Issues: (i) Whether the brass scrap imported under the disputed Bills of Entry originated in the UAE or Pakistan; (ii) Whether goods originating in Pakistan were classifiable under CTH 98060000 and liable to the enhanced customs duty under Notification No. 05/2019-Customs dated 16.02.2019.

Issue (i): Whether the brass scrap imported under the disputed Bills of Entry originated in the UAE or Pakistan.

Analysis: The matching container and seal numbers in the Indian Customs EDI records and the Pakistan International Container Terminal tracking records established that the containers had been loaded at Karachi and transported through Jebel Ali without unloading or reloading. The delivery agent and persons connected with the imports acknowledged that only the bill of lading date was changed, while the container particulars, seal numbers, description and quantity remained unchanged. The pre-shipment inspection certificates were therefore not based on an actual inspection in the UAE. The earlier final order involving the connected live consignment, based on the same modus operandi, was adopted.

Conclusion: The imported goods originated in Pakistan, and their country of origin was misdeclared as UAE, against the assessee.

Issue (ii): Whether goods originating in Pakistan were classifiable under CTH 98060000 and liable to the enhanced customs duty under Notification No. 05/2019-Customs dated 16.02.2019.

Analysis: Notification No. 05/2019-Customs prescribed customs duty at 200% for all goods originating in or exported from Pakistan under tariff item 98060000. Since the declared UAE origin was disproved and Pakistan origin stood established, classification as brass scrap under CTH 74040022 could not govern the levy. The earlier final order on identical facts and imports was treated as governing the present proceedings.

Conclusion: The goods were correctly classifiable under CTH 98060000 for levy of duty under Notification No. 05/2019-Customs dated 16.02.2019, and reassessment and the consequential confiscation, redemption fine and penalties were sustained, against the assessee.

Final Conclusion: The findings of misdeclaration of Pakistani origin and the resulting enhanced-duty classification, together with the consequential customs liabilities, remain operative.

Ratio Decidendi: Where reliable container-tracking records, matching seal particulars and corroborative statements establish that goods originated in Pakistan despite a declaration of UAE origin, the goods attract the Pakistan-origin tariff entry and enhanced duty prescribed by the applicable customs notification.

Issues: Whether Customs could recover alleged excess DEPB credit from exporters under Section 28 of the Customs Act, 1962, on the basis that CAF and BAF were not deducted while determining FOB value.

Analysis: The alleged liability arose from purported excess DEPB credit obtained on exports and not from any short levy of customs duty on a specified import transaction. The applicable line of decisions establishes that DEPB credit is distinct from customs duty, and Customs has no jurisdiction under Section 28 to recover allegedly excess DEPB credit; proceedings concerning cancellation or reduction of such credit fall within the jurisdiction of the DGFT. Characterising the DEPB scheme as an exemption mechanism does not alter the nature of the alleged recovery. The materially identical earlier decision of the same Bench was followed in accordance with judicial discipline.

Conclusion: Recovery of alleged excess DEPB benefit under Section 28 of the Customs Act, 1962, was not permissible; the consequential interest demand and penalties could not survive. The issue was decided in favour of the assessee.

Issues: (i) Whether the confiscation proceedings and show-cause notice concerning the fraudulently imported motorbike were barred by limitation; (ii) Whether duty and interest were payable upon redemption of the confiscated motorbike, and whether the redemption fine required modification.

Issue (i): Whether the confiscation proceedings and show-cause notice concerning the fraudulently imported motorbike were barred by limitation.

Analysis: The Bill of Entry and registration-related documents were established to be fabricated, and customs duty had not been paid on the illegal import. Revenue became aware of the fraudulent import on 17.04.2013 and issued the show-cause notice on 19.08.2013. Fraudulent documents have no legal existence and fraud permits extension of the limitation period. The purchaser was also required to exercise due diligence regarding the genuineness of the documents.

