TaxTMI Updates e-Newsletter
Jan 17,2026

Violation of principles of natural justice - petitioner’s turnover of taxable supply has been increased was never put to the petitioner and as such the petitioner had no opportunity to meet and rebut the same - HELD THAT:- The issue of turnover of taxable supply of the petitioner was not before the adjudicating authority and consequently it was not there before the appellate authority as well, since what was impugned before the appellate authority was the adjudication order only. The adjudication order does not even hint at the said issue.

The said issue has still been considered by the appellate authority and the petitioner’s tax burden has been enhanced on the basis of the decision of the appellate authority on such issue. In such a case, the provisions of second proviso to section 107(11) of the said Act of 2017 definitely get attracted. The Hon’ble Division Bench of this Court has in the case of Hriday Kumar Das [2024 (10) TMI 40 - CALCUTTA HIGH COURT] interfered with an appellate order impugned in that case on the ground of non-adherence to the procedure mentioned in section 107(11) of the said Act of 2017. Similarly, the appellate order dated December 19, 2024 impugned herein also falls foul of the mandate of the second proviso to section 107(11) of the said Act of 2017 and calls for interference.

Furthermore, it also appears that the appellate authority has not applied its mind and picked up a figure mentioned in Form GSTR-3B treating the same to be higher of the figures mentioned in Form “GSTR1/3B/9” without considering the petitioner’s contention that the said figure was corrected by the petitioners in Forms GSTR-9 and GSTR-9C. The petitioner’s contention on such score was required to be noticed. In such view of the matter too, the appellate authority is required to reconsider the aspect upon giving the petitioner an opportunity of being heard.

The observations and conclusion of the appellate authority in the order dated December 19, 2024, only to the extent the same hold the petitioner liable for tax and other consequences flowing therefrom, on the ground of addition to the petitioner’s turnover of taxable supply and of taxing the same “in the 18% [9%+9%] category”, is set aside - the matter is remanded to the file of the appellate authority to the limited extent only for reconsideration of the aforesaid aspect inasmuch as of the total three grounds raised at the adjudication stage, two grounds stood admitted by the petitioner and one was annulled by the appellate authority.

Petition disposed off by way of remand.

Maintainability of petition - final order has been passed by the adjudicating authority which may be challenged by the petitioner under Section 107 of the Act, 2017 - Principles of natural justice - impugned order has been passed against the petitioner without providing personal hearing - HELD THAT:- Perusal of record shows that petitioner himself has filed copy of notice (Annexure P/2) issued by the adjudicating authority/respondent No. 3 under Section 74 of the Act, 2017. Para 20 of impugned order Annexure P/1 further shows that several opportunities of personal hearings were accorded to the petitioner and other persons vide notices dated 07.06.2024, 28.06.2024, 20.11.2024 and 04.12.2024, despite that, they did not appear before the adjudicating authority, hence, it can not be said that proper opportunity of hearing has not been provided to the petitioner. Further, impugned order (Annexure P/1) was passed by the adjudicating authority/respondent No. 3 on 05.02.2025, but instead of filing appeal under Section 107 of the Act, 2017, it is being challenged by the petitioner by filing writ petition, that too, after about 11 months from the date of passing of impugned order.

Having considered the aforesaid facts and further considering the fact that there is alternative remedy available to the petitioner to file appeal against the impugned order under Section 107 of the Act, 2017, before Appellate Authority, hence, it is not inclined to entertain instant writ petition invoking extra ordinary jurisdiction of this Court.

This writ petition is hereby dismissed.

Violation of principles of natural justice - dismissal of petitioner’s appeal only on the ground of delay without appreciating the fact that the petitioner could not file the appeal before the Appellate Authority within the stipulated time period inasmuch as the petitioner missed notice of the adjudication order which was uploaded on the relevant GST e-portal under the “Additional Notices and Orders” Tab and not the main tab - HELD THAT:- It is not in dispute that the petitioner has been served with the notice to show cause in respect of the adjudication proceedings and the adjudication order by way of uploading thereof on the GST e-portal under the “Additional Notices and Orders” tab. Neither the Appellate Authority nor the Adjudicating Authority has indicated anywhere, apart from the assumption voiced in the appellate order impugned that notification through SMS and e-mail must have been issued to the petitioner, that such notification was indeed served.

It is also evident from the adjudication order that the same has been passed without affording an opportunity of personal hearing to the petitioner although Section 75(4) of the said Act of 2017 mandates that in the event an adverse order is contemplated, an opportunity of hearing shall be granted to the person chargeable with tax or penalty. It cannot be disputed that the adjudication order is indeed adverse to the petitioner.

Sankar Agarwala [2025 (11) TMI 295 - CALCUTTA HIGH COURT] has considered a similar matter where the proper officer had passed an adverse order upon issuance of a show cause notice but without affording an opportunity of personal hearing to the petitioner. In the said case, the co- ordinate Bench had been pleased to set aside both the appellate order as well as the adjudication order and had remanded the matter to the file of the proper officer for fresh adjudication upon affording the petitioner an opportunity to respond to the notice to show cause.

Since the petitioner has not got proper opportunity to respond to the notice to show cause and to participate in the adjudication proceedings, the appellate order impugned dated June 26, 2025 as well as the adjudication order dated April 26, 2024 stand set aside - The petitioner shall have liberty to file reply to the notice to show cause within a period of two weeks from date.

Application disposed off.

Short payment of output tax and excess availment of ITC on import of goods - failure to pay appropriate tax - availment of excess ITC on import of goods - liability of the petitioners to reverse ITC for the failure of the petitioners’ suppliers to file returns.

Excess availment of Input Tax Credit (ITC) on import of goods - HELD THAT:- Since the issue of excess availment of ITC on import of goods which is involved in the present case centered around payment of IGST and non-production of certified documents from the customs authority to evince such payment of IGST, this Court directed the customs authorities to file a report in the form of an affidavit as regards the payment of duty along with IGST in respect of eight(8) bills of entry which were the subject matter of the adjudication proceedings.

Since reports as aforesaid have been filed before this Court which throw sufficient light on the subject that fell for consideration before the adjudicating authority as well as the appellate authority, it would be proper for this Court to send this matter back to the appellate authority for reconsideration thereof in the light of the aforesaid reports. The petitioners shall be at liberty to produce these reports before the appellate authority who shall then decide the matter in accordance with law - insofar as the issue of excess availment of ITC on import goods is concerned, the observation made by the appellate authority is set aside. The matter is remanded to the appellate authority for the said authority to reconsider the said issue in the light of the reports filed by the customs authorities before this Court, which shall be produced by the petitioners before the appellate authority.

Reversal of ITC due to the failure of the petitioners’ suppliers to file returns - HELD THAT:- Although the petitioners could have been granted an opportunity to voice their case before the appellate authority for ends of justice without much ado, yet since the petitioners have not been able to satisfactorily explain as to why the petitioners missed the opportunity to represent their case before the appellate authority despite the same being granted, therefore, the appellate authority’s conclusion regarding reversal of ITC due to non-filing of returns of the suppliers shall only be permitted to be reconsidered by the said authority and the petitioners shall only be permitted to agitate their response on the said point before the appellate authority, if the petitioners pay costs to the tune of Rs. 15,000/- to the High Court Legal Services Committee, Calcutta within two weeks from date and furnish proof of such payment before the appellate authority and not otherwise.

Appeal disposed off.

Short payments of GST - Suppression of taxable value - clubbing of period, while issuing notice u/s 74 of the CGST Act - HELD THAT:- The issue involved is covered by a judgment passed by the Division Bench of this Court at Goa in M/s. Milroc Good Earth Developers Vs. Union of India & Ors. [2025 (10) TMI 867 - BOMBAY HIGH COURT], wherein, the Court held that if an authority lacks jurisdiction to have composite assessment for different tax periods/assessment years, then the formality of responding to show cause notice shall not be encouraged - As could be seen, the Division Bench has, in categorical terms, held that there is no scope for consolidating various financial years/tax period while issuing show cause notice under Section 74 of the CGST Act.

The aforesaid judgment was then considered by the Division Bench of this Court in Rite Water Solutions (India) Ltd. Vs. Joint Commissioner, CGST & Central Excise, Nagpur and Ors. [2025 (11) TMI 1939 - BOMBAY HIGH COURT], wherein, the Court reiterated that there is no scope for consolidating various financial years/tax period while issuing show cause notice under Section 74 of the CGST Act.

In the present case, since this Court has, subsequent to decision of the Delhi High Court, taken a different view, the authorities below will be bound by the subsequent judgments. The Hon’ble Supreme Court has neither stayed nor overruled the view taken in above two cases. The argument of Counsel for respondent nos. 2 and 3, therefore, cannot be accepted.

It is well settled that despite alternate remedy, the Writ Petition is maintainable, at least in four contingencies, viz., a) the Writ Petition has been filed for enforcement of a fundamental right protected by Part – III of the Constitution of India; b) there has been a violation of the principles of natural justice; c) the order or proceedings are wholly without jurisdiction; or d) the vires of a legislation is challenged. The Counsel ought not to have wasted time on this point, particularly when he was put to notice.

The show cause notice issued in September – 2023 by respondent no.2 is quashed and set aside - Petition allowed in part.

Rectification of returns-input tax credit- receipt of credit notes by the buyer in Form GSTR-1 - tax liability in relation to such debit notes in the returns regularly filed by the petitioners in Form GSTR-1 and GSTR-3B - outward and inward supply reporting and return filing under the GST regime -mismatch of input tax credit - no loss of revenue - Show Cause Notice proposed reversal of input tax credit and simultaneous appropriation of the amount of output tax paid by the petitioners towards such proposed reversal - HELD THAT:- It appears that while matching the figures of input tax credit, the GST portal takes into account only the amounts accounted for as receipt of credit notes by the buyer in Form GSTR-1, and the portal does not take into account the debit notes issued by the buyer with reference to the discounts given by the seller, even though tax liability under the GST Acts are admitted and paid on such debit notes, thereby effectively reducing the input tax credit. Accordingly, Form GSTR-2A reflected a mismatch of input tax credit in the case of the petitioners. Thus, the petitioners erred in issuing debit notes for the discounted amount by showing the amount of discount in the wrong column in Form GSTR-1.

The petitioners were compelled to reverse the entire available credit balance in the electronic credit ledger and were made to file Form DRC-03. Accordingly, in the writ petition being Special Civil Application, the petitioners had prayed for a direction to permit them to rectify the returns, as the issue is revenue-neutral and the petitioners do not have any tax liability under the GST Act even if the stand of the authorities is accepted.

Since the petitioners are unable to rectify the returns for the years 2017-18 and 2018-19, and as held by various judgments of the High Courts, including the judgment of the Bombay High Court in the case of Star Engineers (I) Pvt. Ltd. Vs. Union of India [2023 (12) TMI 729 - BOMBAY HIGH COURT], if the respondents permit the petitioners to amend or rectify Form GSTR-1, no loss to the revenue would be caused. Hence, in light of the aforesaid settled legal precedents, we direct the respondents to open the portal within a period of four weeks from the date of receipt of this order and to inform the petitioners so as to enable them to amend / rectify Forms GSTR-1 and GSTR-3B within a period of ten days thereafter. In case the portal is not opened, liberty is reserved in favour of the petitioners to file an application to amend/rectify Forms GSTR-1 and GSTR-3B manually, and the respondents are directed to accept and process the same in accordance with law.

Petitions are allowed. The impugned order dated 26.12.2023 stands quashed and set aside.

Dismissal of appeal on the ground of delay - when the petitioners had lodged their appeal before the appellate authority, the statutory period for filing appeals had been extended by orders passed by the Hon’ble Supreme Court in view of the Covid-19 pandemic - HELD THAT:- It is evident that the petitioner has filed the appeal (which has been dismissed by the order impugned) within the time specified by and in terms of the notification dated November 2, 2023 whereby taxable persons whose appeals had been rejected solely on the ground of the same being filed beyond the period of limitation prescribed in Section 107 of the said Act of 2017 had been granted option of filing appeal again under Section 107 of the said Act, 2017 on or before January 31, 2024.

Once the CBIC notification dated November 2, 2023 granted an option to all persons (whose appeals had suffered rejection on the ground of limitation as aforesaid) to file fresh appeals, and the petitioners lodged their appeal accordingly, appellate authority could not have rejected the petitioners’ appeal that had been filed in terms of the said Circular citing the bar of limitation in terms of Section 107 of the said Act of 2017 as the ground for such rejection - Since the appellate authority has evidently not applied its mind to the matter in the light of the said CBIC notification dated November 2, 2023 which permitted persons whose appeals had been dismissed solely on the ground of the same not being filed within the prescribed period of limitation under Section 107 of the said Act of 2017, the appellate order impugned cannot be sustained.

The order dated July 29, 2025 is set aside and the appeal is restored to the file of the appellate authority for being considered afresh.

Parallel proceedings - Prohibition contained in Section 6(2)(b) of the Central Goods and Services Tax Act, 2017, against initiation of parallel proceedings on the same subject-matter, despite an earlier initiation of proceedings by another jurisdictional authority - summons/show cause notices issued by CGST and State GST are overlapping the one or not - HELD THAT:- The aforesaid issue is no-longer res-integra, but stands substantially resolved by the Apex Court in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East & Anr. [2025 (8) TMI 991 - SUPREME COURT], which lays down binding directions regarding the scope of ‘initiation of proceedings’, ‘subject-matter’, and the ‘inter-relationship between Central and State GST authorities’ - It was held in the said case that once one authority, Central or State, has initiated proceedings first in point of time, any subsequent parallel adjudicatory proceedings on the same cause of action by the other authority are barred under Section 6(2)(b). The Apex Court has emphasized the need to avoid overlapping proceedings and multiplicity, while at the same time clarifying that legitimate investigative steps by either authority may continue so long as they do not result in parallel adjudication.

Applying the conclusions and guidelines, contained in Armour Security case, to the facts of this case, it is opined that no further adjudication is required, except issuing directions consistent with the law declared in Armour Security case - Petitioner is directed to appear before the Central Authority and file the response of Show Cause Notice, so issued, and raise the contentions along with relevant documents in terms of the judgment passed by the Apex Court in Armour case on or before 31.01.2026.

Petition disposed off.

Dismissal of appeal on the ground of delay - refusal to condone the delay - sufficient cause for delay or not - HELD THAT:- The Appellate Authority has not found the reasons preferred by the petitioners to be sufficient and has therefore refused to condone the delay occasioned by the petitioners.

