TaxTMI Updates e-Newsletter
Jan 27,2026

Confirmation of demand - misuse of GST credentials - remand for fresh adjudication on merits - pre-deposit as condition for interim relief - vacation of bank attachment subject to compliance - reply to Show Cause Notice in Form GST DRC-01 - HELD THAT:- Having considered the submissions of the petitioner and the learned Government Advocate for the respondent and upon examining the nature of the allegations purportedly made against the petitioner, the case is remitted back to the respondent to pass a fresh order on merits, subject to the Petitioner depositing 10% of the disputed tax in cash from the Petitioner's Electronic Cash Register within a period of thirty (30) days from the date of receipt of a copy of this order.

In case the Petitioner complies with the above stipulations, the Respondent shall proceed to pass a final order on merits and in accordance with law as expeditiously as possible, preferably, within a period of three (3) months of such reply/pre-deposit. Subject to the Petitioner complying with the above stipulations, the attachment of the bank account of the Petitioner shall also stand automatically raised/vacated.

Within such time, the Petitioner shall also file a reply to the Show Cause Notice in GST DRC-01 dated 09.05.2024 together with requisite documents to substantiate the case by treating the impugned Order dated 06.09.2024 as an addendum to the Show Cause Notice dated 09.05.2024.

It is made clear that bank attachment shall be lifted subject to the deposit of 10% of the disputed tax as ordered above and the Petitioner is not in arrears of any amount barring the amount demanded under the impugned Order.

In case the Petitioner fails to comply with any of the stipulations, the Respondent is at liberty to proceed against the Petitioner to recover the tax in accordance with law as if this Writ Petition was dismissed in limine today.

Writ Petition stands disposed of.

Input Tax Credit - Proviso to Section 17(5)(b)(i) - Composite supply - Section 16(2) tax invoice requirement - Principal supply rule under Section 8(a) - Specified premises / 18% versus 5% rate affecting ITC

Input Tax Credit - Proviso to Section 17(5)(b)(i) - Composite supply - Eligibility to avail ITC on inward supplies of food and beverages used in providing event management and tourism services. - HELD THAT: - The Authority held that event management services, by their nature, constitute a composite supply where the principal supply is event management and ancillary elements include room accommodation, conference facilities and food and beverages. Applying the Proviso to Section 17(5)(b)(i), ITC on food and beverages is available where such inward supply is used as an element of an outward taxable composite supply. Since the applicant's outward supplies are taxable event management services and the food and beverages form an integral element of that composite supply, the applicant is entitled to claim ITC on such inward supplies subject to fulfilment of conditions in Section 16. [Paras 4]

The applicant is eligible to avail ITC on food and beverage services under Section 17(5).

Section 16(2) tax invoice requirement - Composite supply - Whether separate invoices from hotel vendors are required for claiming ITC on food and beverage services. - HELD THAT: - The Authority observed that GST law (Section 16(2)) requires possession of a tax invoice but does not mandate separate invoices for individual elements of a composite supply. Where the hotel supplies a bundled/composite service (room, hall, food) and issues a single invoice (itemised or consolidated) charging the appropriate tax, such invoice suffices for the recipient to claim ITC provided other conditions of Section 16 are met and the tax rate aligns with the principal supply. [Paras 4]

No specific requirement for separate invoices; a single hotel invoice is sufficient for claiming ITC subject to compliance with Section 16 and applicable tax treatment.

Principal supply rule under Section 8(a) - Composite supply - Correct method of invoicing to clients for event packages including food and beverage services. - HELD THAT: - The Authority declined to answer this question as it falls outside the scope of questions permissible under Section 97(2) of the GST Act for advance ruling in this proceeding.

Question not covered by the scope of Section 97(2); no answer given.

Input Tax Credit - Composite supply - Whether ITC is available when the hotel raises the food invoice to the applicant and the applicant recharges the client with a margin and issues its own invoice. - HELD THAT: - The Authority held that where the applicant procures food from the hotel and subsequently re-supplies (including by invoicing with a margin) as part of its taxable activity, the inward supply is used in furtherance of business and may be claimed as ITC. If the applicant uses the food as an element of a composite supply, the invoice issued by the applicant to the client must charge tax applicable to the principal supply; the act of adding a margin does not alter eligibility for ITC. [Paras 4]

The applicant is eligible to claim ITC in such cases, subject to Section 16 conditions and correct tax treatment of the outward composite supply.

Composite supply - Specified premises / 18% versus 5% rate affecting ITC - Whether ITC is available on a single invoice billed as a combined 'conference/banquet package' without separate line items for hall and food. - HELD THAT: - The Authority found that where the inward supply is inherently a composite package (conference/banquet with food) and charged by the supplier at the tax rate applicable to the principal supply (typically 18%), the recipient may claim ITC on the entire invoice amount under the Proviso to Section 17(5)(b)(i). However, eligibility is contingent on the supplier charging the rate that allows upstream credit passage; if the supplier is required to charge concessional rate (e.g., 5% for non-specified premises which precludes upstream ITC), the credit would be blocked irrespective of the applicant's use. [Paras 4]

The applicant is eligible to avail ITC on the entire value of a consolidated conference package, subject to the hotel charging the appropriate (credit-permitting) rate.