Conclusion: The notice was within limitation and confiscation of the motorbike was sustainable, against the assessee.

Issue (ii): Whether duty and interest were payable upon redemption of the confiscated motorbike, and whether the redemption fine required modification.

Analysis: Upon exercise of the option to redeem confiscated goods, liability for duty and charges arises in addition to the redemption fine under Section 125(2). Assessment and determination of that duty attracts interest on delayed payment. Although duty and interest remained payable, the purchaser's bona fide acquisition of the vehicle and the prior deletion of penalty warranted mitigation of the redemption fine.

Conclusion: The assessee was liable for duty and interest on redemption, but the redemption fine was reduced to Rs.10,000, partly in favour of the assessee.

Final Conclusion: The fraudulent import remained liable to confiscation and regularisation through redemption required payment of duty and interest, while equitable mitigation was confined to the quantum of redemption fine.

Ratio Decidendi: Where confiscated goods are redeemed under Section 125, the owner becomes liable for duty and consequential interest; forged import documents justify treating the confiscation action as timely upon detection of fraud.

Issues: (i) Whether disposal of overburden by the appellant pursuant to the mining lessee's consent was a sale of overburden or a taxable declared service, and whether the proceeds from boulder sales constituted consideration; (ii) Whether service tax was payable on royalty and permit fees paid to the Government for removal of overburden; (iii) Whether the extended limitation period was invocable.

Issue (i): Whether disposal of overburden by the appellant pursuant to the mining lessee's consent was a sale of overburden or a taxable declared service, and whether the proceeds from boulder sales constituted consideration.

Analysis: The mining lessee was obliged under the mining lease conditions to remove overburden and authorised the appellant to obtain a short-term permit and dispose of it. The purported invoices transferring overburden to the appellant contained no rate or value, and the appellant admitted that no amount was paid or payable to the mining lessee. A sale requires a price and could not arise from a nil-value transfer. Applying the principle of lifting the veil, the proceeds collected by the appellant from customers were treated as the real consideration for performing the mining lessee's obligation of disposal. The activity was consequently a declared service of agreeing to do an act under Section 66E(e), and its value was the gross amount so received under Section 67.

Conclusion: The disposal of overburden was a taxable service rendered to the mining lessee, and the boulder-sale proceeds constituted consideration taxable in the appellant's hands. The finding is against the assessee.

Issue (ii): Whether service tax was payable on royalty and permit fees paid to the Government for removal of overburden.

Analysis: Royalty for mining rights was contractual consideration for enjoyment of mineral rights and not a tax. The exemption for assignment of the right to use natural resources granted before 1 April 2016 was confined to one-time upfront charges. Periodic royalty paid per metric tonne for permission to remove overburden was outside that exemption, was not protected by the negative list, and remained taxable.

Conclusion: Service tax was payable on royalty and permit fees paid for removal of overburden. The finding is against the assessee.

Issue (iii): Whether the extended limitation period was invocable.

Analysis: The nil-value invoices and the stated sale arrangement concealed the actual service relationship and consideration. The material facts emerged only during audit, establishing suppression of the true nature of the transaction with intent to evade service tax.

Conclusion: The conditions in the proviso to Section 73(1) were satisfied and the extended period was validly invoked. The finding is against the assessee.

Final Conclusion: The amounts realised from customers for overburden represented taxable consideration for disposal services, and periodic royalty payments for the governmental permission were independently taxable; the demand was sustainable on merits and limitation.

Ratio Decidendi: A nil-value transfer styled as a sale cannot exclude service tax where, in substance, the recipient performs the transferor's obligation and realises consideration from third parties; periodic royalty for the use of natural resources is not covered by the exemption limited to one-time assignment charges.

Issues: Whether the accused was entitled to anticipatory bail in a case involving alleged creation of fake GST registrations and fraudulent use of personal credentials.

