TaxTMI Updates e-Newsletter
Jan 16,2026

Seeking grant of interim bail - Seeking for grounds of arrest - legality of arrest of accused No.1 and 2/2nd petitioner and father of the 1st petitioner - it is contended that the grounds in the grounds of arrest or reasons in the reasons to believe are not justiciable under Article 226 of the Constitution of India - HELD THAT:- A three Judge Bench of the Apex Court in the case of RADHIKA AGARWAL v. UNION OF INDIA [2025 (2) TMI 1162 - SUPREME COURT (LB)], considers this issue elaborately. The Apex Court holds that Cr.P.C., is applicable to proceedings of arrest under the provisions of the Act and the requirement of issuance of notice under Section 41A of the Cr.P.C., is imperative.

The Apex Court in the afore-quoted judgment considers various issues, right from applicability of the Cr.P.C., for proceedings of arrest. The Apex Court was following the earlier judgment in the case of ASHOK MUNILAL JAIN v. ASSISTANT DIRECTOR, DIRECTORATE OF ENFORCEMENT [2017 (3) TMI 1642 - SUPREME COURT]and holds that in view of Section 4(2) of the Cr.P.C., the procedure prescribed under the Cr.P.C., would apply to the special statutes unless, expressly barred or prohibited. The Apex Court further holds that legality of arrest under the special enactment including the Act if challenged, the Court should be extremely loathe in exercising its power of judicial review. Frequent or causal interference in the functioning of the authorised officers who have been specially conferred with the powers to combat serious crimes may embolden the unscrupulous elements to commit such crimes.

Therefore, minor procedural lapses on the part of the authorised officers may not be seen with magnifying glass.

The submission of the learned senior counsel is that this Court should show mercy or sympathy and release the accused No. 2/petitioner No. 2 on bail. This submission if accepted, would be exercising jurisdiction on misplaced sympathy and would undoubtedly open pandora’s box, as if this Court would entertain the subject petition notwithstanding the finding of no illegality in the arrest proceedings and only on mercy. The mercy can vary from case to case; sympathy can also vary from case to case. Therefore, the facts in the case at hand cannot be termed as so exceptional, that this Court in exercise of its jurisdiction under Article 226 r/w Section 482 of the Cr.P.C., should entertain the petition and grant interim bail.

The petition found wanting in entertainability, for grant of interim bail, stands rejected.

Seeking grant of regular bail - availing and passing on of fraudulent ITC - genuineness of the firm and its business - pendency of trial/ investigation, in offence under Sections 132(1)(B), 132(1)(C) read with 132(5) of Central Goods and Services Act, 2017 punishable under Sections 132(1)(I) of the CGST Act, 2017 read with Section 20(XV) of the IGST Act, 2017 - HELD THAT:- The prosecution case is based upon documentary evidence which have already been collected and in such circumstances, the benefit of bail should be extended in favour of the accused. In the present case also, petitioner has allegedly claimed false input tax credit to the tune of Rs. 7.46 crores. Maximum punishment prescribed for the said offence is five years and the offence upto evasion of input tax credit to the tune of Rs.5 crore is bailable. All the documents have already been taken into possession from the petitioner and case against him is based on documentary evidence. There is no history of past involvement of petitioner in any such similar case. The offences in question are Magisterial Trial. The petitioner is in custody for the last five and half months and trial is certainly going to take a long time to conclude and as such, no useful purpose will be served by detaining the petitioner in custody anymore and he deserves to be released on bail.

Having regard to the aforesaid factual position, but without commenting anything upon the merits of the case, the petition is allowed and the petitioner is ordered to be released on bail on his furnishing bail bond and surety bond to the satisfaction of learned Trial Court/Duty Magistrate concerned, on usual terms and conditions.

Provisional attachment - limitation and expiry - power of inspection, search and seizure - return of seized goods on failure to issue notice within statutory period - failure to extend statutory period under proviso - consequences - duty to issue notice of confiscation within time - effect of delay - official dereliction and departmental inquiry

Provisional attachment - limitation and expiry - provisional attachment - lifting and defreezing of bank accounts - Provisional attachment of the petitioner's bank accounts ordered on 10.03.2022 had to be lifted as the statutory oneyear period under the relevant provision expired and no fresh order was passed. - HELD THAT: - The Court found on record that a provisional attachment order dated 10.03.2022 was not renewed and the deponent to the affidavitinreply admitted that under the statutory scheme such provisional attachment expires after one year. The respondents did not pass any fresh order to continue the attachment within the statutory period, and therefore the continued freezing of the bank accounts was unsustainable. In view of this omission and the established expiry of the statutory period, the competent authority was directed to lift the provisional attachment and defreeze the accounts within ten days from receipt of the order. [Paras 4, 7, 9]

Respondent no.5 directed to lift the provisional attachment of the bank accounts and defreeze them within ten days.

Power of inspection, search and seizure - return of seized goods on failure to issue notice within statutory period - failure to extend statutory period under proviso - consequences - duty to issue notice of confiscation within time - effect of delay - Goods and cash seized on 14.03.2022 were to be released because no notice was issued within six months as required by the statutory provision and no extension was validly invoked. - HELD THAT: - The Court examined Section 67(2) and (7) as recorded in the judgment and found that goods (gold and bullion) and cash seized during the search were not the subject of the requisite notice within six months; nor was any extension under the proviso validly invoked. The notice of confiscation under the later provision was issued only on 21.06.2024, well after the statutory timelines. Given these omissions, the statutory condition for retention of seized goods did not subsist, and the seized articles and cash were ordered to be released by respondent no.3 within ten days. The Court rejected the departmental explanation for delay as insufficient to cure the failure to comply with the timelimits. [Paras 4, 5, 7, 9]

Respondent no.3 directed to release the goods and cash seized during the search within ten days.

Official dereliction and departmental inquiry - The Court directed an inquiry into the conduct of the officers responsible for the omissions in handling the seizure and attachment. - HELD THAT: - Finding multiple lapses - nonrenewal of provisional attachment, failure to issue notice under Section 67(7) within six months, absence of extension under the proviso, and belated issuance of confiscation notice - the Court concluded there was prima facie dereliction of duty by the officers. The admitted explanation of 'lack of clarity' and reallocation of investigation did not absolve the officers of responsibility for complying with statutory timelines. Accordingly, the Chief Commissioner (respondent no.2) was directed to hold an appropriate inquiry against the concerned officers and report the status of that inquiry to the Court on the next listing. [Paras 7, 8, 11]

Respondent no.2 directed to hold appropriate inquiry against the officer(s) involved and report the status; matter listed to examine the inquiry status.

Final Conclusion: Writ petition allowed to the extent that the respondents are directed to release the goods and cash seized and to lift the provisional bank attachment within ten days; respondent no.2 to initiate inquiry into the officers' conduct and report on the inquiry at the next listing.

Maintainability of petition - availability of alternative remedy - GSTAT has not been constituted and made functional - requirement of pre-deposit before filing an appeal - HELD THAT:- It is no longer res integra that the Writ Court can be approached assailing an order for which the forum of appeal is provided and the same is entertainable in the event the forum is not made functional or constituted as the person cannot be rendered remediless. Equally it is true that if conditions are attached to filing an appeal before such forum, the Writ Court shall ensure strict compliance thereof as a person cannot steal a march taking a shelter that there is no inhibition in the writ Court in entertaining the writ petition and passing an order taking departure from the said statutory provision.

Since the forum has already been provided in the statute, which is now made functional and the period for filing the appeal has been extended in a fragmented manner, it would not be proper for the Writ Court to keep such writ petitions pending as the dispute raised by the petitioner in the instant writ petition can be adjudicated by the said forum and, therefore, the writ petition is disposed of with the directions imposed - The petitioner is directed to deposit the amount if not already deposited, as required under sub-section (8) of Section 112 of the GST Act before the GSTAT to file the appeal within the period specified in the timeline mentioned - petition disposed off.

Jurisdiction of writ court where statutory appellate forum is not functional - pre-condition of deposit under Section 112(8) of the GST Act - entertainability of appeal by the Goods and Services Tax Appellate Tribunal where Tribunal is made functional - extension of time for filing appeals before GSTAT by executive notification

Jurisdiction of writ court where statutory appellate forum is not functional - entertainability of writ petition in absence of functional appellate tribunal - Whether the writ court may be approached in respect of an order for which a statutory forum of appeal exists but is not made functional - HELD THAT: - The Court recognised the settled principle that the writ jurisdiction is available where the statutory forum of appeal is not constituted or made functional and a person would otherwise be left remediless. However, since the statutory appellate forum (GSTAT) has been made functional and a scheme for filing appeals has been notified, the writ petition should not be retained for adjudication of the dispute that can be adjudicated by that forum. The Court therefore directed the petitioner to proceed to the statutory forum rather than keep the writ pending, while expressly refraining from expressing any opinion on the merits of the first appellate order. [Paras 2, 4, 5, 6]

Writ petition disposed directing the petitioner to avail the statutory appellate remedy before the GSTAT; no adjudication on merits by this Court.

Pre-condition of deposit under Section 112(8) of the GST Act - Whether the condition in sub-section (8) of Section 112 (payment/deposit requirement) must be complied with before filing an appeal before the GSTAT - HELD THAT: - The Court observed that conditions attached by sub-section (8) of Section 112 operate as a statutory pre-condition to filing an appeal and that the writ jurisdiction cannot be used to bypass such conditions. Consequently, the petitioner was directed to deposit the amount required under sub-section (8) of Section 112, if not already deposited, before filing the appeal before the GSTAT. The Court emphasised that compliance with the statutory requirement is necessary and that the GSTAT shall entertain the appeal if found to be in order under Section 112 read with relevant rules. [Paras 3, 4, 5]

Petitioner directed to make the deposit required under sub-section (8) of Section 112 before filing the appeal; GSTAT to entertain the appeal if it meets the statutory requirements.

Extension of time for filing appeals before GSTAT by executive notification - entertainability of appeal by the Goods and Services Tax Appellate Tribunal where Tribunal is made functional - Directions concerning the timeline and manner for filing the appeal before the GSTAT following notification and portal "User Advisory" - HELD THAT: - The Court took note of the executive notification specifying timelines for filing appeals before the GSTAT and the accompanying User Advisory which sets out staggered filing windows and a final cut-off. In view of the notification and the fact that the GSTAT has been rendered functional, the petitioner was directed to file the appeal in accordance with the timelines set out in the notification and the User Advisory. The Court directed that if the appeal is filed and found to comply with Section 112 and relevant rules, the GSTAT shall entertain it. [Paras 4, 5]

Petitioner to file the appeal within the timeline set out in the notification and User Advisory; GSTAT to entertain the appeal if in order.

Final Conclusion: The writ petition challenging the assessment/order for April, 2019 to March, 2020 is disposed of; petitioner directed to make the statutory deposit under Section 112(8) (if not already made) and to file the appeal before the GSTAT within the notified timeline, whereupon the GSTAT shall entertain the appeal if it satisfies the statutory requirements; no opinion expressed on the merits of the first appellate order.

Refund of accumulated Input Tax Credit (ITC) - application in Form GST RFD-01 under Section 54(3) of the Central Goods and Services Tax Act, 2017 (the CGST Act) - duly complied with the guidelines of Circular No. 125/44/2019-GST, except that the shipping bills could not be uploaded on the GST portal due to size constraints on the portal - HELD THAT:- Since the refund application had been rejected through Form GST RFD-06 and the refund amount was re-credited through Form GST PMT-03 into the electronic credit ledger, the petitioner again attempted to file a refund application for the period from October, 2021 to May, 2022 for refund of accumulated ITC. However, the GST portal did not allow filing of the application and displayed an error stating that the application for the said period had already been filed.

On 18.11.2022, since the credit remained blocked, the petitioner raised a grievance by email to [email protected], requesting a solution for the error displayed on the GST portal while attempting to file a fresh refund application for the period from October, 2021 to May, 2022. In response to the grievance, the petitioner received a reply dated 22.11.2022 from the GST Helpdesk, wherein it was stated that a refund application for the same period cannot be filed again and that a new refund application can be filed only for the period for which a NIL refund application was filed.

On 02.01.2023, the petitioner filed a fresh refund application in Form GST RFD-01 under the category “Any Other” for the period from October, 2021 to May, 2022. The petitioner further submitted a letter dated 30.12.2022 along with the refund application dated 02.01.2023, enclosing relevant documents in support of the refund claim.

On 19.01.2023, the respondent No.02 issued a deficiency memo in Form GST RFD-03, wherein it was contended that the petitioner had not filed the refund application as per Rule 89(5) of the Central Goods and Service Tax Rules, 2017 (“CGST Rules”) for the period from October, 2021 to May, 2022 and that the refund amount had not been debited from the electronic credit ledger.

The present writ petition is allowed. The respondents are directed to act accordingly, in view of the averments made in the affidavit filed by the petitioner, after verification of the documents.

Profiteering - Respondent is ready to pay the amount as calculated the amount of profiteering against him - seeking a time of three months for making payment since payment is to be made to voluminous homebuyers - HELD THAT:- In view of the above undertaking the report of the DGAP is accepted. The Respondent is directed to pay the amount to the tune of Rs. 67,02,147/- within three months from today to eligible homebuyers - It is directed that the Respondent would be liable to pay the interest to the homebuyers as applicable under Rule 133 (3) of the CGST Rules 2017.

Matter disposed off.

Profiteering - short payment /evasion of tax - collection of tax at 5% instead of 12% - HELD THAT:- Considering the statement of the taxpayer, verification of relevant financial records and corresponding returns, evasion of tax in the present issue is not substantiated.

In that view of the matter, after receipt of the Minutes of the Karnataka State Screening Committee notice was issued to the original complainant to file objections, if any, to such findings. He has not filed any written objections - there are no illegality / irregularity in the Minutes of the Karnataka Screening Committee

Proceedings is therefore closed.