Since in the case at hand the petitioners appear to have knowledge of the notices served earlier, the explanation of the petitioners that they missed the adjudication order by reason of the same being uploaded on the “Additional Notices and Orders” Tab is not fully satisfactory.

However, if the petitioners are not permitted to press their appeal before the Appellate Authority on merits, the petitioners would be losing an important forum. In such view of the matter, this Court is of the view that in order to balance the equities, the petitioners should be permitted to prefer appeal before the Appellate Authority upon putting the petitioners to terms.

Petition disposed off.

Validity of composite intimation and show cause notice across multiple tax periods - Adjudicatory competence to issue composite notices and requirement of separate proceedings where subject matters differ - Limitation for adjudication and effect of non-consideration of statutory reply - definition of 'tax period' - HELD THAT:- Without going into the merits of the case and subject matter of Intimation, DRC-01A as well as Show Cause Notice DRC-01, in view of undisputed plea that subject matters of the financial years involved in the present case are different and therefore, separate Intimations and if necessitated so after considering the response separate Show Cause Notices DRC-01 are to be issued, Intimation dated 20.06.2024 (Annexure P-1) and Show Cause Notice dated 05.08.2024 (Annexure P-2) are quashed and set aside along with all consequential orders issued in pursuance thereto, but with liberty to the respondents to take appropriate action in accordance with law on or before 15.12026, if so required and thereafter proceed further as per relevant provisions of law.

It is observed that for pendency of the present petition and for not filing response to Show Cause Notice (Annexure P-2) within prescribed time by the petitioner, limitation period shall not come in the way of the authority concerned for initiating process and passing appropriate order in the matter either way, however the same shall be done within a reasonable period, but not beyond 31.3.2026.

The petition along with pending application(s), if any, is disposed of in the aforesaid terms.

Recovery of tax - deemed withdrawal of assessment order u/s 62(2) of the GST Act - filing of returns and payment of necessary dues had been completed within the period of 120 days along with payment of late fee - HELD THAT:- Filing of returns and payment of taxes by the petitioner, for the month of May 2023 is within the time limit stipulated under Section 62 of the GST Act.

Though the petitioner had complied with the requirements of Section 62, for the month of March 2023, belatedly, the subsequent amendment has been treated to have retrospective effect and as such there is compliance of Section 62 of the GST Act. As far as the months of March 2023 and April 2023 are concerned, there has been a delay beyond the time stipulated under Section 62 of the GST Act. However, this delay, in the circumstances of the case, can be condoned. Further, the High Court of Madras, in its judgment, HELMET HOUSE, REPRESENTED BY ITS PROPRIETOR KUMBA SUNDRAM JEYARAM VERSUS THE DEPUTY STATE TAX OFFICER-1, MADURAI [2024 (9) TMI 391 - MADRAS HIGH COURT], in similar circumstances had held that such delay can be condoned.

This Writ Petition is disposed of declaring that the orders of assessment, dated 27.05.2023, 21.06.2023 and 12.07.2023 are deemed to have been withdrawn.

Timelines for review of order - recovery of refund - provisions like Section 56 of WBGST Act 2017 Act as well as Rule 94 of the connected Rules were not considered in the judgment under review - consequence of not adhering to the timeline of 60 days - HELD THAT:- Upon consideration of the proposition laid down by the Hon’ble Supreme Court in Commissioner of Customs vs. Canon India Private Limited [2024 (11) TMI 391 - SUPREME COURT (LB)], it is found that the Hon’ble Supreme Court observed that in cases where attention of the court was not drawn to a provision of law and the court was oblivious to the relevant statutory provisions, the situation may amount to an error analogous to one apparent on the face of record.

Proceeding on such premise, it is found that the provisions of Section 56 were categorically considered in paragraph-44 of the judgment under review, where it was observed that the said provision, instead of mitigating the mandatory nature of Section 54(7), highlights the same.

Moreover, the subsequent order passed in M.D. Security [2025 (5) TMI 2174 - DELHI HIGH COURT], a copy of which has been handed over to us, in the very second sentence records that it was passed in connection with an application seeking early hearing of the matter and merely recorded the submission of one of the counsel that an order had been passed rejecting the refund.

This court had entered into the merits of the case, both on facts and law, while passing the judgment under review and had considered all the provisions of law cited by the parties at length, which is explicit from the judgment itself - the present case does not come within the ambit of Order XLVII Rule 1 of the Code of Civil Procedure.

Revision dismissed.

Adjustment of income-tax refund against outstanding demand - requirement of notice u/s 245 of the Income Tax Act, 1961 - stay of demand on deposit of a proportion of disputed demand (20%) - HELD THAT:- In the facts of the present case, there is no reference made to the Principal Commissioner of Income Tax/Commissioner of Income for requiring a higher amount of payment from the Petitioner/Assessee as stipulated in the aforesaid Office Memorandums. This is an undisputed fact. Once this is the case, we are clearly of the view, that at the highest, what could have been adjusted from the refund of A.Y. 2023-24 was only 20% of the outstanding demand for A.Y. 2022-23.

As mentioned earlier, the outstanding demand for A.Y. 2022-23 was Rs. 5,17,31,483/-. 20% of this amount would come to Rs. 1,03,46,296/-. Only this amount could have been adjusted from the refund due for A.Y. 2023-24 towards the outstanding demand for A.Y. 2022-23.

We accordingly direct that after adjusting the amount of Rs. 1,03,46,296/-, the balance amount of the refund due to the Petitioner for A.Y. 2023-24, shall be refunded to the Petitioner together with interest, if any, in accordance with law. This refund shall be processed and paid within a period of 30 days from the date of uploading of this order on the High Court’s website.

The sum of 20% [i.e. Rs. 1,03,46,296/-] retained by the Department towards the demand for A.Y. 2022-23, as per this order, will be subject to the outcome of the Appeal filed by the Petitioner inter alia challenging the Assessment Order passed for A.Y. 2022-23, and which Appeal is pending before the CIT (Appeals).

We request the CIT (Appeals) to decide the Appeal pending before him as expeditiously as possible, and preferably within a period of 3 months from the date of communication of this order to the concerned CIT (Appeals). It is needless to clarify that the balance amount of the demand for A.Y. 2022-23 shall remain stayed till the disposal of the Appeal pending before the CIT (Appeals).

Validity of Reopening of assessment - reasonableness of reasons recorded for initiation of reassessment - tangible information with the AO to inititae reopening of assessment - Client Code Modification / accommodation entry receipts

HELD THAT:- We are of the view that the CIT(A) so also the ITAT were justified in holding that the initiation of reassessment proceedings was without application of mind and unsustainable inasmuch as there appears to be no tangible material or evidence and in the reasons recorded by the AO, neither name of any company is mentioned nor the name of broker is correct. If the foundational fact being ground for assumption of jurisdiction is non existent and erroneous, the proceedings cannot clear the test of reasonableness and prudence.

Assessee had paid tax on the disputed transactions at the highest rate of tax and therefore, any question of undisclosed income or payment of lesser tax is out of place. Appeal dismissed.

Recovery without authority of law - non-supply of assessment order - Assessee argued that without service of the assessment order and creation of demand notice under section 156 no statutory liability is created against which the amount can be recovered from the petitioner and thereafter the recovery of amount from the petitioner, is clearly illegal and contrary to petitioner’s fundamental rights -

HELD THAT:- We are of the view that maybe the respondent-Department is justified in contending that since the petitioner had failed to change his address in the PAN database, the respondent-Department cannot be accused of the assessment order not being served. But in any case, when the amount was recovered from the petitioner, and the petitioner had asked for copy of the assessment order, it was incumbent upon the respondents to have supplied him a copy of the assessment order, which the Department has failed to do. Recovery of the amount from the petitioner and not supplying copy of the order amounts to recovery without authority of law.

As the petitioner has been trying hard to get a copy of the assessment order and even pursuant to orders passed by this Court, the respondents have failed to provide a copy of the same, we hereby direct respondent No. 1 to refund along with interest to the petitioner in accordance with law latest by 31.03.2026.

Needless to observe that in case, respondent No. 1 is able to trace out and serve a copy of the assessment order (whereby the demand to the tune of Rs. 11,14,660/- was raised against the petitioner) by 31.03.2026, the amount of Rs. 11,14,660/- shall not be required to be refunded.

If the assessment order has been served upon the petitioner, it shall be free to challenge the same by way of filing an appeal under Section 246(A) of the Act of 1961, within a period of 30 days of service of the assessment order.

Validity of reassessment proceedings against a dissolved company - Right of shareholder to file reply and representation in assessment proceedings - Principles of natural justice consideration of representations -

HELD THAT:- Notice u/s 148A(1) and the order under Section 148A(3) were issued in respect of the erstwhile company which had been dissolved by NCLT order and for which a certificate u/s 178 had been issued earlier - AO did not consider replies filed by the petitioner because those replies were filed by the petitioner as shareholder and not by the noticee on the ITBA portal

We are of the view that the fact that the respondent no. 1-AO has not considered the replies dated 10.04.2025 and 15.04.2025 cannot be said to be arbitrary or illegal in any manner, because, the reply to the notice was filed by the petitioner- company, who was neither the assessee nor the noticee, to whom the notice was issued. The plea that ITBA portal did not recognize or failed to take cognizance of the reply can well be understood and is justified.

We are of the view that the petitioner-company, who was holding 99.99% shareholding in the erstwhile company, has a right to file reply and oppose any proceedings against the erstwhile company, because tax or penal liability (if raised) may ultimately have to be suffered by it.

Hence, while exercising our powers under Article 226 of the Constitution of India to meet the ends of justice, we hereby direct the respondent no. 1-AO to consider the reply so filed by the petitioner-company and the grounds taken in the present writ petition. The petitioner-company may file a fresh reply/representation before the respondent No. 1 in physical form within a period of 10 days, which shall be considered by the respondent no. 1 in accordance with law.

Thus reassessment orders which were issued without considering petitioner’s stand, are contrary to the principles of natural justice and are thus, set aside.

Validity of proceedings u/s 153C - as agued notice in question is based on the entries found in the ledger of other entity which was found at the premises of the searched person and the AO has not even taken into consideration that TDS is shown to have been deducted qua all the transactions.

HELD THAT:- The Court found that the petitioner has a plausible ground to oppose the Section 153C proceedings because the foundational fact required to invoke the provision namely, the creation of an asset as contemplated by the statutory scheme and the fourth proviso to Section 153A appears to be absent. The material indicates that the relevant entries pertain to expenditure and that tax was deducted at source, which bears on the proper characterization of the transactions and the jurisdictional premise for issuing a Section 153C notice.

Such being the position, we deem it appropriate to direct the AO to firstly decide petitioner’s objections filed vide representation/reply dated 09.06.2025 and 10.07.2025 within a period of fifteen days from today. It shall be required of the respondent No. 1-AO to pass a reasoned order latest by 23.01.2026. The order so passed, shall be communicated to the petitioner on its registered email ID.

Characterization of expenditure - revenue or capital - advertisement expenses - assessee had treated and claimed the said expenditure as a deferred revenue expenditure in books of account - HELD THAT:- There is no estoppel against the statute and the Act, which enables the assessee to claim the entire expenditure in the manner in which it is claimed. See Taparia Tools Ltd. [2015 (3) TMI 853 - SUPREME COURT]

As in view of the settled legal precedents and in light of the observations of Core Healthcare Ltd. [2008 (10) TMI 74 - GUJARAT HIGH COURT] the advertisement expenses incurred by the assessee cannot be treated as capital in nature. Assessee appeal allowed.

Validity of reopening of assessment - no notice u/s 143(2) was issued for assumption of jurisdiction to complete assessment - HELD THAT:- CIT(A) having complete access to the ITBA portal or assessment records should have very well negated the assertion of the assessee by factual finding, however, what transpires from impugned order of ld. First Appellate Authority, that burden was rather casted on assessee to allege that assessee was under an obligation to establish that notices were not issued within the stipulated time.

The question was not of service but the fact under dispute is if at all notices were issued which remains ambiguous in the assessment order or First Appellate order and rather the e-portal screen shot filed shall be as if no notice u/s 143(2) was issued. Thus, reliance on the decision of Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] was erroneous, as the question is not of mere irregularity in service but of non-issuance of the notice at all. Appeal of assessee is allowed.

Penalty u/s 271(1)(c) - notice invoking both limbs without striking off inapplicable portion - allegation of defective notice - non specification of clear charge

HELD THAT:- We find that the AO has mentioned both limbs in the notice issued u/s 271(1)(c) and has not struck off the inapplicable portion of the Act. AO in the penalty order has mentioned the facts that the penalty levied u/s 271(1)(c) of the Act for concealment of income. Penalty quashed - Decided in favour of assessee.

Validity of reopening of assessment u/s 147/148 - unexplained cash credit - re-assessment was initiated mechanically solely on the basis of a communication from the investigation wing - independent inquiry or application of mind by the AO - allegation of borrowed satisfaction - reasons to believe - information gathered during the course of survey revealed that post-merger, the assessee being transferee entity, had bogus investments and said money was received from various entities from sale of bogus investments held under the head non-current investments

HELD THAT:- A perusal of the reasons revealed that the ld. AO has recorded very cryptic reasons which are vague, scanty and at best can be considered as borrowed satisfaction of the AO as AO has not recorded any satisfaction on the information received. Therefore, there is no live link between the information and the formation of belief by the ld. AO. Therefore, on this ground the re-opening of assessment and notice issued u/s 148 of the Act based on the said borrowed satisfaction is bad in law and so is the assessment framed consequently.

The case of the assessee find support from case of Meenakshi Overseas (P.) Ltd. [2017 (5) TMI 1428 - DELHI HIGH COURT] as held that reopening made on the basis of borrowed satisfaction cannot be sustained where the reasons failed to demonstrate live link between the tangible material and formation of the reason to believe that the income has escaped assessment.

Reopening of assessment has been made invalidly on the basis of borrowed satisfaction as the ld. AO has failed to apply his mind independently to arrive at an objective belief that the income has escaped assessment.

Period of limitation - assessment framed u/s 147 of the Act dated 31.03.2022 as barred by limitation as the same was served beyond the limitation period as prescribed as under the income tax Act - We find that the assessment was framed by the ACIT Central Circle 1(2), Kolkata on 31.03.2022, which was served upon the assessee on 04.04.2022. We note that the said assessment order was dispatched by the Department on 02.04.2022 as is apparent from the speed post tracking.

