1. Whether the appellant had fulfilled the export obligation (EO) under the EPCG scheme within the stipulated time as per Customs Notification and bond conditions.

2. Whether the non-submission or delay in submission of Export Obligation Discharge Certificate (EODC) by the appellant, due to reasons beyond their control, can justify denial of benefits under the EPCG scheme or sustain a demand for duty.

3. Whether the Appellate Authority was justified in refusing to transfer the matter to call book pending receipt of EODC and in directing recovery of duty by coercive means.

4. The scope and applicability of CBEC instructions and circulars regarding handling of export obligation fulfilment, issuance, and acceptance of EODC under the EPCG scheme.

5. The procedural correctness and legal propriety of the demand for duty and interest raised on the ground of non-fulfilment of export obligation without considering the appellant's application for redemption and subsequent issuance of EODC.

Issue 1: Fulfilment of Export Obligation under EPCG Scheme

- Legal Framework: The EPCG scheme under Customs Notification No.55/2003 and relevant Foreign Trade Policy (FTP) provisions require the importer to fulfil export obligations equivalent to eight times the duty saved amount within eight years from the date of licence issuance. The importer executes a bond undertaking payment of duty and interest in case of non-fulfilment.

- Court's Reasoning: The Adjudicating Authority initially found that the appellant failed to produce evidence of export obligation fulfilment and thus breached the bond and notification conditions. However, the appellant submitted documentary proof including ANF-5B export statements and a redemption letter issued by the competent authority confirming full discharge of export obligation in proportion to duty utilised.

- Key Evidence: The redemption letter dated 28.04.2025 issued by the Zonal Director General of Foreign Trade (JDGFT) confirming export obligation discharge; appellant's correspondence dated 04.06.2012 acknowledging submission of application for redemption; and export documents filed before DGFT.

- Application of Law to Facts: The Court recognized that the appellant had fulfilled the export obligation as per the redemption letter and that the initial demand was based solely on non-production of EODC, not on any substantive failure to meet EO.

- Treatment of Competing Arguments: The Revenue relied on absence of EODC at the time of demand to justify duty recovery. The appellant contended that the delay in issuance of EODC was beyond their control and that the export obligation was met.

- Conclusion: The Court accepted that export obligation was fulfilled and that the appellant was entitled to benefits under the EPCG scheme subject to production of EODC.

Issue 2: Effect of Delay or Non-submission of EODC Beyond Appellant's Control

- Legal Framework and Precedents: The condition precedent for discharge of bond and claiming benefits under EPCG is submission of EODC. However, established legal principle holds that delay caused by government/public authorities beyond the control of the importer cannot be a ground to deny benefits or sustain demands. This principle is supported by authoritative precedent emphasizing that conditions hinging on government action should not prejudice the applicant if delay is not attributable to them.

- Court's Reasoning: The Court observed that the appellant had applied for redemption well within the stipulated time and that delay in issuance of EODC by DGFT was beyond their control. It noted that it is not in the appellant's interest to delay EODC production as it is necessary to redeem bonds and bank guarantees.

- Key Evidence: Correspondence showing timely application for redemption; the eventual issuance of EODC; absence of any allegation of fraud or evasion by appellant.

- Application of Law to Facts: The Court held that delay in issuance of EODC by DGFT cannot be a ground for denying benefits or sustaining recovery demands under the EPCG scheme.

- Treatment of Competing Arguments: The Revenue's insistence on strict compliance with submission timelines was rejected in light of the binding instructions and legal principles protecting the importer from consequences of administrative delay.

- Conclusion: Delay in obtaining EODC beyond appellant's control does not justify denial of EPCG benefits or duty demand.

Issue 3: Refusal to Transfer Matter to Call Book and Direction for Recovery

- Legal Framework: The procedural practice under Customs law allows for transfer to call book when export obligation discharge is pending, especially if the delay is due to reasons beyond the importer's control. CBEC instructions emphasize issuance of simple notices rather than immediate SCNs or coercive recovery in such cases.

- Court's Reasoning: The Appellate Authority refused to transfer the case to call book pending receipt of EODC and directed recovery by coercive means. The Court found this approach inconsistent with CBEC instructions and principles of natural justice.

- Key Evidence: CBEC Instruction F.No.605/71/2015-DBK dated 14-10-2016 and Circular No.16/2017-Cus dated 02-05-2017 mandating issuance of notices and abeyance of action pending EODC issuance; absence of fraud or evasion allegations against appellant.

- Application of Law to Facts: The Court held that the Appellate Authority's refusal to transfer the matter to call book and direction for recovery was unsustainable and contrary to binding administrative instructions.

- Treatment of Competing Arguments: The Revenue's reliance on strict enforcement of duty recovery was outweighed by the procedural safeguards and instructions protecting exporters awaiting EODC issuance.

- Conclusion: The refusal to transfer the matter to call book and coercive recovery direction was improper and the matter requires remand for verification and appropriate action.

Issue 4: Applicability of CBEC Instructions and Circulars on EPCG Export Obligation Monitoring

- Legal Framework: CBEC issued instructions to rationalize procedures for handling export obligations under EPCG, including acceptance of EODC issued by DGFT without further verification except in selected cases; emphasis on transparency, natural justice, and avoidance of undue hardship to exporters.

- Court's Reasoning: The Court emphasized that these instructions are binding on Revenue authorities and must be adhered to in handling cases of export obligation fulfilment and redemption under EPCG.

- Key Evidence: CBEC Instruction dated 14-10-2016 and Circular dated 02-05-2017 outlining procedures for notices, verification, and handling of EODC submissions; requirement of natural justice and avoidance of routine demands without basis.

- Application of Law to Facts: The Court found that the lower authorities failed to follow these instructions, resulting in premature demand and coercive recovery without proper consideration of the appellant's redemption application and EODC issuance.

- Treatment of Competing Arguments: The Revenue's failure to apply these instructions was a critical flaw; the appellant's case was consistent with the prescribed procedural safeguards.

- Conclusion: The impugned orders are contrary to CBEC instructions and must be set aside with directions to comply strictly with these administrative guidelines.

Issue 5: Procedural and Legal Validity of Duty Demand and Interest on Non-fulfilment of Export Obligation

- Legal Framework: Under the EPCG scheme, duty and interest are payable if export obligation is not fulfilled within prescribed time and bond conditions. However, demand must be based on substantive non-fulfilment, not merely procedural delay in submission of EODC. Natural justice and procedural fairness require opportunity for verification and consideration of redemption applications.

- Court's Reasoning: The Court found that the demand was premised solely on non-submission of EODC and did not consider the appellant's bona fide efforts and eventual discharge of export obligation. The absence of fraud or evasion further weakened the case for demand.

- Key Evidence: The redemption letter confirming EO discharge; appellant's timely application for redemption; absence of adverse findings on export performance.

- Application of Law to Facts: The Court held that the demand and interest confirmed by the Adjudicating Authority and upheld by the Appellate Authority were unsustainable in light of the appellant's fulfilment of EO and issuance of EODC.

- Treatment of Competing Arguments: The Revenue's reliance on strict timelines and procedural non-compliance was rejected in favor of substantive compliance and binding administrative instructions.

- Conclusion: The demand for duty and interest is liable to be set aside; the matter is remanded for verification of EODC and grant of consequential benefits.

Remand and Directions

- The matter is remitted to the adjudicating authority for the appellant to produce the EODC and for limited verification as per CBEC instructions and prevailing procedures.

- The adjudicating authority is directed to conduct denovo proceedings within ninety days, adhering to principles of natural justice and transparency.

- The appellant is entitled to consequential benefits under law upon verification of EODC.

1. ISSUES PRESENTED and CONSIDERED

• Whether the Show Cause Notice (SCN) issued under Section 28(4) of the Customs Act, 1962 for the extended period of demand is valid or barred by limitation.
• Whether the importer's classification of the imported 'Polyurethane Sheet' under Customs Tariff Item (CTI) 3926 9099 is correct or the department's classification under CTI 3921 1390 is appropriate.
• Whether there was willful misstatement, suppression of facts, or collusion on the part of the importer justifying invocation of extended period of limitation under Section 28(4) of the Customs Act, 1962.
• Whether penalty under Section 114A of the Customs Act, 1962 is justified in the facts of the case.
• Whether the Tribunal should decide the classification issue on merits when the demand is held barred by limitation.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of SCN under Section 28(4) of the Customs Act, 1962 (Extended Period of Limitation)

Relevant Legal Framework and Precedents:

• Section 28(4) of the Customs Act, 1962 allows demand of duty beyond the normal limitation period if there is collusion, willful misstatement, or suppression of facts by the importer.
• Amendment to Section 17 of the Customs Act, 1962 (effective 8.4.2011) introduced self-assessment, placing onus on importers to correctly declare classification, valuation, and claim of notifications.
• Supreme Court rulings in Uniworth Textiles Ltd. and Aban Loyd Chiles Offshore Ltd. clarified that invocation of extended period requires proof of deliberate default or willful misstatement with a mental element of intent.

Court's Interpretation and Reasoning:

• The Tribunal examined whether the essential ingredients for invoking extended limitation-collusion, willful misstatement, or suppression-were established.
• The department relied on specific intelligence and suspicion of willful misstatement, supported by testing of samples and classification changes.
• The Tribunal found no evidence of willful default or suppression by the importer; rather, the importer's classification differed but was not fraudulent or deliberately misleading.
• 18 Bills of Entry were examined under Risk Management System (RMS) instructions without detection of misclassification or misdeclaration.
• The importer did not seek testing; the department initiated testing based on intelligence.
• The Tribunal emphasized that mere difference of opinion on classification does not amount to willful misstatement.

Key Evidence and Findings:

• CIPET report dated 18.6.2020 confirmed the goods as 'polyurethane sheet used for car seat'.
• No positive act by importer indicating intention to evade duty was found.
• Department's own officers had accepted classification under CTI 3926 9099 in several Bills of Entry prior to investigation.

Application of Law to Facts:

• Since no willful misstatement or suppression was established, invocation of extended limitation under Section 28(4) was improper.
• The SCN dated 1.11.2022 for extended period demand was therefore time barred.

Treatment of Competing Arguments:

• Department argued importer's failure to correctly classify and pay duty justified extended period demand.
• Importer contended absence of malafide intention and that classification was a bona fide difference of opinion.
• The Tribunal accepted the importer's bona fide belief and lack of willful default.

Conclusion: The SCN invoking extended limitation period under Section 28(4) is barred by limitation and does not survive.

Issue 2: Classification of Imported Goods

Relevant Legal Framework and Precedents:

• Classification under Customs Tariff is governed by the Customs Tariff Act and related Notes.
• End use of goods is generally not determinative of classification; classification depends on the nature and composition of goods.
• Relevant Chapter Notes, HSN, and Board Circulars guide classification.
• Precedents caution against penalty or adverse findings where classification disputes arise from genuine differences of opinion.

Court's Interpretation and Reasoning:

• The goods were declared as 'polyurethane sheet used for car seat' and tested as such.
• The importer classified the goods under CTI 3926 9099 (flexible polyurethane sheets), while the department classified under CTI 3921 1390 (other sheets).
• There was divergence even within the department: Bangalore authority classified similar goods under CTI 3926 3090.
• The Tribunal noted the classification issue involves interpretation of competing tariff entries.
• The Tribunal observed that classification differences alone do not amount to misdeclaration or suppression.

Key Evidence and Findings:

• CIPET test report confirming composition.
• Different classification positions taken by Customs authorities at Chennai and Bangalore.
• Principal Commissioner, Bangalore, found no malafide intention and invoked doctrine of bona fide belief to waive penalty.

Application of Law to Facts:

• The Tribunal declined to decide classification on merits as the SCN was held time barred.
• The divergence in classification within the department itself supports the conclusion that the classification dispute was bona fide.

Treatment of Competing Arguments:

• Importer argued classification under CTI 3926 9099 was correct based on composition and flexibility.
• Department argued classification under CTI 3921 1390 was correct and importer misclassified to claim duty exemption.
• Tribunal favored importer's bona fide classification difference, especially in absence of willful misstatement.

Conclusion: The Tribunal did not adjudicate classification on merits due to limitation bar but recognized bona fide difference of opinion on classification.