Composite supply - Specified premises / 18% versus 5% rate affecting ITC - Whether the applicant can claim full ITC on a consolidated hotel package (room accommodation, conference hall, food) invoiced without segregation. - HELD THAT: - The Authority reiterated that such bundled supplies qualify as composite supplies and ITC is admissible on the total invoice where the supplier has charged GST at the rate permitting ITC (18%). Conversely, if the supplier is legally obliged to charge a concessional tax rate that disallows credit (e.g., 5% for non-specified premises), the downstream recipient cannot claim ITC because the credit is blocked at the supplier level. [Paras 4]

Full ITC on the consolidated package is admissible provided the hotel has charged the tax rate that allows upstream credit (18%); otherwise ITC is blocked.

Final Conclusion: The Authority ruled that the applicant may claim ITC on food and beverage services when such supplies form an element of its outward taxable composite supply of event management, a single hotel invoice (itemised or consolidated) suffices for claiming ITC subject to Section 16 compliance, the applicant may re-invoice hotel-supplied food with a margin and still claim ITC provided the outward supply is taxed as a composite supply, and full credit on consolidated conference/room/food packages is admissible only if the supplier charges a credit-permitting rate (notably 18%); otherwise credit is blocked.

Demand leads to double taxation - duplication of proceedings - interest and penalty for delayed filing of GSTR-3B returns - quashing of impugned order - High Court writ jurisdiction -HELD THAT:- In the case on hand, two different orders were passed by two different Authorities for imposing delay in filing the GSTR-3B returns pertaining to very same period, viz., April 2018 to March 2019. Hence, it is clear that there is duplication of proceedings, which leads to double taxation. When such being the case, as rightly contended by the petitioner, the impugned order passed by the respondent is not sustainable in law and hence, the same is liable to be quashed. Accordingly, the impugned order dated 22.03.2024 is hereby quashed.

In the result, this writ petition is allowed.

Compliance with Section 75(7) - requirement to specify all grounds in a showcause notice - reversal of input tax credit in proportion to exempt supplies - adjudication on a ground not raised in the notice - fresh proceedings in accordance with law with exclusion of period for limitation

Compliance with Section 75(7) - requirement to specify all grounds in a showcause notice - adjudication on a ground not raised in the notice - Adjudication order set aside for proceeding on a ground not specified in the showcause notice in breach of the requirement of Section 75(7). - HELD THAT: - The showcause notice related to reversal of input tax credit in proportion to exempt supply and required reconciliation and supporting documents (see point 4(E) reproduced in the notice). The adjudicating authority, however, proceeded to hold that the product dealt in by the petitioner did not qualify as an exempted good and assessed tax and reversal of ITC on that basis. That question as to whether the goods fell within the exempted category was never put to the petitioner and therefore was not within the matters the petitioner was called upon to meet. The Court held that a notice to show cause must clearly specify all charges or grounds to be met and that proceeding to decide on an unnotified ground violates Section 75(7) of the Act of 2017. For these reasons the impugned adjudication order was quashed. [Paras 11, 12, 13, 14]

Impugned order dated February 24, 2025 set aside for noncompliance with Section 75(7) by adjudicating on a ground not raised in the notice.

Fresh proceedings in accordance with law with exclusion of period for limitation - reversal of input tax credit in proportion to exempt supplies - Respondents permitted to initiate fresh proceedings in accordance with law; specified period excluded for computation of limitation. - HELD THAT: - The Court clarified that setting aside the impugned order does not bar the respondents from initiating fresh proceedings on the basis of assertions contained in the adjudication order, provided such proceedings follow statutory requirements. The period from the date of the impugned order (February 24, 2025) until the date of disposal of the writ petition (January 21, 2026), or the date of receipt of the certified copy of the present order, whichever is later, shall be excluded for computing the period of limitation for initiating any proceeding against the petitioners that may follow from the observations in the impugned order. The Court recorded that a coordinate bench had taken a similar course earlier and accordingly followed the same approach. [Paras 15]

Fresh proceedings may be initiated in accordance with law; period from February 24, 2025 to January 21, 2026 (or receipt of certified copy, whichever is later) excluded in computing limitation.

Final Conclusion: The adjudication order dated February 24, 2025 is quashed for breach of the statutory requirement to specify grounds in the showcause notice; respondents remain free to initiate fresh proceedings in accordance with law, with the specified period excluded for limitation.

Wrong claim and rectification of Input Tax Credit (ITC) - wrong entries that were made while filing GSTR-3B - GSTR-3B, GSTR-9 and GSTR-9C rectification mechanism - Jurisdictional bar on further proceedings after acceptance of explanation - Issuance of recovery notices DRC 01A and DRC 01 - Allegation of revenue loss by excess ITC adjustment - HELD THAT:- Though the petitioner made wrong entries while filing GSTR-3B for the financial year 2018-19, the said error was rectified by filing Form GSTR-9C. Once the error is rectified, the question of short payment or excess claim will not come into picture. If the petitioner failed to file GSTR-9C, the respondent is justified in issuing DRC 01A and DRC 01. However, such is not the case. Therefore, on this aspect also the impugned order is not sustainable.

