Issues: (i) Whether the petitioner remained liable under the final regulatory refund order despite resigning as a director in April 2013; (ii) Whether the Recovery Officer lawfully attached and remitted funds towards the quantified recovery liability.

Issue (i): Whether the petitioner remained liable under the final regulatory refund order despite resigning as a director in April 2013.

Analysis: The final regulatory order directed the company and all named directors, including the petitioner, to refund investor monies and contemplated recovery under Section 28A upon non-compliance. The petitioner's appointment from 2007 and resignation on 8 April 2013 overlapped with the fund mobilisation through redeemable preference shares during the financial years 2009-10 to 2012-13. The prior appellate adjudication had also rejected the contention that the petitioner was not a director during the relevant period.

Conclusion: The petitioner remained subject to the refund direction and consequential recovery liability.

Issue (ii): Whether the Recovery Officer lawfully attached and remitted funds towards the quantified recovery liability.

Analysis: The recovery certificate and remittance direction implemented the subsisting final refund order after non-compliance by the company and its directors. The underlying proceedings identified the investor funds mobilised and the outstanding liability recoverable at the time of remittance. No jurisdictional error or illegality in the attachment, computation, or remittance action was established.

Conclusion: The attachment and remittance order were valid.

Final Conclusion: The statutory recovery process could be invoked to enforce the pre-existing refund liability against the petitioner as a director covered by the final regulatory order.

Ratio Decidendi: A recovery action under Section 28A may enforce a final regulatory refund direction against a director whose tenure overlapped with the relevant fund mobilisation and who remains covered by that direction.

Issues: (i) Whether approval of a resolution plan extinguishes the operational creditor's pre-CIRP claim while preserving the corporate debtor's claim against the operational creditor and permitting arbitration; (ii) Whether an extinguished pre-CIRP claim arising from the same contract may be raised solely as a set-off in the arbitration; (iii) Whether the arbitration invocation and application were within limitation after exclusion of the moratorium period.

Issue (i): Whether approval of a resolution plan extinguishes the operational creditor's pre-CIRP claim while preserving the corporate debtor's claim against the operational creditor and permitting arbitration.

Analysis: Section 31(1) of the Insolvency and Bankruptcy Code, 2016 freezes and extinguishes pre-resolution-plan claims against the corporate debtor, including claims not forming part of the approved plan. This clean slate consequence applies against the corporate debtor and successful resolution applicant, but does not automatically extinguish debts owed to the corporate debtor, which the successful resolution applicant may pursue. The arbitration agreement, being separable from the underlying contract, survived its termination and the plan approval. The settled statutory consequence of the approved plan was not an issue left for arbitral determination.

Conclusion: The operational creditor cannot seek affirmative recovery of its extinguished claim against the corporate debtor or successful resolution applicant, while the successful resolution applicant may pursue the corporate debtor's surviving contractual claim in arbitration.

Issue (ii): Whether an extinguished pre-CIRP claim arising from the same contract may be raised solely as a set-off in the arbitration.

Analysis: The competing claims arose from the same contract. The operational creditor's claim had been disclosed and accepted in the resolution process, but was substantially reduced under the approved plan; the corresponding claim of the corporate debtor had not been pursued during CIRP. In the exceptional circumstances, a defensive set-off reconciles the clean slate principle with equitable treatment of reciprocal claims without reviving an extinguished debt as an independently recoverable claim.

Conclusion: The operational creditor may raise its entire pre-CIRP claim as a counterclaim only for set-off against any amount found payable to the successful resolution applicant, and cannot obtain affirmative monetary recovery on that basis.

Issue (iii): Whether the arbitration invocation and application were within limitation after exclusion of the moratorium period.

Analysis: The contractual termination occurred after commencement of CIRP. On excluding the moratorium period, both the arbitration notice and the application for appointment of an arbitrator fell within the applicable limitation period.

Conclusion: The arbitration invocation and the application for appointment of an arbitrator were within limitation.

Final Conclusion: The arbitral proceedings may determine the successful resolution applicant's contractual demand, subject to the operational creditor's limited right of set-off; the clean slate protection against affirmative recovery remains intact.

Ratio Decidendi: An approved resolution plan extinguishes claims against the corporate debtor but does not extinguish the corporate debtor's claims against its debtors; where reciprocal claims arise from the same contract, an extinguished creditor claim may exceptionally be permitted only as a defensive set-off and not as a source of affirmative recovery.

Issues: (i) Whether the tax demand could rest on return and challan discrepancies without independent verification, service-wise quantification, or consideration of revised returns as directed on remand; (ii) Whether manpower recruitment or supply agency receipts were chargeable to Service Tax from the appellant despite the reverse charge mechanism; (iii) Whether services described as erection, commissioning or installation were classifiable as works contract services and entitled to partial reverse charge and valuation benefit; (iv) Whether services connected with SEZ authorised operations qualified for Service Tax exemption; and (v) Whether the absence of mandatory pre-show cause notice consultation vitiated the proceedings.

Issue (i): Whether the tax demand could rest on return and challan discrepancies without independent verification, service-wise quantification, or consideration of revised returns as directed on remand.

Analysis: The demand was constructed principally from differences between ST-3 returns, GAR-7 challans and financial records, without examination of underlying contracts, invoices, recipient status, nature of services, or the applicability of exemptions, deductions and reverse charge. Multiple distinct allegations were combined into one aggregate demand without a coherent service-wise computation. The revised returns, which formed part of the record and were specifically required to be examined in the remand proceedings, were not meaningfully considered in the de novo adjudication.