Issue 3: Willful Misstatement, Suppression of Facts, and Collusion

Relevant Legal Framework and Precedents:

• Section 28(4) requires proof of collusion, willful misstatement, or suppression of facts to invoke extended limitation.
• "Willful" implies conscious, voluntary, and intentional act to evade duty.
• Supreme Court rulings emphasize mental element and deliberate default as mandatory prerequisites.

Court's Interpretation and Reasoning:

• The Tribunal found no evidence of collusion or willful misstatement by the importer.
• The importer's conduct showed bona fide belief in classification rather than deliberate evasion.
• The department's own acceptance of classification in multiple Bills of Entry negates suppression or misstatement.
• Testing was department-initiated, not importer-driven.

Key Evidence and Findings:

• No material indicating fraudulent intent or concealment by importer.
• RMS examination of 18 Bills of Entry without adverse findings.

Application of Law to Facts:

Treatment of Competing Arguments:

• Department relied on intelligence and sample testing to allege willful misstatement.
• Importer denied any malafide intent and asserted bona fide classification difference.
• Tribunal sided with importer's bona fide belief and absence of willful default.

Conclusion: No willful misstatement, suppression, or collusion established; extended limitation and penalty unjustified.

Issue 4: Imposition of Penalty under Section 114A of the Customs Act, 1962

Relevant Legal Framework and Precedents:

• Penalty under Section 114A is linked to evasion of duty by misclassification or misdeclaration.
• Doctrine of bona fide belief recognized by courts as a defense against penalty in classification disputes.
• Precedents hold penalty cannot be imposed where no malafide intent or deliberate evasion is found.

Court's Interpretation and Reasoning:

• The Tribunal noted the Principal Commissioner, Bangalore, had invoked bona fide belief doctrine to waive penalty in a similar case.
• The Tribunal found no malafide intention or deliberate evasion in the present case.
• Since the SCN itself was barred by limitation, penalty based on it cannot be sustained.

Key Evidence and Findings:

• No evidence of willful evasion or suppression by importer.
• Classification dispute was bona fide and contested in good faith.

Application of Law to Facts:

• Penalty under Section 114A is not justified without proof of willful default.
• SCN being time barred negates penalty imposition.

Treatment of Competing Arguments:

• Department sought penalty based on alleged misclassification and evasion.
• Importer relied on bona fide belief and absence of malafide intent.
• Tribunal accepted importer's defense and rejected penalty.

Conclusion: Penalty under Section 114A is not sustainable in the absence of willful misstatement and given limitation bar.

Issue 5: Whether Tribunal Should Decide Classification Merits when Demand is Time-Barred

Relevant Legal Framework and Precedents:

• Judicial precedent holds that once demand is held barred by limitation, adjudication on merits is unnecessary and beyond jurisdiction.
• Supreme Court and High Court rulings emphasize that limitation bar precludes merit adjudication.

Court's Interpretation and Reasoning:

• The Tribunal relied on authoritative rulings holding that limitation bar ends proceedings.
• Consequently, the Tribunal declined to examine classification or eligibility for duty exemption on merits.

Key Evidence and Findings:

• SCN held barred by limitation.
• Precedents cited supporting non-adjudication on merits post limitation bar.

Application of Law to Facts:

• Tribunal set aside impugned order on limitation grounds without deciding classification merits.

Treatment of Competing Arguments:

• Importer urged dismissal on limitation grounds.
• Department sought to argue classification merits.
• Tribunal held limitation bar decisive and preclusive of merit adjudication.

Conclusion: Tribunal correctly refrained from deciding classification merits after holding SCN time barred.

1. ISSUES PRESENTED and CONSIDERED

Whether the activities undertaken by the appellant fall under works contract service or site formation and clearance, excavation, earthmoving and demolition services for the purpose of service tax liability.

Whether the demand of service tax raised by the Revenue invoking extended period of limitation is valid in the facts of the case.

Whether there was any suppression, collusion, or mis-statement by the appellant to justify invocation of extended period of limitation.

Whether absence of executed contract agreement affects the classification of the service and the liability to pay service tax.

Whether the appellant's failure to submit recipient-wise details and relevant documents justifies the demand and penalties imposed.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Classification of Service - Works Contract Service vs. Site Formation and Clearance, Excavation, Earthmoving and Demolition Services

Relevant Legal Framework and Precedents: The classification of services under service tax law depends on the nature of the activity and the contractual terms. Works contract service involves a composite contract for construction, fabrication, or erection involving supply of materials and labor. Site formation and clearance, excavation, earthmoving and demolition services are distinct categories under service tax.

Court's Interpretation and Reasoning: The Tribunal examined the work orders and related documents. Work orders indicated supply of materials such as cement concrete with specific rates quoted, implying involvement of materials inseparable from the work. Although the formal contract agreement was not executed or produced, the work orders stated that the contract agreement was under preparation, which is common in government or public sector contracts where tenders are finalized and formal agreements follow work orders.

Key Evidence and Findings: Presence of VAT payment records and worksheets showing break-up of taxable sales and purchases supported the involvement of materials. No evidence suggested that the work was purely service without material supply.

Application of Law to Facts: The Tribunal held that the absence of a formal contract agreement does not negate the nature of the service. The facts indicated a composite contract involving materials and labor, consistent with works contract service.

Treatment of Competing Arguments: The Revenue argued that no agreement was produced and the work orders mentioned contract agreement under preparation. The appellant argued that the service was works contract service and hence liable under that category. The Tribunal found the appellant's argument reasonable given the nature of the work and supporting documents.

Conclusions: The service undertaken by the appellant is classified as works contract service and not under site formation and clearance, excavation, earthmoving and demolition services.

Issue 2: Validity of Demand Invoking Extended Period of Limitation

Relevant Legal Framework and Precedents: Extended period of limitation under service tax law can be invoked only if there is evidence of suppression of facts or intent to evade tax. Audit-based detection without evidence of suppression does not justify extended period invocation. The Tribunal relied on authoritative precedents establishing that audit-based cases are subject to normal limitation period.

Court's Interpretation and Reasoning: The case originated from an audit of the public sector undertaking's records, which are in the public domain. The appellant had submitted statutory documents and there was no evidence of suppression or collusion.

Key Evidence and Findings: No evidence was brought forward by the Revenue to prove suppression, mis-statement, or collusion by the appellant. The demand was based on audit findings and statutory documents.

Application of Law to Facts: Since the case was detected through audit and no evidence of suppression was found, invocation of extended period of limitation was not justified.

Treatment of Competing Arguments: The appellant contended that the demand was barred by limitation and no suppression was involved. The Revenue contended that non-submission of recipient-wise details justified extended period. The Tribunal rejected the Revenue's contention due to lack of evidence of suppression.

Conclusions: The demand raised invoking extended period of limitation is barred and cannot be sustained.

Issue 3: Allegation of Suppression or Non-Submission of Documents

Relevant Legal Framework and Precedents: Suppression or concealment of facts with intent to evade tax is a precondition for invoking extended limitation and penalties. Mere non-submission of details without intent does not amount to suppression.

Court's Interpretation and Reasoning: The Tribunal noted that the appellant failed to submit recipient-wise details despite repeated requests. However, the appellant had submitted statutory documents and records maintained by the housing board were available to the Revenue.

Key Evidence and Findings: The Revenue did not produce any evidence of suppression or fraudulent intent. The appellant's records and the public documents were accessible to the Revenue.

Application of Law to Facts: Absence of recipient-wise details alone cannot be equated with suppression or evasion of tax liability.

Treatment of Competing Arguments: Revenue argued that non-submission justified demand and penalties. The appellant denied suppression and stated all relevant documents were submitted.

Conclusions: No suppression or intent to evade tax was established; hence, penalties and extended limitation are not justified on this ground.

Issue 4: Effect of Absence of Executed Contract Agreement on Service Classification and Tax Liability

Relevant Legal Framework and Precedents: Service classification depends on the substance of the contract and nature of work, not solely on the existence of a formal contract document.

Court's Interpretation and Reasoning: The Tribunal observed that the work order explicitly mentioned contract agreement was under preparation, a common practice in government contracts. The presence of material supply and VAT payment records indicated works contract service.

Key Evidence and Findings: Work orders, VAT payment records, and worksheets evidencing taxable sales and purchases.

Application of Law to Facts: Absence of formal contract agreement does not negate the nature of the service as works contract.

Treatment of Competing Arguments: Revenue argued absence of agreement undermined appellant's claim. The appellant emphasized the substance over form principle.

Conclusions: Absence of executed contract agreement does not affect classification of the service as works contract service.

Issue 5: Justification for Demand and Penalties Based on Non-Submission of Documents

Relevant Legal Framework and Precedents: Demand and penalties require proof of suppression, mis-statement, or evasion. Mere non-submission of documents without such intent is insufficient.

Court's Interpretation and Reasoning: The Tribunal found that although recipient-wise details were not submitted, the appellant had submitted other statutory documents and the records were available in public domain.

Key Evidence and Findings: No evidence of fraudulent intent or suppression was established by the Revenue.

Application of Law to Facts: Demand and penalties based solely on non-submission of details without suppression or evasion are not sustainable.

Treatment of Competing Arguments: Revenue sought to justify demand and penalties due to non-submission. The appellant denied suppression and argued for limitation bar.

Conclusions: Demand and penalties are not justified on the ground of non-submission of recipient-wise details in absence of suppression or evasion.

Overall Conclusion: The appeal is allowed solely on the ground of limitation as extended period cannot be invoked in audit-based cases without suppression. The classification of service as works contract is accepted. Demand and penalties are not sustainable due to lack of evidence of suppression or evasion. The case need not be remanded for merits as limitation alone decides the matter.

1. ISSUES PRESENTED and CONSIDERED

• Whether the appellant is entitled to avail CENVAT credit of sugar cess paid on imported raw sugar under the Sugar Cess Act, 1982 and the Cenvat Credit Rules, 2004.
• Whether sugar cess paid under the Sugar Cess Act, 1982 qualifies as a duty of excise for the purpose of availing CENVAT credit.
• Whether interest and penalty imposed under the Cenvat Credit Rules, 2004 and the Central Excise Act, 1944 are sustainable when the demand of duty itself is disputed.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to CENVAT credit of sugar cess paid on imported raw sugar

Relevant legal framework and precedents:

• Sugar Cess Act, 1982 - Section 3(1) levies sugar cess as a duty of excise.
• Cenvat Credit Rules, 2004 - Rule 3(1)(vii) allows CENVAT credit of additional customs duty (CVD) paid on imported inputs, where such duty is equivalent to excise duty.
• Central Excise Act, 1944 - Provides the general framework for levy and collection of excise duties.
• Judicial precedents:
  • Tribunal decision holding sugar cess as duty of excise and eligible for CENVAT credit.
  • High Court judgment affirming Tribunal decision that sugar cess is a duty of excise and credit is admissible.
  • Supreme Court decision recognizing cess levied under certain enactments as duty of excise.

Court's interpretation and reasoning:

• The sugar cess, though termed a cess, is levied and collected as a duty of excise under Section 3(1) of the Sugar Cess Act, 1982, applicable to sugar production.
• The Cenvat Credit Rules, 2004 apply to the sugar cess, permitting credit for duties of excise paid on inputs used in manufacture.
• The appellant paid sugar cess on imported raw sugar under ex-bond bill of entry and availed credit in bona fide belief of its admissibility.
• The High Court's ruling clarifies that sugar cess is a duty of excise, not a mere fee, and thus credit under Cenvat Credit Rules is allowable.
• The additional duty (CVD) paid on import of raw sugar is equivalent to excise duty and eligible for credit under Rule 3(1)(vii) of the Cenvat Credit Rules.

Key evidence and findings:

• Payment of sugar cess on imported raw sugar at Rs. 24 per quintal.
• Notification and circular exempting sugar cess, but appellant paid it unaware of exemption.
• Show cause notice and demand confirmed by Commissioner denying credit on ground that sugar cess is not a duty of excise.
• Judicial precedents supporting appellant's claim.

Application of law to facts:

• The appellant's payment of sugar cess qualifies as payment of duty of excise under Sugar Cess Act, 1982.
• The Cenvat Credit Rules allow credit of such duty paid on inputs used in manufacture.
• The appellant's claim for credit is consistent with statutory provisions and judicial pronouncements.