Excess claim of CGST and SGST - As far as CGST and SGST are concerned, there were no dues with regard to the same. Only IGST due was wrongly mentioned as CGST and SGST dues. Further, the question of revenue loss would not arise since excess amount of ITC was available with the Government. In fact, it is also cash payment in advance by the petitioner and the same is yet to be availed. Revenue loss will come into picture only if the petitioner had availed ITC, without any ITC actually available. Hence, the said contention is not sustainable and the same is rejected.

Failure to reverse excess ITC on CGST and SGST - Since the petitioner made excess claim of ITC under CGST and SGST instead of IGST, GSTR-9 and GSTR-9C were filed and the said error was rectified. However, the same was misconstrued as if there was revenue loss to the Government. If the petitioner, without any ITC available, had claimed ITC under CGST and SGST and utilized the same for adjusting the liability of CGST and SGST, in that situation, there would be force in the submissions of the respondent. However, that is not the case here, as the ITC claimed under CGST and SGST is only an excess claim, instead of claiming it under IGST.

Thus, the impugned order is not sustainable in law and the same is liable to be quashed.

Quashing of ex parte assessment order - Remand for fresh adjudication on merits - Pre-deposit condition for interim relief - Vacation of bank attachment subject to compliance - Set-off of prior payments against pre-deposit - Power to recover in case of non-compliance - HELD THAT:- Under similar circumstances, Orders have been quashed and cases have been remitted back to the Respondent to pass a fresh order on terms subject to such Assessee depositing 25% to 100% of the disputed tax depending upon the length of delay in approaching the Court. I do not find any reason to take a different view in this case.

Subject to the Petitioner complying with the above stipulations, the attachment of the bank account of the Petitioner shall also stand automatically vacated.

It is made clear that bank attachment shall be lifted subject to the petitioner depositing 1/3rd of the disputed tax as ordered above and the petitioner not being in arrears of any other amount barring the amount demanded under the impugned Order.

In case there has already been any recovery or any amount paid by the Petitioner towards the tax liability confirmed by the impugned order, the same shall be set off for the purpose of pre-deposit 1/ 3rd of disputed tax as ordered above.

In case the Petitioner fails to comply with any of the stipulations, the 2nd Respondent is at liberty to proceed against the Petitioner to recover the tax in accordance with law as if this Writ Petition was dismissed in limine today.

Writ Petition stands disposed of.

Quashing of assessment order - Remittal for fresh adjudication on merits - Conditional pre-deposit as interlocutory requirement - Adjustment of amounts already recovered - Filing of reply to Show Cause Notice - Bank account attachment / lifting of attachment - Balancing interests of the Assessee and Revenue - Form GST DRC-01 (Show Cause Notice) - Form GST DRC-07 (Assessment/Recovery Order) - HELD THAT:- In case the amount already recovered, as stated above, exceeds or satisfies the 50% pre-deposit requirement, no further amount shall be required to be deposited by the petitioner for the purpose of de nono proceedings.

Within such time, the Petitioner shall also file a reply to the Show Cause Notice in Form GST DRC-01 dated 30.05.2024 together with requisite documents to substantiate the case by treating the impugned Order dated 15.07.2024 as an addendum to the Show Cause Notice dated 30.05.2024.

It is made clear that bank attachment shall be lifted subject to the petitioner depositing 50% of the disputed tax as ordered above and the Petitioner not being in arrears of any amount barring the amount demanded under the impugned Order.

In case the Petitioner fails to comply with any of the stipulations, the first Respondent is at liberty to proceed against the Petitioner to recover the tax in accordance with law as if this Writ Petition was dismissed in limine today.

Writ Petition stands disposed of.

Availment Of Input Tax Credit on the strength of invoices raised by non-existing dealers - failed to file a reply to the Show Cause Notices in DRC – 01 -Challenge to assessment u/s 74 - rectification of assessment orders u/s 161 - maintainability of writ petition in presence of statutory remedy - insufficiency of e-way bills to prove receipt of goods - Form GST DRC-07 and DRC-01 show cause proceedings -HELD THAT:- The Petitioner had failed to file a reply to the Show Cause Notices in DRC – 01 that preceded the impugned assessment orders and thus, suffered the impugned orders in DRC – 07 under Section 74 of the respective GST enactments. It is in this background, the Petitioner had filed an application for rectification of the respective impugned assessment orders which have been rejected by the 2nd mentioned impugned orders.

The statement of e-way bills are not sufficient to substantiate the actual receipt of goods and services. There should be delivery challan, receipts and other documents to substantiate the physical receipts of the goods.

Be that as it may, there is no scope for entertaining these Writ Petitions. Therefore, these Writ Petitions are liable to be dismissed.

Levy of interest for delayed discharge of tax liability - Judicial review by High Court of demand confirmed in Form GST DRC-07 passed u/s 73 - Failure to reply to show cause notice in Form GST DRC-01 - Section 50(1) of the respective GST Enactments - Section 73 of the respective GST Enactments - HELD THAT:- The impugned order was preceded by a show cause notice in DRC-01 dated 08.02.2023 to which the petitioner failed to file a reply and thus, the demand has been confirmed in the impugned order as against the petitioner.

A reading of the impugned order indicates that there has been a delay in discharge of tax liability by the petitioner and thus interest has been demanded and confirmed against the petitioner.

No merits in the challenge to the impugned order seeking to levy interest from the petitioner under Section 50(1) of the respective GST Enactments.