Conclusion: The demand lacked the required factual and evidentiary foundation, and the remand directions were not complied with. The demand was unsustainable on this ground, in favour of the assessee.

Issue (ii): Whether manpower recruitment or supply agency receipts were chargeable to Service Tax from the appellant despite the reverse charge mechanism.

Analysis: The invoices supported the position that manpower supply was provided to body corporates. Notification No. 07/2015-S.T. dated 01.03.2015 shifted liability to the recipients in the applicable circumstances, and no contrary material established that the transactions fell outside that mechanism.

Conclusion: No Service Tax was payable by the appellant on the eligible manpower supply receipts, as liability stood shifted to the service recipients. The issue was decided in favour of the assessee.

Issue (iii): Whether services described as erection, commissioning or installation were classifiable as works contract services and entitled to partial reverse charge and valuation benefit.

Analysis: The work orders and invoices disclosed supply and use of materials in executing the contracted activities, supporting classification as works contract service rather than a standalone erection, commissioning or installation service. The Department did not investigate the contracts or establish a basis to reject that classification. The corresponding partial reverse charge mechanism and valuation treatment under Rule 2A of the Service Tax (Determination of Value) Rules, 2006 were consequently applicable, subject to reversal or adjustment of inadmissible CENVAT credit.

Conclusion: The services were appropriately treated as works contract services, and the entire tax liability could not be imposed upon the appellant. The issue was decided in favour of the assessee.

Issue (iv): Whether services connected with SEZ authorised operations qualified for Service Tax exemption.

Analysis: Certificates and invoices supported the rendering of services in connection with authorised operations of an SEZ unit. No contrary material showed that the services were outside authorised operations or diverted to the Domestic Tariff Area. The absence of Forms A1 and A2 was treated as a procedural lapse insufficient to deny the substantive benefit.

Conclusion: The SEZ-related services qualified for the applicable Service Tax benefit. The issue was decided in favour of the assessee.

Issue (v): Whether the absence of mandatory pre-show cause notice consultation vitiated the proceedings.

Analysis: The Board instructions operative when the notice was issued required pre-show cause notice consultation. The case involved reconcilable discrepancies, statutory benefits and supporting material, rather than deliberate non-cooperation. The omission caused material prejudice because the reverse charge, works contract, SEZ and reconciliation issues could have been addressed before the demand was crystallised. Mere pendency of an appeal against a relied-upon precedent did not displace its effect in the absence of a stay or contrary binding ruling.

Conclusion: Failure to undertake mandatory pre-show cause notice consultation vitiated the proceedings and independently rendered the demand unsustainable. The issue was decided in favour of the assessee.

Final Conclusion: The asserted Service Tax liability, consequential interest and penalties did not survive, and no recovery could be made pursuant to the proceedings.

Ratio Decidendi: A Service Tax demand cannot be sustained merely on unreconciled return and challan figures without verification of the underlying taxable transactions and applicable statutory treatment; where mandatory pre-show cause notice consultation applies and its denial causes prejudice, the resulting proceedings are vitiated.

Issues: (i) Whether service tax on GTA services was payable by the service provider where corporate recipients paid freight and discharged tax under reverse charge; (ii) Whether ITR figures, without verification of taxable services, supported the service-tax demand; (iii) Whether extended limitation could be invoked absent suppression with intent to evade; (iv) Whether failure to conduct mandatory pre-show-cause-notice consultation invalidated the demand; (v) Whether penalties under Sections 77 and 78 of the Finance Act, 1994 were sustainable.

Issue (i): Whether service tax on GTA services was payable by the service provider where corporate recipients paid freight and discharged tax under reverse charge.

Analysis: Under Notification No. 30/2012-Service Tax dated 20.06.2012, liability for transportation of goods by road falls under reverse charge upon a freight-paying recipient falling within the specified categories. The recipients were body corporates, paid the freight, and the consignment notes, bills and declarations established that they discharged the tax liability.

Conclusion: Service tax and interest were not payable by the service provider; the demand was unsustainable, in favour of the assessee.

Issue (ii): Whether ITR figures, without verification of taxable services, supported the service-tax demand.

Analysis: The demand originated solely from ITR data and was issued without investigation into the nature and character of the services or verification that taxable services had been rendered. Turnover reflected in an income-tax return cannot, by itself, establish liability to service tax.

Conclusion: A demand based solely on ITR turnover without verification of taxable services was unsustainable, in favour of the assessee.

Issue (iii): Whether extended limitation could be invoked absent suppression with intent to evade.

Analysis: The service provider was registered and the demand arose from information received from the Income Tax Department. The record did not establish suppression of facts with intent to evade payment of service tax.

Conclusion: Invocation of the extended limitation period was unsustainable, in favour of the assessee.

Issue (iv): Whether failure to conduct mandatory pre-show-cause-notice consultation invalidated the demand.

Analysis: Board Instruction F. No. 1080/09/DLA/MISC/15 dated 21.12.2015 made consultation before issue of a show-cause notice mandatory for demands exceeding the prescribed threshold, except specified preventive or offence-related notices. The matter did not fall within an exclusion, but no consultation was conducted.

Conclusion: The absence of mandatory pre-show-cause-notice consultation rendered the demand unsustainable, in favour of the assessee.

Issue (v): Whether penalties under Sections 77 and 78 of the Finance Act, 1994 were sustainable.

Analysis: Since the substantive demand did not survive and suppression was not established, the basis for the equal penalty did not exist. The separate statutory penalty for contravention of Section 70 of the Finance Act, 1994 remained applicable.