Treatment of competing arguments:

• Revenue argued that sugar cess is not a duty of excise and hence credit is inadmissible.
• Revenue's appeal against High Court decision is pending before Supreme Court but not stayed, hence binding precedent applies.
• Appellant relied on binding High Court decision and Supreme Court precedent recognizing cess as duty of excise.

Conclusions:

• The appellant is entitled to avail CENVAT credit of sugar cess paid on imported raw sugar.
• The impugned order denying credit is unsustainable in law and set aside.

Issue 2: Nature of sugar cess as duty of excise

Relevant legal framework and precedents:

• Sugar Cess Act, 1982 - defines sugar cess as a duty of excise.
• Central Excise Act, 1944 - governs levy and collection of duty of excise.
• Customs Tariff Act, 1975 - Section 3 levies additional customs duty (CVD) equivalent to excise duty on imported goods.
• Judicial precedents:
  • High Court ruling holding sugar cess as duty of excise, not a fee.
  • Supreme Court decision recognizing cess levied under statute as duty of excise.

Court's interpretation and reasoning:

• Section 3 of Sugar Cess Act provides for levy and collection of cess as duty of excise for Sugar Development Fund.
• Since the cess is levied on production of sugar, it is a tax on production and hence a duty of excise.
• At the time of import, the sugar cess is collected as additional customs duty (CVD) under Customs Tariff Act, 1975.
• This additional duty is equivalent to excise duty and eligible for credit under Cenvat Credit Rules.

Key evidence and findings:

• Legislative provisions explicitly describe sugar cess as duty of excise.
• High Court observations clarifying the nature of sugar cess and additional duty paid on import.

Application of law to facts:

• The sugar cess paid by appellant on imported raw sugar is a duty of excise under the Sugar Cess Act, 1982.
• It is also paid as additional customs duty (CVD) under Customs Tariff Act, 1975.

Treatment of competing arguments:

• Revenue's contention that sugar cess is not a duty of excise rejected based on statutory language and judicial pronouncements.

Conclusions:

• Sugar cess is a duty of excise and not a mere fee or tax.
• Therefore, it qualifies for credit under Cenvat Credit Rules.

Issue 3: Sustainability of interest and penalty when duty demand is disputed

Relevant legal framework:

• Rule 14 and Rule 15 of Cenvat Credit Rules, 2004 - provisions for interest and penalty on wrongful availment of credit.
• Section 11A, 11AB, and 11AC of Central Excise Act, 1944 - provisions for demand, interest, and penalty on duty and cess.

Court's interpretation and reasoning:

• If the demand of duty itself is not sustainable in law, then imposition of interest and penalty cannot be sustained.
• The appellant's entitlement to credit negates the basis for demand of sugar cess and corresponding interest and penalty.

Application of law to facts:

• The demand of sugar cess and CENVAT credit disallowance is set aside.
• Consequently, interest and penalty based on such demand cannot be maintained.

Conclusions:

• Interest and penalty imposed under the impugned order are not sustainable and are set aside along with the demand.

1. ISSUES PRESENTED and CONSIDERED

1) Whether the refund claims were barred by limitation under Section 11B, in view of the payer's assertion that the differential duties were paid "under protest".

2) Whether the refund was hit by the doctrine of unjust enrichment under Section 11B(2), having regard to the accounting treatment and the evidentiary record concerning passing on of duty incidence, and the consequent credit to the Consumer Welfare Fund.

3) Ancillary to Issue 1: Whether non-compliance with the procedural steps in the Supplementary Instructions for payment "under protest" defeats the substantive claim that the payments were in fact made "under protest".

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Limitation under Section 11B in light of "payment under protest" (read with Issue 3)

- Relevant legal framework and principles:

• Section 11B prescribes a limitation period for refund claims; however, amounts paid "under protest" are not subject to the limitation bar in the same manner.

• Supplementary Instructions (concerning "under protest") generally require contemporaneous written intimation to the jurisdictional officer, appropriate endorsements in returns/accounts, and linkage to the impugned payments; under the erstwhile regime, the rule on protest did not mandate a rigid form.

• Established jurisprudence recognizes that the concept of "under protest" should not be construed narrowly or pedantically; procedural lapses do not extinguish substantive rights where the protest is otherwise clearly conveyed and acknowledged.

- Court's interpretation and reasoning:

• The Tribunal found no dispute on merits that the duty ought not to have been paid on MRP for the clearances; the differential amounts were paid pursuant to an audit objection later found untenable.

• The payer addressed contemporaneous letters stating that the differential duty was being paid "under protest," which were acknowledged by the Department. One letter accompanied payment; another followed shortly after payment. The Tribunal treated a delay of a day or two as immaterial.

• Although the payer did not strictly follow all procedural steps (e.g., endorsements in ER-2 returns/Profit & Loss or ledger annotations), the intent to pay under protest was clearly conveyed and officially acknowledged. The Department neither disputed receipt nor rebutted the basis for protest at the relevant time.

• The Tribunal emphasized that procedural prescriptions are directory in this context; a mere letter can constitute a valid protest where it unambiguously communicates the payer's objection and links to the payments.

- Key evidence and findings:

• Acknowledged letters contemporaneous with the payments indicating "under protest."

• Background that the payments were prompted by audit objection; subsequently, the Department accepted that MRP-based valuation was not required.

- Application of law to facts:

• Given acknowledged written protests tied to the specific payments, and the broader legal principle that no rigid form is prescribed for protest, the amounts paid were held to be "under protest."

- Treatment of competing arguments:

• Revenue pressed for strict adherence to procedural formalities in the Supplementary Instructions. The Tribunal held that failure to strictly comply does not negate a valid protest where intent and acknowledgment are present; substantive rights prevail over procedural lapses.

- Conclusion:

• The limitation bar under Section 11B does not apply to the refund claim sums paid under protest. The finding that any portion of the refund was time-barred was set aside. See Issue 2 for the ultimate disposition on unjust enrichment, which independently controls the outcome.

Issue 2: Unjust enrichment under Section 11B(2) and credit to Consumer Welfare Fund

- Relevant legal framework and principles:

• Under Section 11B(2), refund amounts found due on merits are, by default, to be credited to the Consumer Welfare Fund unless the claimant proves that the incidence of duty has not been passed on to any other person (or falls within statutory exclusions).

• The satisfaction of the Refund Sanctioning Authority regarding non-passing of incidence is paramount; the burden lies on the claimant.

- Court's interpretation and reasoning:

• The Tribunal agreed that the claimant did not furnish persuasive documentary evidence to demonstrate that the incidence was not passed on, either directly or indirectly.

• The duty amounts were booked as expenses in the books of account/Balance Sheet. This accounting treatment is a strong indicator of passing on of incidence unless convincingly rebutted.

• Sample invoices and an affidavit from a company officer were held insufficient to discharge the burden. There was no evidence negating recovery from consignment agents/customers, nor proof of the absence of supplementary invoicing or any one-to-one correlation ruling out pass-through.

• The Sanctioning Authority's dissatisfaction was justified on the record; hence, the statutory presumption under Section 11B(2) remained unrebutted.

- Key evidence and findings:

• Books of account reflecting the differential duty as an expense.

• Absence of comprehensive documentary evidence showing non-recovery from downstream buyers or intermediaries; lack of one-to-one correlation; inability to produce further proof.

- Application of law to facts:

• In the absence of compelling rebuttal evidence, the doctrine of unjust enrichment applies. Therefore, although the refund is otherwise admissible on merits (and not time-barred per Issue 1), the amount must be credited to the Consumer Welfare Fund.

- Treatment of competing arguments:

• The claimant contended that incidence was not passed on; however, the Tribunal upheld the authorities' view that the evidence was inadequate and that the accounting treatment undermined the claim.

- Conclusion:

• The refund cannot be paid to the claimant due to unjust enrichment; any sanctioned amount is to be credited to the Consumer Welfare Fund. Interest is not payable to the claimant.

Inter-issue cross-references and overall disposition

• Issue 1 resolves limitation in favor of the claimant by recognizing valid "under protest" payments; however, Issue 2 independently bars payment of refund to the claimant due to unjust enrichment.

• Resultantly, despite the absence of time bar and the admitted merits on valuation, the entire refundable amount, if any, stands credited to the Consumer Welfare Fund. Appeals dismissed.

1. ISSUES PRESENTED and CONSIDERED

- Whether Section 142(3) of the CGST Act, 2017 entitles a claimant to cash refund of Countervailing Duty (CVD) and Special Additional Duty (SAD) paid after 01.07.2017 in respect of import transactions where Bills of Entry were filed prior to 01.07.2017 and CENVAT credit cannot be availed post-GST?

- Whether refund under Section 142(3) can be granted where the existing (pre-GST) law did not expressly provide for cash refund of the particular credit/duty paid?

- Whether the requirement of "unjust enrichment" precludes cash refund under Section 142(3) where the duty/tax was paid out of the claimant's own funds after 01.07.2017?

- How to reconcile and apply divergent judicial decisions (including Larger Bench and coordinate Bench decisions of the Tribunal and certain High Court decisions) on the scope of Section 142(3) in granting cash refunds of amounts that previously could only be taken as CENVAT credit?

2. ISSUE-WISE DETAILED ANALYSIS

Issue A - Entitlement to cash refund under Section 142(3) of CGST Act in respect of CVD and SAD paid after 01.07.2017 when CENVAT credit cannot be availed

- Relevant legal framework and precedents: Section 142(3) of the CGST Act (transitional provision) permitting disposal of claims in accordance with existing law and providing for refund of "any amount of CENVAT Credit, duty, tax, interest or any other amount paid" under the existing law; Tribunal Larger Bench and several coordinate Bench decisions addressing whether such amounts paid post-01.07.2017 are refundable in cash under Section 142(3).

- Court's interpretation and reasoning: The Tribunal interprets Section 142(3) as wide enough to encompass not only claims for CENVAT credit but also refund in cash of amounts (CVD+SAD) paid after 01.07.2017 where CENVAT credit cannot be availed in the GST regime. The Tribunal relies on the Larger Bench and subsequent consistent decisions which held that a claimant is eligible for cash refund under Section 142(3) when the amount was paid post-GST and cannot be taken as credit.

- Key evidence and findings: Applicant imported iron ore/iron ore fines through 17 Bills of Entry filed prior to 01.07.2017; final assessments resulted in payment of CVD and SAD of Rs.9,80,040 between July 2018 and July 2019; CENVAT credit could not be availed in GST; refund claim under Section 142(3) was rejected by sanctioning authority and appellate authority.

- Application of law to facts: Applying the Larger Bench reasoning, the Tribunal finds that the amounts paid after 01.07.2017 are eligible for refund in cash under Section 142(3) because the transitional provision contemplates disposal in accordance with existing law and permits refund of "any other amount" paid under the existing law where credit cannot be availed in GST regime.

- Treatment of competing arguments: The Department argued that Section 142(3) does not create new substantive rights not available under existing law and relied on decisions holding that such credits may only be carried forward and not refunded in cash. The Tribunal distinguishes those decisions on facts and legal analysis, emphasizing the Larger Bench and coordinate Bench authorities that permit cash refund and finding them directly applicable.

- Conclusion: The Tribunal concludes that refund of CVD and SAD paid after 01.07.2017 is admissible in cash under Section 142(3) where CENVAT credit cannot be availed under GST; claimant entitled to refund of Rs.9,80,040 with applicable interest.

Issue B - Whether Section 142(3) requires existence of an express refund right under pre-GST law and the role of "existing law" in transitional claims

- Relevant legal framework and precedents: Text of Section 142(3) referencing disposal in accordance with provisions of existing law (Excise Act and related rules as applicable); prior decisions of the Tribunal and some High Courts that interpreted the scope of "existing law" and whether cash refund was allowable where pre-GST law did not expressly permit cash refund.

- Court's interpretation and reasoning: The Tribunal reads Section 142(3) as not being confined to claims for CENVAT credit alone but extending to "any other amount" paid under existing law; where an amount is found admissible under existing law as credit/refund, Section 142(3) empowers disposal and refund in cash notwithstanding absence of express provision for cash refund under pre-GST statute. The Tribunal relies on coordinated Tribunal precedents and the Larger Bench that adopt this expansive reading.