Writ Petition is not maintainable and liable to be dismissed.

Assessment under GST - Input Tax Credit - failure on the part of the petitioner to file the necessary E-Way bills - GSTR-09 transcription error - De novo adjudication on remand - Personal hearing and opportunity to be heard - Attachment of bank account and conditional vacation - Form GST DRC-01 and Form GST DRC-07 - Section 67 of the respective GST Enactments - HELD THAT:- On a perusal of the Annual return in Form GSTR-09 filed by the petitioner, prima facie indicates that a mistake was committed by the petitioner while filling in the details. This would however require a detailed consideration by the respondent.

As far as the E-way bills are concerned, the petitioner shall establish the movement of goods by producing all the e-way bills for the disputed tax periods together with transport documents such as long receipt and toll charges. The petitioner cannot rely on sample documents to establish its case. Therefore, the petitioner shall submit a detailed Reply / Submission along with all the above details within a period of thirty (30) days from the date of receipt of a copy of this order.

Considering the fact that the petitioner has already been given several opportunities but has had failed to clearly establish his case before the respondent, as a condition for de novo adjudication, the case is remitted back to the second Respondent to pass a fresh order.

In the event the petitioner fails to comply with any of the above stipulations, the respondent shall be at liberty to proceed against the petitioner to recover the tax in accordance with law, as if these writ petitions had been dismissed in limine today.

Writ petitions stand disposed of.

Blocking and unblocking of Input Tax Credit - negative blocking of Input Tax Credit - requirement of consideration of representations and evidential certificate - right to be heard before final blocking under Rule 86A(2) - writ jurisdiction of the High Court - HELD THAT:- It appears that the Petitioner has not discharged the tax liability for the month of October which falls due from the month of November and the tax liability for the month of November which will fall due from the month of December.

Considering the same, there shall be a direction to the 1st Respondent to pass a fresh order based on the aforesaid representations dated 06.11.2025 and 10.11.2025 of the Petitioner in the light of certificate issued by the fourth Respondent / Assistant Commissioner (ST). This exercise shall be completed by the 1st Respondent within a period of eight weeks from today.

Writ Petition stands disposed of.

Share premium and valuation of shares - Section 68 - genuineness, identity and creditworthiness of shareholders - non-applicability of Section 56(2)(viib) to the year under consideration - appreciation of evidence by the Tribunal - no substantial question of law arises

Share premium and valuation of shares - Section 68 - genuineness, identity and creditworthiness of shareholders - ITAT's conclusion that the assessee was justified in issuing shares at a high premium and that the amounts credited did not warrant addition under Section 68 was not a substantial question of law. - HELD THAT: - The Court noted the factual findings recorded by the authorities below and accepted the Tribunal's appreciation that the assessee had placed evidence on record regarding the subscribers and the pricing rationale. The Tribunal and lower authorities examined the growth trajectory of the assessee, the pricing basis for issuing shares at a premium, and the documents produced in support of the identity and creditworthiness of the subscribers. On the material before it, the Tribunal held that Section 68 did not lead to additions because the credits were satisfactorily supported. The High Court found that the Tribunal's factual appreciation was permissible and did not raise any substantial question of law warranting interference.

Appeal dismissed insofar as it challenged the Tribunal's factual conclusion on share premium and the applicability of Section 68.

Appreciation of evidence by the Tribunal - Section 68 - genuineness, identity and creditworthiness of shareholders - ITAT's finding that the share subscribers were genuine and creditworthy despite non-appearance on summons did not give rise to a substantial question of law. - HELD THAT: - The Court recorded that the Assessing Officer's notices were acknowledged and that the lenders (share subscribers) confirmed the transactions by filing documents on the record. The Tribunal took these materials into account and concluded that the identity, genuineness and creditworthiness of the creditors were established. Given that the Tribunal's conclusion was based on the documentary material available on file and constituted an evaluation of facts and evidence, the High Court held there was no substantial question of law to be decided.

Appeal dismissed insofar as it challenged the Tribunal's finding on the genuineness and creditworthiness of the subscribers.

Final Conclusion: The High Court found that the Tribunal properly appreciated the factual material concerning share allotment at premium and the documentary confirmation of subscribers; no substantial question of law arises and the appeal is dismissed.

Validity of reassessment proceedings - reasons to believe - delay of 426 days in filing the petition

High Court [2024 (8) TMI 692 - GUJARAT HIGH COURT] quashed the reassessment notice along with an order rejecting the respondent-assessee’s objections to the said reassessment notice.

HELD THAT:- While we find that the view taken by the High Court, on merits, warrants no interference at all by this Court, it appears that the instant special leave petition has been filed only to get the stamp of this Court, given the inordinate delay of 426 days in filing the petition. The explanation tendered for the delay, that it has occurred on account of departmental and administrative procedure, is absolutely vague and unacceptable.

No case to condone the delay is made out. The Special Leave Petition is, accordingly, dismissed on the ground of delay as well as on merits.

Entitlement to claim interest paid on borrowed capital - Allowability of payment of surtax - Addition for provisions made for bad and doubtful debts - MAT computation - payment to L & T towards excise duty -

As submitted the issue raised in the present petition is squarely covered by earlier order passed by this Court in Indian Petrochemicals Corporation Ltd. [2016 (9) TMI 110 - GUJARAT HIGH COURT]

The present Special Leave Petition is disposed of on the same terms.