In our opinion the assessment order has to leave control of the AO within the limitation period which is in the present case was 31.3.2022. The learned CIT(A) has conveniently overlooked the issue though specifically raised before him. Therefore, the assessment order is barred by limitation. The case of the assessee finds support from the decisions of CIT Vs BJN Hotels Karnatka [2016 (3) TMI 283 - KARNATAKA HIGH COURT] and Kuppumalai Estate [1997 (3) TMI 39 - KERALA HIGH COURT] held that the the assessment order must be issued beyond the control of the authority within the period of limitation.in order to make the assessment order complete and effective it should be issued so as to be beyond the control of the assessee so that the same is not subject to any change. Notice u/s 148 quashed - Decided in favour of assessee.

TP adjustment on account of arm's-length price of the AMP expenses - contention of the assessee therein was that assessee is merely acting as a distribution agent and carries on marketing activities and therefore the assessee is promoting its own business in India as a distributor - argument of the assessee therein was that addition was made by using the Brightline test - HELD THAT:- We find that the facts of the case for assessment year 2012–13 till 2017–18 wherein the coordinate Bench has decided the issue in favour of the assessee squarely covers this issue also before us in favour of the assessee as held the transaction of expenditure on AMP cannot be treated as a separate transaction. In the present case, we find from the TP study that the operating profit cost to the total operating cost was adopted as Profit Level Indicator which means that the AMP expenditure was not considered as a part of the operating cost. This goes to show that the AMP expenditure was not subsumed in the operating profitability of the assessee-company. Therefore, in order to determine the ALP of international transaction with its AE, it is sine qua non that the AMP expenditure should be considered a part of the operating cost Therefore, we restore the issue of determination of ALP, on the above lines, to the file of the AO/TPO.

Adjustment in respect of interest on delayed receivable - outstanding dues from the AE are not received by the assessee in time - HELD THAT:- We do not find any infirmity in the order of the learned lower authorities in inputting that international transaction of interest on overdue receivable from its associated enterprises is a separate international transaction and is also required to be benchmarked separately. By virtue of explanation 1 (c) of section 92B of the Act, it is an international transaction “capital financing, including any type of long-term or short-term borrowing, lending or guarantee, purchase or sale of marketable securities or any type of advance, payments or deferred payment or receivable or any other debt arising during the course of business; Thus, it needs to be benchmarked separately.

For credit period, TPO has considered 30 days credit period as reasonable - We find that there is no justification or evidence produced before us to show that general credit period granted by the assessee to the non associate enterprises is also for 60 days. Fact clearly shows that according to article 3.2 of the agreement of services, it says assessee should have received the amounts invoiced within 30 days therefore there is no reason to grant the credit for 60 days to the assessee from outstanding due receivable from its associated enterprises. With respect to the benchmark interest rate adopted by the learned transfer pricing officer of LIBOR plus 400 basis points, no evidence was lead before us that it is not arms’ length, however several judicial precedents were cited to show that in case of such a transaction of capital financing the LIBOR + 200 basis points is appropriate. Therefore, respectfully following those decisions, we direct the ld AO to adopt LIBOR + 200 basis points as appropriate ALP. This is also because there is no risk of credit involved in money outstanding with the parent company.

Seminar and convenience expenses disallowed u/s 37 - These expenses are in the nature of advertisement expenses, promotional materials, some sales meeting and seminar expenses which is under the head of seminar and convention expenses. It is a fact that the AO has not found them to be violative of the provisions of section 37 of the act or the decision of the honourable Supreme Court in in case of Apex Laboratories Limited [2022 (2) TMI 1114 - SUPREME COURT] - we restore the whole issue back to the file of the learned assessing officer with a direction to follow the decision of the honourable Supreme Court in its letter and spirit and verify each of the expenditure. If those are found to be not in violation of the decision of the honourable Supreme Court, same should be allowed.

Double disallowance u/s 43B - claim of the assessee is that it has SUO Moto disallowed the same in its return of income u/s 40A (7) - On hearing the parties, we restore this issue back to the file of the AO with a direction to delete the same disallowance if it is found to be the double disallowance and the assessee has disallowed the same in its computation of income.

Validity of reassessment proceeding u/s 147 - Validity of the assumption of jurisdiction for reassessment u/s 147 pursuant to the notice u/s 148A(b) and consequential proceedings under section 148 - reference to the existence of information or statements - Disallowance u/s 80GGC.

HELD THAT:- We find considerable force in the contention of the assessee that the notice issued u/s 148A(b) suffers from fundamental infirmities. A perusal of the annexure to the said notice reveals that the AO repeatedly alleged that the assessee had undertaken non-genuine transactions with Aadhar Foundation, along with Kisan Party of India. Paragraphs 1, 3 and 4 of the annexure specifically proceed on the premise that the assessee made donation to Aadhar Foundation and claimed deduction under section 80GGC on that basis. It is an undisputed fact on record that the assessee had never made any donation to Aadhar Foundation, and the donation of Rs. 5,00,000/- was made only to Kisan Party of India.

Significantly, this factual error was not only pointed out by the assessee in his reply to the notice under section 148A(b), but the Assessing Officer himself, in order passed u/s 148A(d), admitted that the reference to Aadhar Foundation in the show cause notice was an inadvertent error and that the donation was actually made to Kisan Party of India. In our considered view, once it is admitted that the jurisdictional notice under section 148A(b) was issued on an incorrect factual premise, the very foundation for formation of satisfaction regarding escapement of income stands vitiated. Such an error cannot be treated as a mere clerical lapse, as the assumption of jurisdiction under section 147 is contingent upon correct and specific information suggesting escapement of income in the case of the assessee.

We also find merit in the contention of the assessee that the notice under section 148A(b) is vague and generalised in nature and does not enclose or disclose any material or evidence forming the basis of the allegations.

AO has relied upon statements recorded u/s 132(4) of certain third parties and general investigation findings, but no such statements or relevant extracts thereof were ever furnished to the assessee, despite a specific request. On the contrary, in paragraph 5.5 of the order under section 148A(d), AO has taken a categorical stand that there is no statutory mandate to provide the material relied upon along with the show cause notice.

Reassessment proceedings initiated u/s 148, being in violation of the mandatory procedure prescribed u/s 148A, are invalid and liable to be quashed. Decided in favour of assessee.

Unexplained cash credit u/s 68 - bogus share capital - genuineness, identity and capacity of the investordoubted - summons issued u/s 131 - burden of proof-effect of proviso to section 68 of the Act introduced by Finance Act, 2012 - HELD THAT:- Each of the share subscriber had duly furnished evidences including their ITRs, bank statements, audited financial statements along with explanation regarding source of funds etc. We note that, the AO had also issued summons u/s 131 of the Act, which were personally attended to by the Director of the assessee company. Having perused the statement recorded u/s 131 of the Act, we find that the AO at no point of time had doubted the source of funds of the share subscribers, all of whom belonged to the same group. We thus find that the observations made by the Ld. CIT(A) doubting the source of funds of the shareholders was driven by suspicion, without bringing on record any tangible evidence or material.

Two names share subscribers had furnished the relevant evidences including their ITRs, bank statements, audited financial statements before the lower authorities. According to Ld. CIT(A), while the share subscription monies were received from their bank statements but their source of funds was not verifiable as because these individuals carried small bank balances and only at the time of subscription, they had received fund transfers which they had immediately remitted to the assessee company. In our opinion this reasoning given by the Ld. CIT(A) is based on suspicion and conjectures and cannot be reason enough to justify the addition u/s 68.

Coming to the justification of share premium, it is noted that, the Director of the assessee had given the explanation regarding the same when he was examined u/s 131 of the Act. We also note that, the year involved is assessment year 2012-13 and the proviso to section 68 of the Act introduced by Finance Act, 2012, is prospective and is applicable from 01.04.2013 effective from A.Y. 2013-14. We observe that, the amendment to Section 68 by inserting proviso is not retrospective and is applicable prospectively as has been held in the case of CIT Vs. Gagandeep Infrastructure (P) Ltd [2017 (3) TMI 1263 - BOMBAY HIGH COURT].

Assessee has discharged its burden of proof by satisfying all three conditions as envisaged u/s 68 of the Act and therefore no addition u/s 68 of the Act is called for. Decided in favour of assessee.

Undisclosed investmentu/s 69 - addition of ‘on money’ - Genuineness of seized documents - Burden of proof - Assessee failed to prove the genuineness and source of the amount mentioned in the seized documents - HELD THAT:- It was the specific case of the Assessee that the seized documents is pertaining to his son whose name has been reflected on the top of the document itself and all the entries mentioned in the seized document are pertaining to the son of the Assessee and his family Members only.

To substantiate the said claim the affidavit of the Assessee as well as son of the Assessee Sh. Manoj Gupta have been placed before the AO. Admittedly, the circle rate of the Flat in the year under consideration and the sale deeds have been executed more than the circle value.

There is no any agreement or other corroborative evidence to suggest that the Assessee has paid alleged ‘on money’ for purchase of the Flat. Department has failed to bring any material on record to show regarding the addition made in the hands of the seller M/s Pearl Hides for alleged receipt of ‘on money’. Considering the nature of the seized document and also in the absence of any credible evidence to corroborate the version of the Revenue, we find no reason to upheld the order of the Ld. CIT(A). Appeal of the Assessee is allowed.

Revision u/s 263 - as per CIT AO did not consider the amount remitted to Linkedin Corporation for disallowance u/s 40(a)(i) -prejudicial to the interests of the revenue - assessment was reopened u/s 147 of the Act on the basis of information that the assessee company has made foreign remittances as FTS/FIS without withholding tax - whether the PCIT was correct in law to set aside the reassessment order u/s 147 as erroneous and prejudicial to the interest of the Revenue on account of the fact that the AO should have disallowed 100% of foreign remittance u/s 40(a)(i) instead of 30% disallowance.

Whether this difference in quantum would still be considered differential tax treatment in transactions involving residents and non-residents, and whether the same falls within the ambit of the non-discrimination clause of Article 26(3)? - HELD THAT:- In our opinion, the disallowance on non-resident payments to 100% leads to less favorable treatment as compared to a similar payment to a resident under "same conditions", having 30% disallowance. Thus such disparity, in our view, would trigger the non-discrimination clause in Article 26(3) of tax treaty as excess disallowance of 70%, in case of payment to non-residents, has to be considered as discriminatory as compared to allowability of similar payment made to residents.

We do not agree with the contention of Revenue that the scope of non-discrimination article is restricted to differential treatment of expenses incurred towards residents and non-residents and it does not refer to the quantum of expense which can be disallowed.

Section 40(a)(i), in its present form, is violative of non-discrimination Article 26(3) of India-USA DTAA as far as quantum of disallowance is concerned. In the relevant assessment year of AY 2018-19, in the instant case, Section 40(a)(i) imposed a stringent condition of 100% disallowance for payments to non-residents as compared to disallowance of 30% for payments to residents for the same default of not deducting TDS.

The substantive law laid down in Herbalife India P Ltd[2016 (5) TMI 697 - DELHI HIGH COURT] which pertained to AY 2001-02, holding that Section 40(a)(i) was discriminatory and violated the non-discrimination article 26(3) of DTAA, as there was no disallowance for similar payments to residents, and negating the Revenue action of disallowance u/s 40(a)(i) for payments to non-resident without making TDS, still holds relevance.

We have seen that the AO has made a disallowance @ 30% of remittance which is similar to the rate of disallowance @30% under the non-discriminatory clause of Article 26(3) of the DTAA, therefore there is no occasion to say that the revenue is prejudiced as far as quantum of disallowance is concerned.

Second condition of action of the AO, being prejudicial to the interest of the Revenue, is not satisfied. Since both the ingredients of provisions of section 263 of the Act i.e., the order of the AO being erroneous and prejudicial to the interest of the Revenue, is not satisfied, the assumption of jurisdiction by the PCIT u/s 263 cannot be held as valid - Decided in favour of assessee.

On-money on sale of units - CIT(A) estimating the sale value at a flat rate of Rs. 6,500 per sq. ft. and thereafter applying an estimated net profit ratio of 17% - difference between book rate/sale deed rate and the price as estimated by the AO represented unaccounted on-money received in cash by the assessee - search and seizure action u/s 132 was conducted in the B-Safal & City Estate Group during which certain loose slips/incriminating material was found showing undisclosed cash transactions relating to sale of real estate units and assessee LLP was a part of the same business group - AO estimated cost project as per seized excel files titled “cost details privilon.xlsx” and “cost details parijat.xlsx”,

HELD THAT:- In the case of “Umacharan Shaw & Bros [1959 (5) TMI 11 - SUPREME COURT] has held that suspicion, however strong, cannot take place of evidence.

The facts in the hands clearly suggest that both the lower authorities have proceeded on the basis of their own assumptions and presumptions to assume the receipt of ‘on-money’ by the assessee on sale of units without any corroborative evidence being found during the search action or during the course of post-search inquiries. In view of detailed discussion made herein above, entire addition of on money made by the AO for project "Privilon" and "Parijat Eclate" is ordered to be deleted. Therefore, Ground of Appeal Nos. 2 to 4 of assessee appeal are allowed.

Income from house property - Deemed rent under section 23(5) - standard deduction u/s 24 - addition of deemed rent made by the AO @7.5 of the value of the property, however, restricted by CIT (A) @ 3% of market value of unsold unit - HELD THAT:- The provisions of Section 23(5) of the Act clearly provide that deemed rent is required to be offered to tax by builder for unsold unit when two years have lapsed from obtaining BU permission of the project. The provision of the Act nowhere provides exclusion of estimation of deemed rent for projects, of which construction had commenced prior to introduction of said provisions. The legal plea raised by assessee fails on this ground. AR has not drawn any specific instances, wherein, assessee has tried to give property on rent when they are unsold and lying vacant with it. The estimate of 3% as deemed rent in our view, is justified. We do not find any merit in this Ground of appeal, the same is accordingly dismissed.