- Key evidence and findings: The sanctioning authority and appellate authority treated pre-GST law as not permitting cash refund for manufacturers who are not exporters, and concluded refund could not be granted; Tribunal examined precedents where similar statutory gaps were remedied under transitional provisions.

- Application of law to facts: Given that the existing law permitted recognition of the amounts as CENVAT credit (though not as cash refund), Section 142(3) is applied to permit cash refund in transition because the claimant cannot utilize CENVAT credit in GST regime; the Tribunal treats such relief as within the scope of the transitional provision.

- Treatment of competing arguments: The Department's submission that Section 142(3) cannot confer a right not available under existing law is addressed by the Tribunal through reliance on the Larger Bench and related authorities which held that transitional provisions can and do operate to allow cash refunds where appropriate; contrary High Court decisions were considered but distinguished on context and scope.

- Conclusion: The Tribunal holds that Section 142(3) permits disposal and grant of cash refund of amounts paid under the existing law, even where pre-GST statutes lacked an express provision for cash refund, when the claimant cannot take credit in the GST regime.

Issue C - Unjust enrichment principle and requirement for refund under Section 142(3)

- Relevant legal framework and precedents: Unjust enrichment doctrine as a limiting principle on refunds; Tribunal decisions considering whether unjust enrichment is attracted where tax/duty was paid out of claimant's funds post-01.07.2017.

- Court's interpretation and reasoning: The Tribunal adopts the view from coordinate decisions that unjust enrichment is not attracted where the claimant has admittedly paid the duty/tax from its own funds after 01.07.2017 and as such is entitled to refund under Section 142(3). The Tribunal points to prior Bench reasoning that where the payment was made post-GST and the claimant cannot take credit, refund does not result in unjust enrichment.

- Key evidence and findings: Admissions in the record that CVD and SAD were paid between July 2018 and July 2019 out of the claimant's funds; no evidence that the amount sought to be refunded was retained elsewhere or benefited any other party unjustly.

- Application of law to facts: On the facts, unjust enrichment is held not attracted; therefore the requirement of unjust enrichment does not operate to deny refund under Section 142(3).

- Treatment of competing arguments: Department did not establish any factual basis for unjust enrichment; reliance on general principle that refund must not cause unjust enrichment is acknowledged but found inapplicable on these facts.

- Conclusion: Unjust enrichment does not bar the cash refund in the present case; refund permissible with interest.

Issue D - Reconciliation of divergent judicial decisions and precedential weight

- Relevant legal framework and precedents: Larger Bench decision(s) of the Tribunal and multiple coordinate Bench decisions finding in favour of cash refunds; some High Court decisions and earlier Bench decisions taking a contrary view.

- Court's interpretation and reasoning: The Tribunal gives precedence to the Larger Bench and consistent recent coordinate Bench decisions that interpret Section 142(3) broadly to allow cash refund of amounts paid post-01.07.2017 where credit is not available. The Tribunal notes that some contrary High Court or Bench decisions were decided in different contexts or without consideration of the later Larger Bench rulings; accordingly, those decisions do not displace the applicable Tribunal precedent relied upon.

- Key evidence and findings: Review of multiple authorities and the Larger Bench holding that refund claims under Section 142(3) are to be disposed of in accordance with existing law and that cash refund may be granted where appropriate; recognition that some judgments reached different conclusions but were distinguishable.

- Application of law to facts: Tribunal applies the Larger Bench/coordinate Bench line to the facts, finding them squarely covered and thus allowing the refund despite contrary authorities.

- Treatment of competing arguments: The Department's reliance on contrary High Court decisions is acknowledged and considered; Tribunal explains the distinctions and the superior/relevant weight of the Larger Bench and consistent coordinate Bench decisions for the present statutory provision.

- Conclusion: Divergent decisions do not prevent grant of refund in the present case; Tribunal follows the Larger Bench and consistent Bench authorities permitting cash refund under Section 142(3).

Issue E - Relief granted and incidental directions

- Court's interpretation and reasoning: Having found entitlement, the Tribunal sets aside the impugned appellate order and directs refund with applicable interest.

- Application of law to facts: Refund of Rs.9,80,040 allowed with applicable interest; respondent directed to pay within two months.

- Conclusion: Appeal allowed; direction to sanctioning authority/department to pay refund with interest within stipulated time.

1. ISSUES PRESENTED and CONSIDERED

• Whether a tax demand raised and an assessment order passed under the U.P. Goods and Services Tax Act, 2017 for a financial year prior to the approval of a Resolution Plan under the Insolvency and Bankruptcy Code (IBC) can be sustained after such approval.
• Whether the GST Department can initiate or continue proceedings to create or enforce new tax liabilities against a corporate debtor once the Resolution Plan has been approved by the National Company Law Tribunal (NCLT).
• Whether claims not included in the approved Resolution Plan can be enforced against the successful Resolution Applicant post-approval.
• Whether recovery of amounts pursuant to an impugned assessment order passed after approval of the Resolution Plan should be refunded.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Tax Demands Raised Post-Approval of Resolution Plan

Relevant Legal Framework and Precedents: The Insolvency and Bankruptcy Code, 2016 (IBC), particularly Sections 14 (Moratorium) and 31 (Approval of Resolution Plan), provide that once a Resolution Plan is approved by the NCLT, the corporate debtor is entitled to a fresh start free from any new or belated claims. The Supreme Court judgments relied upon include Ghanshyam Mishra and Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., Vaibhav Goyal & Another v. Deputy Commissioner of Income Tax & Another, and Committee of Creditors of Essar Steel India Ltd. Through Authorised Signatory v. Satish Kumar Gupta & Others, which establish the principle that no new claims can be enforced against the corporate debtor after the Resolution Plan approval.

Court's Interpretation and Reasoning: The Court emphasized that the purpose of the moratorium under Section 14 of the IBC is to bar initiation or continuation of proceedings against the corporate debtor, thereby preventing disruption of the insolvency resolution process. The Court held that allowing tax authorities to pass assessment orders or raise demands post-approval of the Resolution Plan would violate the fundamental principles of the Code and defeat the objective of providing a clean slate to the Resolution Applicant.

Key Evidence and Findings: The Resolution Professional had duly notified the GST Department of the CIRP and the Resolution Plan approval. The impugned assessment order was passed on December 29, 2023, after the CIRP commencement and prior to the Resolution Plan approval on March 12, 2025. The Court found that the GST Department had the opportunity to file claims during the CIRP but did not include the disputed demand in the Resolution Plan.

Application of Law to Facts: Applying the settled legal position, the Court concluded that the impugned assessment order creating new tax liability post-approval of the Resolution Plan was impermissible. The tax demand was not part of the Resolution Plan and thus stood extinguished under Section 31 of the IBC.

Treatment of Competing Arguments: The GST Department's argument that the assessment related to a prior period and could be quantified post-approval was rejected as sophistry. The Court reasoned that permitting such claims would allow authorities to delay assessments until after Resolution Plan approval, undermining the moratorium and the fresh start principle.

Conclusions: The impugned assessment order under Section 73 of the U.P. GST Act, 2017 was quashed as illegal and void. No new or belated tax claims can be enforced against the corporate debtor after Resolution Plan approval.

Issue 2: Bar on Enforcement of Claims Not Included in the Approved Resolution Plan

Relevant Legal Framework and Precedents: Section 31 of the IBC and related Supreme Court judgments clarify that all claims must be submitted and decided during the CIRP. Claims not included in the approved Resolution Plan cannot be enforced subsequently against the Resolution Applicant.

Court's Interpretation and Reasoning: The Court underscored that allowing enforcement of claims outside the Resolution Plan would create uncertainty and disrupt the resolution process. The decision in Committee of Creditors of Essar Steel India Ltd. highlighted that a successful Resolution Applicant must be able to take over the corporate debtor on a clean slate without facing "undecided" claims.

Key Evidence and Findings: The GST Department did not include the disputed tax demand in the Resolution Plan submitted to the NCLT. The demand was raised only after the Resolution Plan approval, violating the legal mandate.

Application of Law to Facts: The Court applied the principle that all claims must be finalized during CIRP and incorporated in the Resolution Plan. Claims raised later are barred and cannot be enforced.

Treatment of Competing Arguments: The Department's contention that pending assessments could be finalized post-Resolution Plan was rejected, as it would allow authorities to circumvent the moratorium and impose unexpected liabilities on the Resolution Applicant.

Conclusions: Claims not included in the Resolution Plan stand extinguished and cannot be enforced against the corporate debtor or the Resolution Applicant post-approval.

Issue 3: Refund of Amounts Recovered Pursuant to the Impugned Assessment Order

Relevant Legal Framework: The quashing of an illegal assessment order entails refund of amounts recovered pursuant thereto, as per principles of natural justice and statutory provisions governing tax refunds.

Court's Interpretation and Reasoning: Since the impugned assessment order was held void and illegal, any recovery made under it was unauthorized. The Court directed the department to refund such amounts in accordance with law.

Application of Law to Facts: The petitioner claimed recovery of Rs. 52,04,015/- made pursuant to the impugned order. The Court ordered refund of this amount.

Conclusions: The department is directed to refund all amounts recovered pursuant to the quashed assessment order.

1. ISSUES PRESENTED and CONSIDERED

(1) Whether a demand for service tax based solely on figures extracted from Income Tax Return (ITR) / Form 26AS without independent departmental investigation or supporting documents is sustainable.

(2) Whether a Show Cause Notice (SCN) which does not specify the particular service for which demand is raised is maintainable.

(3) Whether supply of milk, as reflected in the ITR/computation, constitutes a taxable "service" or is a trading activity not subject to service tax.

(4) Whether the proviso to sub'section (1) of Section 73 (extended period) can be invoked on the basis of figures taken from public documents (ITR/Form 26AS) - i.e., whether there was suppression of facts with intent to evade payment of service tax.

(5) Whether calculation of service tax applying the higher rate for the entire disputed period without period'wise breakup is legally proper.

(6) Whether interest under Section 75 and penalties under Section 77(1)(C) and Section 78 can be sustained where the primary tax demand is held unsustainable or time'barred.

2. ISSUE'WISE DETAILED ANALYSIS

Issue (1): Sustainability of demand based solely on ITR / Form 26AS figures

- Relevant legal framework and precedents: Departmental demand procedures require proof of taxability and onus lies on the Department to establish specific findings on the taxability of the assessee's activities; third'party data (ITR/Form 26AS) is a public document but does not in itself determine tax liability without corroboration.

- Court's interpretation and reasoning: The Tribunal held that the demand was built merely on ITR/Form 26AS figures and that neither the SCN nor adjudicating authorities conducted an inquiry into the nature of the activities or produced supporting documents. The Tribunal emphasized that mere computation attached to ITR, without other documentary support or specific findings on taxability, is insufficient to sustain a demand.

- Key evidence and findings: The only material relied upon by the Department was the computation in the ITR/Form 26AS; the Commissioner (Appeals) had itself observed that the demand was determined on the basis of those figures "without support of any other documents."

- Application of law to facts: Given the absence of departmental investigation and lack of corroborative evidence linking the amounts to taxable services, the Tribunal found the Department failed to discharge its onus to establish taxability; hence the demand grounded solely on ITR computation was unsustainable.

- Treatment of competing arguments: The Department's reliance on third'party data was rejected as a standalone basis for demand. The Tribunal accepted the assessee's contention that additional documentary material (bank statements, explanations) showed that credits were not necessarily receipts for taxable services.

- Conclusion: Demand based only on figures in ITR/Form 26AS, without investigation and independent evidence of taxability, is not sustainable; the demand confirmed on that basis cannot stand.

Issue (2): Maintainability of SCN which fails to specify the service for which demand is raised

- Relevant legal framework and precedents: SCNs must disclose the case against the assessee with sufficient particularity so that the assessee can effectively meet the allegations; identification of the impugned service or taxable event is a basic requirement.

- Court's interpretation and reasoning: The Tribunal noted that nowhere in the SCN it was mentioned which particular service was sought to be taxed. The Tribunal held that an SCN that does not specify the service for which demand is raised is legally deficient and undermines the statutory requirement for a proper adjudicatory process.

- Key evidence and findings: The SCN and adjudication relied on an ITR computation purportedly showing "Sale of Service (ITR)" but did not articulate the nature of service or furnish evidence linking transactions to a specific taxable service.