Profiteering - not passing on the benefit of reduction in the rate of GST on admission to cinema halls - contravention of provisions of Section 171 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Section 171 casts a clear obligation to pass on the benefit of reduction in the rate of tax by way of commensurate reduction in prices, and any such reliance on State-level cinema regulation statutes or governmental orders fixing only the maximum permissible ticket rates is, at best, a procedural and regulatory framework and not, by itself, a cogent basis to justify complete non-passing of tax benefits to consumers. A mere plea that they have acted in accordance with the State cinema law or that its tariffs were approved/within the notified ceiling cannot, explain why prices were not reduced even for a single day after the GST rate cut—or how such conduct can be reconciled with the central anti-profiteering mandate; Central law prevails, and the Respondent's compliance with State procedural limits cannot justify retention of tax benefits.

There is no clear statutory methodology; international practice and inconsistency in DGAP approaches make the proceedings arbitrary; “commensurate reduction” must consider wider commercial factors - the statutory mandate under section 171 of the CGST Act is that any reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. The provision does not freeze or regulate the base price of the supplier in the abstract, but requires that the benefit of the tax reduction must reach the ultimate consumer through an objectively commensurate reduction in the consideration actually charged for the supply.

In interpreting section 171, the Hon’ble Delhi High Court in Reckitt Benckiser India Pvt. Ltd. vs. Union of India, [2024 (1) TMI 1248 - DELHI HIGH COURT] has held that while a supplier is at liberty to set and vary base prices in accordance with commercial and economic factors and applicable laws, such increase in base price must be a genuine exercise and not a mere pretence to appropriate the benefit of tax reduction. The Court has clarified that any presumption of reduction in prices is rebuttable; however, if the supplier asserts other factors as justification, such factors must be established on a cogent basis and cannot be employed as a device to circumvent the obligation of commensurate reduction contemplated under section 171.

GST component should not be treated as profiteering since it was remitted to Government; investigation period should be shorter to reflect changing costs. The Respondent's contention that the GST component (quantified at approximately Rs. 69,455/-, comprising excess GST per ticket such as Rs. 0.53/- for Maharaja Circle Rs. 0.37/- for Dress Circle, and Rs. 0.15/- for First Class) ought to be excluded from the profiteered amount since all collected GST was duly remitted to the Government exchequer without any loss to public revenue, is wholly untenable and contrary to the statutory scheme under Section 171 of the CGST Act.

Section 171 mandates the pass-through of tax rate reduction benefits to the recipient/consumer through commensurate reduction in the total price charged (base price + tax thereon); the consumer suffers the economic detriment of paying the inflated all-inclusive ticket price, irrespective of whether the supplier remits the embedded GST portion to the exchequer. The legislative intent, as upheld in Mallikarjuna Cinema Hall [2025 (9) TMI 1045 - GSTAT NEW DELHI], is to ensure that the entire benefit reaches the ultimate consumer, precluding unjust retention by the supplier; thus, the profiteered amount comprises both the excess base price charged and the GST collected on such excess base.

Interest under Rule 133(3)(c) is only prospective from 28.06.2019 - interest liability arises only pro-rata for the three days within the investigation period falling on or after 28.06.2019 (i.e., 28.06.2019 to 30.06.2019), computed on 3/181 of the total profiteered amount of Rs. 11,88,482/- which sum is negligible and, in line with the Mallikarjuna precedent, waived in exercise of discretion. No interest is payable for the period prior to 28.06.2019.

Interest and penalty - HELD THAT:- There is no flaw in the DGAP's methodology for computation profiteered amount under Section 171 of the CGST Act, there is no single fixed formula that fits every case, especially in the cinema business, where factors like different movies, show timings, weekdays vs. weekends, and ticket classes vary from hall to hall and case to case. It is pertinent to note that the Respondent never disputed the numbers or method of computation in Tables A and B during the hearings before the Bench - Respondent has contravened the provisions of Section 171 of the CGST Act by not passing on the benefit of reduction in GST rates commensurately to the recipient and thus the Respondent has profiteered an amount of Rs. 11,88,482/- - Further, it is held that no penalty under Section 171(3A) of the CGST Act is imposable, because that provision came into force only after 01.01.2020, long after the violation period ended. The jurisdictional Commissioners of CGST and SGST, along with the DGAP, will monitor the compliance this order.

A report in compliance of this order shall be submitted to this Tribunal by the concerned Commissioner within a period of four months from the date of receipt of this order - A copy each of this order shall be supplied to the Respondent and to the concerned Commissioner CGST / SGST for necessary action.

Validity of draft assessment order and final assessment order as barred by limitation u/s 153(2A) - Scope of the word “received” - Tribunal held the draft assessment order and final assessment order passed by the AO are barred by limitation u/s 153(2A) - HC [2024 (2) TMI 1046 - DELHI HIGH COURT] confirmed the ITAT order as held while examining the issue of limitation, one would have to pose the question of when the Department became aware of the order and not when the concerned Commissioner or Principal Commissioner may have been served or had derived knowledge

HELD THAT:- In view of the fact that SLP [2025 (11) TMI 174 - SC ORDER] arising out of the same impugned judgment, has already been dismissed by this Court we see no reason to take a different view in the instant matter.

Royalty v/s business income - distribution revenue earned by the appellant assessee - taxed as royalty, as per section 9(1)(vi) and Article 12 of the DTAA between India and the USA OR a business income -

Delay of 538 days in filing this Special Leave Petition

As decided by HC [2024 (3) TMI 1349 - DELHI HIGH COURT] fact of the Mutual Agreement Procedure having been adhered to by respective parties and consequent to the adjudication completed therein, the assessee having agreed to pay 10% of advertising and subscription revenue is not disputed.

HELD THAT:- As we do not find any plausible and bona fide explanation to condone this inordinate delay. Special Leave Petition is, accordingly, dismissed on the ground of delay.

Maintainability of appeal before High court on low tax effect - monetary limits prescribed in CBDT circulars

As decided by HC [2025 (2) TMI 1318 - BOMBAY HIGH COURT] as the tax effect in this case is Rs.16.09 Lakhs. This Appeal was instituted on 5 April 2018. Therefore, following our order in [2025 (2) TMI 835 - BOMBAY HIGH COURT] and the CBDT circular, we decline to entertain this Appeal. Appeal is declined entertainment and disposed of on the ground of tax effect.

HELD THAT:- No case is made out for interference with the impugned order passed by the High Court. The Special Leave Petition is, accordingly, dismissed.

Application u/s 197 r/w Section 195(3) seeking issuance of a ‘Nil Withholding Certificate’ rejected - Reasoning given by AO is primarily that as an assessment is not possible at the time of consideration of the application, tax is to be deducted at 15% to safeguard the interests of the Revenue - scope of Rule 28AA of the Rules

HELD THAT:- While deciding an application u/s 197 AO needs to satisfy the requirements imposed by Rule 28AA of the Rules, which we have reproduced in paragraph 5 above. The relevant considerations have been laid down therein, which includes:

(i) tax payable on the estimated income of the previous year relevant to the AY;

(ii) tax payable on the assessed or returned income or estimated income for the last four previous years;

(iii) existing tax liability under the Act and the Wealth Tax Act, 1957; and

(iv) advance tax payment (tax deducted at source and tax collected at source) for the AY relevant to the previous year till the date of making the application.

As is apparent, the impugned order does not state whether these factors were really considered by the assessing officer while reaching his conclusion.

As the assessing officer not having considered the issue from the perspective of Rule 28AA of the Rules, it must be held that the statutory requirement on which the application of this nature needs to be decided has not been satisfied. As such, we are of the view that the impugned order and certificate passed by the assessing officer is untenable and is liable to be quashed.

We remand the matter back to the AO who shall consider the application filed by the petitioner/assessee afresh, keeping in view the mandate of the law, specifically Rule 28AA of the Rules, and without being influenced by the filing of the appeal/application against the orders of the Tribunal for AYs 2020-21 and 2021-22, unless the same are set aside or varied either by this Court or by the Tribunal.

Proceedings u/s 195(2) - rejecting the application of the petitioner for granting a Nil Withholding Certificate - virtual service permanent establishment - AO was of the view that there exists a virtual service permanent establishment of the petitioner in India, thus, the income from India is liable to be taxed as business income under Article 5(k) of the DTAA

HELD THAT:- The issue of virtual service permanent establishment had come up for interpretation before us in the case of Clifford Chance [2025 (12) TMI 501 - DELHI HIGH COURT] as interpreted the words “within a Contracting State through employees or other personnel” held that DTAA, which has been carefully drafted and executed after numerous rounds of bilateral deliberations and negotiations at the highest level, must necessarily be interpreted strictly. If something is conspicuous by its absence, the presumption is that it has deliberately been done so. It is not for courts to read in concepts which are not expressly provided for by the treaty. The guiding principle here is that language which is not explicitly included in treaty provisions cannot be artificially read into such provisions by way of judicial fiction.

As already stated, Article 5(6) of the DTAA only contemplates rendering of services by employees present within the country. If that be so, it is not for this Court to analyse the status or merits of a virtual service permanent establishment which does not find mention either in the DTAA or in the domestic Act. As such, the contention of the Revenue that a virtual service permanent establishment of the assessee has been established for AYs 2020-21 and 2021-22 cannot be accepted.

Since the words “within the Contracting State” has a territorial connotation, in the absence of personnel physically performing services in India, there can be no rendering of services within India and as such there can be no virtual service permanent establishment as contended by the Revenue, more so, when such a concept is not contemplated by the DTAA or the domestic Act. As such, the submission of Respondent justifying the impugned order cannot be accepted. His plea that Article 5(2)(k) of the DTAA merely requires furnishing of services through employees or other personnel within the Contracting State and does not mandate physical presence, is unmerited, in view of the law laid down in Clifford Chance (supra).

Petitioner submitted that in view of the facts which arise for consideration in this case, this Court may exercise the powers under Article 226 of the Constitution of India and set aside the order without remanding the matter to the assessing officer, which submission is contested by Respondent.

We are of the view that it shall be appropriate to set aside the impugned certificate and order and remand the matter back to the assessing officer, who shall pass a fresh order on the application filed by the petitioner keeping in view the conclusion drawn by us, within a period of two weeks.

Correct head of income - profit earned by the assessee on sale of land - ‘capital gains’ or ‘business profits’ - any incidence of business activity - Scope of Circular No.4/2007 dated 15.06.2007 making a distinction between a "capital asset" and a "trading asset" - Assessing Authority noted that property development figured as a line of activity in the financials - principles to determine whether the transaction was an adventure in the nature of trade - subject land had been acquired many years ago by the assessee as industrial land and had been reflected in the financials of the company as such, without any development.

HELD THAT:- There is no category of assets under the head ‘investments’ in the financials for year ending 31.3.2001, prior to amalgamation. This category of assets is found only in the financials for year ending 31.03.2002 onwards and according to the assessee, only the assets that devolved upon it post amalgamation with Shaw Wallace are classified as ‘investments’.

The land for development has thus been identified as a separate block of assets distinct and different from the freehold land, which is the original asset base of the assessee comprising fixed assets purchased over the years.

We see no necessity to integrate the two, as such integration would be contrary to the treatment that has been accorded by the assessee, both in the accounts as well as by conduct. The Department has not raised any suspicion in regard to the accounts of the assessee.

Accounts reveal that the assessee holds fixed assets, including freehold land, being land purchased over the years and held as is, without any development. Post amalgamation with Shaw Wallace, it acquired parcels of land which it held as a separate inventory, under the head ‘investments’.

The subject land admitted, falls within the category of fixed assets held by the assessee for several decades. The Department does not dispute the factual position that the assessee had engaged in similar sales for the year prior to, and post the present assessment year, viz., for AY 2003-04 and 2005-06 as well.

For AY 2003-04, the return filed by the assessee offering the sale consideration under the head ‘capital gains’ has been accepted in the assessment made under scrutiny vide order dated 28.02.2006. The Assessing Authority has dealt with the sale of two sheds at Ambattur Industrial Estate bearing Nos.A9 and D18 and the sale consideration of those properties at Rs.50.00 lakhs and 45.00 lakhs respectively.

He had put forth a proposal for adopting the valuation of the Registering Authority at Konnur which was countered by the assessee seeking reference to the valuation cell. Ultimately, the assessment was completed adopting the fair market value as set out in the valuation report of the Valuation Officer. Hence, this is not an issue that has passed muster in a routine manner, but one where the Assessing Authority has specifically applied his mind, finding the classification by the assessee and the tax treatment thereof, acceptable.

For A.Y.2005-06 as well, the assessee had treated the sale consideration likewise, as capital gain.

Circular No.4/2007 dated 15.06.2007 issued by the CBDT makes a distinction between shares held as stock-in-trade and as investment, and the different tax treatment to be accorded to the two categories, and supports the present case.

The error committed by the CIT(A) is in not noting that the assessee had sold off only a portion of those parcels of land that were held by it as fixed assets, and in respect of which there had been no development. The classification as a capital asset, was not merely on the ground of the accounting treatment, but also in the manner of holding of the asset, and the intention and conduct of the assessee over the years.

That apart, he erred in stating that the assessee had engaged in such sales in a routine and regular manner. There is no evidence to support such a conclusion. Decided in favour of assessee.

Bogus purchases - onus to proof - addition made in the absence of any verification made from the parties /any confirmation made by the parties -acceptance of sales - only two parties replied, had responded to notices u/s 133(6) of the Act but did not furnish complete details and one of the parties did not reply

HELD THAT:- Assessee is engaged in manufacturing and trading of non-ferrous metal. It is quite logical that without purchases, there could not be any sales. The sales turnover of the assessee has duly been accepted by AO.

Merely because few of the suppliers have not filed their Income tax returns or the fact that they did not have any valid email Ids, the purchases could not be disallowed. In two cases, the purchases have been doubted merely because in response to notices u/s 133(6), requisite details were not filed by these two parties. However, none of the parties is found to be non-existent.

Assessee would have no control over third party suppliers. When the transactions have been carried out, all the suppliers were having valid PAN, GST registrations and Bank Account. All the payments to the suppliers are through banking channels only. The assessee duly substantiated these purchases before Ld. AO by filing various documentary evidences which include purchase invoices. Ledger extracts and GST registration details of all the suppliers. The copies of bank statement would reveal that all the payments by the assessee are through banking channels only. The assessee has maintained quantitative details and no defect has been pointed out in the books of the assessee.