Reopening of assessment u/s 147 - whether proper service was effected on the petitioner or not? - HELD THAT:- There is doubt as to whether proper service was effected on the petitioner or not. Since, this Court is not convinced that service of notice u/s 148A(b) of the said Act of 1961, was properly done and there is reason to infer that the petitioner has been deprived of a fair opportunity to present its case before the AO prior to the reopening notice u/s 148 of the said Act of 1961 being issued thereby reopening assessment of petitioner’s income, therefore this Court is of the view that the petitioner should be granted one more opportunity to present its case before the Assessing Officer to enable the Ao to take an informed decision as to whether the petitioner’s case is fit for reopening and issuance of a notice u/s 148 of the said Act of 1961 or not.

In such view of the matter, the impugned order dated April 8, 2024 under Section 148A(d) of the said Act of 1961 and the notice dated April 8, 2024 issued under Section 148 of the said Act of 1961 are set aside.

The petitioner shall file its reply to the notice to show cause dated March 8, 2024 issued under Section 148A(b) of the said Act of 1961 within two weeks from date.

Validity of reopening of assessment - petitioner did not produce balance-sheet and profit and loss accounts to reconcile its claim without giving the petitioner one more opportunity to produce such balance-sheet and profit and loss accounts - HELD THAT:- Since it appears that the AO has not given proper opportunity to the petitioner despite the petitioner’s willingness, therefore for ends of justice the petitioner should be granted one more opportunity to produce all relevant documents before the AO including the balance-sheet and the profit and loss accounts. In such view of the matter, the order impugned dated June 25, 2025 as well as the consequential notice for the assessment year 2019-20 under Section 148 dated June 25, 2025 are set aside.

The petitioner shall furnish all requisite documents including the balance-sheet and the profit and loss accounts to the AO within two weeks from date. AO shall consider the petitioner’s reply as well as the documents furnished by the petitioner in terms of this order and shall pass a fresh order, in accordance with law. It is clarified that this Court has not gone into the merits of the case and all points are left open, to be decided by the Assessing Officer, strictly in accordance with law.

Penalty u/s 271(1)(c) - Estimation of income on bogus purchases - HELD THAT:- Considering the totality of the facts of the case and respectfully following the above judgement of Colo Colour Pvt. Ltd. [2025 (9) TMI 1041 - BOMBAY HIGH COURT] we deem it appropriate to set-aside the order passed by CIT(A)/NFAC and direct the AO to delete the penalty imposed u/s 271(1)(c) of the IT Act since the addition, on the basis of which penalty u/s 271(1)(c) was imposed, was made on estimate basis. Decided in favour of assessee.

TDS u/s 194C - payments on account of Annual Maintenance Contracts ("AMC") of Computers, DG Set, Elevator, Internet Telecommunication Services etc. - payment of professional or technical service v/s payments to Contractors - whether the payment made is for 'works contract' or 'professional service' and 'technical service' - definitions of 'works contract', 'professional service' and 'technical service'

HELD THAT:- Considering the definitions of ‘contract’; ‘professional’ or technical’ service as above and juxtaposing the same to the factual matrix of the instant case, we find that the assessee is being provided day to day maintenance of the equipment that have been installed by the assessee, on annual contracts basis wherein the service provider, periodically or as and when required, repairs/maintains the machinery, in terms of the contracts. The payment for such maintenance ‘work’, according to us, would therefore qualify for TDS to be made u/s 194C.

Services rendered for Annual Maintenance Contracts ("AMC") of Computers, DG Set, Elevator, Internet Telecommunication Services maintenance do not qualify as rendering of any managerial, technical or consultancy services u/s 194J nor is within the purview of "fees for technical services" within the meaning of Explanation 2 to section 9(1)(vii) even though the personnel of the providers are technically qualified persons to render the services.

We are of the considered view that the assessee company cannot be held to be an assessee in default u/s 201(1). The order u/s 201(1)/201(1A) is accordingly, set aside. AO is directed to delete the addition made. Grounds of appeal raised by the assessee is allowed.

Rectification u/s 154 - addition u/s 68 - Scope of rectification - HELD THAT:- We find that there was no apparent mistake in the assessment-order passed by AO in so far as the addition u/s 69A is concerned, therefore also the assessee was wrong to invoke rectification jurisdiction of AO u/s 154. We find that the scope and ambit of section 154 is very limited and circumscribed only to ‘rectification of any mistake apparent from the record’ and does not encompass review of order or any investigation, verification and evaluation of facts and record.

The Hon'ble Supreme Court in case of T.S. Balaram, Income-tax officer Vs. Volkart Bros [1971 (8) TMI 3 - SUPREME COURT] considering the scope of rectification u/s 154 held Income-tax Officer was not justified in thinking that on that question there can be no two opinions. It was not open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding u/s 154 of the Income-tax Act, 1961. A mistake apparent on the record must be an obvious and patent mistake and not, something which can be established by a long-drawn process of reasoning on points on which there may conceivably be two opinions.