- Application of law to facts: Because the SCN lacked specificity as to the taxable service, the Department could not be said to have made out a lawful case; the deficiency contributed to the unsustainability of the demand.

- Treatment of competing arguments: The Department's position that computation indicating "supply of milk" sufficed was rejected; the Tribunal declined to equate a label in computation with a proper allegation of service tax liability.

- Conclusion: SCN lacking specification of which service is taxed is not maintainable and cannot support a demand.

Issue (3): Whether supply of milk constitutes service or trading activity

- Relevant legal framework and precedents: Distinction between sale (trading) and provision of service is foundational - supply of goods in trade is not a "service" subject to service tax unless captured by statutory definitions.

- Court's interpretation and reasoning: The Tribunal accepted the submission that even if the computation showed turnover described as "supply of milk," that description alone does not convert a trading activity into a taxable service. The Tribunal emphasized the requirement for the Department to make specific findings on taxability and to demonstrate that the activity falls within the statutory definition of a taxable service.

- Key evidence and findings: Bank statements and transaction particulars were put forward by the assessee to show bona fide receipts (refunds, FD maturity, cancelled DD, policy maturity, CWC adjustments) rather than receipts for provision of a service; Commissioner (Appeals) had excluded turnover from Central Warehousing Company but retained part of the computation as "milk supply" without further proof.

- Application of law to facts: In absence of departmental finding or evidence that the activity constituted provision of a service, the Tribunal held that supply of milk should be characterized as trading activity and not taxable as service.

- Treatment of competing arguments: The Department's reliance on the label in computation was insufficient; the Tribunal rejected the presumption that a computation entry for "milk supply" necessarily establishes a service for service tax purposes.

- Conclusion: Supply of milk, as reflected in the computation, was not established to be a taxable service and was properly characterized as trading activity for the purposes of service tax law; demand on that basis cannot be sustained.

Issue (4): Invocability of extended period under proviso to Section 73(1) - suppression and limitation

- Relevant legal framework and precedents: Proviso to Section 73(1) permits demand beyond limitation period where there is suppression of facts with intent to evade service tax. Public documents (e.g., ITR/Form 26AS) are not private concealments by the assessee; suppression requires a deliberate withholding of material facts.

- Court's interpretation and reasoning: The Tribunal found no suppression by the assessee because the Department's case was built on figures taken from ITR/Form 26AS, which are public documents. The Tribunal held that where the information is already in public domain and accessible to the Department, the allegation of suppression by the assessee cannot be sustained.

- Key evidence and findings: The source of the Department's information was a third'party data exchange from the Income Tax Department; there was no evidence of deliberate concealment by the assessee of transaction particulars from the tax authorities.

- Application of law to facts: Because the Department relied upon publicly filed ITR/26AS and there was no proof of intentional suppression by the assessee, the conditions for invoking the extended period were not met; accordingly the demand was time'barred.

- Treatment of competing arguments: The Department's attempt to invoke the proviso to Section 73(1) on the basis of the ITR figures was rejected; the Tribunal held that absence of suppression precludes extended limitation.

- Conclusion: Proviso to Section 73(1) could not be invoked; the demand was barred by limitation.

Issue (5): Correctness of applying the higher service tax rate for the entire period without period'wise breakup

- Relevant legal framework and precedents: Tax computation must reflect applicable rates for specific periods; where different rates apply in different sub'periods, proper period'wise allocation is required to compute liability accurately.

- Court's interpretation and reasoning: The Tribunal noted the Department applied the higher rate (15%) uniformly because the assessee did not furnish period'wise breakup. However, the Tribunal treated this as another consequence of the Department's failure to establish the taxability of the receipts; since the underlying demand was unsustainable, mathematical issues of rate application were immaterial to sustaining the demand.

- Key evidence and findings: Lack of period'wise breakup in the assessee's submissions and the Department's presumption of higher rate across the year; no independent evidence to justify this assumption.

- Application of law to facts: Even if the higher rate was misapplied, the primary defect was the absence of a legally sustainable demand; hence incorrect rate application did not salvage the demand.

- Treatment of competing arguments: The Tribunal accepted the assessee's contention that presuming the higher rate for the entire amount was arbitrary and vague; but disposition turned on absence of taxability and limitation rather than solely on the rate issue.

- Conclusion: The rate'application criticism reinforced the procedural and evidentiary infirmities in the demand, but the Tribunal's disposal rested primarily on lack of taxability and limitation.

Issue (6): Sustainability of interest (Section 75) and penalties (Section 77(1)(C) and Section 78) where tax demand is unsustainable

- Relevant legal framework and precedents: Interest and penalties are consequential on a valid tax demand; where the principal tax demand fails, associated interest and penalties typically do not survive.

- Court's interpretation and reasoning: The Tribunal held that once the tax demand itself is not sustainable and is time'barred, demands for interest under Section 75 and imposition of penalties under Section 77(1)(C) and Section 78 cannot survive. Additionally, imposition of penalty under Section 78 requires findings of fraud, collusion, willful misstatement or suppression; such findings were absent.

- Key evidence and findings: No proof of suppression or willful misstatement; source of Departmental information was public; adjudicating authorities did not establish culpable conduct warranting penalty under Section 78 or Section 77(1)(C) beyond confirming amounts derived from ITR computations.

- Application of law to facts: As the principal demand was set aside for being unsustainable and time'barred, the consequential interest and penalties were also set aside.

- Treatment of competing arguments: The Department's imposition of penalties based on the computational demand was rejected because the foundational legal and factual bases for such penalties were not demonstrated.

- Conclusion: Interest and penalties linked to the impugned tax demand were not sustainable and were set aside.

Overall Disposition and Cross'References

- The Tribunal set aside the impugned order'in'appeal and allowed the appeal with consequential relief, holding that (i) demands based solely on ITR/Form 26AS computations without specific departmental findings on taxability are unsustainable; (ii) SCNs must specify the service in dispute; (iii) supply of milk was not established as a taxable service but is trading; (iv) extended limitation could not be invoked where information originated from public documents; and (v) consequential interest and penalties do not survive where the tax demand collapses. (Cross'reference: Issues 1, 2, 3 feed into Issues 4 and 6.)

1. ISSUES:

1.1 Whether services rendered by a vocational training provider qualify as services of a "vocational training institute" eligible for exemption under Notification No. 24/2004-S.T. (as in force prior to 01.07.2012) and related notifications.

1.2 Whether Modular Employable Skill ("MES") courses run by a person registered with the Directorate General of Employment and Training (DGET) qualify for exemption under Notification No. 23/2010-S.T. (effective till 01.07.2012) and the definition of "approved vocational education course".

1.3 Whether, after 01.07.2012, services falling within "education as a part of an approved vocational education course" under Section 66D(l)(iii) and the definition of "approved vocational education course" in Section 65B are exempt from service tax.

1.4 Whether registration at a centralised premises satisfies Rule 4(2) of the Service Tax Rules for purposes of claiming exemptions and credits for operations conducted at other offices/addresses.

1.5 Whether services provided by a training partner approved by the National Skill Development Corporation (NSDC) or Sector Skill Council fall within Sl. No. 9A of Mega Exemption Notification No. 25/2012-S.T. (w.e.f. 10.09.2013) and are exempt.

1.6 Whether denial of CENVAT Credit is sustainable where Chartered Accountant certificates, with annexed invoice-wise details, certify the availment and applicability of credit to output services.

1.7 Whether amounts characterized and taxed as "salary" (with TDS under Section 192 of the Income Tax Act) are liable to service tax under the reverse charge mechanism as remuneration to directors.

1.8 Whether receipts from the "sale of books and periodicals" constitute taxable services or are outside service tax scope as "sale of goods".

1.9 Whether invocation of the extended period of limitation under Section 73(1) is permissible absent invocation of the proviso (i.e., where no suppression of facts with intent to evade is alleged).

1.10 Whether penalties are imposable where demands are raised solely on differences between returns and books without a finding of suppression of material facts.

2. RULINGS / HOLDINGS:

2.1 The services in question qualify as services of a "vocational training institute" within the meaning of Notification No. 24/2004-S.T.; exemption under that Notification (as effective till 01.07.2012) is available. The Court held that such services "impart skills to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching."

2.2 MES courses run by a person registered with DGET qualify for exemption under Notification No. 23/2010-S.T.; the certificate in the name of an office of the provider was accepted as covering the provider's operations and the exemption was allowed.

2.3 For the period after 01.07.2012, services that fall within "education as a part of an approved vocational education course" under Section 66D(l)(iii) are exempt; the definition of "approved vocational education course" in Section 65B (as amended) was applied to hold the services exempt.

2.4 Centralised registration and maintenance of a "centralized accounting system" satisfies Rule 4(2); there is no requirement to register each office separately where centralized registration covers all operations.

2.5 Services provided by a training partner approved by NSDC or a Sector Skill Council are exempt under Sl. No. 9A of Mega Exemption Notification No. 25/2012-S.T. (w.e.f. 10.09.2013) where documentary evidence establishes such approval.

2.6 Denial of CENVAT Credit was unsustainable where year-wise Chartered Accountant certificates, with invoice-wise annexures verifying the credits and their use in relation to output services, were produced; such CA certificates were accepted as sufficient proof.

2.7 Amounts shown and taxed as "salary" with TDS under Section 192 of the Income Tax Act are not liable to service tax under the reverse charge mechanism; the demand on directors' remuneration was set aside.

2.8 Receipts from "sale of books and periodicals" are sale of goods and not taxable as service; the service tax demand on such sales was set aside.

2.9 Invocation of the extended period under Section 73(1) requires the proviso (suppression of facts with intent to evade) to be invoked; where the proviso was not invoked and no suppression found, extended period invocation and resultant demands are unsustainable.

2.10 Penalties imposed where demands are based solely on differences between ST-3 returns and books of account, without a finding of suppression of material facts, are not imposable and were set aside.

3. RATIONALE:

3.1 The court applied the textual definitions and exemptions in Notification No. 24/2004-S.T., Notification No. 03/2010-S.T. (amending the vocational training definition), Notification No. 23/2010-S.T. (MES exemption), Section 66D(l)(iii) (Negative List), and the definition of "approved vocational education course" in Section 65B (including its 2013 amendment), reading documentary evidence against those statutory texts to determine eligibility for exemptions.

3.2 Centralised registration and centralized accounting were treated in light of Rule 4(2) of the Service Tax Rules; the CA certificate and affidavit evidencing integrated operations were relied upon to treat separate premises as part of the same registered entity for exemption and credit purposes.

3.3 Sl. No. 9A of Mega Exemption Notification No. 25/2012-S.T. (w.e.f. 10.09.2013) was interpreted to exempt services by an NSDC-approved "training partner" in relation to NSDC-implemented skill development schemes where approval/registration documents were produced.

3.4 CENVAT Credit denial was examined under the CENVAT credit regime; the court treated Chartered Accountant certificates accompanied by invoice-wise annexures as adequate verification of credit admissibility and use for output services, and therefore insufficient ground existed for denial.

3.5 On reverse charge and characterization of remuneration, the court relied on the income tax treatment and TDS under Section 192 to conclude that amounts treated and taxed as "salary" are not service receipts subject to service tax under the reverse charge mechanism.

3.6 On sale of goods versus taxable service, the court applied the service tax principle that pure "sale of goods" is not a taxable service and set aside demands where transactions were sales of books/periodicals without a service component.

3.7 Concerning limitation and penalties, the court applied Section 73(1) and its proviso, holding that absent invocation of the proviso or any finding of "suppression of facts" with intent to evade, the extended limitation period cannot be validly invoked and consequential penalties for suppression cannot be sustained.

3.8 There are no separate concurring or dissenting opinions recorded.

1. ISSUES:

1.1 Whether invoices allegedly retrieved from a third party's mobile phone are admissible where the procedure and authentication required by section 138 C of the Customs Act, 1962 has not been complied with.

1.2 Whether a statement recorded under Section 108 of the Customs Act, 1962 without issuance of a summons is legally admissible and can be relied upon against an importing entity.

1.3 Whether a demand of differential customs duty in respect of multiple Bills of Entry can be confirmed on the basis of four invoices allegedly relating to four consignments, without comparison of goods or material basis for re-valuation across all contested imports.