Analysis: The material collected during the ongoing investigation included technical links between the mobile numbers and email accounts used for GST filings and the accused, as well as allegations of his role in creating fake GST entities and receiving client payments. The accused had not joined investigation, the alleged fraud required further technical investigation, and custodial interrogation was considered justified. The seriousness of fraud involving misuse of PAN cards and related credentials, its wider economic ramifications, and the accused's alleged involvement in other financial-fraud cases weighed against pre-arrest protection.

Conclusion: Anticipatory bail was refused.

Issues: Whether adjudicating and quasi-judicial authorities may rely on unverified artificial-intelligence-generated case law while issuing orders; (ii) whether the impugned show-cause notice, cancellation order, revocation-rejection order and appellate order should be quashed and reconsidered afresh.

Issue (i): Whether adjudicating and quasi-judicial authorities may rely on unverified artificial-intelligence-generated case law while issuing orders.

Analysis: The impugned order relied upon non-existent and irrelevant authorities generated through artificial intelligence. The departmental instructions required independent verification of AI-generated legal material through primary sources, accurate and relevant citation of judgments, consideration of taxpayer authorities, human oversight, and the officer's independent application of mind. The issuing authority remains responsible for the correctness and legal sustainability of the order.

Conclusion: Unverified AI-generated content cannot be relied upon for adjudicatory orders; the prescribed instructions must be scrupulously followed, and their breach would amount to contempt of court.

Issue (ii): Whether the impugned show-cause notice, cancellation order, revocation-rejection order and appellate order should be quashed and reconsidered afresh.

Analysis: The respondents accepted that the impugned orders required revision and agreed to issue a fresh notice. In view of the defective reliance on AI-generated authorities, fresh proceedings were required, with due consideration of the petitioner's reply and defence and a reasoned decision in accordance with law.

Conclusion: The impugned notice and orders are quashed; fresh notice and fresh adjudication shall follow, with all rights and contentions kept open.

Final Conclusion: The dispute is restored to the adjudicatory stage for a lawful, independently reasoned determination after fresh notice.

Ratio Decidendi: Adjudicatory authorities must independently verify legal material and apply their own mind; artificial intelligence may assist research but cannot substitute authentic legal verification or reasoned quasi-judicial decision-making.

Issues: (i) Whether refund of unutilised SGST input tax credit could be granted by treating transitional credit as credit available for the relevant refund period; (ii) Whether writ jurisdiction could be invoked after expiry of the statutory limitation for appeal against the assessment order.

Issue (i): Whether refund of unutilised SGST input tax credit could be granted by treating transitional credit as credit available for the relevant refund period.

Analysis: Section 140 and Rule 117 require transitional credit to be carried forward on filing the prescribed TRAN-1 declaration. The claimed amount could be considered for refund only upon satisfactory proof that it stood credited in the Electronic Credit Ledger as opening credit on 01.07.2017. The petitioner did not produce the TRAN-1 declaration or satisfactory material establishing such credit.

Conclusion: Refund of the disputed transitional SGST credit was not allowable. The issue was decided against the assessee.

Issue (ii): Whether writ jurisdiction could be invoked after expiry of the statutory limitation for appeal against the assessment order.

Analysis: Statutory appellate and revisional remedies were available under Sections 107 and 108. A party which allows the appellate limitation to expire cannot ordinarily invoke Article 226 to revive an unenforceable cause of action. The discretionary writ remedy cannot defeat the legislative scheme of limitation or disturb finality in litigation.

Conclusion: The belated writ petition was not maintainable for challenging the assessment order after the appellate limitation had expired. The issue was decided against the assessee.

Final Conclusion: The assessment order denying refund of the disputed transitional credit remains undisturbed, and the challenge was barred by the petitioner's failure to pursue the statutory remedy within time.

Ratio Decidendi: A writ court ordinarily cannot revive a time-barred statutory challenge where the assessee neither establishes entitlement to the claimed transitional credit nor pursues the prescribed appellate remedy within limitation.