Classification under General Interpretative Rules (GIR) - incomplete or unfinished goods having essential character of the complete or finished goods - imported “Latch and Actuator Assembly” - classified under CTI 83012000 as “Locks of a kind used for automobiles” - benefit of exemption availed in terms of Sl. No. 1478 of Notification No. 46/2011-Cus. - differential duty - Essential character test - Extended period of limitation (Section 28(4) Customs Act) - Confiscation without prior bond - Whether the imported “Latch and Actuator Assembly” are qualified to be considered as a semifinished locks of a kind used in automobiles capable of performing essential function of a lock or not and the appropriate classification for the imported goods? - HELD THAT:- We have observed that it is evident from the manufacturing process adopted by the Appellant and the particulars of procurements of other components required for manufacturing of the Complete Lock System provide factual clarity that the imported Latch and Actuator Assembly neither has any essential character nor capable of performing any independent function of a lock of an automobile lock since substantial and vital manufacturing process along with other procured components are required to make it as a Lock, which is capable of being fitted into an automobile vehicle. The only possible conclusion therefore is that the imported items are only ‘parts of locks’ and not a ‘finished lock’ and in view of this, the observation of the Original Authority is unsustainable. We find the reliance placed by the Appellant on of M/s. Shiroki Auto Components India Pvt. Ltd Vs CCE & ST [2020 (7) TMI 706 - CESTAT AHMEDABAD] as upheld by the Hon’ble Supreme Court [2021 (9) TMI 729 - SUPREME COURT] is very apt, wherein the imported ‘Latch and Actuator Assembly’ have been held to be classified as ‘parts of Automobile Locks’ under CTI 83016000 and not under CTI 83012000.

Reclassification of the goods from CTI 87089900 to CTI 83016000, whether the benefit of preferential rate of duty can be denied or not. The admitted facts are that at the time of import and clearance of the goods, the Appellant had sought the benefit of preferential rate in terms of Sl. No. 1478(I) of Notification No. 46/2011Cus. dated 01.06.2011. Sl. No. 1478 of the said Notification provides benefit of preferential duty for all goods classifiable under CTH 870895 to CTH 870899, and the applicable rate of Basic Customs Duty is 5%.

In the case on hand, we find that the SCN was issued after a period of sixty days from the date of import, to deny the benefit of the preferential rate of duty, which is not permissible in law and as a consequence, the findings and observations of the Adjudicating Authority are invalid and incorrect. Moreover, there is neither any allegation in the SCN nor any finding in the Impugned Order, to the extent that the Country-of-Origin Certificate is produced to the importing party by the Appellant was or is invalid or illicit.

It is also a fact that the imported goods are to be reclassified under CTI 83016000 as “Parts of Locks” and Sl. No. 1043 of the said Notification No. 46/2011-Cus. confers preferential rate of duty benefit and the applicable BCD is 0% for the imported goods classifiable under CTI 83016000 as against Sl.No.1478(I) for CTI 87089900 wherein the Appellant had paid BCD @ 5%. However, there is no plea by the Appellant for downward revision of the rate of duty in terms of Sl. No. 1043 of the said Notification. Based on the above, the findings of the Original Authority and the conclusions reached thereon in the Impugned Order are clearly unsustainable as bereft any merit or basis and hence, the same deserves to be set aside which we hereby do.

There is no documentary evidence placed on record by the Revenue to substantiate that their attempt for reclassification was an outcome of any commission or omission of the Appellant. There is no finding concerning any fraudulent intention or mala-fide action of the Appellant to seek wrong classification to avail the benefit of preferential rate of duty. In the absence of any credible evidence or prima facie material, the imported goods are not liable for confiscation, and this principle is upheld in many cases including in the case of Union of India Vs M/s. Garware Nylons Ltd. [1996 (9) TMI 123 - SUPREME COURT]

We hold that imposition of penalty under Section 114A of the Customs Act, 1962, is unsustainable. Moreover, in the case of Commissioner of Customs (Import), Mumbai Vs Finesse Creation Inc [2009 (8) TMI 115 - BOMBAY HIGH COURT], which stands upheld by the Hon’ble Supreme Court vide Order [2010 (5) TMI 804 - SC ORDER], it is held that in the absence of any bond executed with Customs prior to clearance of the imported goods, no confiscation could be ordered. Following the above ratio, we hold that redemption fine imposed in the Impugned Order is liable to be set aside and we set aside both penalty and redemption fine.

In the result, the Impugned Order is set aside and the Appeal filed by the Appellant stands allowed with consequential reliefs, if any, as per law. The MA filed by Appellant for submission of additional documents also stands disposed of.

Revocation of customs broker licence - forfeiture of security deposit - imposition of penalty - overvalued to avail ineligible drawback -breach of obligations - due diligence and antecedent verification obligations of customs brokers - maintenance of records and response to summons - timelines for proceedings under the licensing regime - HELD THAT:- It is seen that revocation of licence, forfeiture of security deposit and imposition of penalty had been founded on the alleged breach of regulation 10(d) and 10(e) of Customs Brokers Licensing Regulations, 2018. It is also seen that the issue pertains to alleged overvaluation of export cargo with intend to claim ineligible drawback.

It is also seen that the customs broker had represented against non-adherence to time-lines prescribed in Customs Brokers Licensing Regulations, 2018 despite which the elapse of 344 days, the gap between the commencement of proceedings by notice dated 29th March 2023 and the submission of the enquiry report, had not been dealt with in the impugned order. The Hon'ble High Court of Bombay, in re Unison Clearing Pvt Ltd. [2018 (4) TMI 1053 - BOMBAY HIGH COURT], had held that the timelines are mandatory in the event that the impugned order does not establish that such delay occurred at the instance of the customs broker. It would appear, from the absence of any finding on this aspect, that the delay was not on account of the appellant herein.

In the light of above the impugned order does not sustain and is set aside to allow the appeal.

Entitlement to exemption as "parts of aircraft" for concessional customs duty - review of adjudication - Admissibility of documentary evidence - Interpretation of exemption notifications and role of Ministry certification - Extended period of limitation u/s 28(4) of the Customs Act, 1962 - Interest and penalty provisions under Sections 28AA and 114A of the Customs Act, 1962 - Notification No.50/2017-Cus Sl. No.545 - HELD THAT:- In common parlance parts are used in the manufacture of the final product and without which the final product cannot be conceived of. It also defines part as a piece or portion of a whole. Further component has been defined as one of the parts of a sub-assembly or assembly of which a manufactured product is made up and into which it may resolve. In the light of the said facts, it was averred that the appellant firm has incorrectly availed the benefit of Notification No.50/2017-Cus on Fire Extinguishers and parts of Fire Extinguishers as they were not part of Aircrafts. The duty so short paid by irregular availment of Sr. No.545 of Notification No.50/2017-Cus is correctly held liable to be recovered from the appellant firm.

The declaration issued by the Ministry of Defense clearly states that the fire extinguishers are mandatory for the issuance of certificate of safety of flight and that they are specifically designed for aircrafts shows that the fire extinguisher is an integral part of the aircraft without which the aircraft will not be able to be airborne.

Since the declarations issued by the Ministry of Defence and the certificates are relevant documents to decide the issue whether ‘Fire Extinguisher and parts’ thereof are to be considered as ‘parts of aircraft’, it is necessary that the Adjudicating Authority may consider the same and in the light of the decisions referred to above and decide the issue afresh.

The impugned order is set aside. The appeals are, accordingly, allowed by way of remand.

Classification of goods under 23099090 schedule - import Of Danisco Phytase - common / regular trade parlance as a premix or animal feed additive - seeking advance rulings- conditions required for filing the application for advance ruling -HSN explanatory note -term "nomenclature." - Additional Notes to GRI define heading - HELD THAT:- Having examined the CAAR-1 application, the comments received from the jurisdictional Customs Commissionerate, the record of personal hearing and the applicable legal framework, find the application to be valid in terms of the Customs Act, 1962 and the CAAR Regulations, 2021. Therefore, allow the application and proceed to determine the classification of the proposed imports on the basis of the information on record.

As per the Circulars, the preparation containing active ingredient preparations used for animal feeding is classifiable under heading 2309. The Board has also clarified that while deciding the classification of the products claimed to be animal feed supplements, it is necessary to ensure that the said animal feed supplements are ordinarily or commonly known in the trade as products for specific use in animal feeding. The applicant has submitted that the subject product is exclusively used in animal feed and has no other use; contains an active ingredient, i.e., Phytase enzyme; is commonly known in the trade as products for a specific use in animal feeding and is an animal feed additive.

As per the HSN explanatory note, the heading 2309 excludes protein substances of Chapter 35. However, the impugned product contains these protein substances, i.e. enzymes in very small quantities. They can't be considered as protein only product, rather they are products containing enzymes among other substances like stabilisers and carriers. Therefore, the product does not appear to be hit by the above-mentioned exclusion clause.

On the basis of trade parlance and the declaration of the supplier, it appears that the said product is used for animal feed. Thus, the product merits classification under heading 2309 and specifically under subheading 2309 90 90 as 'Other'.

In Commissioner of Central Excise Pune Vs. Abhi Chemicals & Pharmaceuticals Pvt. Ltd [2005 (2) TMI 848 - SUPREME COURT], the Supreme Court held that a mixture of vitamins and other ingredients (solvents, anti-oxidants, and stabilisers), used as animal feed, is classifiable as an animal feed supplement under Chapter Heading 2302 of Central Excise Tariff Act, 1985. In Collector of Central Excise Bangalore vs Teragon Chemie Pvt Ltd [2001 (7) TMI 127 - SUPREME COURT], the Supreme Court held that the products which consisted of one or more vitamins mixed with diluents, used in small quantities as supplements to the main feed to improve the performance of livestock were correctly classifiable under Heading 2302 of CETA, 1985.

The product Danisco Phytase fulfills the essential criteria for classification under Heading 2309. The product Danisco Phytase merits classification under heading 2309 and specifically under subheading 2309 90 90. It is exclusively used in animal feed and has no other use; contains an active ingredient and is commonly known in the trade as premix or animal feed additive. Accordingly, the subject product namely "Danisco Phytase" merits classification under Chapter 23, Heading 2309, sub heading 2309 90, Tariff Item 2309 90 90 of the First Schedule to the Customs Tariff Act, 1975.

Vegetable saps and extracts - Classification under the General Rules of Interpretation (GRI) - HSN Explanatory Notes as an aid to classification - Chapter Note 3 to Chapter 30 - simple vegetable extracts treated as unmixed products - Medicaments (Headings 3003/3004) - requirement of mixed constituents and/or measured doses/retail packing - Residuary heading principle - Heading 2106 is residual and excluded if goods fall under a more specific heading

Vegetable saps and extracts - HSN Explanatory Notes as an aid to classification - Classification under the General Rules of Interpretation (GRI) - Linum Life is classifiable under Tariff Item 13021919 (Heading 1302) as a vegetable extract. - HELD THAT: - The Authority examined the product composition and manufacturing process and found Linum Life to be a single plant extract (flax seed hull extract) obtained by solvent extraction (ethanol) and presented in powdered form with an inert carrier (potato maltodextrin) added only to convert/stabilise the extract. The HSN Explanatory Notes to Heading 1302 cover vegetable extracts obtained by solvent extraction and expressly permit the addition of inert substances that do not alter the extract's nature. Chapter Note 3 to Chapter 30 and the Explanatory Notes confirm that simple single vegetable extracts, even when standardised or presented in powder form, remain within Heading 1302. Applying the GRI (including preference for the most specific heading where applicable), the Authority held that the product falls squarely within Heading 1302 and, as not otherwise specified, within sub-heading 130219 and Tariff Item 13021919. [Paras 5, 6]

The impugned goods merit classification under Chapter 13, Heading 1302, sub-heading 130219, Tariff Item 13021919.

Chapter Note 3 to Chapter 30 - simple vegetable extracts treated as unmixed products - Medicaments (Headings 3003/3004) - requirement of mixed constituents and/or measured doses/retail packing - Classification of Linum Life under Headings 3003 or 3004 (medicaments) is not sustainable. - HELD THAT: - Heading 3003 requires medicaments consisting of two or more constituents mixed together for therapeutic or prophylactic uses and not put up in measured doses or retail packing. Heading 3004 requires medicaments (mixed or unmixed) put up in measured doses or retail packing. Chapter Note 3 clarifies that simple vegetable extracts of Heading 1302 merely standardised or dissolved in a solvent are to be treated as unmixed products and are excluded from classification as mixed medicaments. The product is not presented in measured doses nor in retail packings and is not a mixture of two or more active constituents; the carrier used is inert and for physical form/stability only. Therefore the essential conditions for classification under 3003/3004 are not met. [Paras 5]

The product cannot be classified under Heading 3003 or Heading 3004.

Residuary heading principle - Heading 2106 is residual and excluded if goods fall under a more specific heading - Classification under the General Rules of Interpretation (GRI) - Classification of Linum Life under Heading 2106 (food preparations) is not appropriate. - HELD THAT: - Heading 2106 is a residual entry for miscellaneous edible preparations and covers products that are preparations for direct human consumption or preparations consisting wholly or partly of foodstuffs used in making beverages/food preparations. Linum Life is a raw material single plant extract not fit for direct consumption in its as-imported form, and it is not a finished food supplement or a preparation of the kind exemplified under Note 5 to Chapter 21. As the product is properly classifiable under the more specific Heading 1302, resort to the residuary Heading 2106 is not justified in accordance with established principle that a residuary entry applies only when goods cannot be brought under any specific heading. [Paras 1, 5]

The product is not classifiable under Heading 2106.

Final Conclusion: The Authority allowed the advance ruling application and held that Linum Life (a solvent-extracted, single plant extract presented in powder form with inert carrier) is classifiable under Chapter 13, Heading 1302, subheading 130219, Tariff Item 13021919; competing classification under Headings 3003/3004 or 2106 was rejected for the reasons stated.

Classification of imported Girls Slips of various types and sizes to India - classifiable under CTH 61081110 of the Customs Tariff as Slips and Petticoats of man-made synthetic fibres thereof or under CTH 6208 11 00 of the Customs Tariff as Slips and petticoats of man-made fibres or under CTH 62121000 of the Customs Tariff as "Brassieries"? - HELD THAT:- There are three main features of a girl's slip which distinguishes it from a Brasserie (a) begin above the bust or at the waist; (b) are held in place with shoulder straps; and (c) do not include moulded cups, boning, or specialized support structures characteristic of brassieres.

In the instant case, after examination of the colour pictures of the subject goods as provided by the applicant, it is found that the aforementioned three features are present in the subject goods. Therefore, to my mind, the aforementioned garments appear to be undergarments for girls made of knitted synthetic fibres, designed to be worn under outer garments such as tops or dresses. These appears to be lightweight, feature shoulder straps, and are intended primarily for modesty and layering. These garments are not appeared to be constructed for body shaping or support. They do not include structural elements such as padding, reinforcement, or compression panels and thus these items are not intended to hold or support bust or waist - Further, it is noted that the presence of shoulder straps and elasticized bands is a common and necessary feature in slips to keep the garment in place on the body and does not in any manner imply that the product is a brassiere as they do not intend to hold or support bust.