Conclusion: The penalty under Section 78 of the Finance Act, 1994 was set aside in favour of the assessee, while the penalty under Section 77 of the Finance Act, 1994 was upheld against the assessee.

Final Conclusion: The substantive service-tax liability, interest and equal penalty were eliminated, while the separate statutory penalty for non-compliance with Section 70 remained operative.

Ratio Decidendi: Where a specified freight-paying recipient is liable under reverse charge for goods transport agency services and has discharged that liability, service tax cannot again be recovered from the service provider.

Issues: (i) Whether amounts recovered from transporters for short or damaged delivery of cement constitute consideration for a taxable declared service; (ii) Whether the penalties under Sections 78, 77(1)(a) and 77(2) of the Finance Act, 1994 are sustainable.

Issue (i): Whether amounts recovered from transporters for short or damaged delivery of cement constitute consideration for a taxable declared service.

Analysis: Section 66E(e) covers an agreement to tolerate an act or situation, while Section 66D(p) places specified transportation services in the negative list. The recoveries were contractual compensation for the transporters' failure to deliver the contracted quantity of cement in proper condition. They were liquidated damages for loss and not consideration for any service of tolerating breach. Service tax had already been paid on the freight, and the compensation could not be taxed again as a declared service.

Conclusion: The recoveries are liquidated damages and not consideration for a taxable declared service; the service-tax demand and interest were set aside in favour of the assessee.

Issue (ii): Whether the penalties under Sections 78, 77(1)(a) and 77(2) of the Finance Act, 1994 are sustainable.

Analysis: Since the allegation of non-payment of service tax was not sustained, the penalty under Section 78 could not survive. The penalties under Sections 77(1)(a) and 77(2) were retained for violation of Section 70.

Conclusion: The Section 78 penalty was set aside in favour of the assessee, while the penalties under Sections 77(1)(a) and 77(2) were upheld against the assessee.

Final Conclusion: The impugned tax demand and its principal penalty consequence were annulled, while independent compliance penalties remained operative.

Ratio Decidendi: Contractual liquidated damages for short or damaged delivery, absent consideration for a service of tolerating breach, are not taxable as a declared service.

Issues: (i) Eligibility to CENVAT credit on capital goods, inputs and input services used in manufacturing dutiable and exempted biscuits; (ii) Validity of invoking the extended limitation period where credit availment was disclosed in statutory records and returns.

Issue (i): Eligibility to CENVAT credit on capital goods, inputs and input services used in manufacturing dutiable and exempted biscuits.

Analysis: Rule 6(4) of the CENVAT Credit Rules, 2004 disallows credit on capital goods only where they are exclusively used for manufacturing exempted final products. The assessee manufactured both dutiable and exempted goods, and no material established exclusive use of capital goods for exempted goods. The limited credits on inputs and input services, viewed against the assessee's substantial turnover, supported that such credits were proportionately availed for dutiable goods.

Conclusion: The denial of CENVAT credit on capital goods, inputs and input services was unsustainable and the related demand was set aside in favour of the assessee.

Issue (ii): Validity of invoking the extended limitation period where credit availment was disclosed in statutory records and returns.

Analysis: The availment and utilisation of credit were recorded in the RG-23C register and ER-1 returns. These disclosures negated suppression of facts or wilful misstatement necessary for recourse to the extended period.

Conclusion: Invocation of the extended limitation period was invalid, and the demand for that period was barred by limitation in favour of the assessee.

Final Conclusion: The demands for reversal of credit, together with consequential interest and penalty, could not be sustained.

Issues: (i) Whether the extended period of limitation could be invoked to demand central excise duty on cement sold below CAS-4 cost under an area-based exemption scheme; (ii) Whether service tax was payable on freight collected from buyers in excess of the actual freight incurred for the period before 1 July 2012; (iii) Whether recovery of an allegedly erroneous refund could be sustained by invoking the extended period of limitation.

Issue (i): Whether the extended period of limitation could be invoked to demand central excise duty on cement sold below CAS-4 cost under an area-based exemption scheme.

Analysis: Duty payments under the area-based exemption scheme were subject to departmental verification before refunds were sanctioned. The sale below CAS-4 cost, without evidence of any flow-back of additional consideration, did not establish suppression of value or intent to evade duty. The circular concerning below-cost sales did not apply merely because the cost of production exceeded the sale price, particularly where its stipulated circumstances were absent.

Conclusion: The extended period was not invocable; the central excise demand, with consequential interest and penalty, was set aside in favour of the assessee.

Issue (ii): Whether service tax was payable on freight collected from buyers in excess of the actual freight incurred for the period before 1 July 2012.

Analysis: Rule 2(1)(d)(i)(B) of the Service Tax Rules, 1994 required payment of service tax on freight paid by the assessee, not on the surplus collected from customers over the actual freight expenditure. That surplus constituted profit from the transportation activity. The applicable rule contained no distinction that justified liability for the period before 1 July 2012.

Conclusion: Service tax was not payable on the excess freight collection for the period before 1 July 2012; the service-tax demand and its related interest and penalties were set aside in favour of the assessee.

Issue (iii): Whether recovery of an allegedly erroneous refund could be sustained by invoking the extended period of limitation.

Analysis: The refund related to a period for which the appellant's records had been verified by departmental officers before sanction. Those circumstances did not support an allegation of suppression of facts with intent to evade duty, a necessary basis for invoking the extended period.