AO has made substantial disallowance of purchases which is more than 40% of total purchases as made by the assessee. The financial results of the assessee, for this year, are in line with financial results of earlier years and no abnormality could be noticed in the same. Net Profit Rate for this year is not abnormally low. Addition deleted - Decided in favour of assessee.

Allowability of club subscription charges- expenses are personal in nature OR wholly and exclusively for the purpose of business - CIT (A) partly deleting the addition being 50% as against the total addition made by the AO - HELD THAT:- Tribunal found that no query was raised by the AO during assessment proceedings so the assessee had no opportunity to explain admissibility - CIT(A) sustained a 50% disallowance without reasoning/ justification for the same. In our opinion, the disallowance cannot be made on estimation and presumption basis as has been held in the case of Daulat Ram Rawatmull [1972 (9) TMI 9 - SUPREME COURT]

Also club expenses incurred by the assessee which is a corporate entity is wholly and exclusively admissible as has been held in the case of United Glass Mfg. Co. Ltd [2012 (9) TMI 914 - SUPREME COURT] and JOHNSTON PUMPS (INDIA) LIMITED [1986 (7) TMI 14 - CALCUTTA HIGH COURT]

We modify the finding of the CIT (A) and direct the ld. AO to delete the entire addition. The ground no.1 is allowed

Addition u/s 14A r/wRule 8D- expenditure incurred on earning exempt income - assessee submitted before the AO that it had not incurred any expenses for earning the exempt income - HELD THAT:- We find merit in the plea of the assessee that if at all the disallowance u/s 14A is to be made that has to be restricted to an amount calculated on the basis of these investments which yielded exempt income only. The case of the assessee find support from the decisions of KESORAM INDUSTRIES LIMITED [2022 (1) TMI 995 - CALCUTTA HIGH COURT], M/S. REI AGRO LIMITED [2022 (3) TMI 1549 - CALCUTTA HIGH COURT] AND M/S. ELECTROSTEEL CASTINGS LTD. [2019 (3) TMI 687 - ITAT KOLKATA] - we set aside the order of ld. CIT (A) on this issue and direct the ld. AO to restrict the disallowance to exempt income only.

MAT computation - addition as made by AO u/s 14A r.w.r. 8D to the book profit u/s 115JB - HELD THAT:- AO has added the amount of disallowance to the book profit as computed u/s 115JB of the Act which in our opinion is wrong and cannot be sustained. CIT(A) confirmed the order of the lower authorities AO on this issue. The case of the assessee is squarely covered by the decision of Apollo Tyres Ltd. [2002 (5) TMI 5 - SUPREME COURT] wherein held that adjustment are not provided in section 115J of the Act cannot be made to increase book profit for the purpose of Section 115J. Decided in favour of assessee.

Disallowance of exemption u/s 10(26AAA) - assessee did not furnish a ‘Sikkim Subject Certificate’ - assessee is Sikkimese individual assessed as such and has been residing in the state of Sikkim -domicile in Sikkim - assessee is a member of bonafide domicile old settlor of Sikkim and is also member of association of old settlers of Sikkim and has been issued certificate to this effect by the said association - HELD THAT:- Association of old settlor of Sikkim has been in litigation before the Hon’ble Supreme Court to contest for the entitlement of the benefit u/s 10(26AAA) of the Act of Old Settlers of Sikkim and Hon’ble Supreme Court in the case of Association of Old Settlers of Sikkim vs. Union of India [2023 (1) TMI 583 - SUPREME COURT] struck down the earlier definition of Sikkimese in section 10(26AAA) of the Act as unconstitutional because it excluded the old settlers from its ambit by holding that such exclusion was arbitrary, discriminatory and violative of Article 14.

The Hon’ble Supreme Court has held that old settlers are fully entitled to exemption u/s 10(26AAA) of the Act and directed that they must be treated at par with other Sikkimese individuals. The Parliament by the Finance Act, 2023 amended section 10(26AAA) of the Act retrospectively from 01.04.1990 by adding explanation to amended section providing that where it is established that an individual or its father or other specified relative was domiciled in Sikkim on or before 26.04.1975 then any individual whose name does not appear in the Register of Sikkim Subjects is entitled to the benefit. Decided in favour of assessee.

Unexplained cash credit u/s 68 being gift received from relative - We observe that the assessee has filed some additional evidences before us which were not available before the before the AO as well as well as before the Ld.CIT(A). The assessee has filed an application for admission of these additional evidences comprising ITR Acknowledgement and final accounts of the donor brother, ledger copy in the books of the assessee etc. - As the brother of the assessee has full source and creditworthiness to make the gift in favour of the assessee. The assessee has also proved the identity and relation of the donor by filing these evidences. Therefore, we admit these evidences and restore this issue back to the file of AO with the direction to decide the issue afresh.

Penalty u/s 271D - violation of section 269SS - amount reflected in the books was only a journal entry passed to record a cheque payment to third party - HELD THAT:- We find that in this case the assessee has not received any payment in violation of section 269SS of the Act as the amount stated to be repaid was by way of account payee cheque to M/s Gawar Constructions which was paid by Shri Mahabir Prasad Agarwal directly to the said construction company on behalf of the assessee. As examined the copy of bank statement of Central Bank of India in the case of Mahabir Prasad Agarwal of the appellate order and find that there is no cash involved and is only just journal entry to which provisions of section 269SS of the Act are not applicable. The case of the assessee is squarely covered by the decision of Noida Toll Bridger Co. Ltd. [2012 (11) TMI 556 - ALLAHABAD HIGH COURT] wherein it has been held where transactions are effected only through books adjustment and no cash passes between the parties, section 269SS of the Act is not attracted. We direct the AO to delete the penalty.

Penalty levied u/s. 272A(1)(d) - assessee has failed to comply with the statutory notices u/s. 142(1) -notices were issued on wrong e-mail id/husband's ID by the assessing officer - Scope of legal maxim “Expression unius est exclusion alterium” - as submitted husband of the assessee was suffering continues illness, hence could not access the email-id - HELD THAT:- Assessee has herself registered her e-mail with the Income Tax Department. However, Income Tax Department (AO) issued notices on the e-mail id of her husband, hence assessee was not aware about the notices issued by the AO.Husband of the assessee could not open his e-mail id, as the husband was feeling severe illness and the assessing officer did not send the notices on the e-mail id of the assessee (herself), which was registered with Income Tax Department. As noted that when assessee herself had furnished his e-mail id to the Income Tax Department, then AO should have served the notices on the e-mail id of the assessee and not on the e-mail id of her husband.

Law is well settled that when the statue required to do certain thing in certain way, the thing must be done in that way or not at all. Other methods or mode of performance are impliedly and necessarily forbidden. The aforesaid settled legal position is based on a legal maxim “Expression unius est exclusion alterium” meaning thereby that if a statue provides for a thing to be done in a particular manner, then it has to be done in that manner.

AO has failed to issue notices on the e-mail id of the assessee(herself), hence, penalty should not be levied on the assessee - Appeal of the assessee is allowed.

Addition u/s 69A - addition based on a third-party ledger - Reliance on dump ledger -as per AO considering the smallness of the amount an estimated addition @ 10% should be made in the hands of the assessee - assessee is engaged in providing tuitions to students. The original return of income has not been filed, by the assessee, as her total income was below basic exemption limit

HELD THAT:- Entire assessment has been initiated and completed solely on the basis of a single document, an alleged dump ledger, which is digital and editable, and which contains incomplete particulars and does not bear signature or handwriting of either of the parties.

Additionally, the assessment is solely based on a statement recorded under section 132 of the Act from a third party, the builder, during a search operation. However, the Assessing Officer failed to provide a copy of the said statement to the assessee and did not grant any opportunity for cross examination, despite such a request having been made. This amounts to a serious procedural lapse and violation of the assessee's fundamental right to a fair hearing.

Both parties have agreed for adhoc addition/estimated addition, and entire on money cannot be treated profit of the assessee and only profit element of the “onmoney”, may be taxed, in the hands of the assessee, therefore, to meet the end of justice, direct the A.O. to make disallowance @ 30% of Rs. 80,000/-, which comes to Rs. 24,000/-, by applying normal rate of income. Appeal filed by the assessee is partly allowed.

Estimation of agricultural income - estimating production of wheat and coriander at 3640 Kgs and 960 Kgs as against the actual production - treating excess income from agriculture activities as income from undisclosed source on the alleged that the assessee failed to produce sales bills - assessee has cultivated groundnut in Kharif Crop season and assessee has cultivated Wheat and Jiru for Ravi Crop season.

HELD THAT:- Assessee has earned total Agriculture Income of Rs. 8, 14,000/- for two crop seasons, which the assessing officer did not accept, and assessing officer used the data collected from Agriculture University, Junagadh, which are not applicable to the assessee, under consideration, as the production of agricultural commodities depends upon climate condition, monsoon condition, weather condition, land condition etc, therefore, university data, which is only for academic purpose, cannot be used in the assessee`s case under consideration.

Assessee took one crop in Kharif Crop on Monsson season and the crop in Ravi season on own source available with him or nearby other agriculturist.

Area of land shown by the assessee in the land holding documents are not sufficient to produce such agricultural income, therefore, find that some of the documents and evidences submitted by the assessee are self -servicing, evidences and documents, therefore should not be relied fully. However, considering these facts and circumstances, and considering the smallness of the amount both have agreed that the ad-hoc, estimated addition of Rs. 50,000/- may be made in the hands of the assessee to meet the end of Justice.

Addition u/s 56(2)(x) - assets received by the assessee pursuant to scheme of demerger - violation of Section 2(19AA) - ‘real estate undertaking’ of OSAIPL had been demerged into the assessee - NCLT sanction of scheme / appointed date - assessee is a publicly listed company which is engaged in the business of real estate development - as alleged demerger was not in compliance with the provisions of Section 2(19AA) - AO is found to have held that, though all the current assets pertaining to the real estate undertaking was transferred, but according to him, the liabilities which corresponded to these assets were not transferred by the assessee resulting in violation of the condition laid down in Section 2(19AA)(ii)

As alleged valuation exercise undertaken to ascertain the swap ratio for allotment of shares to the shareholders of OSAIPL pursuant to the scheme of demerger was neither fair nor in accordance with Rule 11UA of the Income-tax Rules

HELD THAT:- We firstly agree with the argument of the assessee that, Section 2(19AA)(iv) only stipulates proportionate share allotment of resulting company to shareholders of demerged company and there is no mention of any share valuation therein and therefore the case sought to be made out by the Revenue is wrong and misplaced.

Rule 11UA has been notified only for the purposes of Section 56 of the Act and not for other provisions. AO is not justified in importing the said Rule into Section 2(19AA)(iv) of the Act, even when the provision itself does not stipulate so. We further note that, CIT(A) has also examined the valuation exercise undertaken by the registered valuer of the assessee in light of the observations of the AO and found the valuation to be fair. CIT(A) observed that, the valuation arrived at by the registered valuer [Rs. 90 per share] was higher than the prevailing market value on the appointed date of demerger i.e. 01.04.2019 [Rs.120.55 per share] and therefore there was no inadequacy of consideration paid to the shareholders of OSAIPL

Scheme of demerger in question was compliant with Section 2(19AA) r.w. Section 47(vi) of the Act. Hence, the assessee was covered by the exception carved out in Clause (IX) to Section 56(2)(x) of the Act and thus the Ld. CIT(A) had rightly deleted the impugned addition made u/s 56(2)(x) of the Act.

The Tribunal upheld deletion of the addition made u/s 56(2)(x) and held the demerger compliant with Section 2(19AA) r.w. Section 47(vi), dismissing the Revenue's contentions.

Binding value of the NCLT order - We agree with the Ld. DR that, mere sanction of scheme by NCLT does not bind the Income-tax Department regarding the tax implications arising from the scheme. Instead, it is open to the Revenue to examine the Scheme w.r.t. the tax implications and such examination would be the exclusive domain of the tax authorities at the time of assessment even if during the subsistence of the Scheme before the NCLT, the Revenue did not object to the Scheme or provide objections.

DR was also unable to controvert the fact that the scheme of demerger became effective from the Appointed Date 01.04.2019 i.e. AY 2020-21 and that there was no event of demerger in FY 2020-21 relevant to impugned AY 2021-22. We are therefore in agreement with the Ld. CIT(A)’s findings that there was no event which took place pursuant to the scheme of demerger, in the relevant AY 2021-22, for which any tax consequence could have been legally inferred or arisen in the relevant AY 2021-22. We uphold the order of Ld. CIT(A) deleting the addition made by the AO u/s 56(2)(x) of the Act.

Non-deduction of TDS u/s 194IC - payment made for acquisition of their Project - slump sale u/s 50B - CIT(A) had rightly held that provisions of Section 194IC had no application to the impugned payment made pursuant to the MOU dated 25.03.2021 as undisputed that the said agreement was 'unregistered' and that the consideration is in the form of cash alone. It is seen that the criteria (i) & (iii) cited above are not met, and thus the agreement dated 25.03.2021 fails to qualify as a 'specified agreement' as defined in Explanation (ii) to Section 45(5A) of the Act. Accordingly, the applicability of provisions of Section 194IC fails. Therefore, agree with the appellant’s contention that NFAC’s direction to the JAO to refer the matter to AO, TDS for alleged non-deduction of TDS u/s 194IC of the Act is unjustified. Appeal is allowed on these grounds.

Addition being waiver of non-convertible debentures - revenue receipt taxable u/s.28(iv)/41(1) V/S capital receipt - AO observed that debenture holders of the Assessee-Company had waived off their right in debenture payable - Assessee treated it as capital receipt - AO disagreed with submission of assessee - whether the waiver of debentures is taxable or not? - Assessee explained that it was a long term borrowing duly reflected in balance sheet

HELD THAT:- Hon’ble Supreme Court in the decision of CIT Vs. Mahindra & Mahindra Ltd [2018 (5) TMI 358 - SUPREME COURT] held that Section 28(iv) does not apply on the receipts which are in the nature of money.