Heading 6212 covers articles such as brassieres, corsets, and similar items. As per the HSN Explanatory Notes to Heading 6212. This heading covers articles of a kind designed for wear as body-supporting garments or as supports for certain other articles of apparel, and parts thereof. These articles may be made of any textile material including knitted or crocheted fabrics (whether or not elastic), therefore, the subject goods do not fall within the functional or structural scope of Heading 6212. Therefore, there are no force in the contention of the department that subject goods are covered under CTH 6212.

Further after having examined both sub headings i.e. 61081110 and 62081100 along with the HSN explanatory notes to Heading 6108 & 6208, it is observed that Heading 6108 covers "slips, petticoats, briefs, panties and similar articles (underclothing)" for women or girls, knitted or crocheted and on the other hand Heading 6208 covers "slips, petticoats, briefs, panties and similar articles (underclothing)" for women or girls, not knitted or crocheted. Since the applicant has submitted that Goods under consideration in their application i.e. girl's slip which are knitted and are made of man-made fibres, therefore, the sub heading 61081110 provides a more specific description of the subject goods than sub heading 62081100. The principle of Rule 3(a) of GRI dictates that where goods are prima facie classifiable under two headings, the heading giving the most specific description shall prevail over a more general one.

The "girl's slip of synthetic man-made fibres, knitted or crocheted" are classifiable under heading 6108, subheading 610811, more specifically under tariff item 61081110 of the First Schedule to the Customs Tariff Act, 1975 and therefore merit classification under CTI 61081110 of the First Schedule to the Customs Tariff Act, 1975, subject to verification by the field formations regarding the design, features and functionality at the time of import.

Commencement of the CIRP against the Corporate Debtor - financial debt was due and payable and existence of default or not - Taking on record the rejoinder placed - HELD THAT:- The Appellant never attempted to pursue or establish the allegation of fraud through appreciation of evidence. Having failed to act upon his own rights, he cannot later resile from the stand already taken and adopt a contradictory position at the appellate stage by contending that the documents evidencing the financial liabilities of the Corporate Debtor were fraudulently executed, particularly when no proof to the contrary has been produced. Merely alleging that a document is fraudulent does not suffice for the adjudication of a dispute. Fraud is a fact that must be established by evidence, which the Appellant has failed to do, and hence he cannot take advantage of such a plea, especially while objecting to documents such as the Audit Report, the Balance Sheet, and his own One-Time Settlement proposals contained in the correspondence dated 16.06.2022 and 19.07.2025. In fact, a summary consideration of these documents clearly indicates a tacit admission by the Appellant of his financial liability, because unless such liability existed and was admitted, there would have been no occasion for him to explore the possibility of a One-Time Settlement. An attempt to enter into a One-Time Settlement constitutes an admission of financial debt payable to the Financial Creditor.

As per the dictum of the Hon’ble Apex Court rendered in M/s Innoventive Industries Limited v. ICICI Bank Limited [2017 (9) TMI 58 - SUPREME COURT], it has been held that the definition of a ‘claim’ includes even a disputed right of payment, and that proceedings under the Code are triggered the moment the default exceeds the statutory threshold limit.

Even otherwise, if the aforesaid principle as applied by the Ld. NCLT is considered in its entirety, the basic criterion is that only the existence of a claim is required to be prima facie established. Its quantification does not affect the maintainability of proceedings under Section 7 of the I & B Code, 2016; quantification becomes relevant only at a later stage, when the matter is adjudicated on its merits.

Taking on record the rejoinder placed - documents filed with the Rejoinder can be read in evidence or not - HELD THAT:- Since a Rejoinder forms part of the pleadings, it is open to consideration by the Ld. Tribunal while deciding the case on merits, and no formal permission is required from the Ld. Adjudicating Authority prior to placing the Rejoinder on record to be read in evidence. Moreover, the documents filed with the Rejoinder, being public documents such as the Auditor’s Report and the balance sheet, are already in the public domain and clearly reflect the existence of a debt due from the Appellant to the Financial Creditor. Furthermore, the Appellant’s liability stands explicitly admitted in the communication dated 16.06.2022, as well as in his subsequent efforts to pursue a One-Time Settlement on 19.07.2025. A proposal for One-Time Settlement itself constitutes an admission of debt, once the Appellant initiates steps to settle the liability through payment.

The Company Appeal lacks merit and the same is accordingly dismissed.

Undue hardship doctrine - non-compliance with the pre-deposit requirements - right of appeal - invoking the second proviso to Section 19(1) - Whether the Ld. Tribunal was legally justified in dismissing the appeals for non-compliance with the 10% pre-deposit condition, or whether such a dismissal, in the face of a specific plea of financial incapacity and a communication gap with counsel, offends the principles of natural justice and the right to a forum ? -HELD THAT:- In our view, the Learned Tribunal failed to balance the mandate of Section 19(1) with the "undue hardship" doctrine. When a party alleges that their very existence as a "going concern" is at stake, the Tribunal must look beyond mere non-payment and examine if the 10% condition had effectively rendered the statutory right of appeal illusory.

We are equally cognizant of the need to "safeguard the realization of penalty" as required by the proviso. The Revenue’s interest cannot be jeopardized by indefinite delays. However, a dismissal on technicalities in a matter involving such high stakes—without a hearing on merits—is a result that this Court finds difficult to sustain.

The right of appeal is a substantive statutory right. While the Revenue’s interest in safeguarding the penalty is legitimate, the doors of justice cannot be bolted solely due to a temporary liquidity crisis. Considering the substantial questions of law involved, we find that a further modification of the pre-deposit threshold is necessary to prevent a miscarriage of justice and to ensure that the appellants are not rendered remediless.

Accordingly, the appeals are disposed of.

Money Laundering - provisional attachment order - no notice was served upon the appellant - Order passed ex-parte - reason to believe under section 8 of PMLA - proceeds of crime - attachment as value - continuing offence - preponderance of probabilities - burden of proof - HELD THAT:- It is by now well-settled that the issue of retrospectivity or otherwise, in so far as the offence of money-laundering is concerned, has to be examined with reference to the time of commission of the act which constitutes ‘money laundering’ under the PMLA, which includes concealment/ possession/ acquisition/ use/ projecting or claiming of proceeds of crime to be untainted property. If any of these actions takes place after the offence from which the proceeds were derived was added to the Schedule, the offence of money laundering would stand committed.

The Hon’ble Supreme Court, in the landmark case of Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] which has been relied upon by the ld. counsel for the Respondent, has held that the criminal activity may have been committed before the same had been notified as scheduled offence under PMLA, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as a scheduled offence, such person may be liable to be prosecuted for offence of money laundering under PMLA.

A continuing offence occurs and re-occurs, and each time, an offence is committed. The observation of the Hon’ble Delhi High Court in Prakash Industries Limited [2022 (7) TMI 877 - DELHI HIGH COURT] may also be referred to in this context, wherein, it was held that the PMLA, 2002 penalizes the act of money laundering. It does not penalize the scheduled offence. That offence merely constitutes the substratum on which charge of money laundering is being raised. Therefore, what is required to be seen is whether the act comprising money-laundering was committed when the offence from which the proceeds were derived already stood included in the Schedule to the PMLA.

This is a matter which the competent court of criminal jurisdiction has to decide after considering the evidence led before it. At this stage, in the present proceedings before this Appellate Tribunal, it is sufficient to observe that on the preponderance of probabilities, there is enough material on record to support the allegations against the appellant. The legal position is well-settled that attachment of property is a balancing arrangement to secure the interests of the person, as also ensure that the proceeds of crime remain available to be dealt with in the manner provided by the Act at the conclusion of the criminal trial. Mere attachment does not lead to loss of possession and the appellants are free to enjoy the property unless, in a given case, it becomes imperative for the Directorate to take possession of the property due to exceptional circumstances as held by the Hon’ble Supreme Court in Vijay Madanlal Choudhary. Therefore, pending conclusion of trial in the criminal prosecution case filed under the PMLA, attachment of the subject property needs to continue.

There are no grounds to interfere with the impugned order - appeal dismissed.

Taxable service or not - composite service - maintenance of gardens service or horticulture involving cultivation and development of gardens? - Horticulture, not a taxable service prior to 01.07.2012 and is covered under agriculture in the Negative List thereafter - services rendered to Coimbatore City Municipal Corporation are municipal/sovereign functions under Article 243W or not - services rendered to SEZ units are exempt under the SEZ Act or not - levy of service tax on sale of plants, manure, soil, milk etc. - invocation of extended period of limitation.

Whether landscaping and garden maintenance activities undertaken by the appellant are classifiable as taxable services? - HELD THAT:- The contracts and invoices on record unmistakably show that the appellant was entrusted with upkeep, preservation and periodic maintenance of existing gardens and parks, and not with one-time development or creation of new horticultural assets - The definition of “management, maintenance or repair service” under Section 65(64) read with Section 65(105)(zzg), as amended w.e.f. 01.05.2006, is wide enough to cover maintenance of properties, whether movable or immovable. The services rendered by the appellant clearly satisfy this definition.

The reliance placed on Kasturi (Dead) v. Gaon Sabha [1989 (7) TMI 338 - SUPREME COURT] is misplaced, as the said judgment was rendered in a land-tenure context and not in a fiscal statute. The meaning of horticulture in land laws cannot be mechanically imported into service tax law. Similarly, the plea of works contract is unsustainable, as the contracts are service-dominant, and any supply of goods is only incidental. Accordingly, we hold that the activities are correctly classifiable as taxable “management, maintenance or repair service”.

Whether services rendered to Coimbatore City Municipal Corporation constitute sovereign functions under Article 243W? - HELD THAT:- The Core functions of the State such as taxation, legislation, policing, defence, or statutory administration are Sovereign function and Execution of municipal works by private entities for consideration under contract by a private contractor: does not become a sovereign authority, and the Appellant does not step into the shoes of the State or municipality merely because the work relates to a municipal function.

It is noted that Service tax law exempts services rendered by Government/local authority, not services rendered to them by private contractors / entities unless are specifically exempted by the statute. The appellant is not a local authority, is not acting under statutory delegation, and is providing services under commercial contracts for consideration - the activity remains taxable service, subject to classification and exemption provisions.

It is found that although maintenance of parks and gardens is a function entrusted to municipalities under Article 243W of the Constitution, the appellant, being a private service provider executing such work under commercial contracts for consideration, does not perform a sovereign function. Outsourcing of municipal functions does not confer sovereign character upon the contractor or its activities. Accordingly, services rendered by the appellant to the Coimbatore Municipal Corporation cannot be treated as sovereign functions and are not immune from levy of service tax - the Appellant is liable to Tax on this score.

Whether the appellant is eligible for service tax exemption for period prior to 01.07.2012 and post 01.07.2012 under the Negative List or Mega Exemption - HELD THAT:- For period pre 01.07.2012, it is found that Service tax was leviable on specified taxable services. Landscaping and garden maintenance were squarely covered under “management, maintenance or repair service”. No exemption existed for services rendered to municipalities by private contractors.

For period post 01.07.2012, “Agriculture” under Section 65B refers to cultivation for food, fibre, fuel or raw material. Maintenance of urban parks and gardens for aesthetic and recreational purposes does not fall within this definition. Further, Notification No. 25/2012-ST exempts services by governmental authorities, not services rendered to them.

Accordingly, no exemption is available either before or after 01.07.2012.

Whether sale of plants, manure, soil, milk etc. attracts service tax? - HELD THAT:- It is well settled that pure sale of goods, involving transfer of property in goods, is outside the scope of service tax, in view of Article 366(29A) of the Constitution of India. The Hon’ble Supreme Court in BSNL v. Union of India [2006 (3) TMI 1 - SUPREME COURT] and Imagic Creative Pvt. Ltd. v. CCE [2008 (1) TMI 2 - SUPREME COURT] has categorically held that the value of goods and the value of services are required to be segregated, and service tax cannot be levied on the value of goods - Further, even in the case of composite contracts, the value of goods sold is liable to be excluded from the taxable value, subject to documentary proof, in terms of Notification No. 12/2003-ST, provided such goods are sold and the value thereof is shown separately.

Thus, the demand to the extent it includes the value of pure sale of goods not relatable to landscaping and maintenance contracts is unsustainable. However, for the purpose of limited verification and re-computation, this issue is remanded to the Adjudicating Authority, who shall: a) examine the documentary evidence produced by the appellant, b) verify whether the sales are independent of service contracts, and c) allow appropriate relief and recompute the demand in accordance with law, after granting due opportunity to the appellant.

Whether services rendered to SEZ units are exempt? - HELD THAT:- The appellant has failed to establish that the landscaping and garden maintenance services rendered to SEZ units were approved as authorised operations under the SEZ Act, 2005. Further, the appellant has not demonstrated compliance with the mandatory procedural requirements prescribed under the SEZ Rules and the relevant service tax exemption notifications. In the absence of such compliance, exemption under Section 26 of the SEZ Act cannot be extended. The overriding effect of Section 51 of the SEZ Act does not dispense with fulfilment of statutory and procedural conditions - the claim of exemption in respect of services rendered to SEZ units is not allowed.

Whether invocation of extended period and imposition of interest and penalties are sustainable? - HELD THAT:- The proviso to Section 73(1) permits invocation of the extended period where nonpayment of tax is by reason of fraud, collusion, wilful misstatement, suppression of facts or contravention of statutory provisions with intent to evade tax - it is found that although the appellant was registered under one taxable category, they did not declare the impugned activities, nor did they discharge tax under the appropriate category of “Management, Maintenance or Repair Service”, nor file ST-3 returns reflecting the consideration received under these contracts.

It is settled law that statutory returns are the primary mode of disclosure under service tax law. Mere availability of information in books of accounts, contracts or invoices would not amount to disclosure unless the same is specifically declared in statutory returns. The Hon’ble Supreme Court in Pushpam Pharmaceuticals Co. v. CCE [1995 (3) TMI 100 - SUPREME COURT] held that suppression includes failure to disclose information which the assessee was legally required to disclose. Similarly, in Nizam Sugar Factory v. CCE [2006 (4) TMI 127 - SUPREME COURT], it was held that nondisclosure of correct information in returns justifies invocation of extended period. The appellant’s contention that the Department was aware of their activities due to audit or correspondence cannot be accepted. The Hon’ble Supreme Court has consistently held that knowledge of some officers or audit parties cannot substitute statutory disclosure.

The extended period has been correctly invoked - it is found that Interest under Section 75 is mandatory and compensatory in nature. Once tax liability is upheld and delay in payment is established, interest follows automatically.