Conclusion: The extended period could not be invoked to recover the alleged erroneous refund; the refund-recovery demand, interest, and penalty were set aside in favour of the assessee.

Final Conclusion: The central excise, service-tax, and erroneous-refund recoveries, together with their consequential liabilities, were unsustainable; the independent fixed penalty under Section 77 remained operative.

Issues: (i) Whether, during 2017-18, receipt of supplier credit notes by itself required the recipient to reverse input tax credit; and (ii) Whether excess IGST paid while correcting the credit-note treatment could be adjusted against CGST and SGST liabilities in the December 2017 GSTR-3B.

Issue (i): Whether, during 2017-18, receipt of supplier credit notes by itself required the recipient to reverse input tax credit.

Analysis: Section 34 of the Central Goods and Services Tax Act, 2017 then regulated reduction of the supplier's output tax liability and did not impose a corresponding mandatory reversal of input tax credit on the recipient. The matching mechanism under Section 43 was never operationalised, while Rule 37 of the Central Goods and Services Tax Rules, 2017 applied only where the recipient failed to pay the supplier within 180 days. The later amendment expressly linking the supplier's credit note to reversal by the recipient could not govern the period in dispute.

Conclusion: During 2017-18, a supplier's credit note did not, by itself, create a statutory obligation for the recipient to reverse input tax credit, in favour of the assessee.

Issue (ii): Whether excess IGST paid while correcting the credit-note treatment could be adjusted against CGST and SGST liabilities in the December 2017 GSTR-3B.

Analysis: Circular No. 26/26/2017-GST permitted correction of past-period errors on a net basis in the GSTR-3B for the period in which the error was noticed. Although an excess IGST amount could ordinarily be adjusted against future IGST liability or claimed as refund under Section 54, a refund of tax discharged through the electronic credit ledger would, under Rule 92(1A), be recredited as IGST input tax credit. Such recredited IGST credit was capable of prescribed cross-utilisation for CGST and SGST under Section 49. The direct cross-head adjustment bypassed that procedure, but was a bona fide procedural lapse during the initial GST period and caused no revenue loss.

Conclusion: The direct adjustment was procedurally irregular but, being bona fide and revenue-neutral, did not sustain recovery of tax, interest or penalty, in favour of the assessee.

Final Conclusion: The confirmed fiscal liability arising from the credit-note correction and wrong-head adjustment cannot be sustained.

Issues: (i) Whether suspension of the customs broker licence was justified on allegations of breach of Regulations 10(d), 10(e), 10(m) and 10(n) of the Customs Brokers Licensing Regulations, 2018; (ii) Whether continuation of the suspension without initiating action within the prescribed timeframe under Regulation 17 of the Customs Brokers Licensing Regulations, 2018 rendered the suspension unsustainable.

Issue (i): Whether suspension of the customs broker licence was justified on allegations of breach of Regulations 10(d), 10(e), 10(m) and 10(n) of the Customs Brokers Licensing Regulations, 2018.

Analysis: Regulations 10(d), 10(e), 10(m) and 10(n) require a customs broker to exercise prescribed diligence, but a breach cannot rest on general or unsubstantiated allegations. The customs broker had obtained statutory identification and KYC documents, did not proceed with clearance after departmental instructions, and no evidence established collusion, knowledge of misdeclaration, or a specific contravention of the Regulations. A customs broker is not required to physically verify the importer's premises or independently determine the transaction value of imported goods.

Conclusion: The suspension was unwarranted and the issue is decided in favour of the appellant customs broker.

Issue (ii): Whether continuation of the suspension without initiating action within the prescribed timeframe under Regulation 17 of the Customs Brokers Licensing Regulations, 2018 rendered the suspension unsustainable.

Analysis: The statutory timelines governing proceedings against a customs broker are mandatory. Suspension cannot be continued indefinitely without the timely initiation and completion of the prescribed procedure. No show-cause notice under the licensing regulations had been issued despite the prolonged suspension.

Conclusion: The continued suspension was procedurally unsustainable and the issue is decided in favour of the appellant customs broker.

Final Conclusion: The suspension orders have no continuing legal effect, with consequential relief following in accordance with law.

Ratio Decidendi: Suspension of a customs broker licence requires evidence of a specific regulatory breach and strict adherence to mandatory timelines; unsubstantiated findings and prolonged suspension without timely statutory action cannot sustain the measure.

Issues: (i) Whether the available CENVAT credit balance could be adjusted against the confirmed service-tax demands and consequential interest; (ii) Whether penalty was imposable for failure to file ST-3 returns and disclose taxable services.

Issue (i): Whether the available CENVAT credit balance could be adjusted against the confirmed service-tax demands and consequential interest.

Analysis: The appellant had a sufficient CENVAT credit balance as on 30 June 2017 to meet the liabilities arising under both show-cause notices. The availability of such credit did not excuse the failure to file service-tax returns, but the credit balance was available for adjustment against the confirmed service-tax liabilities.

Conclusion: The CENVAT credit balance was permitted to be adjusted against the service-tax demands; consequently, no service-tax demand or interest remained payable.

Issue (ii): Whether penalty was imposable for failure to file ST-3 returns and disclose taxable services.

Analysis: The appellant had not filed the ST-3 returns within time and had not declared the taxable services. These defaults warranted penal consequences despite adjustment of the tax liability through available credit.

Conclusion: Penalty under Section 78 was sustained but reduced to 25% of the service tax payable.