1.4 Whether the adjudicating authority followed the Customs Valuation Rules sequence (Rules 4 to 9) when rejecting declared transaction value and whether contemporaneous imports or the deductive method submitted by the importer were wrongly disregarded.

1.5 Whether penalties under Sections 112(b), 114A and 114AA of the Customs Act, 1962 (and confiscation/redemption fine) are sustainable where the foundational documentary evidence is defective.

1.6 Whether penalty under Section 112(b) is sustainable against an individual where there is no allegation or material that he dealt in smuggled goods and the allegedly incriminating invoices cannot be authenticated.

2. RULINGS / HOLDINGS:

2.1 The invoices allegedly retrieved from the mobile phone are inadmissible: "the four invoices cannot be relied upon as documentary evidence in this proceedings" because authentication under section 138 C of the Customs Act, 1962 was not complied with and no certificate or name of the person who decrypted the data is on record.

2.2 The statement recorded under Section 108 without summons cannot be relied upon against the importer; reliance on such a statement, coupled with unauthenticated documents, is insufficient to sustain demand.

2.3 The confirmation of differential customs duty for 165 Bills of Entry on the basis of four invoices is legally impermissible and "not sustainable" because there was no comparison of goods and no material basis for re-valuation across the broader set of imports.

2.4 The adjudicating authority failed to follow the statutory valuation sequence: "under the Customs Valuation Rules, if the transaction value is rejected, the sequence of Rules 4 to 9 must be scrupulously followed," and contemporaneous import data and the importer's deductive method, which were not disputed, must be accepted.

2.5 All penalties and confiscation/redemption fine imposed under Sections 112(b), 114A and 114AA are set aside because the necessary ingredients for imposing those penalties are not established by admissible evidence.

2.6 The penalty under Section 112(b) imposed on the individual is set aside since there is no material showing dealing in smuggled goods and the invoices alleged to have been recovered from his phone "cannot be relied upon as a documentary evidence in this proceedings."

3. RATIONALE:

3.1 Statutory authentication for digital evidence: Section 138 C of the Customs Act, 1962 requires authentication procedures for electronic data retrieved from devices; absence of a certificate, name of the decrypting person, signatures of officers/witnesses, and use of an unapproved private lab undermine admissibility and chain-of-custody.

3.2 Statements under Section 108: Procedural safeguards (such as summons) and proper recording are prerequisites for admissibility and weight of statements; a statement obtained without required procedural formalities cannot substitute for authenticated documentary proof.

3.3 Valuation framework: The Customs Valuation Rules prescribe a mandatory sequence (Rules 4-9) where transaction value is rejected; contemporaneous imports and values produced by the importer (including deductive method) are relevant and, if undisputed, must be accepted rather than adopting an arbitrary across-the-board re-valuation.

3.4 Requirements for comparative re-valuation: Re-determination of assessable value across multiple consignments requires material basis involving comparison of "similarity, nature, or quality of the goods" (e.g., thickness, quality of steel); confirming duties for many Bills of Entry based solely on invoices relating to four consignments lacks legal foundation.

3.5 Penalty jurisprudence: Imposition of penalties under Sections 112(b), 114A and 114AA requires establishment of statutory ingredients by admissible evidence; where foundational evidence is invalidated, penalties and measures such as confiscation/redemption fine cannot be sustained.

3.6 No dissenting or concurring opinion was recorded; the decision rests on procedural inadmissibility of digital evidence, failure to follow the Valuation Rules sequence, and absence of material to support penalties or broadened re-assessment.

1. ISSUES PRESENTED and CONSIDERED

1.1 Whether an operational debt was due and payable such that a Section 9 petition under the Insolvency and Bankruptcy Code could be admitted.

1.2 Whether a pre-existing dispute existed between the parties in relation to the claimed operational debt so as to bar initiation of CIRP under Section 9, applying the established test for pre-existing disputes.

1.3 Whether contemporaneous communications and commercial conduct (including WhatsApp chats, purchase orders, warranty communications and an indemnity bond) constitute sufficient evidence of a genuine pre-existing dispute requiring rejection of a Section 9 application.

1.4 Whether the Adjudicating Authority erred in treating certain documents (communications, warranty draft, indemnity bond) as grounds for rejecting the Section 9 petition.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Whether an operational debt was due and payable

- Relevant legal framework and precedents: Admission of a Section 9 petition requires existence of debt and default; Section 8(2) notice/reply and Section 9 enquiry focus on whether debt has crystallised.

- Court's interpretation and reasoning: The Tribunal framed the short point as whether an operational debt was due and payable and whether any pre-existing dispute existed in terms of the test laid down by the leading authority on pre-existing disputes. The Tribunal emphasized that crystallisation of claim is sine qua non for Section 9 admission.

- Key evidence and findings: Communications showed repeated complaints about defective batteries, acknowledgements, assurances to replace, and contemporaneous messages admitting large quantum of defective batteries. The Corporate Debtor expressly denied crystallisation of the claim in its reply to the demand notice and maintained that replacement liabilities and other obligations remained outstanding.

- Application of law to facts: Given ongoing complaints, admissions of defects, unresolved replacement obligations and denial of indebtedness in the respondent's reply, the Tribunal found that the claimed operational debt had not crystallised at the relevant time.

- Treatment of competing arguments: The Operational Creditor argued invoices, delivery confirmations and ledger entries established a legally enforceable debt and pointed to an email seeking current invoices as an admission; the Corporate Debtor pointed to repeated defect communications, warranty/indemnity obligations and denial of debt. The Tribunal treated the email seeking invoices as not amounting to unconditional admission where other communications and denials showed unresolved obligations.

- Conclusion: The Tribunal concluded that the debt had not crystallised and thus the requirement for admission under Section 9 was not satisfied in light of pre-existing, unresolved issues impacting liability.

Issue 2 - Whether there existed a genuine pre-existing dispute that warrants rejection of Section 9 (application of the Mobilox test)

- Relevant legal framework and precedents: The Tribunal applied the established test that a pre-existing dispute must be "truly existing in fact" and not "spurious, hypothetical or illusory," and that the Adjudicating Authority must determine whether a plausible contention requiring further investigation exists rather than conduct a full merits trial.

- Court's interpretation and reasoning: The Tribunal held that the enquiry is limited to whether a dispute exists that warrants adjudication by an appropriate forum and is not a patently feeble argument. The Tribunal examined contemporaneous communications, warranty terms and indemnity bond to see if disputes were articulated prior to demand notice.

- Key evidence and findings: The record contained extensive WhatsApp exchanges from May 2022 onwards documenting complaints about batteries (burning, short-circuiting, fire-related cases), acknowledgements/apologies by supplier representatives, promises to replace, subsequent complaints that replacements were also defective, an indemnity bond accepting liability for repairs/replacement and warranty communications predating the demand notice. Also noted was the Corporate Debtor's reply to the demand notice explicitly denying crystallisation of claim and asserting replacement and other sums due from the Operational Creditor.

- Application of law to facts: Applying the test, the Tribunal found these communications and documents collectively constituted a plausible and genuine dispute requiring investigation; they were not mere routine correspondence or patently feeble defences. The indemnity bond and warranty proposal, being contemporaneous and uncontroverted as executed, strengthened the conclusion of a pre-existing dispute.

- Treatment of competing arguments: The Operational Creditor characterized the disputes as moonshine, contending the purchase of fresh orders (including a high-value order) showed absence of dispute and relied on an email dated 16.08.2022 as admission. The Tribunal rejected that characterization, finding the commercial conduct (including fresh orders) did not negate contemporaneous complaints and that the 16.08.2022 communication could not be read as an unqualified admission where other messages and the reply to the demand notice evidenced denial and unresolved liabilities. The Operational Creditor's argument that warranty was unsigned and indemnity bond signed under coercion were noted but the Tribunal held those contentions raised issues needing deeper investigation beyond summary IBC proceedings.

- Conclusion: The Tribunal concluded there was a genuine pre-existing dispute prior to the demand notice and at the time of the Section 9 filing; therefore the Section 9 application was liable to be rejected under the applicable test for pre-existing disputes.

Issue 3 - Whether WhatsApp communications, warranty proposal/draft and indemnity bond can be treated as evidentiary basis for pre-existing dispute

- Relevant legal framework and precedents: Adjudicating Authority may rely on documentary record and contemporaneous communications to determine whether a plausible dispute exists; Section 9 proceedings do not require full trial of contractual disputes.

- Court's interpretation and reasoning: The Tribunal held that contemporaneous chat messages, emails and signed documents that manifest disagreement, admissions of defects, refusal to accept replacement as adequate and an indemnity undertaking are legitimate materials to determine existence of a dispute for purposes of Section 9.

- Key evidence and findings: WhatsApp messages recorded repeated defect complaints and supplier acknowledgements; warranty proposal asserted warranty terms and was relied upon by purchaser to place orders; indemnity bond (signed and stamped) set out express obligations to remedy or buy back defective batteries within a specified period and to indemnify against fire-related losses.

- Application of law to facts: The Tribunal held these materials were not routine "after-sales" notes but went to the root of the contractual performance and liabilities, and therefore constituted evidence of a genuine pre-existing dispute that could not be resolved in a Section 9 summary process.

- Treatment of competing arguments: Supplier's contention that warranty was only a draft and indemnity bond signed under duress were noted; Tribunal observed such defenses implicate factual disputes requiring fuller adjudication and are inappropriate to displace the prima facie effect of the contemporaneous records in summary IBC proceedings.

- Conclusion: The Tribunal treated WhatsApp communications, warranty correspondence and the indemnity bond as sufficient to establish a pre-existing dispute for purposes of rejecting the Section 9 application.

Issue 4 - Whether the Adjudicating Authority erred in rejecting the Section 9 petition

- Relevant legal framework and precedents: Standard of appellate interference on factual/contemporaneous record and application of the Mobilox test without conducting final merits adjudication in Section 9 proceedings.

- Court's interpretation and reasoning: The Tribunal reviewed the impugned order's findings, the record of communications and documents and concluded the Adjudicating Authority properly applied the relevant test and did not err in holding the defence not patently feeble.

- Key evidence and findings: The impugned order noted substantial quality issues communicated from May 2022, assurances of rectification and replacement, and execution of indemnity bond; the Tribunal found these findings supported by the record and not amenable to reversal on appeal.

- Treatment of competing arguments: The Tribunal considered arguments that the adjudicating authority misread routine correspondence or overlooked admissions, but found reliance on contemporaneous record and the denial in the reply to demand notice justified the rejection. Allegations of later coercion or that documents were drafts raised questions for trial and not fit for summary disposition under IBC.

- Conclusion: The Tribunal upheld the Adjudicating Authority's rejection of the Section 9 petition as justified on the record and consistent with the applicable legal test.

3. SIGNIFICANT HOLDINGS

- Verbatim crucial legal reasoning preserved:

"It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the 'existence' of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the 'dispute' is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application."

- Core principles established or reaffirmed:

• A pre-existing dispute must be "truly existing in fact" and not a spurious, hypothetical or illusory defence; the adjudicating authority's role is to determine whether a plausible contention requiring further investigation exists rather than adjudicate merits.

• Contemporaneous communications (including informal messages), warranty terms and executed indemnity instruments can constitute sufficient evidence of a pre-existing dispute in Section 9 proceedings.

• Denial of debt and assertions that replacement obligations or other liabilities remain outstanding can prevent crystallisation of the claimed operational debt for the purpose of initiating CIRP under Section 9.

- Final determinations on each issue:

• The claimed operational debt was not shown to be crystallised at the relevant time in view of contemporaneous disputes and denials.

• There existed a genuine pre-existing dispute prior to the demand notice and at the time of filing the Section 9 application; the dispute warranted further adjudication and was not patently feeble.

• WhatsApp communications, warranty correspondence and the indemnity bond collectively constituted sufficient evidence of the pre-existing dispute.

• The Adjudicating Authority did not err in rejecting the Section 9 petition; the appellate forum declined to interfere with the impugned order.

1. ISSUES:

1.1 Whether services rendered by a person who is not "a port or other port or any person authorized by such port or other port" prior to 01.07.2010 fall within the definition of "Port Service".