In the present case, Assessee had borrowed loan. Therefore, we hold that Section 28(iv) of the Act, is not applicable in the case of the Assessee. Hence, no addition can be made u/s.28(iv) of Rs. 75 lakhs.

As far as applicability of Section 41(1) is concerned, AR specifically submitted that no interest was debited to profit and loss account. Revenue has not rebutted this fact. Neither the Assessing Officer, nor the CIT(A) has brought on record any evidence to prove that any of the interest pertaining to Rs. 75 lakhs was debited to profit and loss account. Therefore, we hold that no addition can be made u/s.41(1).

Accordingly, we direct AO to delete the addition.

AO has not allowed set-off of brought forward business loss and unabsorbed depreciation - CIT(A) merely brushed aside the ground stating that assessee has not furnished credible proof. We failed to understand what kind of credible proof ld.CIT(A) was looking for. This is sheer lack of application of mind by ld.CIT(A).

In the assessment order in the very first sentence, AO has admitted that Assessee had claimed loss - On perusal of the Return of Income filed by Assessee, it is distinctly evident that there was a loss to be carried forward as per Schedule CFL of the Return of Income. Also, Schedule-UD of Return of Income gives the unabsorbed depreciation. Once these facts are on record, there was reason for denying the carried forward of losses and unabsorbed depreciation. In these facts and circumstances of the case, we direct the AO to allow the carried forward of losses and unabsorbed depreciation claimed by Assessee in the Return of Income. Accordingly, Ground No.2 raised by the assessee is allowed.

Denial of benefit of Section 54F - as alleged assessee already owned two residential properties, thus was in violation of sub-clause (i) of the proviso to Section 54F - also assessee have jointly constructed a new residential property - clubbing provisions u/s 64 - AO additionally observed assessee had acquired the shares of Emami Ltd by way of gift from her spouse few months prior to the sale and therefore according to him, this was a colourable device deployed to avail benefit of Section 54F

Case of the AO that, the assessee owns more than one residential house as on the date of transfer of original asset viz., two residential properties, in the present case - HELD THAT:- AO was also unable to disprove the confirmation issued by the tenant that it was the owner of the super-structure / factory constructed over the said land. Therefore, the AO had proceeded on mistaken fact that, the assessee had constructed and was the owner of the super structure on the said vacant land. In our considered view, the property at 13 BT Road comprised of vacant land owned by the assessee and therefore did not qualify as residential property for the purposes of sub-clause (i) of proviso to Section 54F of the Act.

It was also brought to our notice that, the nature and usage of land was industrial in nature and the super structure constructed was a factory, which had been leased out by M/s Sneh Enclave Pvt Ltd (successor to M/s Diwakar Viniyog Private Limited to M/s Emami Limited.

Viewed from any angle therefore, the immovable property at 13 BT Road did not qualify as residential house property and therefore it was to be excluded for the purposes of proviso to Section 54F of the Act.

Jointly held family property - Property located at 110 Southern Avenue, it is not in dispute that, this was a family-owned property and that the assessee was one amongst several co-owners of the property. We find that in the case of Dr. Smt. P.K. Vasanthi Rangarajan [2012 (7) TMI 563 - MADRAS HIGH COURT] has held that if a residential property is jointly owned by two persons, that would not preclude the person (as an assessee) from claiming exemption under section 54F of the Act, as the assessee would not be hit by the proviso to section 54F of the Act, being not the exclusive owner of the residential property. Also decided in Deepak Kothari [2025 (8) TMI 626 - ITAT DELHI] jointly held family property cannot be regarded as ‘residential house’ exclusively owned by the assessee for purposes of sub-clause (i) of proviso to Section 54F - thus we hold that the condition stipulated in clause (i) of proviso to Section. 54F (1) disentitling claim u/s 54F is not satisfied in the present case before us.

Construction had begun much prior to the date of sale - According to the AO, the proceeds received from the sale of shares ought to have been directly utilized for construction of property, which was not done in the present case - Hon’ble Karnataka High Court in the case of CIT vs. Anandraj [2015 (12) TMI 1179 - KARNATAKA HIGH COURT] has held that, there is no requirement for the assessee to directly utilize the sale proceeds for construction / purchase of the property and as long as the amount spent towards construction of the residential house is more than the consideration received upon sale of capital asset, the assessee is entitled to the benefit of Section 54F of the Act.

Thus, there is no stipulation set out in Section 54F which requires the assessee to directly utilize the capital gains for purchase / construction of the residential property. Assessee had complied with the primary conditions of Section 54F viz., she had incurred cost of construction towards a new residential property which was completed within three years from the date of sale of capital asset and therefore the lower authorities were unjustified in denying the benefit of exemption u/s 54F of the Act.

Clubbing provisions u/s 64 - colourable device - Whether transaction involving sale of shares of M/s Emami Ltd was a colourable device to avoid tax? - as per DR shares of Emami Limited were acquired by way of gift by the assessee from her spouse, to which clubbing provisions contained in Section 64 would have applied and that the spouse was ineligible to claim exemption u/s 54F? - HELD THAT:- It is seen from the material placed before us that, the newly constructed property was acquired by the family of the assessee wherein the lead members were the females of the family and that, the act of acquiring and constructing a property in the name of the female members was influenced by their Hindu culture and traditions, where holding residential property in the name of the females of the house is considered to be auspicious. We also find that on similar facts, another female member, Smt. Rashmi Goenka had also claimed exemption u/s 54F in respect of the cost of construction incurred towards the property at 1 Queens Park against the long term capital gains derived on sale of shares of Emami Limited in AY 2020-21, and the NFAC after considering the same factual matrix, had accepted and allowed the exemption so claimed by the said assessee.

Thus, we hold that the assessee is entitled to exemption of capital gain invested in the construction of new property. Decided in favour of assessee.

Benami transaction without satisfaction of three ingredients of the Section 2(9)(A) - fiduciary capacity - acquisition of shares and land - claim of loan repayment found non-genuine - EMC scheme - Non- compliance of the terms and conditions set out under the EMC Scheme and notifications/ guidelines - Whether the payment of consideration by OMIPL while registration of the land in the name of HEPL constitute a benami transaction - HELD THAT:- It is born out from the facts that the loan amount was repaid to the extent of 80% in the very next year. The fact aforesaid has been ignored by the Adjudicating Authority. The respondent contested the issue aforesaid and submitted that HEPL was having hardly any business after its incorporation and more specifically between 10.08.2018 and 14.06.2022. OMIPL gave loan of Rs.12 Crores on 27.06.2018 and remain outstanding for almost two years. It is only when Mr. Mohinder Singh Malik became the majority shareholder of HEPL, he started repaying the amount while the revenue of HEPL was zero till mid of years 2022-2023.

OMIPL was, in fact, having 99.99% shareholding of TEGNA and therefore it was necessary for the OMIPL to reduce its shareholding because as per the condition of the EMC scheme, one unit was not entitled to retain more than 25% of the shareholding and otherwise the SPV was required to have seven constituents. Accordingly, the constituents were got involved with distribution of shares holding in SPV. The HEPL was one of its constituents in the cluster and if we now go back to the issue of advancement of land of Rs.12 Crores to be genuine or not, the fact remains that Mr. Mohinder Singh Malik was introduced by OMIPL to have its control of HEPL. Mr. Mohinder Singh Malik was the Director of the OMIPL and was deeply involved in the affairs of the OMIPL and also found authorized signatory of OMIPL. Thus, plea taken by the appellant that he was non-executive Director was not accepted.

It is evident that prior to making payment to M/s OMIPL funds in the bank account of M/s HEPL were originated from the bank accounts of the personalities belonging to M/s OMIPL, which is clearly an arrangement' where no funds or loan was repaid in actual. In fact, the funds were just rotated among the connected entities and smoke screen was created by the concerned entities to hide the true nature of the transactions. Apart from above, various credits from M's Pacetel System Pvt Ltd. and M Perfect Handling (both entities being controlled by M/s OMIPL through Shri Mohinder Singh Malik) were noticed in the bank account of Shri Mohinder Singh Malik, out of which various FDs were created. This fact clearly indicates that the source of the FDs of Rs. 1.90 crore each, would have been arranged in the same manner.

It is evident that the consideration for acquiring the impugned properties (land+shares) in the name of M/s HEPL was provided by M/s OMIPL and the claim of loan repayment is found non-genuine as this was an arrangement of the entities involved to misguide and deceive the Authorities. No loan was repaid in actual, just funds have been rotated among the same group of parties.

Thus, we do not find any error in the impugned order and accordingly appeals are dismissed.

Provisional attachment - Validity of show cause notice u/s 24(1), issued by the Initiating Officer without independent application of mind and satisfaction - “reasons to believe” - mandate under section 24(1) - recorded prior to the issuance of the notice - Burden of proof as to ownership - failed to establish either the ownership or the source of the entire cash - reason to believe - survey under section 133A of the Income Tax Act, 1961 - HELD THAT:- The examination of the show cause notice under section 24(1) of the Act of 1988 reveals that “reasons to believe” were duly recorded in writing and were conveyed to the appellant. The reasons were framed prior to the issuance of the notice and were thereafter incorporated in the notice. The allegation is that the “reasons to believe” has to be recorded prior to the issuance of the notice, as only after recording “reasons to believe” a notice can be issued. There is no mandate under section 24(1) to separately record reasons to believe rather it has to be given in the notice. Thus, it cannot be said that reasons to believe were not recorded by the IO rather it was conveyed to the appellant even though there is no mandate for it under section 24(1) of the Act.

Even before the CIT(A), the appellant did not come forward with a clear and consistent explanation regarding the ownership of the cash, which is the central requirement under the PBPT Act.

It is also pertinent to note that the appellant has failed to furnish conclusive evidence regarding the ownership of the cash allegedly belonging to third parties and cash in hand. The explanations furnished were limited to incomplete names, Aadhaar cards, mobile numbers, and temporary handwritten chits prepared by its employees, which do not constitute reliable or legally admissible proof of ownership. No books of account was shown to establish cash in hand.

No explanation whatsoever has been furnished in respect of Rs. 1,00,000/- claimed to be belonging to Shri Vinod Atmaram Kambli. The appellant has merely referred to an entry without providing any supporting material or justification to establish ownership of the said amount. The appellant failed to disclose the name of the aforesaid persons when he was asked to disclose where about of the customers with address. It was thus taken to be an after-thought.

It is evident that the appellant has failed to establish cogent and credible evidence, the real ownership of the cash found during the search. Mere partial relief granted under the Income Tax Act does not absolve the appellant from discharging the burden cast upon it under the PBPT Act. The explanations offered are inconsistent, unsupported, and unreliable.

Taking the overall facts into consideration, we do not find any merit in the case so as to cause interference in the impugned order.

Transaction value - undervaluation - Customs Valuation Rules - examination report - burden of proof - intelligence reports - contemporaneous higher-priced imports or other specific incriminating material -Benefit of doubt to importer - statements recorded u/s 108 -Whether the electronic components imported by the appellant from M/s Hopeen Trading Pte Ltd, Singapore was of Phillips brand and had been deliberately undervalued in order to evade customs duty. - HELD THAT:- In the instant case, the allegation is that the imported electronic components were of Phillips brand and therefore, the price at which the same was sold to their supplier should be the price for customs assessment when imported into India.

From the perusal of the relevant Section 14 and Customs Valuation Rules, we note that the Department, before rejecting the invoice price, has to give cogent reasons for such rejection, as the invoice price forms the basis of the transaction value. Consequently, before rejecting the transaction value as incorrect or unacceptable, the Department has to find out whether there are any imports of identical goods or similar goods at a higher price at around the same time. In the absence of such evidence, invoice price has to be accepted as the transaction value. If the charge of undervaluation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer. If the Department wants to allege undervaluation, it would have to undertake detailed inquiries, collect material and also adequate evidence. In this context, we find that the impugned order has merely relied on the transaction price of the sale of goods between M/s Phillips and the supplier M/s Hopeen Trading in order to substantiate their allegation of undervaluation.

In the absence of any evidence led by the department that the goods imported were of Phillips brand, as also lack of evidence of contemporaneous imports to establish such undervaluation, the findings of the impugned order cannot be sustained.

Thus, we set aside the impugned order and allow the appeal.

Customs Broker Licence- imposing a penalty and forfeiting the entire amount of security deposit under Regulations 14 and 18 read with Regulations 17(7) of the Customs Broker Licencing Regulations, 2018 -Relevancy of statements u/s 138B -due diligence-supervision of employees- Duty to inform client of statutory compliance - Vicarious liability of employer - Whether, based on the available evidence on record, it can be said that the appellant had violated Regulations 10(d), 10(e), 10(f), 10(m) and 13(12) of CBLR and if so, whether the penalty imposed on the appellant is proportionate to the violations. - HELD THAT:- Since the Commissioner did not admit the statements as evidence, they also are not relevant and cannot be relied upon in these proceedings. Therefore, the finding that the appellant had violated Regulations 10(d) and 10(e) cannot be sustained.

This finding is also based on the statement recorded before the Customs Officer under section 108 of the Act and the Commissioner has, as discussed above, not examined the persons who made the statements has witnesses and admitted them as evidence. Therefore, the statements are also not relevant under section 138D of the Act. Hence, the finding that the appellant violated Regulation 10(m) cannot be sustained.

In short, all the findings in the impugned order regarding violation of various provisions of CBLR by the appellant were only based on various statements. The Commissioner could have summoned and examined the persons who made the statements and could have admitted their statements as evidence, but he did not. Not only the persons were not examined by Commissioner, but the statements of various persons have also not been relied upon in the SCN.

In view of the above, the impugned order cannot be sustained and deserved to be set aside.