Issues: Whether the passport renewal of an accused on bail in proceedings under the Central Goods and Services Tax Act, 2017 could be restricted to three years rather than the regular ten-year term.

Analysis: The continuing conditions requiring prior court permission for foreign travel, coupled with monitoring safeguards, applied irrespective of the passport's validity period. The petitioner's family, residence, business and immovable properties in India materially reduced the apprehension of absconding. No plausible reason, substantive harm or reasonable apprehension justified limiting renewal to three years.

Conclusion: The passport was directed to be renewed for the regular term of ten years, while all other conditions governing foreign travel and passport use remained binding.

Issues: Whether an advance of Rs. 10 crores admittedly received in financial year 2006-07 could be added as unexplained cash credit under Section 68 in assessment year 2016-17.

Analysis: The amount sought to be added had admittedly been received in financial year 2006-07. Even if the assessee had structured the later disclosure of the land-sale transaction to obtain set-off of capital gain against capital loss, recourse to Section 68 for adding the old receipt in assessment year 2016-17 was not permissible within the statutory framework. Any alleged avoidance required the Assessing Officer to adopt legally appropriate measures rather than treat a receipt of an earlier year as unexplained cash credit in the year under assessment.

Conclusion: The addition of Rs. 10 crores under Section 68 for assessment year 2016-17 was unsustainable, in favour of the assessee.

Issues: Whether notifications under the Foreign Trade Policy could retrospectively curtail accrued Service Exports from India Scheme benefits for services rendered during FY 2019-20.

Analysis: Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 authorises formulation and amendment of the Foreign Trade Policy but does not confer power to retrospectively amend a scheme so as to extinguish benefits accrued to exporters. The petitioners had rendered eligible services, earned foreign exchange and acquired entitlement under the prevailing scheme before the subsequent notifications introduced Appendix 3X, excluded specified services and imposed a cap for FY 2019-20. The retrospective operation of those changes impermissibly denied accrued SEIS benefits. The notifications could operate only from their respective dates of issuance.

Conclusion: The retrospective effect of the notifications was quashed, and the petitioners are entitled to accrued SEIS benefits for the relevant pre-notification period.

Issues: (i) Whether the imported cut-length aluminium hollow profiles were classifiable under CTI 76042100 or under residual CTH 76169990; (ii) Whether exemption under Serial No. 39 of Notification No. 24/2005-Cus was available for goods used in manufacture of Solar PV Modules.

Issue (i): Whether the imported cut-length aluminium hollow profiles were classifiable under CTI 76042100 or under residual CTH 76169990.

Analysis: Classification must be determined from the objective characteristics and condition of goods when presented for assessment, applying the tariff terms, relevant notes and interpretative rules. Invoice nomenclature, past self-assessments and intended downstream use are not conclusive. Section Note 9(b) treats products of uniform cross-section as profiles even where subsequently worked, unless they assume the character of articles of another heading. Cutting profiles into shorter lengths does not, by itself, cause them to cease being profiles. No evidence established that the imported goods had lost their profile characteristics, lacked uniform cross-section, or had become finished, independently usable frames. Heading 7604 specifically covers aluminium profiles, whereas Heading 7616 is residuary and cannot displace a specific heading merely because the goods were described as solar frames or intended for use in solar modules.

Conclusion: The imported goods are classifiable under CTI 76042100 as aluminium hollow profiles, in favour of the assessee.

Issue (ii): Whether exemption under Serial No. 39 of Notification No. 24/2005-Cus was available for goods used in manufacture of Solar PV Modules.

Analysis: The exemption turns on the intended manufacture of the notified final goods and compliance with the concessional-duty procedure, not on hypothetical alternate uses of the imported goods. The prescribed procedure was followed and end-use certificates issued by the jurisdictional authorities were furnished; their validity was neither disputed nor shown to have been obtained improperly. The exemption was available to Chapter 76 goods used for manufacture of the specified Solar PV Modules irrespective of their precise classification within that Chapter. The subsequent amendment operated from 01.04.2022.