1.2 Whether the services in question are classifiable as "Cargo Handling Service" and whether "handling of export cargo" is excluded from service tax liability under Section 65(23) of the Finance Act, 1994.

1.3 Whether reversal of inadmissible CENVAT Credit that has been voluntarily reversed by the assessee attracts penalty where suppression of facts with intent to evade tax is not established.

1.4 Whether demand issued after the normal limitation period can be sustained by invoking the "extended period of limitation" in the absence of suppression with intent to evade payment of service tax.

1.5 Whether interest is payable on irregularly availed CENVAT Credit from date of availment to date of reversal where credit has been subsequently reversed.

2. RULINGS / HOLDINGS:

2.1 On Issue 1.1 - The demand of service tax confirmed under the category of "Port Service" for the period prior to 01.07.2010 is not sustainable because, prior to that date, "Port Service means any service rendered by a port or other port or any person authorized by such port or other port, in any manner, in relation to a vessel or goods".

2.2 On Issue 1.2 - The services in question are appropriately classifiable under "Cargo Handling Service" as defined under Section 65(23), and "handling of export cargo has been specifically excluded from the purview of service tax as defined under Section 65(23)"; accordingly the demand under "Port Service" is set aside.

2.3 On Issue 1.3 - No penalty is imposable for the irregular CENVAT Credit of Rs.1,81,251/- because suppression of facts with intention to avail irregular credit has not been established and the assessee accepted and reversed the inadmissible credit.

2.4 On Issue 1.4 - Demands confirmed by invoking the extended period of limitation are not sustainable where the Show Cause Notice was issued after the normal period but no suppression with intent to evade tax is established and documents had been produced during the earlier audit; the demand is set aside on the ground of limitation.

2.5 On Issue 1.5 - The assessee is liable to pay interest on the inadmissible CENVAT Credit "from the date of availment till the date of reversal", if not already paid; however, no penalty is imposed for the inadvertent availment.

3. RATIONALE:

3.1 The court applied the statutory definitions and temporal scope of taxable services, noting that the pre-01.07.2010 definition of "Port Service" was restrictive and limited liability to services rendered by a port or persons authorized by the port; the post-01.07.2010 amendment expanded that scope.

3.2 The court treated classification under Section 65(23) ("Cargo Handling Service") as determinative for the facts, observing that statutory exclusion for "handling of export cargo" removes the services from service tax liability for the relevant period.

3.3 The court relied on binding higher-court precedent interpreting the temporal effect of the expanded definition of "Port Service" and followed the principle that an amendment expanding taxable scope cannot be applied retrospectively to periods before the amendment.

3.4 Concerning limitation and penalties, the court applied the established principle that invocation of the extended period requires a finding of "suppression of facts with intention to evade payment of service tax"; absent such suppression and where records were produced during audit, extended limitation and penalty are not sustainable.

3.5 On CENVAT mechanics, the court recognized the obligation to reverse inadmissible input credit and to pay interest for the period the credit was held, but reaffirmed that penalty requires culpability and is not warranted where reversal was voluntary and no intent to evade is shown.

1. ISSUES:

1. Whether the buyer and seller are "related" for valuation purposes under Section 4(3)(b) of the Central Excise Act where the entities are "inter-connected undertakings".

2. Whether valuation of goods cleared to such buyer must be determined under Rule 9 read with Rule 8 (i.e., "110% of the cost of production") or under Rule 10(b) in conjunction with Section 4(1)(a) ("transaction value").

3. Whether determination of "cost of production" for application of Rule 8 may be equated to the sale price to the related/inter-connected buyer in the absence of a CAS-4 certificate.

4. Whether the "cum-duty" / "cum-tax-price" principle under Section 4(4)(d)(ii) must be taken into account in valuation and computation of duty.

5. Whether the "extended period" of limitation and consequent "penalty under Section 11AC" are invocable where demand arises from audit and no allegation of suppression with intent to evade duty is made.

6. Whether penalty under Rule 26(1) can be imposed on persons in charge (e.g., managerial personnel) without evidence satisfying both ingredients of the Rule (knowledge that goods are liable for confiscation and dealing with goods in the specified manner) and where no confiscation is recorded.

7. Whether appropriation of amounts paid under protest and imposition of interest under Sections 11AA/11AB is sustainable where the foundational duty demand is held unsustainable.

8. The scope of officer's duty to scrutinize self-assessed returns and the effect of such duty on limitation and invocation of extended period.

2. RULINGS / HOLDINGS:

2.1 On relatedness: The entities, though "inter-connected undertakings", are not ipso facto "related" for the purposes of Section 4(3)(b) unless the relationship falls within sub-clauses (ii), (iii) or (iv) of Section 4(3)(b) or the buyer is a holding company or subsidiary; mere common managerial control does not make them "related".

2.2 On applicable valuation rule: Valuation of the goods cleared to the inter-connected undertaking must be determined under Rule 10(b) and Section 4(1)(a) (i.e., "transaction value") where the conditions of Rule 10(a)/Rule 9 are not satisfied; Rule 9/Rule 8 (and the "110% of the cost of production" method) apply only when the buyer is related as per clauses (ii), (iii) or (iv) or is a holding/subsidiary.

2.3 On Revenue's method of computation: The adoption of the sale value to the buyer as the "cost of production" without a CAS-4 certificate is legally invalid; valuation cannot be re-determined by equating present sale value to cost of production in the absence of the prescribed costing methodology.

2.4 On cum-duty / cum-tax-price: The "cum-tax-price" / "cum-duty" benefit under Section 4(4)(d)(ii) must be taken into account when assessing value; failure to do so renders the demand unsustainable.

2.5 On extended period and Section 11AC penalty: The "extended period" of limitation and consequential "penalty under Section 11AC" cannot be invoked where the show cause notice does not allege suppression with intent to evade payment of duty and the matter involves a bona fide question of interpretation discovered on audit.

2.6 On Rule 26(1) penalties: Penalty under Rule 26(1) requires satisfaction of both ingredients-knowledge that goods are liable for confiscation and that the person dealt with the goods in the manner specified-and is not sustainable where there is no evidence of such knowledge/dealing and no confiscation has been recorded.

2.7 On appropriation and interest: Appropriation of amounts paid under protest is not legally sustainable where the underlying demand is held invalid, and amounts paid under protest are liable to refund subject to applicable law on interest under Sections 11AA/11AB.

2.8 On officer scrutiny and limitation: The officer's duty to scrutinize self-assessed returns and to call for documents is operative; reliance on audit alone to trigger extended limitation is insufficient where statutory scrutiny opportunities existed and no intent to evade is alleged.

3. RATIONALE:

3.1 Statutory framework applied: The court applied Section 4(1)(a) and Section 4(3)(b) of the Central Excise Act, 1944 together with the definitions and Explanations (including the definition of "inter-connected undertakings"), and Rules 8, 9 and 10 of the Central Excise Valuation Rules, 2000; the distinction between sub-clauses (ii),(iii),(iv) of Section 4(3)(b) and the notion of "inter-connected undertakings" under the Explanation was central to the analysis.

3.2 Interpretation of Rules 8-10: Rule 9 applies only where sales are to or through persons related under sub-clauses (ii), (iii) or (iv) of Section 4(3)(b); where those conditions (or Rule 10(a)'s holding/subsidiary condition) are absent, Rule 10(b) requires valuation "as if they are not related persons" and Section 4(1)(a) transaction value governs.

3.3 Precedential and administrative support: The conclusion aligns with prior tribunal authority and administrative clarification that "inter-connected undertakings" are not automatically to be treated as "related" for the purpose of rejecting transaction value, and a Board clarification supports that where clauses (ii)/(iii)/(iv) do not exist and buyer is not holding/subsidiary, they "will not be considered related".

3.4 On costing procedure: The statutory scheme contemplates cost of production to be established by prescribed means (e.g., CAS-4 certificate) for application of Rule 8; re-characterising present sale price as cost of production without the prescribed certificate is "not provided" by the Rules and is legally impermissible.

3.5 On cum-tax principle: Section 4(4)(d)(ii)'s "price-cum-duty" concept requires recognition of cum-duty/cum-tax adjustments in valuation; failure to apply the "cum-duty benefit" distorts assessable value.

3.6 On limitation and penalties: Invocation of the "extended period" under Section 11A(4) and imposition of "penalty under Section 11AC" requires specific allegations and evidence of suppression with intent to evade; audit-discovered interpretational issues and revenue-neutral transactions do not justify extended limitation or penalty.

3.7 On Rule 26(1) mechanics: Application of Rule 26(1) is conditional on both requisite mental element (knowledge/reason to believe goods liable for confiscation) and physical dealing as specified; absent evidence of either (and absent confiscation), penalty cannot be sustained.

3.8 No dissent or concurring opinion recorded; outcome follows the statutory text, rule construction and consistent tribunal authority favoring valuation under Rule 10(b) where statutory preconditions for Rule 9 are unmet, and restricting extended limitation and punitive measures where no intent to evade is shown.

ISSUES:

Whether excess transit insurance charges collected from dealers are includible in the assessable value of excisable goods under the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.Whether the valuation of excisable goods should be governed by Rule 5 and Rule 6 of the Central Excise Valuation Rules, 2000, in respect of excess transit insurance collected.Whether the place of removal and transfer of title at the factory gate excludes transit insurance charges from assessable value under Section 4(1)(a) of the Central Excise Act.Whether excess transit insurance collected constitutes a part of the consideration for sale or is merely a profit on which excise duty is not leviable.Whether invocation of the extended period of limitation is justified in the absence of suppression of facts by the assessee.Whether interest and penalty can be imposed when the underlying demand is not sustainable.

RULINGS / HOLDINGS:

The excess transit insurance charges collected from dealers are not includible in the assessable value of excisable goods as they are not connected with the sale of goods or manufacture activity.The valuation of excisable goods in respect of excess transit insurance is not governed by Rule 5 and Rule 6 of the Central Excise Valuation Rules, 2000, as the excess charges are independent of the transaction value.Since the sale and transfer of title occur at the factory gate, and the dealer bears transportation costs thereafter, the excess transit insurance does not form part of the transaction value under Section 4(1)(a) of the Central Excise Act.The excess transit insurance collected is merely a profit and no excise duty is leviable on such profit, consistent with binding judicial precedents.The extended period of limitation cannot be invoked as there is no suppression of facts by the assessee and the demand arose from data furnished by the assessee itself.When the demand is unsustainable, the imposition of interest and penalty is not justified.

RATIONALE:

The Court applied the statutory framework under Section 4(1)(a) of the Central Excise Act, which defines assessable value as the transaction value at the time and place of removal, and the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.The Court relied extensively on the terms of the dealership agreement establishing that the place of removal and transfer of title is at the factory gate, thereby excluding post-removal charges like transit insurance from assessable value.Judicial precedents were cited to establish that excess charges collected post-sale which constitute profits are not subject to excise duty, reinforcing the interpretation of assessable value.The Court noted the absence of suppression or concealment by the assessee, precluding invocation of extended limitation period, consistent with established principles regarding limitation under excise law.The Court upheld the principle that interest and penalty cannot be imposed when the foundational demand is not sustainable, aligning with procedural fairness doctrines.

ISSUES:

Whether the imported goods "Unit Assy - BCM" and "Unit Assy - I.B.U." are classifiable under CTH 9032 8910 as "Automatic Regulating or Controlling Instruments and Apparatus" or under CTH 8537 1000 as "Programmable Controllers."Whether the impugned goods qualify as "Programmable Logic Controllers" or "Programmable Process Controllers" for classification purposes.Whether the impugned goods are eligible for exemption under Notification No. 152/2009, Sl. No. 953, attracting 0% Basic Customs Duty (BCD).

RULINGS / HOLDINGS:

The impugned goods are classifiable under CTH 9032 8910 as "Automatic Regulating or Controlling Instruments and Apparatus" and not under CTH 8537 1000 as "Programmable Controllers."The goods qualify as "Programmable Process Controllers" rather than "Programmable Logic Controllers," as they perform continuous monitoring and regulatory functions by comparing input signals with desired values and automatically controlling various automotive body electronics without human interface.The exemption under Notification No. 152/2009, Sl. No. 953 applies, and the demand for differential duty is rightly dropped.