Classification of the imported goods -​​​​​​​“Arm and Blade Assembly for Windscreen Wipers”, complete windscreen wiper under CTH 85124000, or as parts thereof under CTH 85129000- men's rea or intent to evade duty - essential character of a complete windscreen wiper -HSN Explanatory Notes- penalty under Section 112(a) - HELD THAT:- As per the HSN Explanatory Notes to Heading 8512, windscreen wipers are described as motor-driven devices. In the absence of a motor, the imported goods cannot be regarded as complete windscreen wipers.

Heading 85129000 specifically covers “Parts of the articles of heading 8512”. Thus, the subject goods clearly fall within this description.

The application of Rule 2(a) of GIR presupposes that the imported article, as presented, possesses the essential character of the complete article. Essential character must be assessed with reference to functionality, and not merely physical appearance. In the present case, without the motor and related mechanism, the Arm and Blade assembly cannot perform the essential function of a wiper.

Therefore, we hold that the impugned goods do not attain the essential character of a complete windscreen wiper.

We find that Rule 2(a) cannot be mechanically applied. It applies only where the incomplete article substantially represents the complete article. In the present case, the absence of the electrical motor, which is the heart of the system, renders the goods incapable of independent operation. Hence, Rule 2(a) is inapplicable.

It is well settled that mere misclassification, in the absence of men's rea or intent to evade duty, does not attract penalty under Section 112(a) of the Customs Act, 1962.

Once the confiscation under Section 111(m) has already been set aside by the lower appellate authority, the penalty imposed cannot survive independently. Accordingly, the penalty imposed under Section 112(a) is unsustainable and is set aside.

The imported Arm and Blade Assembly is correctly classifiable under CTH 85129000 as parts of windscreen wipers; and Reclassification under CTH 85124000 is unsustainable;

Penalty upper limit - Revocation of Customs Brokers License apart from forfeiture of Security Deposit - failed to discharge the obligation cast upon them under the Regulation 17(9) of the CBLR, 2013 - Levy of penalty, which is not commensurate with the gravity of the offence committed - Whether the impugned order calls for any interference? - HELD THAT:- From the relevant clauses of governing Customs Brokers Licensing Regulations, 2013 and at regulation 8(1) and under Regulation 20, two things are clear to us, viz. the threshold of penalty for any violation insofar as Customs Brokers Licensing Regulations is concerned, is Rs. 50,000/- only; and secondly, the governing statute, i.e. CBLR does not provide for forfeiture of Security Deposit at all.

Hence, we are of the view that the grievance of the Department has no solution at all, as could be understood from the Regulations, 2013. When the Rules prescribe an upper limit, imposing the maximum penalty as provided cannot therefore be held to be ‘not in commensurate’ and therefore, we do not find any infirmity in the impugned order, which is upheld. Ordered accordingly. Resultantly, Appeal filed by the Revenue is dismissed.

Refund claim -Entitlement to interest on deposited amount from the date of deposit till disbursement - imposition of penalty and demand of interest -Section 11B(2) of Central Excise Act- Scope of Section 35F - Central Government Circular No. 984/8/2014-CX - HELD THAT:- The Central Government vide Circular No. 984/8/2014-CX. Dated 16.09.2014 has made provisions for interest on the pre-deposited amount by an assessee. Any deposit in the hands of department has to be refunded with interest from the date of deposit in terms of Section 129EE of the Customs Act, 1962.

It is also settled that amount paid during investigation is as good as the amount paid under Section 35F of the Central Excise Act. Section 35FF of the Act talks about interest on delayed refund of the amount deposited under Section 35F. This Section got amended in the Year 2014. The perusal makes it clear that prior 2014, the assesse used to be entitled for interest upon the amount of refund of amount of pre-deposit if and only if, the refund was not used to sanction within a period of three months. However, post Finance Act, 2014, the amendment in Section 35F makes assessee always entitled for interest at the rate of not less than five per cent and not more than thirty-six per cent per annum on the amount deposited by the assess/appellant under Section 35F.

It is also the admitted and apparent fact that the amount in question was got deposited even prior the SCN was issued. Also the refund claim was initially filed on 21.03.2018. After the Tribunal’s final order in favour of appellant, though another refund claim was filed by appellant on 27.10.2023 but it relates back to the already filed refund claim dated 21.03.2018 (section 11B(2) of Central Excise Act). Hence it is held that refund claim dated 27.10.2023 which was refiled after the order of CESTAT, has wrongly been considered as the original refund application.

In view of the settled position and the circumstances of the present case, it is held that since the amount in question is as good as amount of pre-deposit and appellant is held not liable to pay any customs duty, the said revenue deposit is liable to be refunded along with interest to be paid from the date of deposit till the disbursement of said amount at the rate of 6% as fixed by the central government. With these findings, order under challenge is hereby set aside and appeal stands allowed.

Transaction value - Classification of the goods - imported goods are correctly classifiable under CTI 6303 99 90 (textile curtains) or under CTI 8708 99 00 (parts and accessories of motor vehicles) - intent to evade of duty -waived the show cause notice - requirement of personal hearing -penalties imposed u/s 114A - reasonable doubt about the truth and accuracy of the imported goods - liability for confiscation u/s 111 (m) - HELD THAT:- Admittedly, what were imported by the appellant were not curtains or drapes but were shades meant and for use in cars. We do not find CTI 6303 99 90 is the correct classification for such car accessories even though the purpose of this particular accessories is to provide protection from the sun. They are clearly not curtains. Such shades are sold as car accessories in shops. They have also been described as car accessories in the appellant’s own documents. Therefore, on question of classification of the goods, we find in favour of the department and against the appellant.

Since the appellant’s overseas supplier was a trader, the Joint Commissioner asked the appellant to submit the manufacturer’s invoice, which the appellant failed to submit. The Joint Commissioner concluded that the appellant had willfully mis-declared the value of the goods with an intent to evade of duty.

As per Rule 3 of the Customs Valuation (Determination of Value of Imported Goods), Rules 2007 [Valuation Rules] subject to Rule 12, the value of the imported goods shall be the transaction value adjusted in accordance with Rule 10 of the Valuation Rules. Rule 10 of the Valuation rules provides for addition of certain costs and services to the transaction value which are not relevant for this purpose. Rule 12 provides for the proper officer to ask the importer to furnish further information or documents who has reason to doubt the truth and accuracy of the imported goods and after receiving such information or in the absence of such information from the importer by the proper officer still has reasonable doubt about the truth and accuracy of the imported goods then it shall be deemed that the transaction value cannot be determined under Rule 3.

Admittedly, the appellant had imported the goods from a trader and had provided the trader’s invoice. But the Joint Commissioner asked for manufacturer’s invoice and the appellant failed to provide it evidently because he had not bought the goods from manufacturer. As far as the market value of the goods in Indian market is concerned, it can be much higher than the international market price and that itself does not give the Joint Commissioner a reasonable doubt regarding the truth or accuracy of the transaction value. We do not find that the Joint Commissioner had a reasonable doubt regarding the truth or accuracy.

Admittedly, there was no difference between the description of the goods or the quantity on examination. The only difference was that the goods were classified by the appellant according to it’s understanding and not according to the classification decided by the Joint Commissioner while re-assessing the Bills of Entry. There was no mis-declaration whatsoever. Therefore, the confiscation of the goods under section 111 (m) of the Act, the imposition of redemption fine and consequential penalty under section 112 of the Act in the impugned order cannot be sustained.

Appeal is partly allowed upholding the classification of the imported goods under CTI 8708 99 00 and setting aside the rest of the impugned order. The amount of duty needs to be re-calculated, as above. The matter is remanded to the original authority for the sole purpose of calculation.

Appeal is allowed by way of remand. The appellant will be entitled to consequential relief, if any.

Classification of goods -import "AB-Fortis® Microencapsulated Iron" and requested for ruling for classification of the goods in question under 21069099 -food supplements and preparations for human consumption- Interpretation by General Rules for Interpretation (GRI) and HSN Explanatory Notes-Residuary heading and exclusionary application of specific Chapter/Section Notes-Customs Authority for Advance Rulings (CAAR) jurisdiction and maintainability of application - HELD THAT:- The product is a mixture of two components i.e., Ferric saccharate and calcium alginate. It is suitable for human consumption. It can be consumed after such simple processing such as dissolving in water etc. and is capable of being a food supplement to the normal diet. It is a preparation consisting wholly or partly of foodstuffs used in the making beverages or food preparations for human consumption.

The product brochure of the product states that its stability, absence of metallic taste and low reactivity makes it possible to fortify beverages and foodstuffs such as dairy products, cereals, bread, meat, vegetarian meat analogues, and many others.

As per the Explanatory notes of heading 2106, the said heading includes "food supplements or dietary supplements, consisting of, or based on, one or more vitamins, minerals, amino acids, concentrates, extracts, isolates or the like of substances found within foods, or synthetic versions of such substances, put up as a supplement to the normal diet." Thus the products i.e. AB Fortis in the present application appears to be classifiable under heading 2106 of the Customs Tariff Act, 1975.

The product "AB-Fortis® Microencapsulated Iron" fulfils the essential criteria for classification under Heading 2106. It is a supplement, consisting of mixed constituents, for avoiding iron deficiency. Accordingly, I hold that the subject product namely "AB-Fortis® Microencapsulated Iron" merits classification under Chapter 21, Heading 2106, sub-heading 210690, Tariff Item 21069099 of the First Schedule to the Customs Tariff Act, 1975.

Condonation of Delay Application - initiate proceedings before the Tribunal or to file an Appeal under Section 61 - Resolution Plan -compliance with the mandatory requirements under Section 30(2) -

A) Company Appeal (AT) (CH) (INS) - HELD THAT:- The number of days of delay sought to be condoned falls well within the ambit of the proviso to sub-section (2) of Section 61 of the I & B Code, 2016, the delay stands condoned and IA stands allowed.

The shareholders, independently, have no right under law to maintain an Appeal under Section 61 of the Code against an order approving a Resolution Plan.

This principle has been propounded by the Larger Bench of this Appellate Tribunal in Park Energy Private Limited v. State Bank of India & Anr [2025 (12) TMI 229 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI] wherein it was observed that shareholders, in their individual capacity, have no independent right under law to initiate proceedings before the Tribunal or to file an Appeal under Section 61 of the Code. Their rights are limited to the extent of their investment in the share capital of the Corporate Debtor, and they have no vested right to challenge the Resolution Plan.

Since the Company Appeal at the behest of shareholders is not maintainable, Company Appeal (AT) (CH) (INS) stands dismissed as not maintainable.

B) Company Appeal (AT) (CH) (INS) - Primarily, the sole contention of the Appellants was that appropriate action be taken against Respondent No. 2 or any other person under Section 65 of the Code for initiating malicious proceedings before the Ld. Adjudicating Authority.

Since the relief sought by the Appellants was in their capacity as shareholders of the Corporate Debtor, and in light of the judgment of the Larger Bench of this Appellate Tribunal referred to above, proceedings at the behest of shareholders are not maintainable. The Appellants have no vested right to independently initiate such proceedings, as their rights are limited under law.

Accordingly, applying the ratio of the Larger Bench, Company Appeal (AT) (CH) (INS) also stands dismissed.

C) Company Appeal (AT) (CH) (INS) - Since, the Appellants question the impugned order in the capacity of being the shareholders on the ground of alleged theory of fraud because, it was alleged that the Corporate Debtor had colluded and had not contested the proceedings on merits by filing a counter and rather only filed a written submission. This, in itself cannot be inferred to be a collusion to attach fraud to the proceedings and if at all there will be an aggrieved party, it would be the Corporate Debtor and not the Shareholders of the Corporate Debtor because, the Shareholders, as it has been already observed in the Larger Bench’s decision referred to herein above, have got a very restricted right under the I & B Code, 2016, to initiate and contest proceedings under Section 61 of the Code.

Since the Appellants being the Shareholders have got no right to sustain the Appeal, the instant Company Appeal (AT) (CH) (INS), would accordingly stand dismissed. All pending connected Interlocutory Applications, if any, would stand closed.

Seeking punishment for alleged falsification of the books of accounts of the Corporate Debtor, which upon establishment calls for imprisonment for a term not less than three years - misconduct allegedly falling within the ambit of Section 71 - Whether the platform provided under the I&B Code can be utilized for the purpose of taking vengeance for personal grievances. - HELD THAT:- The grievance of the Appellant is that no effective order has been passed on IA, where he prayed for punishing the Respondents under Section 71 of the I&B Code for having knowledge of the books yet failing to proceed in accordance with law.

The effect of the order is that those against whom allegations were made in IA, now stand impleaded, and thus, in light of the order dated 29.07.2025, the reasoning adopted in disposing of IA by the impugned order dated 04.07.2024 loses its significance. Since the impediment regarding non-impleadment has been removed, IA No. is now free from any procedural hindrance and must be considered independently on its own merits.

Hence, limited to the extent of IA, wherein the Appellant has prayed for punishing the Respondents under Section 71 of the I&B Code and the matter still remains to be adjudicated on merits, this Company Appeal is accordingly disposed of, with a request to the NCLT, Chennai, that in view of the order rendered in IA, whereby the RP and the Liquidator have already been impleaded in IA, the said application must now be decided independently on its merits, as the impediment of non-impleadment no longer survives.

The Company Appeal is disposed of, with the direction to the NCLT, Chennai, to decide IA, exclusively on its own merits without being influenced by any observation made by us in today's order.

Approval of Resolution Plan - financial debt within the meaning of Section 5, sub- section (8) of the IBC or not - claim of the Appellant was accepted as ‘other creditors’ on the total principal amount and the treatment of the Appellant has been given in the approved Resolution Plan as other creditors - HELD THAT:- In the case of Greater Noida [2024 (2) TMI 681 - SUPREME COURT (LB)], the Greater Noida has filed an IA challenging to the categorization of it as an Operational Creditor, in which the Greater Noida claimed it to be a secured creditor. An IA No.344 of 2021 was filed by Greater Noida, challenging the decision of the RP, which came to be rejected by the NCLT. The Appeal having been dismissed by NCLAT, an Appeal was filed in the Hon’ble Supreme Court.