Conclusion: The exemption is admissible for Bills of Entry filed on or before 31.03.2022, in favour of the assessee.

Final Conclusion: The reclassification and denial of concessional treatment fail; consequently, the duty demand does not survive and no interest, redemption fine or penalty can be sustained.

Ratio Decidendi: Goods that retain the objective character of aluminium profiles at import remain under the specific profile heading despite cutting to length or intended downstream use, and cannot be shifted to a residuary heading without evidence that they have assumed the character of finished articles.

Issues: Whether keyboards imported through courier for personal use, carrying a free rate of customs duty under Customs Tariff Heading 8471 60 40, are classifiable as dutiable personal imports under Heading 9804 and liable to customs duty and IGST at 28%.

Analysis: Chapter 98 applies notwithstanding a more specific tariff entry only where its prescribed conditions are fulfilled. Heading 9804 covers all dutiable goods imported for personal use, whereas the specific entry for keyboards under Heading 8471 carries a free rate of duty. Goods on which no duty is leviable by reason of the tariff rate are not dutiable goods. The Schedule IV IGST entry for Heading 9804 likewise covers only dutiable articles intended for personal use. The principle that goods bearing a free tariff rate cannot be brought under a Chapter 98 heading restricted to dutiable articles applies equally to the keyboard imported for personal use.

Conclusion: The keyboard is classifiable under Heading 8471 60 40 and cannot be classified under Heading 9804; no customs duty or IGST under the Heading 9804 entry is payable.

Issues: Whether an assessee opting for the Works Contract Composition Scheme is entitled to retain the composition rate prevailing when it exercised the option throughout the contract, notwithstanding a subsequent revision of the rate.

Analysis: Rule 3 makes the option to follow the composition procedure irrevocable for the entire works contract, but does not freeze the applicable tax rate as on the date of exercising that option. Before the Point of Taxation Rules, 2011, the rate was governed by the taxable event, namely rendition of service. After those Rules came into force, the applicable rate is determined at the point of taxation, including under Rule 4 where there is a change in the effective rate of tax. The earlier Calcutta High Court decision had not considered the Point of Taxation Rules, 2011.

Conclusion: The composition option continues for the entire works contract, but the service-tax rate is the rate prevailing at the point of taxation and is not permanently fixed at the rate existing when the option was exercised; the issue is decided against the assessee.

Issues: Whether refund of excess excise duty paid owing to inclusion of pre-declared cash and turnover discounts in the transaction value could be denied on the ground of unjust enrichment.

Analysis: The discount schemes were disclosed to dealers before clearance, although their precise quantum was determinable only after completion of the relevant discount period. Cum-duty credit notes were issued to the dealers to pass on the agreed discounts. The Tribunal's earlier decision in respect of the same assessee had recognized entitlement to provisional assessment under Rule 7 and, consequently, to refund of excess duty attributable to such pre-known discounts. The Chartered Accountant's and dealers' certificates established that the duty incidence had not been passed on to the dealers or buyers and was borne by the assessee.

Conclusion: The refund claims are not barred by unjust enrichment, and the assessee is entitled to refund of the claimed excess excise duty.

Issues: Whether CENVAT credit on inputs procured before the amendment to Rule 12 from units availing area-based exemption under Notification No. 01/2010-C.E. was admissible.

Analysis: The CENVAT Credit Rules were required to be read harmoniously. Credit is available where duty has been suffered on inputs, the inputs are used in manufacture of final products, and they are received under prescribed invoices or documents. As these conditions were undisputed and the pre-amendment Rules contained no express prohibition against such credit, a subsequent express provision could not be read as restricting credit only from its effective date.

Conclusion: CENVAT credit on the disputed inputs was admissible even before the amendment to Rule 12; the issue was decided in favour of the assessee.