Final Conclusion: The available CENVAT credit extinguished the tax and interest consequences of the confirmed demands, while a reduced statutory penalty remained payable for non-compliance with return-filing and disclosure obligations.

Issues: Whether contract manufacture of alcoholic liquor for a brand owner was liable to service tax for the disputed periods.

Analysis: Under the Negative List Regime, with effect from 1 June 2015, alcoholic liquor for human consumption was excluded from the exclusion available to processes amounting to manufacture or production of goods. Binding Precedent distinguished manufacture by and for oneself from Contract Manufacturing or Job Work undertaken for another person for consideration; the latter constitutes a taxable service. The authorities relied on by the appellant did not address the applicable negative-list framework and were therefore inapplicable.

Conclusion: Contract manufacture of alcoholic liquor for a brand owner constituted a taxable service, and service tax was payable on the activity.

Issues: (i) Deduction under section 43B for unutilised indirect-tax credits and customs/excise duties; (ii) Disallowance under section 14A read with Rule 8D; (iii) Weighted deduction for expenditure at DSIR-approved in-house R&D facilities before amendment to Rule 6(7A), including engineering-support fees; (iv) Revenue character of royalty and R&D cess; (v) Allowability of scientifically estimated supplier-price and warranty provisions; (vi) Deductibility of CSR expenditure under section 37(1) before and after Explanation 2; (vii) Character of sales-tax subsidy received under Rule 28C; (viii) Characterisation of gains and losses from redemption of mutual funds; (ix) Withholding-tax disallowance on offshore purchases from a Japanese associated enterprise; (x) Arm's length price of royalty paid to the associated enterprise; (xi) Challenge to section 143(1) adjustments in an appeal from assessment under section 143(3); (xii) Weighted deduction under section 35(2AB) after amendment to Rule 6(7A); (xiii) Transfer-pricing adjustment for captive transfer of power and steam; (xiv) Addition for alleged cessation of trade liabilities under section 41(1); (xv) Deduction under section 80G for qualifying CSR donations.

Issue (i): Deduction under section 43B for unutilised indirect-tax credits and customs/excise duties.

Analysis: Section 43B permits deduction of specified duties on an Actual Payment Basis. Binding decisions in respect of unutilised personal ledger account and excise-credit balances governed those components. Customs and countervailing duties actually paid on goods in transit, included in closing stock, or paid under protest remained deductible notwithstanding their future adjustment against excise liability.

Conclusion: Deduction for the specified unutilised excise-credit balances was denied against the assessee, while deduction for the actually paid customs and excise duties was allowed in favour of the assessee.

Issue (ii): Disallowance under section 14A read with Rule 8D.

Analysis: Invocation of Rule 8D requires Objective Satisfaction, having regard to the accounts, that the assessee's own disallowance is incorrect. General observations regarding administrative or interest expenditure do not meet that requirement. The Interest-free Funds Presumption applied because available interest-free funds exceeded the investments. For indirect expenditure, only investments that actually yielded exempt income could enter the Rule 8D(2)(iii) computation.

Conclusion: Interest disallowance was deleted in favour of the assessee; the indirect-expense disallowance was restricted to a fresh computation on income-yielding investments after giving credit for the assessee's own disallowance.

Issue (iii): Weighted deduction for expenditure at DSIR-approved in-house R&D facilities before amendment to Rule 6(7A), including engineering-support fees.

Analysis: Approval of the in-house R&D facility by the prescribed authority satisfied the material statutory condition. Quantification or non-approval of particular expenditure in Form 3CL did not govern the quantum of weighted deduction for the relevant period. The engineering-support material established that the services related to R&D undertaken for development of a new vehicle at the approved facility; the liability crystallised upon execution of the service agreement.

Conclusion: Weighted deduction on the full eligible R&D expenditure, including qualifying engineering-support fees, was allowed in favour of the assessee.

Issue (iv): Revenue character of royalty and R&D cess.

Analysis: Payments for the continuing use of technical know-how, manufacturing licence, and associated rights did not create a capital asset merely because they assisted the business over time. The R&D cess paid on such royalty followed the same character.

Conclusion: Royalty and the related R&D cess were allowable as revenue expenditure in favour of the assessee.

Issue (v): Allowability of scientifically estimated supplier-price and warranty provisions.

Analysis: Supplier-price provisions were based on an established commercial arrangement for retrospective price revisions and a scientific estimate of increased component costs. Warranty provisions were made on an accrual basis for unexpired warranties using a consistent scientific methodology and were supported by actual claims. Both represented Accrual of Liability rather than unascertained contingencies.

Conclusion: The supplier-price and warranty provisions were allowed as deductible expenditure in favour of the assessee.

Issue (vi): Deductibility of CSR expenditure under section 37(1) before and after Explanation 2.

Analysis: Explanation 2 to section 37(1) operates prospectively from assessment year 2015-16. CSR expenditure incurred before its effective operation and otherwise incurred for business purposes was not disallowable under that Explanation. However, expenditure classified as CSR under section 135 of the Companies Act, 2013 for assessment year 2015-16 was expressly excluded by the statutory deeming fiction even where it bore a business nexus.

Conclusion: Pre-amendment CSR expenditure was allowed in favour of the assessee, whereas CSR expenditure covered by Explanation 2 from assessment year 2015-16 was disallowed against the assessee.

Issue (vii): Character of sales-tax subsidy received under Rule 28C.

Analysis: The Purpose Test showed that the subsidy was designed to attract industrial investment and promote growth and employment. The timing of receipt after commencement of production did not alter the subsidy's character where its purpose was establishment and expansion of industry.