In present case, the AO passed assessment-order u/s 144 because of non-compliances made by assessee to various notices issued by AO and made impugned addition u/s 69A on the basis of deposit/credit entries found in bank a/c which remained unexplained by assessee at assessment stage. The AO’s action is very much justified on the basis of material available at the time of making assessment. To assail AO’s action, the assessee is required to explain the source of the deposits/credits by producing clinching evidences, which is clearly beyond the scope of rectification proceedings u/s 154.

Assessee has failed to demonstrate as to how the impugned addition constitutes a mistake apparent from record capable of rectification u/s 154? Even if the assessee was aggrieved by the addition made by AO u/s 69A in assessment-order, the proper legal course would have been to file an appeal against assessment order to AO which the assessee has not done (as narrated/contended by Ld. AR). Decided against assessee.

Penalty u/s 270A - definition of “under-reported income” - whether the penalty was initiated for “under-reporting of income” u/s 270A(2) or for “misreporting of income” u/s 270A(9) - mandation of fulfilment of the conditions of misreporting u/s 270A(9)

HELD THAT:- Scope of section 270A(1) of the Act in its plain statutory setting. The provision empowers the Assessing Officer or the appellate authorities to direct levy of penalty “during the course of any proceedings under this Act” where a person has under-reported his income. The expression “any proceedings” is undoubtedly wide and is not confined to assessment proceedings alone. Width of the forum or stage of proceedings does not dilute the substantive requirement embedded in the provision, namely, the existence of “under-reporting” of income.

The concept of under-reporting is intrinsically linked to a legally enforceable obligation to report income. In a situation where a survey is conducted during the very previous year relevant to the assessment year, the accounting year has not concluded, the books of account are not finalised, and the statutory time available to the assessee for reporting income by filing the return u/s 139 has not expired, it cannot be said that the assessee has failed in its reporting obligation merely because certain amounts were offered to tax during survey proceedings to buy peace. Once such income is duly incorporated in the return of income filed within the prescribed time and the assessment is completed by accepting the returned income, the foundational element of “under-reporting” itself ceases to exist.

Having regard to the statutory scheme of section 270A, the absence of any under-reported income, the non-fulfilment of the conditions of misreporting under section 270A(9), the vagueness in initiation of penalty proceedings without specification of the applicable limb, and the binding ratio laid down by the Hon’ble Gujarat High Court [2023 (11) TMI 288 - GUJARAT HIGH COURT] which has not been distinguished or controverted by the Revenue, we hold that the penalty levied under section 270A(8) of the Act is unsustainable in law. Assessee appeal allowed.

Addition of employees stock option plan (ESOP) - whether allowable expenses against its Taxable Income u/s. 37(1)? - HELD THAT:- We observed that this issue is squarely covered in favour of the assessee by the decision of Lemon Tree Hotels Ltd. [2015 (11) TMI 404 - DELHI HIGH COURT] - Department's SLP against the same has been admitted by the Hon'ble Supreme Court and this cannot be the reason for denying the claim of expenses of the assessee which presently covered by the decision of Hon'ble Jurisdictional High Court in favour of the assessee. Accordingly ground raised by the Revenue is dismissed.

Denial of credit of TDS - relevant documents were not produced during the assessment proceedings or before the first appellate authority - Mode of taking additional evidence - HELD THAT:- The tax has already been deposited by the assessee. The Only question is that the relevant documents were not produced during the assessment proceedings or before the first appellate authority due to the bonafide belief/ misconception. There is nothing brought on record by the revenue which may show any Act or omission on the part of assessee or the omission was not bonafide, as nothing malafide has been alleged for brought to our notice on the part of the assessee for not producing additional evidence/ relevant evidence in support of royalty income being earned for the relevant AY 2020-21.

We are of the considered opinion that the assessee/ appellant should not be penalized for mere technical lapse on their part by not filing the relevant document at the relevant time. Further, no prejudice is going to be caused to revenue as the lawful tax is already deducted/deposited.

We are of the considered opinion that the additional evidence sought to be filed, should be admitted and considered by the Revenue authorities as the lawful tax, which the assessee was liable to pay has already been paid and no prejudice is going to be caused to the revenue if the additional evidence is admitted allowed at this stage. For these reasons, the end of justice required that appellant/assessee be given an opportunity to file additional evidence in support of its claim of TDS deduction/ credit of TDS which is lawfully available to the assessee.

In view of the provisions of the Rule 30 of the Appellate Tribunal Rules, 1963 and in the given facts and circumstances, the case is restored to the file of the AO who shall consider the additional evidence to be filed by the assessee/appellant before the Ld. AO within the period of 60 days from this order. AO after verification of claim of the Assessee shall allow deduction u/s TDS amount as per Law. Grounds of the appeal are allowed for statistical purposes.

Applicability of provisions of section 56(2)(viib) - valuation of the shares of the company -receipt of share premium as income - Valuation by registered valuer and effect of rounding off - Issue of shares to existing shareholders

HELD THAT:- We observed that the assessee has issued shares to its existing shareholders and also based on the valuation report by the independent valuer. Since the shares were issued to its existing shareholders and the share premium was rounded to Rs. 15/- per share. Considering the other intangible benefits, the assessee has contained the business.

Mere rounding off of the value of shares to the nearest denomination will not give any advantage to the company moreover the shares were issued to its own existing shareholders. Considering the factual matrix on record, in our the provisions of section 56(2)(viib) of the Act is not applicable. Accordingly, the appeal filed by the assessee is allowed.