In the present case, the categorization regarding non-inclusion of the Appellant as Financial Creditor in a class was never questioned by the Appellant, although List of Creditors was uploaded by RP, where Appellant was not included as creditor in a class. Further, the Appeal has been filed challenging the order approving the Resolution Plan, which has been submitted on the basis of List of Creditors as uploaded by the RP and shared with the Resolution Applicant formulating the Resolution Plan on the basis of List of Creditors as shared.

The Appellant’s claim was included in the category of other creditors, hence, the treatment of the Appellant in the Plan was in other creditors. The treatment of the Appellant in the category of other creditors, cannot be said to violate the provision of Section 30, sub-section (2) of the IBC.

Reliance also placed on judgment of this Tribunal in Canara Bank vs. Sh. Vivek Kumar [2025 (5) TMI 800 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI]. In the above case, Canara Bank has filed its claim in Form-C as Financial Creditor on the basis of it having given housing loan to the Borrower for purchasing residential units. The RP rejected the claim of Canara Bank as Financial Creditor, which was challenged by filing IA No.836 of 2023, which came to be rejected on 10.02.2023, which order came to be challenged before this Tribunal and this Tribunal by its judgment dated 09.01.2025 allowed the Appeal and set aside the order and remitted the matter to NCLT for reassessment of the case.

The judgment of this Tribunal in Canara Bank is distinguishable from the present case due to two distinguishing features. Firstly, the Canara Bank filed its claim as a Financial Creditor and RP having rejected the claim as Financial Creditor, the decision of RP was agitated by filing an IA No.836 of 2023, which was rejected by the Adjudicating Authority giving rise to the Appeal. In the Canara Bank’s case, the Resolution Plan was not approved and the said matter was still pending before the Adjudicating Authority, whereas in the Appeal before us, challenge to the Appellant in other creditors on the basis of List of Creditors uploaded by the RP, was never questioned by the Appellant - the judgment of this Tribunal in Canara Bank relied by the Appellant is clearly distinguishable and does not help the Appellant.

There are no ground to interfere with the order dated 24.04.2023 approving the Resolution Plan in the CIRP of the CD - the approval of Resolution Plan and treatment of the claim of the Appellant in the Resolution Plan of the CD, shall not preclude the Appellant from taking steps for execution of Decree obtained from Debt Recovery Tribunal against the Borrower.

Appeal dismissed.

Applications for pre-deposit of penalty - demand of differential customs duties forgone and penalties - payments made to overseas clients through Hawala channels - Contravention of FEMA Section 3(b) - Presumption as to documents​​​​​​​ -importing high value Pesticides/Insecticide/Fungicides from China in guise of chemicals such as “Wetting Agents” - double jeopardy​​​​​​​ - intent to evade payment of appropriate customs duties - HELD THAT:- We find that investigations were made under the provisions of FEMA, as well and the statements of the Appellants were recorded under Section 37 of FEMA. The said statements are also corroborated by the statements recorded by DRI and the admission of guilt by the appellants before the Settlement Commission regarding under-valuation, and thereby, paid the differential amount of Custom Duties along with interest, as directed by the Settlement Commission vide order dated 16.10.2017. The said evidence is also corroborated by the proforma invoices in possession of the appellants recovered during search from the pen- drive in their possession.

The contention of the appellants that the said proforma invoices are just quotations and cannot be relied is devoid of merits, seeing the fact that two live consignments were intercepted by the Custom Authorities and it was found the case of misdeclaration by showing the insecticides/pesticides/fungicides as “wetting agents”. There is nothing on record that the said wetting agents were having value equal to the imported consignments. The appellants themselves admitted the facts that they imported the insecticides/pesticides by mis-declaring as wetting agents, in order to compete in the market at competitive prices. They also admitted the fact that differential amount of imported consignment was used to be sent to the exporter based in China through Hawala transactions and also in person while visiting China.

Hence, obtaining the recovered material from the electronic devices through DRI, needs to only meet the provisions of Section 39 of FEMA for the present proceedings.

Thus, we find that such material has been seized from the custody and control of the appellants under the provisions of Customs Act, which fulfils the requirements of Section 39 (i) of FEMA. These documents have been introduced in evidence in the Adjudication Proceedings conducted under FEMA. Thus, the requirement of Section 39 (b) of FEMA is squarely met. Under such circumstances the Judgments cited by the Appellants in the context of the Customs Act and other Acts would not have applicability. Moreover, in the present case, the penalty is imposed on the Appellants by the Adjudicating Authority only qua the Hawala payments for sending the differential amount to the exporter based at China, which is covered under Section 3(b) of FEMA, 1999.

We find that as per investigation, Shri T. Ravikumar was only de-jure Manager of the proprietorship concern, however, the said three directors of M/s Prism were de-facto running the affairs of M/s Osho Organics. We, therefore, find that the case against the said three Directors under Section 42 of FEMA is clearly made out, being the association of individuals for commission of contravention. Thus, they cannot escape from the liability to pay penalty.

Now, coming to the quantum of penalty, we are inclined take the lenient view to reduce the penalty amount on the said three Directors and M/s Osho Organics, seeing the fact that they have already paid the differential value of custom duty along with interest before the Settlement Commission, coupled with the fact that they are not in a good financial condition to pay huge amount of penalty as imposed by the Adjudicating Authority.

Accordingly, seeing the facts and circumstances of the case, we hereby reduce the penalty amount imposed on all the appellants.

Appeals Partly Allowed.

Seizure of Demat accounts u/s 37A - contravention of Section 4 of the Act of 1999 -furnishing a Fixed Deposit (FD) of equivalent value - incriminating documents seized from the residential premises - artificial juridical person - failed to provide proper explanation for the said foreign exchange - HELD THAT:- We, find an observation favourable for sympathetic consideration of the case of the appellants. It is for the reason that the respondents are required to secure the equivalent amount in India and accordingly they could seize two Demat Accounts. It could have been even the FDs if it would have been existing at the relevant time for the equivalent value. The purpose of the seizure is to secure the equivalent sum to the amount alleged in contravention of the Act of 1999. Thus, we do not find request of the appellants to be unjust, rather it is equitable for both the parties. If the FD of equivalent amount is taken, then it would secure the seized amount and if the appellants approach the RBI for compounding, then it would remain subject to the outcome of the order thereupon. The result of the order for substitution would allow the appellants to seek compounding.

Generally, compounding is sought when the contravention alleged against the person is not challenged but a prayer is made to compound the contravention. Thus, the prayer for such a relief cannot be said to be unjust and otherwise if the compounding is not permitted, the amount under seizure would exist though with substitution of the fixed deposit of the equivalent value. Accordingly, we pass the following equitable order.

The seizure of two Demat Accounts is substituted with the Fixed Deposit of equivalent amount to be furnished by the appellants and the said FD would remain subject to the final outcome of the adjudication proceedings and if the appellants approach RBI for compounding, then subject to the outcome of the order passed therein.

The amount equivalent to the value of the shares in Demat Accounts would get secured with the aforesaid. The order aforesaid has been passed after taking into consideration the observation of the Commissioner of Customs (Appeals) for sympathetic consideration of the request of the appellants and accordingly, with the aforesaid, the appeals are disposed of with lifting of the seizure of Demat accounts under Section 37A of the Act of 1999 but on furnishing the FD of the equivalent amount, with lien of the respondents.

Money Laundering - Seeking grant of Regular bail - earlier bail application before Trial Court was erroneously rejected - invocation of inherent jurisdiction of this Court - reasons to believe - reliance placed upon statements recorded under Section 161 CrPC of certain rice millers, as well as statements under Section 164 CrPC of co-accused/accomplices, to oppose the prayer for bail - HELD THAT:- In the present case, the material placed before this Court prima facie indicates that the statements of the rice millers are stereotyped and mechanically recorded. The Applicant has placed on record a comparative chart demonstrating that the concluding portions of as many as 47 statements of witness - This, coupled with the fact that these statements are verbatim reproductions of each other. This, coupled with the fact that these statements were recorded only after the observations made by this Court in its order dated 18.07.2025 granting bail to co-accused Roshan Chandrakar in MCRC No. 2836 of 2025—wherein it was noted that no rice miller had lodged any complaint of extortion.

As regards the statements recorded under Section 164 CrPC of Ankur Paliwal and Suraj Pawar, the legal position is no longer res integra that the statement of a co-accused or accomplice cannot be the sole basis for implicating another accused and can be relied upon only for corroboration. This principle has been authoritatively laid down by the Hon’ble Supreme Court in Haricharan Kurmi v. State of Bihar [1964 (2) TMI 83 - SUPREME COURT] and reiterated in Somasundaram v. State [2020 (6) TMI 806 - SUPREME COURT]. A perusal of the said statements reveals that co-accused/accomplices, the legal position is no longer res integra that the statement of a co-accused or accomplice cannot be the sole basis for implicating another accused and can be relied upon only for corroboration.

It is also not in dispute that after filing of the main charge-sheet, the prosecution proceeded to collect further material and to file a supplementary charge-sheet without obtaining prior leave of the competent Court as mandated under Section 173(8) CrPC. The material so collected cannot, at this stage, be permitted to prejudice the liberty of the Applicant.

The settled position of law is that while considering bail, the Court must assess whether there exists a prima facie case, the nature and gravity of accusation, the role attributed to the accused, the possibility of the accused absconding, tampering with evidence or influencing witnesses and the larger interests of justice. The presumption of innocence continues to operate until guilt is proved beyond reasonable doubt in a full fledged trial. In the present case, upon careful scrutiny of the material placed on record, it emerges that the prosecution case against the applicant rests largely on documentary material, digital evidence and statements of witnesses, all of which are already in custody of the investigating agency. The applicant is no longer in a position to influence the collection of such evidence. The apprehension expressed by the State regarding tampering with evidence or influencing witnesses remains general in nature and is not supported by any specific material showing an attempt on the part of the applicant after his arrest.

This Court finds that the core allegation against the Applicant—that he orchestrated or influenced the enhancement of the Central Rice Quota or milling charges—is entirely unsupported by contemporaneous documentary material. No file noting, cabinet record, correspondence, approval order, or statutory document has been produced to demonstrate that the Applicant had any role, direct or indirect, in the policy-making process - The Apex Court in P. Chidambaram v. Directorate of Enforcement [2019 (9) TMI 286 - SUPREME COURT] has categorically held that bail cannot be denied as a matter of punishment, and that in economic offences as well, custody must be justified by compelling reasons such as flight risk, tampering with evidence, or influencing witnesses. None of these circumstances have been demonstrated in the present case.

Further, in Sanjay Chandra v. CBI [2011 (11) TMI 537 - SUPREME COURT], the Apex Court has observed that pre-trial incarceration should not be resorted to merely because allegations are grave, and that the object of bail is to secure the presence of the accused at trial, not to inflict punishment before conviction.

Having regard to the nature of the allegations, the stage of investigation, the period of custody already undergone, the volume of evidence involved, this Court is also conscious that the trial is likely to take considerable time. The object of bail being to secure the presence of the accused at trial and not to impose punishment prior to conviction and in the absence of any specific material indicating a likelihood of misuse of liberty, this Court is of the considered view that the ends of justice can be adequately safeguarded by imposing stringent conditions ensuring the applicant’s presence during trial and preventing any misuse of liberty. The object of bail is to secure attendance of the accused at trial and not to inflict punishment before conviction. Thus, balancing the gravity of the allegations with the fundamental right to personal liberty, the stage of investigation, the nature of evidence, the period of custody already undergone and the absence of specific material indicating likelihood of misuse of liberty, this Court is satisfied that the applicant has made out a case for grant of bail.

The applicant shall be released on bail subject to fulfilment of conditions imposed - bail application allowed.

Money Laundering - provisional attachment order - proceeds of crime - obtaining the LOUs amounting to Rs. 3032.17 Crores from PNB, Mumbai, fraudulently by cheating the bank in connivance of the bank personnel without giving any cash margin on the basis of the material placed before him procured during the course of investigation - reasonable belief - HELD THAT:- There is nothing on record that any of the attached properties vide said PAO was directed to be released by the Adjudicating Authority.

It is quite clear that inadvertently the property at serial no. 24 is not mentioned in para 17 & 18 of the impugned order which was owned by present Appellant Rohan Choksi. Accordingly, the present case needs to be remanded to the Adjudicating Authority for passing the specific order qua the property at serial no. 24.

The case is remanded back to the Adjudicating Authority for passing the specific order qua the property at serial no. 24 - Appeal disposed off by way of remand.

Money Laundering - provisional attachment of property in the absence of proceeds of crime - availing housing loans by submitting fake/forged documents - reason to believe for passing the PAO and confirmation of the same or not - requirement to conduct independent investigation qua the predicate offences.

Whether any properties of the appellants can be attached as value thereof, in absence of proceeds of crime? - HELD THAT:- The perusal of the definition of proceeds of crime reveals three limbs of the definition out of which first part refers to the property acquired or derived directly or indirectly by a person relating to the criminal activity to a scheduled offence. The second part includes “the value of any such property”. The second part is generally mixed with third part for giving interpretation.

Further, this Tribunal has also given an elaborate judgment on the issue in the case of Sadananda Nayak v. The Deputy Director, Directorate of Enforcement, Bhubaneswar [2024 (10) TMI 1619 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI], where all the judgments on the issue have been considered and thereby this issue was decided in favour of ED.

Thus, the second limb of the definition of “proceeds of crime” has been applied to attach the property of equivalent value. Thus, this ground raised by the appellants cannot be accepted.

Whether there was any reason to believe for passing the PAO and confirmation of the same? - HELD THAT:- In the matter at hand, there is ample evidence available from the investigation against the appellant Ganne Srinivasa Rao that during the period 2010-2013, he took loans fraudulently from the State Bank of India, Jangareddygudem; Andhra Bank, Jangareddygudem; Indian Overseas Bank, Krishna Nagar Branch; Oriental Bank of Commerce, Rajahmundry Branch and Bank of Maharashtra, Eluru Branch to the tune of Rs. 29,66,40,000/-, on the basis of false and forged documents, which was later-on siphoned of by him for the other purposes than shown in the loan applications/agreements. Out of the said defrauded amount, sum of Rs. 19,83,78,905/-, is still outstanding towards the said banks and accordingly, the quantum of proceeds of crime were taken by ED as the said amount - Regarding applicability of Section 5(1)(a) & (b), the appellant Shri Ganne Srinivasa Rao, is an accused in the said FIR and the ECIR is also recorded against him, his wife and relative Nandigam N. Kumar, thus, they are the persons in possession of alleged proceeds of crime and there is likelihood of concealment or divesting of the impugned properties is not ruled out. Hence, the said properties are clearly covered for attachment under Section 5(1)(a) & (b). The fact that four properties our of 13 properties are already attached and auctioned by the banks, is no ground to set aside the impugned order qua the remaining properties.