Conclusion: The sales-tax subsidy was a capital receipt not chargeable to tax, in favour of the assessee.

Issue (viii): Characterisation of gains and losses from redemption of mutual funds.

Analysis: Mutual funds were acquired from surplus funds as investments to maximise investment returns. Frequency of redemption could not by itself convert investment activity into trade where the investment character had been consistently accepted.

Conclusion: Gains and losses on redemption of mutual funds were assessable under the head capital gains, in favour of the assessee.

Issue (ix): Withholding-tax disallowance on offshore purchases from a Japanese associated enterprise.

Analysis: Goods were purchased on an FOB basis, with title, risks, and rewards passing outside India. Section 195 applies only to payments chargeable to tax in India. Further, the Non-discrimination obligation under the India-Japan treaty precluded a disallowance for purchase payments to the foreign supplier when equivalent domestic purchase payments did not attract withholding tax. The related-party purchase transaction had also been accepted in transfer-pricing proceedings.

Conclusion: No tax was required to be withheld on the offshore purchase payments, and the disallowance under section 40(a)(i) was deleted in favour of the assessee.

Issue (x): Arm's length price of royalty paid to the associated enterprise.

Analysis: The royalty arrangement concerned core technology, designs, technical information, and trademark rights fundamental to manufacture of vehicles. The assessee's local R&D activities comprised localisation, validation, homologation, and adaptation for Indian conditions and did not replace the associated enterprise's core technology. An Arm's Length Price adjustment cannot be made by rewriting the transaction or attributing sales to local R&D without applying a prescribed method and reliable comparables.

Conclusion: The transfer-pricing adjustment to royalty was deleted in favour of the assessee.

Issue (xi): Challenge to section 143(1) adjustments in an appeal from assessment under section 143(3).

Analysis: Upon scrutiny following notice under section 143(2), an intimation under section 143(1) issued thereafter was impermissible under section 143(1D). Where the assessment computation adopted income determined in the intimation as its starting point, the intimation merged into the regular assessment under the Doctrine of Merger. The incorporated adjustments were therefore open to challenge on merits in the appeal from the regular assessment.

Conclusion: The assessee was entitled to contest the incorporated adjustments; the additions were restored for fresh adjudication on merits in accordance with law.

Issue (xii): Weighted deduction under section 35(2AB) after amendment to Rule 6(7A).

Analysis: Section 35(2AB) makes approval of the in-house facility the statutory requirement and measures the deduction by eligible expenditure actually incurred. The amended Rule 6(7A) imposes a reporting duty on the prescribed authority but cannot, as Delegated Legislation, curtail the substantive deduction granted by the Act. Quantification in Form 3CL is not conclusive where the approved facility and genuineness of the expenditure are undisputed.

Conclusion: Weighted deduction was allowable on the entire eligible expenditure incurred at the approved facility notwithstanding lower DSIR quantification, in favour of the assessee.

Issue (xiii): Transfer-pricing adjustment for captive transfer of power and steam.

Analysis: Determination of an Arm's Length Price under section 92C(1) requires application of a prescribed method and cannot rest on an unsupported view that profits are excessive. The rates on the Indian Energy Exchange were not comparable to regular power supply, and a nil price could not be adopted without a valid comparable. Steam had commercial value and involved conscious generation and use in the manufacturing process; it could not be treated as valueless merely by calling it a by-product.

Conclusion: The transfer-pricing adjustments for captive transfer of power and steam were deleted in favour of the assessee.

Issue (xiv): Addition for alleged cessation of trade liabilities under section 41(1).

Analysis: A creditor's unilateral write-off does not automatically establish Cessation of Liability in the debtor's hands. The applicability of section 41(1) depends, inter alia, on whether the liability had earlier yielded a deduction, remained recorded as payable, and was subsequently discharged or otherwise ceased. The relevant confirmations and details had not been supplied to the assessee.

Conclusion: The addition could not be sustained merely on creditors' write-offs and was remitted for party-wise fresh examination in accordance with the stated legal principles.

Issue (xv): Deduction under section 80G for qualifying CSR donations.

Analysis: CSR expenditure disallowed under section 37(1) is an application of income, whereas section 80G operates independently at the stage of computing total income under Chapter VIA. A statutory CSR obligation does not negate the voluntary character of a donation when the donee gives no reciprocal benefit. The statutory exclusion of only specified CSR contributions indicates that other qualifying donations remain eligible subject to section 80G conditions.

Conclusion: Qualifying CSR donations were eligible for deduction under section 80G to the allowable extent, in favour of the assessee.

Final Conclusion: The computation must give effect to the revenue deductions, capital-receipt treatment, capital-gain treatment, and deletion of unsustainable withholding and transfer-pricing adjustments identified above, while the limited matters requiring verification remain for lawful redetermination.

Issues: (i) Deductibility under section 37(1) of interest paid for delayed remittance of tax deducted at source under section 201(1A); (ii) Requirement to examine on merits the claimed exemption of capital gains from compulsory land acquisition under section 96 of the RFCTLARR Act, 2013; (iii) Applicability and computation of transfer-pricing adjustment for captive-power supply despite no claimed section 80-IA deduction; (iv) Sustainability of disallowance computed under section 14A read with Rule 8D(2)(ii); (v) Deductibility under section 37(1) of project establishment and supervision expenses capitalised in the accounts; (vi) Addition of foreign-exchange variation cost to closing inventory; (vii) Applicability of section 14A disallowance in book-profit computation under section 115JB.