Issues: (i) Whether the exporter was entitled to refund of accumulated input tax credit where goods were delivered under the bill-to ship-to model despite toll-movement discrepancies and cancellation of registrations of indirect suppliers; (ii) Whether Revenue could raise fresh allegations and rely on additional material before the Tribunal that were not part of the show cause notices or prior proceedings.

Issue (i): Whether the exporter was entitled to refund of accumulated input tax credit where goods were delivered under the bill-to ship-to model despite toll-movement discrepancies and cancellation of registrations of indirect suppliers.

Analysis: Section 16(2) of the Central Goods and Services Tax Act, 2017 requires fulfilment of the stipulated conditions for input tax credit. Tax payment, export of goods, and the direct supplier's continuing registration were undisputed. E-way bills issued under the bill-to ship-to model, transport documents, shipping bills, export general manifest details, transporter certification, and banking records substantiated delivery at the export location and subsequent export. The GST law does not require goods to commence movement from the registered premises of the supplier, nor does it prescribe toll-plaza receipts as a mandatory condition for credit. Cancellation of registration of suppliers beyond the direct supplier did not establish any irregularity attributable to the exporter.

Conclusion: Refund of accumulated input tax credit was admissible to the assessee; toll data and alleged irregularities of indirect suppliers did not justify denial.

Issue (ii): Whether Revenue could raise fresh allegations and rely on additional material before the Tribunal that were not part of the show cause notices or prior proceedings.

Analysis: The show cause notices were confined to the alleged transport-route discrepancy and cancellation of registrations of indirect suppliers. The further allegations concerning licensing, investigations, and other concerns were introduced for the first time at the appellate stage, without a request for admission of additional evidence or supporting investigation material. Rule 45(1) of the GSTAT (Procedure) Rules, 2025 and Rule 112(1) of the Central Goods and Services Tax Rules, 2017 bar production of additional evidence before the Tribunal except in exceptional circumstances, which were not established.

Conclusion: The fresh grounds and unsupported additional material could not be considered; this issue was decided in favour of the assessee.

Final Conclusion: The assessee's documented export transactions and corresponding input tax credit entitlement remain unaffected by non-statutory toll-data objections, indirect-supplier irregularities, or fresh appellate-stage allegations.

Ratio Decidendi: Where the statutory conditions for input tax credit are fulfilled through undisputed transactional and export documents, credit cannot be denied merely on toll-movement discrepancies or alleged defaults of suppliers beyond the recipient's direct supplier; fresh allegations and evidence outside the show cause notice cannot be introduced in appeal without satisfying the prescribed exceptional grounds.

Issues: (i) Whether an importer using forged or manipulated transferable duty-credit scrips through an authorised customs-clearance agent can claim protection as a bona fide purchaser; (ii) Whether non-production of original scrips and allied documents, and denial of cross-examination of Customs officers, vitiate the proceedings for breach of natural justice; (iii) Whether penalties under Sections 112 and 114A of the Customs Act, 1962 are sustainable where the importer claims lack of actual knowledge of the manipulation.

Issue (i): Whether an importer using forged or manipulated transferable duty-credit scrips through an authorised customs-clearance agent can claim protection as a bona fide purchaser.

Analysis: An authorised agent's acts within the scope of authority are attributable to the importer under Sections 182, 186 and 226 of the Indian Contract Act, 1872 and Section 147 of the Customs Act, 1962. The importer authorised the agent to undertake customs clearance and utilise scrips, obtained the resulting duty benefit, and could not disclaim the consequences of that agency.

Analysis: The equitable principle underlying Section 41 of the Transfer of Property Act, 1882 requires good faith and reasonable care. The excess value reflected in manipulated EDI records was never part of the entitlement issued by the DGFT and could not be transferred under the principle of nemo dat quod non habet. The importer neither verified the scrips, their source, validity or available balance, nor questioned material irregularities in the clearance arrangements. Caveat emptor required such due diligence.