Levy of penalties u/s 78 of FA - HELD THAT:- Section 78 provides for penalty where non-payment of tax is due to suppression or wilful misstatement. In the present case: the appellant has failed to declare taxable services despite registration; the plea of bona fide belief is rejected on merits; suppression with intent to evade is established.

The Hon’ble Supreme Court in Rajasthan Spinning & Weaving Mills [2009 (5) TMI 15 - SUPREME COURT] has held that once conditions under Section 78 are satisfied, penalty is a civil consequence and men’s rea need not be separately proved. Accordingly, penalty under Section 78 is sustainable, subject to re-computation of tax based on our remand directions Supra. Penalties under 77 are imposed for failure to pay tax and non-compliance with statutory requirements such as filing of returns.

There are no infirmity in their imposition, as the appellant admittedly failed to comply with statutory obligations.

Whether waiver of penalties under Section 80 of FA 1994 is justified in this case? - HELD THAT:- The appellant has sought waiver of penalties under Section 80 on the ground of bona fide belief. However, it is found that Section 80 requires the assessee to establish reasonable cause. In the present case, continued non-declaration of taxable services despite registration negates the plea of reasonable cause. Hence, benefit of waiver of Penalties under Section 80 cannot be extended in this case.

The Appeal filed by the Appellant is allowed partly to the portion of the Pure standalone sale of goods (plants, manure, soil, milk, etc.) which is not taxable by way of remand proceedings before the Adjudicating Authority.

Rejection of appeal filed before the learned Commissioner (Appeals) as having been filed beyond the time limit prescribed under 85 of the Finance Act, 1994 - liability to pay service tax, in respect of the value of turnover towards Information Technology Software Service as shown in the Income Tax Return for the Financial Year 2013-14 in terms of the Finance Act, 1994 - HELD THAT:- The legal provisions contained in Section 37C of the Central Excise Act, 1944 as made applicable to matters of Service Tax in terms of Section 83 of the Finance Act, 1994 are relevant. These provide the manner in which the Order or notice shall be served on the person to whom it is intended i.e., the noticee, assessee, tax-payer etc. and Section 85 of the Act of 1994 provide for the legal provision for filing an appeal before the Commissioner (Appeal).

There exists no document to show the ‘proof of delivery’ in terms of the requirement under Section 37C of the Act of 1944 and that the effective date of delivery of the Order-in-Original dated 28.05.2021 for confirmation of the adjudged service tax demands is to be taken as only on 23.01.2023.

The Hon’ble Bombay High Court, in the case of Amidev Agro Care Private Limited Vs. Union of India & Others [2012 (6) TMI 304 - BOMBAY HIGH COURT] had in identical set of facts of dealing with the issue of determining whether the requirement of Section 37C ibid have been complied with or not, have held 'the requirements of Section 37C have been complied with cannot be accepted. As per Section 37C(1)(a) of the Central Excise Act, 1944, it was obligatory on the part of the Revenue, either to tender a copy of the decision to the assessee or to sent it by registered post with acknowledgment due to the assessee or its authorized agent. In the present case, neither of the above have been complied with by the Revenue. Accordingly, the contention of the assessee that a copy of the order of Commissioner of Central Excise (Appeals) was received for the first time on 26th February 2010 would have to be accepted.'

The appeal in the present case should have been preferred by the appellants before the Commissioner (Appeals) within 22.03.2023, by calculating the normal appeal period of two months from the date of receipt of the order with which they were aggrieved with. The Commissioner (Appeals) in terms of proviso to Section 85(3A) of the Finance Act, 1994, can condone the delay for a further period one month i.e., upto 22.04.2023, if the appellant shows that they were prevented by sufficient cause from presenting the appeal within the aforesaid period of two months - In the present case, the order of the original authority has been sent to M/s Rosoft Limited having GSTIN 27AAACA3634P1ZH which had become inactive and the new entity i.e., M/s One Vibgyor Limited having GSTIN 27AAACA3634P2ZG was only active. It is also noted that the Directors of the appellants company presently are S/Shri Dyuti Biswas, Sumit Phool Chand Sharma and Ms. Renee Mallick and the earlier nine directors of the company who had served in the past have already resigned on various dates. Therefore, the reasons claimed by the appellants such as recreation of service tax login details from the departmental portal, making arrangements for pre-deposit in view of the change in the name/constitution of the appellant company, for the delay of five days caused if filing appeal, qualify for being ‘sufficient cause’ for condoning the delay.

It is found that the show cause proceedings were initiated and the impugned order confirming the original order in demanding service tax on the appellants was issued on the presumption that the entire value of Information Technology Software Service totaling to Rs.25,11,236/- are liable to service tax and such tax has not been paid by the appellants, without obtaining any reply from the appellants and giving them an opportunity for personal hearing to explain their case.

It is found that on rejection of appeal filed before the Commissioner (Appeals) on the ground of limitation, similar to the issue in the present case was examined by the Co-ordinate Bench of this Tribunal in the case of Shree Cement Limited Vs. Commissioner of Central Excise and CGST, Jaipur [2023 (1) TMI 103 - CESTAT NEW DELHI], wherein it was held that when the department had failed to provide any evidence of proof of delivery of the order of original authority, the Commissioner (Appeals) rejecting the appeal filed before him, without proper substantiation, cannot be sustained.

Thus, taking into account that fact that the appellants have voluntarily paid service tax of Rs.3,10,389/- vide CBIC CTIN No.2303531073 dated 23.03.2023, it is found that the appellants have fulfilled all the requirements for discharge of service tax liability as determined in the ex-parte adjudication proceedings - there are no strong grounds to hold that the appellants did not pay service tax in respect of the differential amount identified by the Department, for the period October, 2013 to March, 2014.

There are no merits in the impugned order of the learned Commissioner (Appeals) in upholding the order of the original authority for confirmation of adjudged demands on the appellants and in rejecting the appeal filed by the appellants on the grounds of non-filing of appeal before the prescribed time limit.

The impugned order dated 22.09.2023 is set aside - the appeal filed by the appellants is allowed on the basis of their voluntary payment of differential service tax amount.

Refund of service tax paid on input services used in relation to authorized operations of their SEZ unit - time limitation - HELD THAT:- Admittedly, SEZ Act is a special legislation which is also a self-contained enactment, the same provides for exemption and the manner of claiming refund. Section 26 is the governing provision which prescribes the modalities insofar as exemptions are concerned. These exemptions are specific to units operating in a SEZ. Admittedly, the grant of exemptions supra flows from N/N.9/2009–Service Tax, dated 03.03.2009. In effect, therefore, Section 26 of the SEZ Act, 2005 is governed by this Notification. Clause 2 of the said Notification prescribes guidelines in the form of conditions the fulfilment of which enables the claimant to be entitled to the exemption. The Appellant has consistently claimed that it has paid service tax which is one of the condition-precedents, for claiming the exemption and in any case, both the Appellant and the Department do not disagree with conditions at sub-clauses (a) to (e) of Clause 2. The dispute pertains to sub-clause (f) which prescribes that claim for refund shall be filed within six months from the date of actual payment of service tax.

This issue has already been settled by the Mumbai Bench of CESTAT, in the case of Credit Suisse Services (India) Pvt. Ltd. Vs. CCE, Pune-1, [2015 (3) TMI 182 - CESTAT MUMBAI] which in turn has followed earlier orders of the very same bench in the case of Tata Consultancy Services Ltd. VS CCE & ST Mumbai [2012 (8) TMI 500 - CESTAT, MUMBAI] and Wardha Power Company [2012 (5) TMI 289 - CESTAT, MUMBAI]. The Bench after following its earlier orders [supra], has concluded that the Appellant was eligible for refund of Service Tax paid on input services wholly consumed within the SEZ under the provisions of Section 11B of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1994.

It is found that in the decision in M/s. Hexaware Technologies Limited Vs. Commissioner of GST and Central Excise, Chennai I Commissionerate [2025 (6) TMI 2092 - CESTAT CHENNAI], Coordinate Bench has clearly held that once the Services on which ST was paid were authorized by the Approval Committee, then that would be final - the denial of refund on this ground also cannot sustain.

The impugned orders are set aside - Appeals are allowed.

Application for rectification of mistake - mistake of mentioning the old provisions - SCN barred by time limitation or not - HELD THAT:- The period of dispute is 2014-15 and 2015-16. The due date for filing ST-3 returns for April-September 2015 was 25.10.2015 and the normal period for issuance of the show cause notice was 30 months under Section 73(1) of the Finance Act, 1994. It has been submitted by the learned Counsel that the period for issue of Show Cause Notice was 18 months and not 30 months. However, the period to reckon the limitation would be the provision of law as on the date of the said notice.

It is found that this Tribunal’s decision in the case ofGolden Dew Tea Factory vs Commissioner of Central Excise, Coimbatore [2006 (11) TMI 530 - CESTAT, CHENNAI], wherein in similar factual matrix, it held that 'Admittedly, the show-cause notices issued to the Consultant’s clients were within one year from the relevant dates. Even otherwise, the time-bar plea of the consultant representing respondents in the Department’s appeals seems to be innocuous inasmuch as he has not claimed that the plea was raised before the lower authorities.'

It is noted that this decision of the Tribunal has been upheld by the Supreme Court in Golden Dew Tea Factory vs. Commissioner [2007 (4) TMI 668 - SC ORDER]. In view of the above, the said notice was not barred by limitation as contended by the learned counsel.

It is noted that a Show Cause Notice is a formal communication by a competent authority calling upon a person to explain why proposed adverse action should not be taken against them, before any such decision is made. The Supreme Court has consistently held that quoting an incorrect legal provision in a Show Cause Notice doesn't automatically invalidate it as this is a curable defect. It has been held that if the allegations are clear and the authority possesses the power to act under a different, correct provision, and no substantial prejudice is caused to the affected party.

The Final Order stands modified - The Rectification of Mistake Application is disposed off accordingly.

Invalidity of show cause notice for non-quotation of Document Identification Number (DIN) - Invocation of extended period of limitation under the proviso to Section 73(1) - requirement of suppression, fraud, collusion or wilful mis-statement - Reversal of Cenvat credit for input services used for provision of exempted services / common input services - Penalty not leviable in absence of contumacious, dishonest or deliberate conduct - Weight to supplier's certificate in determining use of input services

Invalidity of show cause notice for non-quotation of Document Identification Number (DIN) - Show Cause Notice issued without electronically generated DIN is invalid and is to be treated as never issued. - HELD THAT: - The Tribunal found that the CBIC circular dated 5th November, 2019 mandates quoting of computer-generated Document Identification Number on specified communications and directs that any such communication not bearing electronically generated DIN (and not covered by the enumerated exceptions) shall be treated as invalid and deemed never to have been issued. The impugned Show Cause Notice dated 11th December, 2019 did not bear the DIN and was not shown to fall under any exception; accordingly the notice is non-est and invalid. [Paras 4]

Show Cause Notice is invalid for non-quotation of DIN and is deemed never to have been issued.

Invocation of extended period of limitation under the proviso to Section 73(1) - requirement of suppression, fraud, collusion or wilful mis-statement - Extended period of limitation under the proviso to Section 73(1) was wrongly invoked by the Revenue. - HELD THAT: - Applying settled authorities, the Tribunal held that the extended period can be invoked only where there is suppression, fraud, collusion, wilful mis-statement or contravention with intent to evade tax. The record showed that the appellant had regularly filed returns and had disclosed the relevant service receipts in books of account; there was no material to demonstrate deliberate suppression or intention to evade tax. Consequently, the Revenue failed to justify invocation of the extended fiveyear period and the demand is barred by limitation. [Paras 2, 4]

Invocation of the extended period was unjustified; the demand is time-barred.

Reversal of Cenvat credit for input services used for provision of exempted services / common input services - Weight to supplier's certificate in determining use of input services - The Commissioner (Appeals) erred in rejecting the appellant's contention and the supplier's certificate that the security service was used exclusively for taxable services; therefore the impugned finding on inadmissibility and proportionate reversal is not sustainable. - HELD THAT: - The Tribunal observed that Rule 6 of the Cenvat Credit Rules disallows credit on input services used for exempted services but also permits identification where eligible credit is separately identified and utilized. The adjudicating authorities declined to accept the certificate of the security service provider and found the services to be common without contemporaneous records demonstrating separate use or separate premises for trading. The Tribunal concluded that the Commissioner improperly ignored the supplier's certificate and the material on record, and therefore the adverse finding ordering proportionate reversal could not be sustained in the circumstances of the case. [Paras 2, 4]

Finding of inadmissibility of Cenvat credit and requirement of proportionate reversal is unsustainable in view of the supplier's certificate and record; the Commissioner's conclusion is set aside.

Penalty not leviable in absence of contumacious, dishonest or deliberate conduct - Penalty imposed on the appellant is not justified and is liable to be set aside. - HELD THAT: - Relying on authorities and the facts that the appellant had filed returns and had not acted in a contumacious, dishonest or deliberate defiance of law, the Tribunal held that imposition of penalty was not warranted. The absence of any proven intention to evade tax disentitles the Revenue from levying penalty under the circumstances. [Paras 2, 4]

Penalty is not sustainable and is set aside.

Final Conclusion: For the reasons recorded, the Show Cause Notice without DIN is invalid, the extended period of limitation was wrongly invoked, the Commissioner erred in rejecting the supplier's certificate and in ordering proportionate reversal, and the penalty is unjustified; consequently the impugned order dated 10.02.2022 is set aside and the appeal is allowed.

Dismissal of appeal for default - grant of adjournment for more than three times to a party during the hearing of the appeals - HELD THAT:- Rule 20 of the CESTAT Procedure Rules provides that if the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his non-appearance when the appeal was called on for hearing can set aside the dismissal and restore the appeal.

There is no request on record for the appeal to be decided on merits ex-parte based on the grounds preferred in the appeal in the absence of the appellant’s presence or representation through its counsel - If the matter was to be decided on merits, without having the benefit of hearing the appellant and upon such hearing, if it was to hold against the appellant, then, Tribunal having no locus to review own judgement since Tribunal is rendered functus officio, the Tribunal would thus be not only depriving the appellant of a chance to be heard, but also would be relegating the appellant to seek appropriate remedy in a higher judicial forum, if at all the appellant has justifiable reasons for repeated non representation and also for lack of representation today.