Issue (i): Deductibility under section 37(1) of interest paid for delayed remittance of tax deducted at source under section 201(1A).

Analysis: The compensatory character of interest under section 201(1A) only addresses the prohibition relating to expenditure incurred for an offence or purpose prohibited by law; it does not satisfy the independent requirement that an outlay be incurred wholly and exclusively for business purposes. Interest arising from a statutory default in remitting tax withheld for the Government is not a business outlay. The jurisdictional precedent directly governing such interest was binding, and contrary Tribunal decisions could not prevail consistently with judicial discipline.

Conclusion: Interest paid under section 201(1A) is not deductible under section 37(1). This issue is decided against the assessee.

Issue (ii): Requirement to examine on merits the claimed exemption of capital gains from compulsory land acquisition under section 96 of the RFCTLARR Act, 2013.

Analysis: Admission of the additional ground did not substitute a merits examination of the compulsory acquisition exemption. The omission to claim the exemption in the return could not, by itself, determine taxability. The acquisition documents, nature of compensation, statutory conditions under section 96, and the applicable CBDT clarification required verification.

Conclusion: No final determination on exemption eligibility is made. The issue is remitted for fresh merits adjudication after verification of the relevant material.

Issue (iii): Applicability and computation of transfer-pricing adjustment for captive-power supply despite no claimed section 80-IA deduction.

Analysis: The absence of a section 80-IA deduction for the generating unit did not by itself resolve whether the consuming unit claimed excessive expenditure through an inter-unit power price exceeding the arm's length price. Applicability of the transfer-pricing provisions and determination of the correct arm's length price, including the relevance of an internal comparable uncontrolled price, required separate examination.

Conclusion: No final arm's length price is determined. The issue is remitted to determine the applicability of the transfer-pricing provisions, the appropriate comparable price, and any consequential tax effect.

Issue (iv): Sustainability of disallowance computed under section 14A read with Rule 8D(2)(ii).

Analysis: The availability of interest-free funds was not dispositive without identifying the expenditure actually subjected to disallowance under Rule 8D(2)(ii). The voluntary disallowance, the basis of the Assessing Officer's recorded dissatisfaction, the nature of the expenditure considered, and the relevance of interest-free funds required examination for computing disallowance of expenditure relating to exempt income.

Conclusion: No final disallowance is sustained. The issue is remitted for recomputation in accordance with section 14A and Rule 8D after the required factual examination.

Issue (v): Deductibility under section 37(1) of project establishment and supervision expenses capitalised in the accounts.

Analysis: Accounting treatment is not conclusive for tax purposes and cannot override the substantive conditions of section 37(1). Earlier coordinate decisions in respect of identical expenditure had accepted its revenue character, and no reversal or stay of those decisions was shown. Judicial discipline required adherence to that settled position.

Conclusion: The establishment and supervision expenses are allowable as revenue expenditure under section 37(1). This issue is decided in favour of the assessee.

Issue (vi): Addition of foreign-exchange variation cost to closing inventory.

Analysis: The factual basis for adding foreign-exchange variation cost to inventory required verification, including the actual foreign-exchange gain or loss recorded in the accounts and the underlying utilisation and valuation facts. The prior coordinate approach on comparable facts required fresh fact-based adjudication.

Conclusion: No final determination on the inventory addition is made. The issue is remitted for fresh adjudication after verification of the underlying facts.

Issue (vii): Applicability of section 14A disallowance in book-profit computation under section 115JB.

Analysis: The computation under clause (f) of Explanation 1 to section 115JB(2) is independent of the computation under section 14A and Rule 8D. The section 14A disallowance could not be mechanically imported into book-profit computation.

Conclusion: The section 14A and Rule 8D disallowance cannot be added to book profit merely by importing the amount computed under the normal provisions. This issue is decided in favour of the assessee.

Final Conclusion: The statutory-default interest remains non-deductible, while the revenue character of the establishment expenditure and the independent treatment of book-profit adjustments are maintained. The remaining claims require fresh factual and legal determination by the appellate authority.

Outcome: The writ petition was allowed; the impugned original and appellate orders were set aside and the matter was remitted for fresh consideration from the show-cause-notice stage.

Issues: Whether an assessment order based on a show-cause notice uploaded only on the GST portal after cancellation of registration, and passed without a personal hearing, is sustainable.

Analysis: Section 75(4) of the Central Goods and Services Tax Act, 2017 requires an effective opportunity of personal hearing. Uploading a notice on the portal is a valid mode of service; however, where repeated portal notices receive no response, the proper officer must explore other modes of service available under Section 169(1), particularly when the registration has been cancelled. Passing an ex parte assessment without taking reasonable steps to ensure effective service, and without affording a personal hearing, amounts to a breach of principles of natural justice.

Conclusion: The assessment order passed without effective notice and personal hearing is unsustainable for violation of principles of natural justice.

Issues: Whether cancellation of GST registration should be set aside and a further opportunity granted to seek revocation of registration.

Analysis: Having regard to the stated reasons for the failure to pursue available remedies and the difficulties faced by assessees who are not technically equipped, a further opportunity was considered appropriate. The relief was conditioned on applying for revocation, furnishing proposed returns, payment of due taxes, and substantiating the intended place of business.

Conclusion: The cancellation order was set aside, with directions for consideration of the revocation application and restoration of registration if the request is accepted.

Issues: Whether reassessment proceedings under sections 148A and 148 could be initiated on the basis of material found during a search conducted before 1 April 2021, instead of invoking the search-assessment mechanism under sections 153A/153C.