Denial of deduction u/s 54B - assessee has invested sale consideration into acquisition of another agricultural land in the name of his wife - HELD THAT:- We find no error in the order of CIT(A) in confirming the denial of deduction u/s 54B as the assessee had purchased the new agricultural land in the name of his wife and not in his own name. Accordingly, all the grounds of the appeal of the assessee are dismissed.

Validity of reopening of assessment u/s 147 - mandatory approval of the authority specified u/s 151 - new regime prescribes a higher level of specified authority (Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General) to grant prior approval - HELD THAT:- In the present case the notice was issued on 25-05-2022 for the A.Y. 2017-18 from the prior approval of the Pr. Commissioner, without, the approval of the authority specified u/s 151 of the Act. The notice was issued beyond the period of three years from the end of the relevant assessment year, thus in term of section 151(ii) of the Act the sanction was required to be approved by the Principal Chief Commissioner or Principal Director General or where there is no such authority, by Chief Commissioner or Director General. Reassessment order quashed and accordingly allow the appeal of the assessee.

Addition of credits in the books of account - addition u/s 68 - HELD THAT:- We find that the ld DR could not controvert that credit in the banks which were added u/s 68 were not the outstanding balances of secured bank loans and outstanding unsecured loans of previous years which were carried forward.

DR also did not controvert that there was no incriminating material found in the course of search. We, therefore, find no fault in the order of the ld. CIT(A) and decline to interfere with the same. Ground 2 is dismissed.

Addition on GP - rejection of the books of accounts - CIT(A), after analysing the assessments made u/s 143(3) for AYs 2019-20 & 2022-23, found that they were completed at returned income and the books of accounts have been accepted - HELD THAT:- CIT(A) held that in the instant year, the books were rejected only for the reason that the assessee was not able to produce the complete documents during the assessment proceedings which was because of the precarious health condition of the Director. Considering the history of the case, and having found no specific defects in the books, and on the basis of remand report, as also the comparison of GP rate of 4.67% during the year under consideration with 4.60% during AY 2019-20 and 3.92% during AY 2018-19, held that the rejection of the books of accounts was uncalled for and the deleted the addition on GP made by the AO. We find that the reasons adopted by the CIT(A) is fair and justified, hence we have no occasion to interfere with his decision. Ground 3 is dismissed.

Benami transaction / beneficial ownership - burden and source of consideration - documentary evidence versus circumstantial evidence - doctrine of sham or fraudulent transactions- compliance with Rule 5 PBPT Rule - Initiating Officer (IO) initiated proceedings under the PBPT Act, 1988 on the basis of information received from the Joint Commissioner of the Income Tax (BPU) - HELD THAT:- The statutory exception for lineal ascendants and descendants applies to the transaction in question. The exception under section 2(9)(A) applies only when the property is held for the benefit of the lineal ascendent/descendant and the consideration is paid by the lineal relative. However, in the present case, the nephews paid the consideration and the property was held for their benefit and not for the benefit of Satpathy. Therefore, the statutory exception would not save the appellants from the legal consequences under the PBPTA, 1988.

With respect to the argument that, the post-registration transactions show the property was always intended for Sh. Prasanta Kumar Dash and Sh. Shishir Kumar Sahoo, The Ld. AA rightly noted after getting the land registered in his name in 2018, Satpathy immediately executed sale agreements with both nephews in 2018–19. Moreover, no fresh consideration was paid during the 2019 transfer which proves that 2019 sale was merely book adjustment of earlier funds paid by the nephews. This demonstrates classic benami layering.

With respect to the argument that compliance with Rule 5 PBPT Rules, it is irrelevant when benami elements are proven. Even if minor procedural issues are alleged, they do not override the core statutory violation. The bank statements, agreements, and admissions independently satisfy all ingredients of Section 2(9)(A). Thus, procedural objections cannot invalidate the findings.

The Tribunal is unable to accept the contention that the purchase of the subject property by Shri Prabhakar Satpathy was a bona-fide and independent transaction funded entirely from his own resources. Even if certain advance payments or expenditures were allegedly made by Shri Satpathy, it does not by itself, establish his financial independence in the acquisition of the impugned property. The respondent has placed material indicating the financial incapacity of Shri Satpathy vis-à-vis the value of the property and the financial involvement of Sh. Prasanta Kumar Dash and Sh. Shishir Kumar Sahoo. Even though the appellants claim that the beneficial interest remained with Shri Satpathy from 26.10.2009 to 2018, the evidence on record establish the fact that the Sh. Prasanta Kumar Dash and Sh. Shishir Kumar Sahoo were the actual beneficiary and intended owner.

Benami transaction- burden of proof - provisional attachment - statutory requirements of a benami transaction as defined u/s 2(9)(A) - benamidar - beneficial owner - Initiating Officer - Whether the IO has successfully discharged the statutory burden upon him u/s 2(9) read with Sections 23 and 24 of the PBPTA, 1988, in order to establish that M/s Surge Ahead Solutions Pvt. Ltd. and M/s Bajaj Capital Insurance Broking Ltd. are the benamidar and beneficial owner respectively - attached bank accounts are benami properties. - HELD THAT:- The provisional attachment order of the IO also suffers from fundamental infirmities as well. The IO by the said PAO sought to attach bank accounts, however, he falls short in identifying the original benami property that may have been transfer in favour of the “Surge” for the immediate or future benefit of the Bajaj Group or even its converted form, or its traceable proceeds. In fact, the IO attempts to treat bank balances as “equivalent value” assets, which is not a concept under the statutory scheme of the PBPT Act, 1988.