The Adjudicating Authority after perusal of the contents of Original Complaint No. 1189/2017 along with the relied upon documents was satisfied with the same and accordingly, Show Cause Notice was issued to the defendants (herein Appellants) - the issue is decided against the Appellants.

Whether ED was required to conduct the independent investigation qua the predicate offences? - HELD THAT:- The police/CBI has to conduct the investigation for the commission of the predicate/schedule offence and ED is not empowered to re-investigate the same - The ED has to confine its inquiry/investigation qua the remaining four points mentioned above. Accordingly, we are of the view that ED is not required to conduct any investigation for the predicate offence. ED can only point out any glaring mistake, or lacunae in the said investigation conducted by police/CBI, which may come to its knowledge while conducting the investigation under PMLA. However, ED cannot arrive at different conclusion qua the predicate offence and quantum of fraud/POC, while conducting investigation for PMLA, as it is not a supervisory investigating agency. Thus, this contention is decided against the appellants, as no independent investigation is required to be made by the ED, to assess the quantum of POC.

The present Appeals are hereby dismissed being devoid of any merits - However, it is made clear that any mortgaged property already attached and auctioned by banks will remain protected from the impugned order and the banks will be at liberty to move appropriate application before the Ld. Special Judge, PMLA Court for disposal of remaining properties, subject to deposit of excess amount in the form of FDR with the Respondent ED.

Money Laundering - provisional attachment order - part-time job fraud involving a mobile application - luring the public with promises of part-time online jobs and investment opportunities - offence under Section 419, 420 of IPC and Section 6(D) and Section 6(C) of the Information Technology Act, 2008 - HELD THAT:- The Adjudicating Authority did not find any reason to deny the confirmation of the PAO. It is more so the appellant failed to produce the evidences to show his involvement in extending tuition to his classmates to generate funds. The sources of funds were declared but remained without any proof. Despite the fact that the burden of proof was on the appellant as per Section 24 of the Act of 2002.

It is further found that the appellant has avoided the summons for recording of his statement under Section 50(2) of the Act of 2002 and otherwise during the course of investigation, it was confirmed by Zerodha that one of the suspected email ids belongs to the appellant, Shri Chetan Prakash and bank credit of a sum of Rs. 14.24 Crores were found which was mainly out of the collection of money from the public through the payment gateway- Razorpay Software Private Limited. The amount settled in the bank account of the appellant were in turn debited to various trading accounts on Buyhatke and Zerodha and also routed to his various self- accounts.

Taking those facts into account and in the absence of disclosure of source of the amount of Rs. 14.24 Crores by the appellant, there are no reason to cause interference in the impugned order for provisionally attachment of Rs. 1,82,481 in the hands of the appellant - appeal dismissed.

Money Laundering - provisional attachment order - proceeds of crime generated out of scheduled offences - entering into service agreement without due diligence - allowing the fintech companies to misuse the data of the borrowers - offence under section 417, 419, 420 of the IPC, 1860 and section 66-C, 66-D of the IT Act, 2000 - HELD THAT:- The agreement between the NBFCs and fintech companies is under a co-lending model wherein, the fintech companies were flush with funds, provide funding to the NBFCs under the pretext of ‘Performance Guarantee’ and the amount is disbursed for loan to the borrowers. The NBFCs gets guaranteed revenue in accordance with the service agreement entered into with the fintech companies on revenue sharing basis in the form of service fees ranging from 0.5% to 1% on total disbursement through the mobile apps or minimum commitment on monthly basis of the amount specified in the agreement, whichever is higher. Thus, NBFCs without investing a single rupee, gets return in lieu of lending licensing and giving it to service provider companies - The NBFCs further took undue advantage of the permission given by RBI vide circular dated 09.11.2017 to outsource its activities without adhering to the guidelines of RBI. NBFCs on the pretext of engaging the Fintech companies as service providers, had instead out-sourced the core business activity of lending, in violation of the master directions of RBI.

The Fintech Companies provided facilities to avail loan with minimum requirements and not merely a software, thus luring the borrowers who are in dire need of funds. The appellants took advantage of their situation and made them subject to the harassment/ blackmailing/extortion/ abuse etc through the tele- callers by misusing their personal data with the sole intention of recovery of exorbitant interest rates and processing charges.

A bare perusal of the guidelines referred by the appellants would show that core management functions would not be outsourced like determining compliance of the KYC norms, for opening deposit accounts, sanction for loans and management of investment portfolio - the argument of the appellant stating that fintech companies had limited role cannot be accepted.

The arguments of the appellants cannot be agreed upon - appeal dismissed.

Money Laundering - provisional attachment order - proceeds of crime - utilization of network of the company and financial transactions to divert fund - HELD THAT:- The facts were elaborately discussed in the PAO and even in the Original Complaint (OC) coupled with the money trail for routing the proceeds of crime to inject the shareholding in the appellant company. The OC detailed out the name of more than 147 entities managed by the accused, Shri Neeraj Singal. It is apart from the other companies and accordingly finding proceeds of crime travelled to the appellant, OSISL directly in the shape of proceeds in share warrants and after making additional payment of Rs. 39.75 Crores to OSISL, it could obtain equity shares of OSISL and accordingly the respondent provisionally attached the properties belonging to OSISL - there is no illegality in the action of the respondent for provisional attachment of the properties where the proceeds of crime were injected by the accused directly in the shape of purchase of share warrants and then converted it into equity shares. It is apart from the amount injected through NBFCs controlled by the accused, Shri Neeraj Singal. It is, however, shown to be for utilization of funds for mobilization. It is in the shape of loan to the appellant company said to have served. The appellant, however, failed to make out a case that no amount was injected in the NBFCs out of the proceeds of crime. Therefore, even if the loan was served, extension of loan was out of the proceeds of crime and therefore the defence taken by the appellant cannot be accepted. Therefore, the Appellate Tribunal not inclined to interfere in the impugned order.

The arguments of the Ld. Counsel for the appellants cannot be accepted that the purchase of shares could not have been co-related with the injection of proceeds of crime in the appellant company, rather, facts available on record show how the proceeds of crime was injected in the appellant company and for that the appellant was not falling in classified Category of ‘B’ & ‘C’ co-related with the BSL. The facts on record show how the money was injected in the appellant company and accordingly while filing OC, the appellants have been named as accused in the Prosecution Complaint. The position of facts of BKM Mining are similar because loan was obtained from NBFCs where the proceeds of crime was injected by the accused.

There are no merit in the appeals and accordingly the same are dismissed.

Money Laundering - Ketamine, a substance prohibited under the Narcotics Drugs and Psychotropic Substances (NDPS) Act 1985 - preponderance of probabilities - sufficient material to support the view that the seized items and the frozen properties were involved in the money laundering or not - HELD THAT:- In the present case, the impugned order was passed only on 24.06.2024. Secondly, in that case, the issue involved was whether the order passed by the Ld. AA would cease to exist after completion of the period of 90 days as provided in Section 8(3)(a) as it existed at the relevant time. The factual finding recorded by the Hon’ble Supreme Court in UOI vs. J. P. Singh [2025 (4) TMI 695 - SC ORDER] was that there was no dispute that when the order under Section 8(3) was passed by the AA in that case, the prosecution complaint already stood filed and the proceedings in the PMLA case were pending before the Ld. Special Court. The Apex Court found that the Appellate Authority and the High Court had relied upon the wrong legal provision, which was not applicable at the relevant time, and accordingly, allowed the appeal filed by the Union of India. Thus, the said case is entirely distinguishable both on facts and the applicable legal provision from the present one. Moreover, as already mentioned, it does not lay down any law to say that where a prosecution complaint stands filed, the appeal pending before this Appellate Tribunal challenging the legality of the order of the AA would become infructuous or that in such a case continued retention becomes a fait accompli and this Appellate Tribunal must invariably uphold the continued retention of the properties seized/frozen even if the search conducted under Section 17 was patently illegal and/or the impugned order passed by the Ld. AA allowing further retention or continued freezing of the properties had no legs to stand on.

At the present stage, on the preponderance of probabilities, there is more than sufficient material to support the view that the seized items and the frozen properties were involved in the money laundering and, therefore, have rightly been allowed to be retained further under Section 8(3) by the Ld. AA. No arguments have been presented from the side of the appellant to challenge the impugned order on merits or to establish that the properties were not involved in money laundering. The onus in this regard was clearly on the appellant which remains undischarged.

The present appeal fails and is hereby dismissed.

Fraudulent availment of CENVAT Credit on input services - companies were mainly conduits for generating bogus invoices with fictitious bank accounts and employees acting as proxies for directors - service tax charged on these invoices was neither deposited nor remitted to the Government - applicability of time limitation - HELD THAT:- The Commissioner (Appeals) has noted that from perusal of the input service invoices and output service invoices submitted by the respondent that the major input service and output service of the party is of same description. However, the Commissioner (Appeals) has observed that there was some discrepancy in the 'month' of service as in input service invoice, the same is mentioned as 'April', while in output service invoice it is mentioned as December. However, it is found that the Commissioner (Appeals) has erred in comparing the input invoice for the month April to the output invoice for the month of December.

It is abundantly clear that the input invoice was for the month of April, whereas the output invoice was for the month of December and as such the nature of service is that it could have been availed for the month it pertained to. It is noted that the nature of input and output service are similar that it is received and provided in the same month. Consequently, the Commissioner (Appeals) has erred in his findings.

Further, it is found that the Commissioner (Appeals) has held that mere return of 'speed post' letters need not to be taken as a conclusive piece of investigation, holding that the postal authorities remarks 'left' or 'no such company exist' does not means that the addresses did not exist or that the company is untraceable.

It is found that as per Rule 4(7) of Cenvat Credit Rules, 2004 as applicable during relevant period, the CENVAT credit in respect of input service was allowed, on or after the day which payment is made of the value of input service shall be allowed, on or after the day which payment is made of the value of input service and the service tax paid or payable as is indicated in invoice, bill or, as the case may be, challan referred to in Rule 9. Thus, it was the obligation on the part of respondent to provide proof of payment of value of input service and the service tax paid or payable as is indicated in the invoices. It is on record that M/s SVAM Software Ltd., the respondent could not provide tax payment evidence in respect of services in question, as they did not receive any service from the above mentioned non-existing vendors except invoices.

The Rajasthan High Court in Vodafone Digilink Limited vs. Commissioner of Central Excise, Jaipur-II [2012 (11) TMI 955 - RAJASTHAN HIGH COURT] held that cenvat credit is a conditional and statutory concession and not an absolute right, consequently, subject to strict compliance with the said Rules.

Similarly in Akik Dychem Private Limited vs. Commissioner of Central Excise [2013 (9) TMI 415 - CESTAT AHMEDABAD], this Tribunal upheld the demand of cenvat credit fraudulently availed along with interest and penalties finding evidence of its fraudulent nature.

Further, it is settled law that fraud vitiates everything, which is a fundamental legal doctrine which means that any act obtained through deliberate description is void and a nullity. In the instant case, it is on record that the firms which had purportedly supported the input services were fictitious.

The Commissioner (Appeals) had erred in setting aside the demand of Rs. 20,07,497/- - the impugned order is set aside - appeal allowed.

Scope of SCN - SCN issued has not specified as to under which taxable category Service Tax is being demanded - demand raised simply on the basis of the difference between Profit & Loss Accounts, Trial Balance and S.T.-3 Returns - Demand raised on the advances received - Demand of Service Tax of Rs.2,24,73,978/- under reverse charge - Denial of CENVAT Credit - time limitation - penalty.

Scope of SCN - SCN issued has not specified as to under which taxable category Service Tax is being demanded - demand raised simply on the basis of the difference between Profit & Loss Accounts, Trial Balance and S.T.-3 Returns - HELD THAT:- For the period prior to 01st July, 2012, the charge of Service Tax under Section 66 of the Finance Act was on services falling under the various subclauses of Section 65(105). It was therefore necessary for the Department to establish that the alleged differential income pertained to rendering of taxable services falling under one of the sub-clauses of Section 65(105) of the Act. The burden is cast upon the Department to prove that Service Tax is leviable under the charging provision, which the Department has failed to do in the instant case. Hence, the demand of Service Tax confirmed cannot be sustained.

A similar view has also been taken by this Bench in the case of M/s. Nirman Construction Versus Commissioner of Central Excise, Service Tax and Customs, Durgapur Commissionerate, Burdwan (West Bengal) [2025 (8) TMI 6 - CESTAT KOLKATA] wherein it has been held that no Service Tax can be demanded merely on the basis of difference between Balance Sheet and S.T.-3 Returns.

Even for the period after 01st July, 2012, Service Tax can be levied only when there is a clear identification of service provider, service rendered, service recipient and consideration paid for the same, to analyse the nature of service rendered and the liability to Service Tax on the part of the appellant thereon. Since no such exercise has been done in the Show Cause Notice, we agree with the submission made by the appellant that the demand confirmed in the impugned order cannot sustain.

There are merit in the submission made by the appellant that the demand of Rs.4,28,99,373/- confirmed in the impugned order merely on the basis of difference between Profit & Loss Accounts, Balance Sheets and S.T.-3 Returns, is not sustainable. Accordingly, the demand of Rs.4,28,99,373/- confirmed in the impugned order is set aside.