Analysis: The statutory saving under section 149 preserves the search-assessment regime for searches initiated on or before 31 March 2021. Since the search was conducted on 11 April 2017, the jurisdictional route available on the basis of the search material was under sections 153A/153C. Reassessment under sections 147/148 may be invoked only on material independently obtained after the search, subject to fulfilment of the statutory conditions; it cannot replace the prescribed search-assessment procedure for incriminating material found in the search.

Conclusion: The notice under section 148A(b), the order under section 148A(d), and the consequential notice under section 148 were without jurisdiction and were quashed.

Issues: (i) Whether BNR Udyog Ltd., Firstsource Solutions Ltd., HCL Technologies Ltd. and Fortune Infotech Ltd. should be excluded as comparables because of significant related-party transactions; (ii) Whether the assessee could seek exclusion of comparables originally selected in its transfer-pricing study; (iii) Whether Maple Esolutions Ltd., Triton Corp Ltd., Spanco Telesystems and Solutions Ltd., Wipro Ltd. and Iservices India Pvt. Ltd. should be excluded because of material differences affecting comparability.

Issue (i): Whether BNR Udyog Ltd., Firstsource Solutions Ltd., HCL Technologies Ltd. and Fortune Infotech Ltd. should be excluded as comparables because of significant related-party transactions.

Analysis: A related party transaction filter serves to exclude an uncontrolled entity whose operating profitability may be materially influenced by controlled dealings. The filter is not confined to related-party sales, since related-party operating costs and other operating transactions may also affect the net margin. The verified related-party transaction percentages of the disputed entities substantially exceeded the 25% threshold applied in the comparability analysis, and no factual error in the underlying financial data was established.

Conclusion: The exclusion of the four related-party transaction comparables is sustained, in favour of the assessee.

Issue (ii): Whether the assessee could seek exclusion of comparables originally selected in its transfer-pricing study.

Analysis: The prior remand expressly required adjudication of the assessee's challenge to those comparables. A comparability analysis under Rule 10B is directed at determining a reliable arm's length price; initial selection of an entity does not prevent its exclusion where subsequent examination establishes that it fails the applicable comparability parameters. There is no estoppel against determination of the correct arm's length price.

Conclusion: The assessee was entitled to seek exclusion of the originally selected comparables, in favour of the assessee.

Issue (iii): Whether Maple Esolutions Ltd., Triton Corp Ltd., Spanco Telesystems and Solutions Ltd., Wipro Ltd. and Iservices India Pvt. Ltd. should be excluded because of material differences affecting comparability.

Analysis: Rules 10B(2) and 10B(3) require evaluation of functions performed, assets employed, risks assumed, and other factors materially affecting profitability. Maple Esolutions Ltd. and Triton Corp Ltd. had unreliable or abnormal financial results arising from an acquisition and extraordinary growth. Spanco Telesystems and Solutions Ltd. reflected a materially different outsourcing model and unreliable segmental profitability due to unallocated corporate expenses. Wipro Ltd. had diversified operations, substantial product revenue, significant scale and valuable brand intangibles, unlike a contact-centre service provider. Iservices India Pvt. Ltd. rendered diversified and higher-end web, hosting, domain and email-management services, with no reliable segmental data isolating any comparable activity. TNMM tolerates only differences that do not materially affect net margins or can be neutralised through reliable adjustments.

Conclusion: The exclusion of Maple Esolutions Ltd., Triton Corp Ltd., Spanco Telesystems and Solutions Ltd., Wipro Ltd. and Iservices India Pvt. Ltd. is sustained, in favour of the assessee.

Final Conclusion: The arm's length price is to be determined without the excluded entities through a comparability analysis compliant with Rule 10B.

Ratio Decidendi: Under TNMM, an entity cannot be retained as a comparable where controlled transactions, material functional or business-model differences, extraordinary events, valuable intangibles, or unreliable segmental results materially affect profitability and cannot be neutralised by reliable adjustments.

Issues: Whether penalty under Section 271G of the Income-tax Act, 1961 could survive after the transfer-pricing adjustment forming its basis had been deleted in the quantum proceedings.

Analysis: An identical penalty on substantially similar facts for an earlier assessment year had been deleted, and that deletion had been sustained. The quantum addition underlying the impugned penalty had also been deleted and the deletion affirmed. Since the foundation for the penalty no longer existed, the same approach was applied consistently.

Conclusion: The deletion of penalty under Section 271G was sustained, in favour of the assessee.

Issues: Whether reassessment-initiation steps could be sustained when the computation and material supporting the alleged undisclosed turnover, and other adverse propositions, were not disclosed before the determination under Section 148A(3).

Analysis: The statutory process requires that the assessee be notified of the definite information and propositions proposed to be relied upon and be afforded a reasonable opportunity to respond before a determination leading to reassessment proceedings. The notice identified alleged undisclosed turnover, but did not disclose its computation. The response explained that bank credits could not automatically be treated as turnover and offered further particulars. The subsequent determination additionally relied on allegations concerning use of firms for parking or rotating funds, unsecured loans, expenses and accounting practices, none of which formed part of the show-cause notice or was supported by disclosed material. Proceeding without supplying these details would convert reassessment into a roving enquiry. Approval is to be granted after examination of all relevant material.

Conclusion: The impugned reassessment-initiation order, approval and notice could not stand without disclosure of the computation and supporting material and a fresh reasonable opportunity to respond; the matter requires reconsideration in accordance with that process.