RATIONALE:

The Court applied the legal framework established by the Board's Circular No. 49/3/97-CX dated 09.05.1997, which differentiates between "Programmable Logic Controllers" (PLCs) and "Programmable Process Controllers" (PPCs), emphasizing that PPCs continuously monitor and regulate variables such as flow, pressure, temperature, or electrical quantities to maintain desired values.The impugned goods' functions, including automatic control of vehicle body electronics (e.g., automatic wiper control, cabin climate control, automatic headlights) without human intervention, align with the definition of "Automatic Regulating or Controlling Instruments and Apparatus" under Chapter 90, heading 9032.The Court relied on the detailed functional description in the impugned order, which highlighted that the goods perform regulatory functions by continuously comparing inputs with desired levels and generating output signals, consistent with PPC characteristics rather than PLCs.The Court noted that the impugned goods are "multi-faceted electronic components" that act as a "power distribution centre" and communicate with other electronic control units, further supporting classification under CTH 9032.The decision follows binding precedent affirming the applicability of the Board's Circular and the distinction between PLCs and PPCs, rejecting the argument that the goods are merely "Programmable Controllers" under CTH 8537.No dissent or doctrinal shift was noted; the Court affirmed the impugned order's reasoning and classification approach.

ISSUES:

Whether penalty under Section 129(1)(b) of the GST Act is justified when goods in transit are found without an e-way bill at the time of inspection.Whether the absence of an e-way bill due to a technical glitch exempts the consignor or consignee from penalty under Section 129(1)(b) of the GST Act.Whether the presence of a tax invoice or other specified documents accompanying the goods in transit affects the applicability of Section 129(1)(a) versus Section 129(1)(b) of the GST Act.Whether suspension and subsequent restoration of the purchaser's registration affects the legality of penalty imposition under Section 129(1) of the GST Act.Whether the authorities were justified in rejecting the appeal against the penalty order.

RULINGS / HOLDINGS:

The penalty under Section 129(1)(b) of the GST Act for non-production of e-way bill at the time of inspection is upheld, as "non-generation of e-way bill could easily be the intention of evasion of legitimate payment of tax."The claim of non-generation of e-way bill due to a "technical glitch" is not accepted, since it was specifically stated that no e-way bill was generated even after the movement of goods.Where a tax invoice or other specified document accompanies the goods in transit, "either the consignor or the consignee should be deemed to be the owner," and accordingly, proceedings ought to be under Section 129(1)(a) rather than Section 129(1)(b) of the GST Act.The suspension of the purchaser's registration after movement of goods but prior to detention, followed by restoration of registration, does not render the consignor or consignee "bogus" or justify adverse inference; hence, penalty under Section 129(1)(b) on this ground is not sustainable.The appeal against the penalty order was not justified to be rejected outright; however, the penalty order itself is not illegal, but requires modification to be treated as passed under Section 129(1)(a) instead of Section 129(1)(b) of the GST Act.

RATIONALE:

The Court applied the provisions of the GST Act, specifically Sections 129(1)(a) and 129(1)(b), governing detention, seizure, and penalty for goods in transit without proper documentation.Reliance was placed on Clause 6 of the Circular dated 31.12.2018, which clarifies that if a tax invoice or other specified document accompanies the consignment, the consignor or consignee is deemed the owner of the goods.Precedents from this Court and other High Courts were followed, including judgments holding that absence of an e-way bill at the time of inspection indicates an intention to evade tax, justifying penalty under Section 129(1)(b).The Court distinguished between cases where no documents accompany the goods and those where tax invoices are present, requiring different application of Sections 129(1)(a) and 129(1)(b).The Court recognized that suspension of registration during transit, if later revoked, cannot be used to presumptively declare consignor or consignee as bogus, thus impacting the nature of penalty imposed.Accordingly, the Court modified the penalty order to align with the appropriate statutory provision, reflecting a doctrinal refinement in the application of Sections 129(1)(a) and (b) in cases involving accompanying documents and registration status.

ISSUES:

Whether a writ petition challenging an assessment order framed under Section 147 read with Section 144 of the Income Tax Act, 1961 can be entertained when an alternative statutory remedy is available.Whether the Assessing Officer erred in rejecting the petitioner's adjournment request and proceeding with assessment despite claimed health and bereavement issues.Whether the Assessing Officer, Ward 3(2), Purulia (West Bengal) had jurisdiction to issue notice under Section 148 and proceed with assessment of a taxpayer filing returns in Odisha.Whether the assessment order suffers from violation of principles of natural justice or is illegal, arbitrary, or without jurisdiction.Whether disputed factual issues relating to genuineness of transactions and claim of input tax credit can be examined in writ jurisdiction.Whether the writ jurisdiction can be exercised in cases involving alleged bogus purchase transactions and fraudulent availment of input tax credit under the GST regime.

RULINGS / HOLDINGS:

The writ petition challenging the assessment order is not maintainable at this stage as an efficacious alternative remedy is available under the Income Tax Act, and the Court should not exercise its discretionary writ jurisdiction to circumvent the statutory appellate process.The Assessing Officer did not err in rejecting the adjournment request dated 19.03.2025, as sufficient opportunities were afforded to the petitioner throughout the assessment proceedings, and the assessment was required to be completed before the limitation period expired on 31.03.2025.The jurisdictional challenge against the Assessing Officer, Ward 3(2), Purulia, is not tenable as the petitioner had submitted to the jurisdiction by responding to notices and seeking time to adduce evidence; the issue of jurisdiction is a mixed question of fact and law better suited for appellate adjudication.The assessment order does not suffer from violation of principles of natural justice or jurisdictional infirmity warranting interference under Articles 226 and 227 of the Constitution of India.Disputed questions of fact regarding the genuineness of transactions and input tax credit claims cannot be resolved in writ jurisdiction and must be adjudicated by the competent statutory authorities.The Court should not exercise writ jurisdiction in cases involving alleged fraudulent availment of input tax credit, as such matters require detailed factual inquiry and are appropriately dealt with through the statutory appellate mechanism.

RATIONALE:

The Court applied the principle that writ jurisdiction under Articles 226 and 227 is discretionary and should not be exercised where an adequate and efficacious alternative remedy exists, unless exceptional circumstances such as breach of fundamental rights, violation of natural justice, or jurisdictional excess are established.The Court relied on settled precedents distinguishing between "null and void" orders for want of jurisdiction and "illegal or irregular" orders which are amenable to correction in statutory proceedings, emphasizing that irregular assumption of jurisdiction does not render an order a nullity.The Court noted that the petitioner was aware of the limitation period and had ample opportunity to participate in the assessment proceedings but chose to delay and seek adjournment at the last moment, which was rightly refused by the Assessing Officer to prevent time-barred assessment.Regarding jurisdiction, the Court referred to authoritative decisions clarifying that submission to jurisdiction by the assessee precludes collateral challenge, and that jurisdictional issues involving mixed questions of fact and law are better addressed through appeals rather than writ petitions.The Court acknowledged the serious nature of allegations relating to bogus transactions and fraudulent input tax credit claims, recognizing that such complex factual disputes require detailed examination by the tax authorities and appellate forums rather than resolution in writ jurisdiction.The Court reiterated the settled legal position that writ jurisdiction is not a substitute for statutory remedies and should not be exercised to support litigants who have not availed available remedies or who attempt to bypass the appellate process.

1. ISSUES:

1. Whether "prior period items" and "extraordinary items" constitute components of "net profit or loss" for the purpose of computing book profit under section 115JB.

2. Whether "prior period expenses" shown separately (including when shown "below the line" or not debited to the Profit & Loss account) can be excluded from the computation of book profit under section 115JB.

2. RULINGS / HOLDINGS:

1. The court holds that "prior period items" and "extraordinary items" are components of the "net profit or loss" and "are to be included in the determination of net profit or loss" for the purposes of section 115JB; net profit must be computed after taking such items into account.

2. The court holds that the presentation of prior period items separately (including the alternative approach of showing such items "after determination of current net profit or loss") does not exclude them from computation of net profit under section 115JB, and such items are "not to be taken into account in computing net profit" only where an accounting standard requires or permits otherwise - absent that, they must be subsumed in book profit.

3. The decision of the jurisdictional High Court on this issue is binding and therefore controls the outcome where it addresses the same questions of law and accounting treatment.

3. RATIONALE:

1. The court applies the accounting framework of Accounting Standard (AS 5), noting that AS 5 (a) defines prior period items as income or expenses which arise "in the current period" due to errors or omissions in preparing prior periods' financial statements; (b) requires that items "recognised in a period" be included in determination of net profit or loss unless an accounting standard requires or permits otherwise; (c) states that the net profit or loss "inter alia, comprises of extraordinary items"; and (d) prescribes disclosure and two alternative presentation approaches (including showing prior period items after determination) to indicate their impact on current profit or loss.

2. The court reasons that the Companies Act / prescribed accounting presentation (Parts II and III of Schedule VI as then applicable) required separate disclosure of prior period and extraordinary items so their impact on the current profit or loss can be perceived, but such separate presentation does not mean those items are excluded from computing net profit for section 115JB.

3. The court rejects the view that prior period expenses shown "below the line" or not debited to the Profit & Loss account are necessarily excludable from book profit, observing that the alternative presentation permitted by AS 5 still results in those items being components of net profit and therefore to be taken into account for MAT computation under section 115JB.

4. The court acknowledges differing views of other High Courts but follows the binding ruling of the jurisdictional High Court on the point, applying it to overturn the addition made to book profit and allowing the appeal.

ISSUES:

Whether the addition of notional interest income on sale consideration received in an earlier year can be added to determine Long Term Capital Gain (LTCG) in a subsequent year where sale deed was executed later.Whether the provisions of section 56(2)(vii)(c) of the Income Tax Act apply to receipt of bonus shares by a shareholder.Whether exemption under section 54F of the Income Tax Act can be denied on account of ownership of more than one residential house when one property is acquired by will but mutation in the assessee's name occurred after the date of transfer of original asset.

RULINGS / HOLDINGS:

Regarding LTCG computation, the Court held that the assessee has rightly computed long term capital gain as per the mode of computation prescribed in section 48 of the Income Tax Act, and the Assessing Officer was not justified in computing income on a notional basis by adding time value of money; "there is no such procedure for computation of capital gain prescribed under the Income Tax Act" and "Income Tax Act permits the taxation of Real Income and not the notional Income".On applicability of section 56(2)(vii)(c) to bonus shares, the Court held that the provisions of sub-clause (c) of clause (vii) of section 56(2) would not apply to bonus shares, as bonus shares are "merely a distribution of capitalised undivided profit" and "no property however being passed on to the assessee in the instant case". The addition made by the Assessing Officer was thus deleted.Regarding exemption under section 54F, the Court held that the assessee became owner of the additional property only after mutation in March 2017, which was after the date of transfer of the original asset in August 2016. Mere right under a will prior to mutation does not constitute ownership for the purposes of section 54F. Therefore, the assessee was owner of only one residential house on the date of transfer and eligible for exemption under section 54F.

RATIONALE:

The Court applied the statutory provisions of sections 48 and 52 of the Income Tax Act for computation of capital gains, emphasizing that section 48 prescribes the mode of computation based on "full value of the consideration received or accruing" and disallows taxation of notional income such as interest on sale consideration received earlier but taxed later. The Court relied on precedents including K.P. Varghese vs ITO and various Supreme Court decisions affirming that "Income Tax Act permits the taxation of Real Income and not the notional Income".In interpreting section 56(2)(vii)(c), the Court recognized the legislative intent and judicial precedents (including Khoday Distilleries Ltd. v. CIT and ITAT decisions) that bonus shares are a capitalization of company reserves and do not constitute receipt of property without consideration. The Court noted that the provision targets undervaluation or receipt of property without consideration, which is not the case with bonus shares. The principle that no new property passes to the shareholder was emphasized, supported by multiple judicial authorities.For section 54F exemption, the Court analyzed the concept of ownership versus right, relying on judicial precedents distinguishing "Right" and "Ownership" in property law. The Court held that ownership arises upon mutation or legal transfer, not merely on creation of a will. The Court also referred to decisions holding that joint or partial ownership does not constitute ownership of multiple residential houses for section 54F purposes. The principle that the assessee was owner of only one residential house on the date of transfer was upheld, allowing the exemption.