Conclusion: The importer cannot claim bona fide purchaser protection or avoid liability for duty benefits derived from manipulated scrips. This issue is decided against the assessee.

Issue (ii): Whether non-production of original scrips and allied documents, and denial of cross-examination of Customs officers, vitiate the proceedings for breach of natural justice.

Analysis: The evidentiary basis comprised DGFT entitlement data, customs registration records, EDI transaction trails, electronic records and statements recorded under Section 108 of the Customs Act, 1962. Under Section 119 of the Bharatiya Sakshya Adhiniyam, 2023, an adverse inference from non-production is discretionary and does not arise where the relevant facts are independently established.

Analysis: The importer had never possessed or independently verified the disputed original scrips and did not establish any actual prejudice from their absence. The denial of cross-examination likewise did not invalidate the proceedings because no material fact or resulting prejudice was identified.

Conclusion: The proceedings are not vitiated by non-production of original documents or denial of cross-examination. This issue is decided against the assessee.

Issue (iii): Whether penalties under Sections 112 and 114A of the Customs Act, 1962 are sustainable where the importer claims lack of actual knowledge of the manipulation.

Analysis: Section 114A applies where duty is short-levied through fraud, wilful misstatement or suppression intended to evade duty. The importer filed Bills of Entry relying on scrips without verifying their existence, validity or credit balance, and directly benefited from the manipulated credits. Personal execution of the electronic manipulation was not necessary for the statutory penalty.

Analysis: The proviso to Section 114A excludes a separate penalty under Section 112 where penalty is imposed under Section 114A.

Conclusion: Penalty under Section 114A is sustained, while the separate penalty under Section 112 is set aside. This issue is partly in favour of the assessee.

Final Conclusion: The findings apply equally to the connected writ matters arising from the same investigation, and the customs-duty consequences founded on the manipulated duty-credit scrips remain enforceable subject to removal of the separate Section 112 penalty.

Ratio Decidendi: An importer that authorises an agent to use transferable duty-credit scrips and obtains the resulting benefit remains responsible for manipulated or excess credits where it failed to exercise reasonable diligence; absence of original instruments does not invalidate proceedings supported by independent reliable evidence and absent demonstrable prejudice.

Issues: Whether service tax paid on a contractual advance, where no service was rendered and the entire advance was recovered upon termination of the contract, was refundable without the limitation under Section 11B.

Analysis: The contractual advance was received against a project that was terminated before commencement, and no service was provided or consideration adjusted against contractual performance. The entire advance was recovered through encashment of the bank guarantee, while the incidence of the tax payment remained with the assessee. A payment made where no taxable service was rendered does not retain the character of service tax legally payable; it is a deposit with the Revenue. Consequently, the refund limitation applicable to duty under Section 11B did not govern the claim. In any event, the entitlement to refund arose upon termination of the contract and recovery of the advance.

Conclusion: The refund claim was not time-barred under Section 11B, and the assessee was entitled to refund with consequential relief.

Issues: Whether payment by a closely held company to its substantial shareholder, made against the shareholder's continuing credit balance in a running account, constitutes deemed dividend as a loan or advance.

Analysis: Section 2(22)(e) applies only where a payment by the company possesses the character of an advance or loan to the shareholder; the words "any payment" cannot be severed from that qualifying requirement. The audited accounts and ledger established that the company was indebted to the assessee from the beginning of the year, the account never became debit, and it closed with a credit balance in the assessee's favour. The payment consequently reduced the company's pre-existing liability and did not create any indebtedness of the assessee to the company. Absence of a formal loan agreement, interest stipulation or board approval could not alter the established character of the transaction.

Conclusion: The payment was repayment of funds already due to the assessee and was not a loan or advance taxable as deemed dividend under Section 2(22)(e) of the Income-tax Act, 1961; the issue is decided in favour of the assessee.