Demand raised on the advances received - HELD THAT:- By taking into account the balance of advances received as mentioned in the trial balance sheet of the appellant for the respective Financial Years. However, it is found that the ld. adjudicating authority has not adduced any reasons to justify the demand of Service Tax confirmed in this regard. For levy of Service Tax, identification of the underlying service is the mandatory requirement, which has not been done in the present case. It was incumbent upon the Department to specify the taxable service being provided by the appellant and in the absence of any specific taxable service being pointed out in the impugned Show Cause Notice, the demand raised against the appellant cannot sustain.

The same issue came up for consideration before the Tribunal in the case of Commr. of Service Tax, Kolkata Versus M/s. Haldia Logistics Pvt. Ltd and vice-versa [2025 (5) TMI 2187 - CESTAT KOLKATA], wherein the appeal filed by the Revenue has been dismissed, as service wise quantification was not done in that case.

Demand of Service Tax of Rs.2,24,73,978/- under reverse charge - HELD THAT:- The said demand, under reverse charge, has been confirmed simply by taking into account the figures reported in the annual audited accounts under the head “expenditure in foreign currency” and comparing the same with ST-3 Returns where import of service figure was reported and the corresponding Service Tax paid by the appellant, without specifying the nature of taxable service for which the appellant has allegedly short paid the Service Tax - It is a settled position of law that no demand of service tax can be made simply based on the difference between the Balance Sheet and the ST-3 returns without providing any explanation about the nature of service on which service tax is payable. Accordingly, the demand of Service Tax of Rs.2,24,73,978/- confirmed under ‘reverse charge' in the impugned order is not sustainable and hence we set aside the same.

Denial of CENVAT Credit to the tune of Rs.1,67,768/- - HELD THAT:- The appellant’s submission is noted that they have already reversed the credit and therefore, are not contesting the said issue. Accordingly, the denial of CENVAT Credit of Rs.1,67,768/- in the impugned order is upheld.

Time limitation - HELD THAT:- As no suppression of facts with intention to evade the tax has been established against the appellant in this case, the demands confirmed by invoking the extended period of limitation are not sustainable. Thus, the demands confirmed by invoking the extended period is not sustainable on the ground of limitation also.

Imposition of penalty under Section 78 of the Act and Rule 15(3) of the Rules - HELD THAT:- it is well settled that penalty under Section 78 or under Rule 15(3) can only be imposed in a situation where Service Tax is not paid by reason of fraud, collusion or wilful mis-statement or suppression of facts or contravention of any provisions of the law, with the intent to evade payment of Service Tax. However, in the present case, it is found that the appellant has never suppressed any facts regarding the activities undertaken by them. In fact, the entire demand has been computed solely on the basis of the figures provided by the appellant, sourced from its audited annual accounts and S.T.-3 Returns filed during the relevant period. The Department has failed to adduce any evidence to establish suppression of facts on the part of the appellant with the intent to evade payment of Service Tax in the instant case. In fact, in this case, the appellant has reversed the CENVAT Credit from their CENVAT Credit account prior to utilization of the same and much before passing of the Order-in-Original. Considering the above, we do not find any reasons to sustain the penalties imposed on the appellant under Section 78 and Rule 15(3) in the impugned order and therefore, the same are set aside.

Penalty u/s 77(2) of the Act for failure to assess their Service Tax dues - HELD THAT:- Since no Service Tax is payable by the appellant in this case, there are no reason to sustain the penalty imposed under Section 77(2) ibid. and accordingly, the same is set aside.

Appeal disposed off.

Invocation of extended period of limitation - exclsuion of value of goods sold or deemed to have been sold to the recipient of the service as part of their repair and maintenance service - entitlemnet for the benefit of N/N. 12/2003-ST - no other dispute as regards quantification of amount relating to deemed sale for the purpose of levy of Service Tax - HELD THAT:- Tribunal in RAMAKRISHNA ELECTRICAL WINDING WORKS VERSUS COMMISSIONER OF CENTRAL EXCISE, VISAKHAPATNAM II [2014 (6) TMI 796 - CESTAT BANGALORE] had upon remanded the matter with observation for the value of goods and material deemed to have been sold is liable to exclusion either under the provision of under Section 67 or qua Notification No.12/2003.

Tribunal Mumbai, in the case of Indian Oil Tanking Pvt Ltd. [2017 (7) TMI 293 - CESTAT MUMBAI] held that the reversal is sufficient compliance with condition of non-availment of Cenvat Credit.

In the case of JCT Ltd., [2015 (2) TMI 600 - CESTAT NEW DELHI], the Co-ordinate Bench, New Delhi held that the reversal of Cenvat Credit amounts to non-taking of credit on inputs. The benefit of exemption notification cannot be denied.

Principal Bench CESTAT, New Delhi in the case of Hospitech Management Consultants Pvt Ltd. [2023 (5) TMI 657 - CESTAT NEW DELHI], held that “the extended period of limitation could have been invoked only if there was suppression of facts with intent to evade payment of Service Tax”. The claim of benefit of exemption notification cannot be considered as suppression of fact with intent to evade payment of Tax.

Therefore, invoking of limitation in the instant case is also not sustainable - the order of the Adjudicating Authority is not sustainable and liable to set aside - Appeal is allowed by way of remand only for limited purposes to re-calculate the demand accordingly for normal period.

Availability of Cenvat credit on capital goods which were sent directly to a job worker and not brought to the appellant's factory premises - denial of credit only on the ground that Kink Bending Machine is that the machine was not received in the factory of the Assessee - Rule 4(5)(a) of CCR -Time limitation - HELD THAT:- In terms of Rule 4(5)(a), amended vide Notification No. 6/2015-CE dated 01.03.2015 by insertion of a new proviso, an Assessee can take cenvat credit on the goods sent directly to the job worker's premises without being brought to the factory of the Assessee. Hence, this amendment is clarificatory in nature and so this position is to be taken as it existed even prior to the insertion.

It remains uncontroverted that owing to the size and weight of the machines in question they were not brought to the Appellant’s factory premises, there is no dispute as to the Appellant being the owner of said machines and also to the fact that the same were used exclusively for the manufacture of chassis frames, for the Appellant. Hence, there may not be any issue as to the Appellant’s eligibility for taking and retention of credit as per Rule 4(5)(a) ibid.

Even otherwise, it is found that if at all, it was only a procedural infraction for which, a substantive benefit could not be denied. This view has ben laid down by the Hon’ble Apex Court in the CCE Vs. Home Ashok Leyland Ltd. [2007 (3) TMI 257 - SUPREME COURT] In any case, it is not the case of the Revenue that the goods in question ‘Kink Bending Machine’ was ineligible capital goods per Rule 2(a) of the CCR.

Time limitation - HELD THAT:- No case is made out for invoking the larger period since there was nothing that was suppressed - Even otherwise, there cannot be any room to allege duty evasion as it’s clearly a Revenue-neutral situation - Tribunal is agreed with the Revenue-neutral situation because, going by Rule 4(5)(a), if the said capital goods are not received back within 180 days after being sent for job work, then the Appellant has to reverse the amount equal to the credit taken and take the credit when the capital goods are received in their factory.

There are no merit in the impugned order, the Order-in-Original was in order both on merits as well as on limitation and hence, the impugned Order-in-Appeal does not sustain - appeal allowed.

Denial of tax concessions under Rule 28C of Haryana General Sales Tax Rules, 1975 - requirement of registration of unit with Department of Industries for qualifying as a unit in pipeline - HELD THAT:- It is a matter of record in each of the three writ petitions that petitioner - companies in question had been established in the years 1991, 1994, 1997 Sales tax exemptions, as were applicable at the relevant time, had been duly afforded to petitioners. Notification dated 28.07.2000 was issued which provided that sales tax concession would be available only to new industrial units/expanded unit/diversified unit. Eligible industrial unit is duly defined in Rule 28C(3)(c)(vi) of HGST Rules as the one which has come into commercial production during the operative period or was in pipeline on 30.04.2000 or any other later date as notified by the Government. Subsequently, vide notification dated 15.10.2001, clause (o) was added to clause 28C(3) whereby definition of ‘units in pipeline’ was clearly delineated. Said clause (o) specifically provides that ‘units in pipeline’ means an industrial unit which as on 30.04.2000 is registered with the Department of Industries, has arranged land or premises by way of purchase, allotment, lease or rent, has applied for finances from regular financial institution and start production within two years i.e. before 01.05.2002.

The argument raised by learned counsel for petitioner that firstly IEM registration for expanded unit/expansion is not even required and in any case it should relate back to first registration is attractive at first flush but the same is devoid of any merit on closer scrutiny. It is a matter of record and not denied by learned counsel for petitioners in all the three petitions that sales tax concession i.e. sought under Rule 28C is only qua expanded unit and not for the entire production. In such a situation, it cannot be concluded that IEM registration should relate back to original or the first IEM which was issued for original unit. Very purpose or foundation of this provision itself would stand defeated. There is clear cut provision that four conditions should be satisfied before the concession in question can be afforded.

Argument raised by learned counsel for petitioner in CWP-8802-2004 that intimation regarding expansion has been sent to the respondent is of no avail to petitioner as it is admitted position that IEM registration was not available with the petitioner on the cut off date.

Admittedly, in all the three writ petitions petitioners do not meet the requisite parameters as provided in the applicable rules to be eligible for sales tax benefit as sought. In our considered opinion, respondents have correctly denied this benefit to the petitioners. Learned counsel for petitioners were unable to point out any illegality, irregularity or infirmity in the action taken by the respondents, which calls for interference.

There are no ground to cause interference in these matters in exercise of jurisdiction under Article 226 of Constitution of India - petition dismissed.

Constitutional validity of prior approval for investigation - reading down - independent screening mechanism - role and jurisdiction of Lokpal and Lokayukta - Article 14 - impermissible classification - Article 21 - protection of reputation and liberty - rule of law - preliminary enquiry - judicial review as safeguard

Constitutional validity of prior approval for investigation - Article 14 - impermissible classification - preliminary enquiry - rule of law - Validity of Section 17A of the Prevention of Corruption Act, 1988 - HELD THAT: - The question whether Section 17A (mandating previous approval before any enquiry, inquiry or investigation into offences 'relatable to any recommendation made or decision taken' by a public servant) is constitutionally permissible was the central controversy. The Bench recorded sharply divergent views. One opinion (Viswanathan, J.) held that the object of Section 17A - protecting bona fide official decision-making from frivolous probes - is legitimate and that the provision can be sustained if interpreted to incorporate an independent screening mechanism by the Lokpal/Lokayukta whose recommendation is to govern the grant or refusal of approval; accordingly that Judge formulated directions to give effect to such a screening mechanism, time-limits and reasons for recommendations. The other opinion (Nagarathna, J.) concluded that Section 17A is in substance a resurrection of earlier provisions/directives struck down in Vineet Narain and Subramanian Swamy, that it forecloses preliminary enquiry and is liable to protect corrupt public servants, and therefore ought to be struck down as violative of Article 14 and the rule of law. Because the two judges expressed irreconcilable conclusions on the core question of validity, the Court did not record a single binding decision of the Bench on the constitutional validity question and directed that the matter be placed before the Chief Justice for constitution of an appropriate larger Bench.

Divergent opinions recorded; matter referred to the Chief Justice for constitution of an appropriate Bench for fresh consideration.

Role and jurisdiction of Lokpal and Lokayukta - independent screening mechanism - reading down - judicial review as safeguard - Whether an independent screening mechanism (Lokpal/Lokayukta) should be read into Section 17A and the procedure for forwarding information received under Section 17A - HELD THAT: - The question whether Section 17A must be read down to require that information received by the competent authority be forwarded to the Lokpal/Lokayukta for independent preliminary inquiry/screening (and that the Lokpal/Lokayukta's recommendation be binding on the Government in grant/refusal of approval) was extensively analysed. Viswanathan, J. concluded that, to avoid the mischief identified in Vineet Narain and Subramanian Swamy and to preserve the statute, Section 17A ought to be interpreted so that the authority forwards Section 17A information immediately to the Lokpal/Lokayukta; the Lokpal/Lokayukta may conduct a preliminary inquiry under their statutes and must forward reasoned recommendations which the Government/competent authority shall be bound to follow in grant or refusal of approval; time-limits in the proviso to Section 17A remain applicable; and where a body falls outside Lokpal jurisdiction an appropriate independent investigative agency should be commissioned to screen the information. Nagarathna, J. rejected reading words into the statute and held that substitution of 'Government' with 'Lokpal/Lokayukta' is impermissible judicial legislation and would not save the provision, maintaining that prior-approval itself is unjustified. Because these views conflict, the Court recorded divergent opinions and referred the issue for consideration by a larger Bench.

Divergent views recorded; final determination on reading down and the precise role of Lokpal/Lokayukta deferred to a larger Bench constituted by the Chief Justice.

Final Conclusion: The Bench recorded irreconcilable opinions on the constitutional challenges to Section 17A. As a consequence the Registry was directed to place the matter before the Chief Justice of India for constitution of an appropriate larger Bench to consider the issues afresh; no single binding pronouncement on validity was recorded by this Bench.

Dishonour of Cheque - acquittal of accused - rebuttal of presumption available under Sections 118 and 139 of the NI Act - onus of burden to prove - burden shifted to complainant to prove the disputed cheque - HELD THAT:- Considering the entire evidence available on record and more particularly, the admission of P.W.1 in his evidence before the trial Court, the learned trial Judge has rightly held that the accused have successfully rebutted the presumption drawn in favour of the complainant under Sections 118 and 139 of the NI Act and as such, the burden gets shifted to the complainant to prove that the disputed cheque was issued for discharging the lawful amount due by the accused to him.

As already pointed out, the complainant has not produced any other evidence to show that Ex.P.1 cheque was issued for discharging the legally enforceable debt or liability. Hence, this Court has no hesitation in holding that the complainant miserably failed to prove the liability of the accused and the issuance of the cheque in dispute therefor.

Consequently, this Court concludes that the judgment of acquittal passed by the learned Judicial Magistrate is perfectly legal and the same cannot be found fault with and that therefore, the Criminal Appeal, which is devoid of merits, is liable to be dismissed.

Appeal dismissed.