the threshold exemption was available for the residual taxable-service receipts of Rs. 9,32,999.

Issue (i): Whether the service-tax demand based on the departmental computation of the assessee's sales turnover was sustainable.

Analysis: The acknowledged VAT audit report in Form E-704 recorded sales turnover of Rs. 1,16,70,673 and payment of VAT attributable to those transactions. The lower authorities adopted a substantially lower sales figure of Rs. 85,89,993 without referring to documentary material supporting that computation. The service-tax demand resulting from the assumed taxable-service component was therefore unsupported by adequate evidence.

Conclusion: The service-tax demand founded on the unsubstantiated turnover computation is unsustainable, in favour of the assessee.

Issue (ii): Whether the threshold exemption was available for the residual taxable-service receipts of Rs. 9,32,999.

Analysis: Notification No. 33/2012-S.T. dated 20.06.2012 exempted taxable services within the threshold limit of Rs. 10 lakh from service tax leviable under Section 66B of the Finance Act, 1994. The residual receipts identified as taxable-service income were Rs. 9,32,999 and fell within that limit.

Conclusion: The threshold exemption is available for the taxable-service receipts of Rs. 9,32,999, in favour of the assessee.

Final Conclusion: The adjudged service-tax liability lacks a sustainable basis, and no service tax is payable on the residual receipts within the notified threshold.

Issues: Whether the maximum packing speed of a pan masala packing machine could be reduced through alterations to the machine for determining duty liability when the same goods continued to be packed.

Analysis: The statutory scheme treats the number of packing machines and the maximum packing speed at which they can be operated as relevant factors for capacity determination, deemed production and duty. A fresh declaration may be filed upon subsequent changes, but the permissible changes do not authorise reduction of the maximum speed of a machine by alteration when packing the same goods at the same retail sale price. The records established that the machine had operated at 1000 pouches per minute and fell within the category of 751 pouches per minute and above; altered actual operating speed or a claimed reduction in speed could not displace that maximum-speed category.

Conclusion: The reduced speed declaration was not admissible. The machine was correctly classifiable in the category of 751 pouches per minute and above, with duty payable on that basis, against the assessee.