The adjournments can’t be given for the mere asking without any serious reason, backed with proof, for the non-appearance of the Appellant or his authorised representative on the dates of public hearing, thus no purpose would be served in continuing to keep this appeal pending - the appellant is not interested in pursuing the appeal that has been preferred and that the appeal is thus liable to be dismissed for default.

This appeal is dismissed for default as per Rule 20 of CESTAT (Procedure) Rules, 1982. However, liberty is granted to the appellant to file for restoration of the appeal showing sufficient justifications and reasons while seeking such restoration.

Dismissal of appeal for default - grant of adjournment for more than three times to a party during the hearing of the appeals - HELD THAT:- Rule 20 of the CESTAT Procedure Rules provides that if the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his non-appearance when the appeal was called on for hearing can set aside the dismissal and restore the appeal.

There is no request on record for the appeal to be decided on merits ex-parte based on the grounds preferred in the appeal in the absence of the appellant’s presence or representation through its counsel - If the matter was to be decided on merits, without having the benefit of hearing the appellant and upon such hearing, if it was to hold against the appellant, then, Tribunal having no locus to review own judgement since Tribunal is rendered functus officio, the Tribunal would thus be not only depriving the appellant of a chance to be heard, but also would be relegating the appellant to seek appropriate remedy in a higher judicial forum, if at all the appellant has justifiable reasons for repeated non representation and also for lack of representation today.

The adjournments can’t be given for the mere asking without any serious reason, backed with proof, for the non-appearance of the Appellant or his authorised representative on the dates of public hearing, thus no purpose would be served in continuing to keep this appeal pending - the appellant is not interested in pursuing the appeal that has been preferred and that the appeal is thus liable to be dismissed for default.

This appeal is dismissed for default as per Rule 20 of CESTAT (Procedure) Rules, 1982. However, liberty is granted to the appellant to file for restoration of the appeal showing sufficient justifications and reasons while seeking such restoration.

Classification of services - bank charges deducted from the export proceeds credited to the appellant’s account by the Foreign Banks during the disputed period - classifiable as Banking and Other Financial Services or not - liability to pay service tax in terms of Section 66A of the Finance Act, 1994 read with Rule 2(1)(d)(i)(G) and Rule 6 of the Service Tax Rules, 1994 or not - HELD THAT:- It is found that it is undisputed that it is the State Bank of India who has been engaged by the appellant and is paying service tax for its services on the bill raised. There is no evidence let in of the appellant having engaged the foreign bank or having any dealings directly with the foreign bank so as to consider the appellant to have received any services from the foreign bank. In fact, the adjudicator has merely stated that he is not expected to go into the merits of the subject demand since the same pertains to the subsequent period and therefore has concluded that the demand of service tax is sustained.

As rightly contended by the Appellant, the issue on identical facts and circumstances stands decided in the Appellant’s favour in M/s. SKM Egg Products Export (India) Ltd v. Commissioner of GST & Central Excise, Salem [2025 (6) TMI 184 - CESTAT CHENNAI] where it was held that service tax under reverse charge on Banking and Other Financial Services is payable only by the actual service recipient.

The demand made on the appellant is untenable. Therefore, the impugned order in appeal cannot be sustained and is hereby set aside - Appeal allowed.

Availment of wrongful credit on the towers, installed, for provision of telecommunication service - neither capital goods nor inputs - denial of credit for the reason that the appellants have taken credit on the basis of a document, which is not a document prescribed under Rule 9, supplied by their Input Service Distributor (ISD) - HELD THAT:- The issues has been settled by the Hon’ble Supreme Court in the case of Bharti Airtel Ltd. [2024 (11) TMI 1042 - SUPREME COURT] where Hon’ble Court observed 'Having held that the tower and Pre-Fabricated Buildings (PFBs) are “goods” and not immovable property and since these goods are used for providing mobile telecommunication services, the inescapable conclusion is that they would also qualify as “inputs” under Rule 2(k) for the purpose of credit benefits under the Cenvat Rules.'

It is further found that as submitted by the learned Counsel for the appellants that this Bench relying on the case of United Phosphorous[2022 (11) TMI 747 - CESTAT AHMEDABAD] in favour of the appellants, in their own case, holding that CENVAT credit distributed by the ISD on the strength of allegedly non-confirming documents cannot be denied.

All the issues raised in the impugned case stands settled in favour of the appellants - Appeal allowed.

Admissibility of CENVAT Credit availed prior to seeking registration with the tax department - admissibility of cenvat credit pertaining to the commercial construction and allied services for setting up for establishment of an immovable property.

HELD THAT:- Both the issues have been considered by various Benches of Tribunal and has consistently held that firstly for claiming the cenvat credit there is no requirement to obtain prior registration under the Cenvat Credit Rules, 2004 as held by the Karnataka High Court in the case of M/s M Portal India Wireless Solutions Pvt Ltd [2011 (9) TMI 450 - KARNATAKA HIGH COURT] and various other decisions relied upon by the learned counsel for the respondent.

The Cenvat credit on all the input services which are sought to be denied by the Revenue fall within the definition of input service as defined under Rule 2(l) of Cenvat Credit Rules, 2004 before amendment w.e.f. 01.04.2011.

Whether the respondent has used the input services in setting up and erection of immovable property? - HELD THAT:- This issue is also no more res integra and has been considered by various High Courts and the Tribunal including the jurisdictional High Court of Punjab & Haryana, in the case of CCE Vs. Bellsonica Auto Components India Pvt Ltd. [2015 (7) TMI 930 - PUNJAB & HARYANA HIGH COURT].

Further, it is found that in this case, the substantial amount of Cenvat credit has been availed before the amendment in the definition of input service w.e.f. 01.04.2011; it is also found that the respondent has also availed the Cenvat credit of Rs. 35,923/- in the month of April, 2011 to December, 2011 which is after the amendment in the definition of input service but the learned Commissioner in the impugned order has clarified that this Cenvat Credit does not pertain to construction service which is excluded from the definition of input service w.e.f. 01.04.2011 and therefore, there is no infirmity in allowing this credit also.

There is no infirmity in the impugned order passed by the learned Commissioner, the same is upheld - appeal of Revenue dismissed.

Denial of Cenvat Credit of Service Tax paid - recovery with interest and penalty - Invocation of extended period of limitation - fraud & suppression of facts - HELD THAT:- Since the appellant was regularly filing the ST-3 Returns and duly reflecting the amount of credit availed therein, this certainly cannot be a case where any of the rigors of provisions of Section 11A(4) providing for larger limitation are invokable. At outset itself, the impugned notice issued to the appellant is barred by time. On merits of the case as well, as the appellant has availed the credit of the duty already paid by them, the Courts and Tribunals have long held in a plethora of judgments that the credit of the said tax cannot be denied as long as the receipt of duty paid good/services and its utilization in the final product is not disputed.

Even if the appellant was not liable to pay the said Service Tax, the fact remains they have been charged the said amount as tax, paid the same and only thereafter have they availed credit thereon. The credit of the said amount, therefore cannot be denied, no show cause notice invoking larger limitation period can be issued to the appellants, moreso when the appellant was clearly reflecting the availment of the said credit in their Cenvat accounts and regularly filing Returns to the Department clearly indicating the same.

The Hon’ble Gujarat High Court in the case of Commissioner of Central Excise & Customs, Surat-III Vs. Creative Enterprises [2008 (7) TMI 311 - GUJARAT HIGH COURT] has held that the Tribunal was justified that even if the activity of the party did not amount to manufacture and there was no question of levy of duty, even if the duty was paid, Modvat Credit thereto cannot be denied by holding that the same did not amount to manufacture.

To similar ratio, are a plethora of decisions where activity undertaken did not amount to manufacture or the goods were not excisable yet duty paid and credit availed on such goods was not required to be reversed - reliance can be placed in Commr. of C. Ex., Pune III Vs. Ashok Enterprises [2007 (11) TMI 67 - CESTAT, CHENNAI] and Super Forgings & Steels Ltd. Vs. Commissioner of Central Excise, Chennai [2007 (7) TMI 77 - CESTAT, CHENNAI].

Thus, the demand raised was held as not sustainable by the Courts/Tribunal.

Time Limitation - HELD THAT:- The demand is certainly barred in time; when the fact of payment of tax and availment of credit thereon has not been concealed from the Department and the duty demand has been worked out on the basis of the periodical Returns filed by the appellant. Thus no charge of suppression can withstand a legal scrutiny in the matter.

Thus, no penalty is leviable on the appellant. As for the Revenue’s contention, that the rightful course was seeking refund of Service Tax duty paid, it may be just & fair to point out that in any case, such exercise is revenue neutral and in view of the precedent decisions cited having paid the Service Tax charged credit availment thereto is not deniable to the appellant.

Appeal allowed.

Refund of service tax paid on taxable services for authorised operations in a Special Economic Zone-Exemption to services consumed within SEZ and refund route for services consumed outside SEZ - Primacy of Special Economic Zones Act over other fiscal laws - Appellate Tribunal (CESTAT) treatment of SEZ exemption claims - Notification No.9/2009-ST and Notification No.15/2009-ST - HELD THAT:-We find that this Tribunal has already considered this issue in appellant’s own case vide Final Order [2025 (6) TMI 1963 - CESTAT BANGALORE], dated 30.05.2025 and held that refund claim cannot be rejected and accordingly allowed their appeals.

Thus, the impugned order is set aside and appeal is allowed with consequential relief, if any, as per law.

Classification of goods - non fermented non liquored crushed tobacco leaves packed in small retail pouches as Chewing tobacco - to be classified under Customs Tariff heading No. 2401 unmanufactured tobacco, Tobacco Refuse or Custom Tariff Heading No. 24039910 as chewing tobacco or not - different rates of duty under the provisions of Goods and Services Tax Act, 2017? - HELD THAT:- If the definition of term “manufacture” provided in section 2(72) of the GST Act is applied for levy of GST on the product sold by the petitioners in small retail pouches containing non fermented non liquored crushed tobacco leaves, it would have to be analysed as to whether such processing of tobacco leaves in gunny bags would result in emergence of new product having a distinct name, character and use or not. Admittedly, the tobacco leaves in the gunny bags cannot be used for chewing purpose unless the same is processed for the purpose of making it suitable for “chewing” by packing in small retail pouches. The petitioners are also branding such small retail pouches of the non-fermented non liquored crushed tobacco leaves for chewing purpose. Thus, the small retail pouches prepared by the petitioners would have a distinct name, character and use, partaking the character of “chewing tobacco”.

It is true that the petitioners are not adding any material to the tobacco leaves which are sold in small retail pouches after undergoing the process such as drying, cleaning, sieving, sizing, cutting and thereafter packing into retail pouches and accordingly, the petitioners have classified such product as unmanufactured tobacco under Tariff Heading 2401 during the excise regime and the authorities under the Central Excise Act has also considered it as a valid classification in view of clarification issued by CBEC in circular dated 23.06.1987 - the definition of “manufacture” in section 2(72) of the GST Act refers to processing of raw materials or inputs in any manner which means that the tobacco leaves in gunny bags procured by the petitioners which is a raw material is processed by drying, cleaning, sieving, sizing, cutting which results in emergence of “chewable tobacco” having a distinct name and character and use. Therefore, small retail pouches containing the tobacco leaves processed as “chewing tobacco” would fall within the Chapter Heading 2403 9910 under the sub-heading “chewing tobacco” of Tariff heading 2403.

In view of settled legal position under the Central Excise Act, the product of small retail pouches have been rightly classified under Tariff Heading 2401 as unmanufactured tobacco in view of definition of “manufacture” under the Central Excise Act and in view of change of definition of “manufacture” as contained in section 2(72) of the GST Act, in view of the fact that small retail pouches as produced by the petitioners results in emergence of new product having a distinct name, character and use namely “chewing tobacco” under Tariff Heading 24039910.

‘Copta’ as well as Explanatory Note of HSN (2017 Edition) issued by the World Customs Organization read with definition of “manufacture” as per section 2(72) of the GST Act, it is opined that the chewing tobacco manufactured by the petitioners sold in retail pouches after re-packing from bulk packages to retail packages would fall within the Tariff Heading No. 2403 9910 as “chewing tobacco’ and not under Tariff Heading 24012090 as “unmanufactured tobacco”.

Reliance placed by the petitioners on the classification of the product as unmanufactured tobacco under Tariff Heading 2401 in the Central Excise regime would have to be now changed to classification of Tariff Heading 2403 9910 and the petitioners would be liable to pay GST and Compensation Cess applicable as per Tariff Heading 2403 9910 and not as per Tariff Heading 24012090. Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 prescribing the GST rate on the basis of Tariff Heading as specified in First Schedule to Customs Tariff Act, 1975 and the Rules made thereunder would have to be in consonance with the definition of “manufacture” as provided in the GST Act. The respondent authorities, therefore, have rightly classified the product of the petitioners as “chewing tobacco” under Tariff Heading 2403 9910.

The demand raised under the provisions of Central Excise Act as discussed here-in-above, cannot be sustained as the provisions of Central Excise Act could not have been invoked to levy of any duty on the chewing tobacco manufactured by the petitioners as, in view of the definition of “manufacture” under section 2(f) of the Central Excise Act and in view of the circulars, notifications and clarifications issued by the Board prior to coming into force of GST Act, the products cannot be said to have not been rightly classified under Tariff Heading 2401 under the excise regime by the respondent authorities at the relevant point of time.

Petition allowed.

Levy of Central Excise Duty - RVI Elements and aluminium doors/frames/shutter/lockers etc installed by the Appellant at the sites of its various vendors - Classification of the RVI Elements by the department under sub-heading 9405 60 90 - Demand of excise duty on aluminium doors, windows, frames and other structures fabricated by the Appellant - Levy of personal penalty under Rule 26 of the Central Excise Rules - invocation of extended period of limitation.

Whether the RVI Elements and aluminium doors/frames/shutter/lockers etc installed by the Appellant at the sites of its various vendors are liable to central excise duty or not? - HELD THAT:- The issue is no longer res integra as the same has been decided by various benches of the Tribunal in favour of the assessees in respect of similar contracts - It is also found that the RVI Elements are not cleared from the factory in fully manufactured condition rather the same came into existence as a part of permanent structure on site only and the once the same installed, the same cannot dismantled nor re-installed at alternate locations/petrol-pumps. It is further found that these RVI Elements are not resold/marketable by IOCL, therefore, it cannot be said that the Appellant manufactured the RVI Elements completely.

The Adjudicating Authority in the impugned order, has wrongly confirmed the demand of differential amount of excise duty on the ground that the RVI Elements were manufactured by the Appellant in its factory and the same were cleared from the factory in CKD condition which were assembled at site and fixed to civil foundation with nuts and bolts to make them stand still. It is also found that in the case of RVI Elements, the Test of Marketability has also not been satisfied because these parts, in the form that they are cleared, are not capable of being used for any other purpose than the fabrication and installation of RVI Elements at the retail outlets of IOCL only.

Classification of the RVI Elements by the department under sub-heading 9405 60 90 - HELD THAT:- This heading is a residuary clause and therefore, any item can only be classified under this heading if its classification elsewhere in the Tariff is ruled out. There is no such finding in the impugned order that the RVI Elements were not classified under any other tariff heading and hence covered under 9405. It has been held by the Tribunal in the case of Studio Printfall New Delhi Pvt Ltd [2004 (7) TMI 138 - CESTAT, NEW DELHI] that 9405 covers those items which have permanent light source.

Demand of excise duty on aluminium doors, windows, frames and other structures fabricated by the Appellant - HELD THAT:- This issue is already settled in favour of the Appellant vide Order-in-Original No. 111/2003 dated 31.10.2003 wherein it was held that the conditions of marketability and of being goods were not satisfied as the final product is immovable and hence not chargeable to excise duty.

Levy of personal penalty under Rule 26 of the Central Excise Rules - HELD THAT:- For imposing the penalty under Rule 26, the department has to produce evidence showing mala fide intention and involvement of the person in respect of the allegations raised in the show cause notice; whereas, in the instant case, the department has failed to prove any mala fide intention of the Appellant No.2. Further, it is found that the penalty under Rule 26 can be imposed only when a person has dealt with the excisable goods with the knowledge of the liability of the said goods to confiscation; whereas, in the present case, there has been no such proposal in the show cause notice stage to confiscate the goods. Therefore, imposition of penalty under Rule 26 is not sustainable in law.

Whether invocation of extended period of limitation is justified in this case or not? - HELD THAT:- The entire demand has been confirmed by invoking the extended period of limitation. The period under dispute is 2006 to 2009 whereas the show cause notice was issued on 04.07.2011 by alleging suppression of facts, fraud or misstatement on the part of the Appellant. We find that the Appellant has been regularly filing the returns and has disclosed the goods manufactured in its factory and has been paying excise duty for the same under respective tariff heading - it cannot be said by any stage of imagination that the Appellant has suppressed the material facts from the department with intent to evade payment of duty. Therefore, invocation of extended period is not justified and the entire demand is also barred by limitation.

The impugned order is not sustainable in law and is liable to be set aside on merit as well as on limitation - Appeal allowed.

Classification of goods - Kopiko - classifiable under Heading 1704 9090 or under Heading 2101 1200 or otherwise? - applicability of Rule 2 and Rule 3(a) are applicable or Rule 3(b) or Rule 3(c) are applicable for determining the correct classification? - HELD THAT:- If the Department intends to classify the goods under a particular heading or sub-heading, different from that claimed by the assessee, the Department is required to adduce proper evidence and thereby discharge the burden of proof. Reliance is placed on the decision of the Apex Court in HPL Chemicals Ltd versus CC Ex, Chandigarh [2006 (4) TMI 1 - SUPREME COURT], which relied on the earlier decision of the Apex Court in Union of India & others versus Garware Nylon Ltd & Ors [1996 (9) TMI 123 - SUPREME COURT] and Hindustan Feredo Ltd versus Central Excise, Bombay [1996 (12) TMI 49 - SUPREME COURT]. The respondent in support of their claim that the product ‘Kopiko’ is classifiable under CH 1704 9090 has produced sufficient evidence whereas the revenue while deviating from the said classification has not produced any evidence and have therefore not discharged the burden.

The product being a food item has necessarily to be in conformity with the provisions of FSSAI and FSSR, whose primary objective is to regulate and monitor the manufacture, processing, distribution, sale, and import of food and to ensure that regulations have been framed governing the various food products with addition of even small doses of extracts, so as to enrich food products. Under FSSR, the candy manufactured is classified under Rule 2.7.1 as a sugar boiled confectionery and, therefore, the same is a relevant factor in determining the classification of sugar based confectionary with 2.5%/4.5% of coffee extract under Heading 1704, which is specifically for sugar confectionary and cannot be considered as a preparation with coffee extract or essence as the basis to be classified under Heading 2101. Further, the manufacturing process of the product as noted by the Commissioner conforms to Regulation 2.7.1 of FSSR to be called as sugar boiled confectionary.

The Hyderabad Bench accepted that certification by FSSAI as a sugar confectionary does have persuasive value, but on the other hand, observed that it does not have binding effect on Central Excise Authorities, which actually is contrary to the principles laid down in this regard. The Apex Court in Kirloskar Oil Engines Ltd. versus Union of India [1995 (5) TMI 30 - SUPREME COURT] and National Sales Corporation versus Customs, Madras [1995 (5) TMI 31 - SUPREME COURT] held that IS specification is not ignorable in the absence of any material.

Similarly, the Commissioner after quoting the information available on the website with reference to the subject product, took note of the specific description under Kopiko Cappuccino and Kopiko Espresso as ‘Candy’. The description of the two products specifically refers to it as a candy, which actually imparts its true characteristics as a sugar confectionery. Had it been a description with the basis of coffee extract, essences or concentrates, there would have been no relevance to incorporate the term ‘candy’ and the mixture would be quite unpalatable and unmarketable. The description of the product as ‘candy’ basically means a confectionary, which cannot be ignored, and it is where the Hyderabad Benchhas fallen in error in agreeing with the Revenue. Both the advertisement as well as the website data has consciously used the term ‘candy’ and that is how it is known to the public at large.

The discussion above leads to the determination that sugar forms the major ingredient which renders the main taste i.e., sweetness to Kopiko. Thus sugar constitutes the basis and coffee cannot be said to be the basis of preparation of sugar boiled confectionary as it just gives an aromatic effect in view of the decision of the Apex Court in Satnam Overseas [2015 (4) TMI 356 - SUPREME COURT] that mere addition of certain items would not change its essential character.

The law laid down by the Ahmedabad Bench in the case of the appellant themselves [2024 (8) TMI 1668 - CESTAT AHMEDABAD]that the product ‘Kopiko’ Cappuccino and Kopiko Espresso is classifiable under Tariff Heading 1704 9090 as ‘sugar confectionery’ is the correct law and the same is hereby affirmed. The view taken by the Hyderabad Bench that the impugned goods are preparations based on coffee extract/essence and is, therefore, classifiable under chapter heading 2101 1200, has no merit and is, therefore, not sustainable - In determining the classification, it is Rule 1 and Rule 3(a), that is applicable.

The papers may now be placed before the Division Bench of the Tribunal for deciding the appeal on merits.

Entitlement for benefit of exemption under Sl.No.70 of the N/N. 3/2005-CE dated 24.02.2005 - failure to pay applicable duty on manufactured LLDPE pipe and sprinklers - classification of the goods - classifiable under Chapter 3917 or under Chapter 8424 of CETA, 1985 - HELD THAT:- Undisputed facts of the case are that the appellant had discharged Central Excise duty on other manufactured items of general activity viz. CPVC pipes, fittings etc. whereas not discharged duty on LLDPE pipes in running length being used in DIS claiming its classification under Chapter 8424. Evidences brought on record not disputed by Revenue also indicate that the LLDPE pipes and sprinklers cleared by the appellant are exclusively used for agricultural purposes. The issue of classification of such pipes and sprinklers has been addressed by this Tribunal in the case of ELGI Ultra Appliances Ltd. [1999 (7) TMI 422 - CEGAT, CHENNAI] which has been subsequently followed in a series of cases.

It was held in the said case that 'The irrigation system basically is of these pipes and the other items referred to above, which carry out the functions of distribution and dispersing or spraying in terms of the description under Chapter 84.24 and the said sub-heading 8414.10 dealing with removable appliances of the kind used in agriculture or horticulture. Therefore, parts thereof are covered by sub-heading 8424.91. As a result, the appellants’ claim for the benefit of exemption Notification for the items falling under Heading 84.24 claiming nil rate of duty under Notification No. 56/95 dated 16-3-1995 is justified.'

Thus, the LLDPE pipes cleared in running length even though not punched with holes and the sprinklers cleared by the appellant are classifiable under Chapter heading 8424 and the appellants are entitled to the benefit of Notification No.3/2005-CE dated 24.02.2005.

The impugned orders are set aside - Appeal allowed.

Refund of unutilized CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 for the exports by an 100% EOU to another 100% EOU - goods were not exported during the quarter of the claim, the value of export turnover was alleged not to be considered for export - deemed export not eligible for refund under Rule 5 of CENVAT Credit Rules, 2004 - HELD THAT:- The issue is squarely covered by the decision of this Tribunal in the matter of Nash Industries Vs. Commissioner of Customs & S.T. Bangalore [2015 (6) TMI 377 - CESTAT BENGLALORE]upheld by Hon’ble High Court of Karnataka[2017 (3) TMI 1277 - KARNATAKA HIGH COURT] following the Judgment of High Court of Gujarat in the matter of M/s. Shilpa Copper Wires [2010 (2) TMI 711 - GUJARAT HIGH COURT], wherein Department's appeal was dismissed by the Hon’ble Supreme Court. While discussing the issue, Hon’ble High Court of Karnataka upheld the finding and held that 'Appellant is a 100% EOU and the refund claims filed by them have been denied on the ground that clearances to 100% EOU cannot be considered as export and refund cannot be allowed of the Cenvat credit availed by them. The learned CA on behalf of the appellants submitted that this issue was considered in the Interim Order No 79 to 151/2014, dated 18- 9-2014 and in paragraph 6.8 it has been held that such credit is admissible and refund is admissible.'

Thus, the supplies to EOU can be considered as 'deemed export' and respondent is eligible for refund - the department's appeal is dismissed.

Seeking directions for closure of a Look Out Circular - commission of cognizable offence of grave economic offence having national and international ramifications - prevention from fleeing the country - prevention from influencing the witnesses abroad - Petitioner entered into a deep rooted conspiracy through a complex web of transactions having national and international ramifications - HELD THAT:- The facts of the present case are glaring and apparent. The Respondent is conducting the investigation with huge final financial ramifications and huge financial scam, in which there are allegations of involvement of the Petitioners, and public interest would undoubtedly be in peril if the Petitioners are permitted to leave the country.

Reliance is placed on Nimmagadda Prasad vs. CBI [2013 (5) TMI 920 - SUPREME COURT]. Furthermore, a significant corollary of the diversion and investment of illicit money (black money) acquired by committing such crimes into furthering crimes and the hegemony of the criminal syndicate root, the threat to public security and eventually national security, would appear imminent as an ultimate course.

The opening of LOC does not lead to violation of fundamental and statutory rights of the Petitioner in any manner. A person, who has committed grave offence, cannot as a matter of right claim a right to travel adopt. Reliance is placed on Justice K.S. Puttaswamy (Retd.) and Anr. vs. Union of India and Others [2017 (8) TMI 938 - SUPREME COURT] wherein the Apex Court observed that preservation that prevention and investigation of crime and protection of the revenue are amongst the legitimate aims of the State.

The circumstances in which the Look Out Notice can be opened has been explained in the decision of this Court in Sumer Singh Salkan vs. Assistant Director & Ors. [2010 (8) TMI 1083 - DELHI HIGH COURT], wherein the Apex Court held, “Recourse to LOC can be taken by investigating agency in cognizable offences under IPC or other penal laws, where the accused was deliberately evading arrest or not appearing in the trial court despite NBWs and other coercive measures and there was likelihood of the accused leaving the country to evade trial/arrest”. It was further observed, “LOC is a coercive measure to make a person surrender to the investigating agency or Court of law. The subordinate courts’ jurisdiction in affirming or cancelling LOC is commensurate with the jurisdiction of cancellation of NBWs or affirming NBWs”.

Both the Petitioners have been willingly cooperating during the investigation in the search and seizure proceedings and have also joined the investigation pursuant to the summons issued and have provided all the information and cooperated during the investigation. The detailed circumstances given in the Petitions and the detailed Replies filed by the Respondents, show that Petitioners have joined the investigation and have not been deliberately evading arrest.

There is voluminous record to show that the Petitioners, with the permission of the Court, have travelled abroad many times, have never violated the terms of travel, and have always returned in terms of the permission granted for travel - The Petitioners shall keep the Trial Court informed about his place of residence and his updated contact details. In the event of travelling abroad, he may inform the Trial Court by way of an Application with his itinerary annexed and details of the intended placed of residence abroad.

Petition allowed.

Recovery of dues - Challenge to demand notice, possession notice and sale notice - jurisdiction of Tribunal to entertain and allow the interim application filed by the borrowers in the SARFAESI Act proceedings - nature of enforcement proceedings under the SARFAESI Act and the RDDBFI Act - proceedings under the SARFAESI Act and the RDB Act are separate and distinct in nature and cannot be clibbed - HELD THAT:- It is clear from the contents of the section 30 of the RDB Act that any person aggrieved by an order of the recovery officer made under this Act may prefer an appeal before the Tribunal below, but in the present case, instead of filing the appeal under the said Act, the respondents-borrowers filed interim application before the Tribunal below in its pending S.A. filed under the SARFAESI Act. It is settled by the Hon'ble Apex Court that the Bank can proceed simultaneously in both the Acts i.e. RDDBFI Act and the SARFAESI Act, but both the proceedings cannot be clubbed together, as the proceedings under the SARFAESI Act and the RDDBFI Act are separate and distinct.

The respondents-borrowers have filed the Interim Application against the order of the Recovery Officer in its pending S.A. under the SARFAESI Act in order to save themselves from depositing the amount of debt due because if the borrowers had filed an appeal under section 30 of the RDDBFI Act, 1993, then section 30-A would have come and they had to deposit 50% of the debt due as determined by the Tribunal below under section 19 of the said Act. Thus it is clear that the borrowers have filed the said application with very cleverly in its pending S.A. under the SARFAESI Act in spite of having alternative remedy u/s 30 of the RDDBFI Act. If any order is passed under the wrong Act, the same is considered to be null and void as well as without jurisdiction. In the present case, the application filed by the borrowers has been entertained by the Tribunal under the SARFAESI Act below knowingly that there was alternative remedy for the borrowers to file the appeal u/s 30 of the RDDBFI Act against the order of the Recovery Officer. Thus the order impugned passed by the Tribunal below is liable to be held without jurisdiction.

The order impugned is set aside being without jurisdiction and the appeal filed by the appellant is allowed.