It is also noted that the IO has relied on investigations conducted by the Income Tax Department and that no independent inquiry appeared to have been undertaken by him under the PBPT Act, 1988. Even if it established that the Bajaj Group practiced certain degree of control and influence over “Surge”, the statutory requirements of section 2(9)(A) under the PBPT Act, 1988 need to be fulfilled. The PBPT Act, 1988 cannot be invoked as a substitute to hold the parties accountable for alleged violations of IRDAI regulations or any fiscal statutes. The respondents can be accused of misusing regulations in order to circumvent the corporate structuring, but this is not a case of benami transaction.

Thus, we find that the IO has failed to make out a case under section 2(9)(A) of the PBPT Act, 1988. Therefore, we find no reason to cause interference in the order of the Ld. AA. The appeal accordingly fails and is dismissed.

Condonation of delay in filing and re-filing the appeal - Seeking release of Seized Gold - confiscation - payment of excess custom duty - HELD TAHT:- Delay condoned.

We do not see any good ground to interfere with the impugned judgment and order of the High Court. Hence, the Special Leave Petition is dismissed.

Aiding and abetting the exporter for attempting to export the prohibited goods - Requirement of mens rea and actus reus for imposition of penalty - Duty and scope of due diligence of Customs House Agent - Suspension of Customs Broker License - Judicial review of administrative order - HELD THAT:- The petitioner, who is a Customs House Agent, has been penalised under Section 114 of the Act on the ground that they aided and abetted the exporter who attempted to export “Bos Indicus (Ox/Bull) Meat”, which is a prohibited item, by falsely declaring the same as “Boneless Buffalo Meat”, which is a permissible item for export. A Customs House Agent can be penalised for misdeclaration if there is direct evidence of their active involvement, collusion, or intentional wrong doing.

There is no evidence available on record to prove that there was intentional wrong doing or deliberate misrepresentation by the petitioner for declaring the goods as “Boneless Buffalo Meat”, a permissible item for export, instead of correctly declaring the goods as Bos Indicus (Ox/Bull) Meat, a prohibited item for export.

It is also to be noted that, except for the case on hand, the petitioner, who had acted as a customs broker for the exporters involving similar goods in 10 other similar cases, has been exonerated of any liability under the Customs Act. It is only in the instant case, the petitioner is imposed with the liability to pay penalty under Section 114 of the Act for allegedly aiding and abetting the exporter to export prohibited goods. The fact that in identical cases involving the very same issue, the petitioner has been exonerated has also not been disputed by the respondent. In 10 other similar cases, the Customs Department only after examining the documents has come to the conclusion that the petitioner is not liable for the acts of the exporter in misdeclaring the goods.

From the documents available on record, which were also placed for consideration before the respondent, it is clear that the petitioner has not violated any of the Regulations of the CBLR, 2018, more particularly, Regulations 10(d), (e) and (n) relied upon by the respondent for suspending the petitioner’s customs broker license,

Since the impugned orders have been passed by total non-application of mind to the fact that the petitioner cannot be treated as an abettor as there is no mens rea on their part to commit the actus reus, these writ petitions are maintainable despite the fact that there is an alternate statutory appellate remedy available to the petitioner.

This Court, after giving due consideration to the documents placed on record before this Court, is of the considered view that the petitioner has conclusively established before this Court that they did not have any knowledge whatsoever about the misdeclaration committed by the exporter, and therefore, it cannot be said that they had abetted the exporter in attempting to export the prohibited goods.

Since the impugned orders are arbitrary and illegal, the same are liable to be quashed by this Court in respect of petitioner alone, and accordingly, these writ petitions are allowed, and the impugned order-in-original, insofar as the petitioner alone is concerned, namely, imposing a penalty, as well as the consequential impugned order suspending the petitioner’s Customs Broker License, are hereby quashed.

Export Obligation - Advance Authorization Scheme - regularization of bonafide default - Export Obligation Discharge Certificate (EODC) - DGFT's primacy in interpreting the Foreign Trade Policy - binding effect of DGFT certification on Customs - condition of Customs notifications relating to export obligation - enforcement of demand under Section 143(3) of the Customs Act, 1962

Export Obligation - Export Obligation Discharge Certificate (EODC) - binding effect of DGFT certification on Customs - regularization of bonafide default - condition of Customs notifications relating to export obligation - DGFT's primacy in interpreting the Foreign Trade Policy - Customs cannot sustain a demand for duty, interest, penalty or confiscation on the ground of non-fulfilment of export obligation where DGFT has regularized the bona fide default, revised the export obligation and issued EODCs certifying discharge of the export obligation. - HELD THAT: - The Tribunal held that the fulfilment of the Export Obligation is that which is specified by the DGFT in the Advance Authorization and its acceptance by the DGFT by issuing EODC is determinative. Regularization by DGFT under the relevant FTP/HBP provisions has the effect of revising and restating the EO; fixing the quantum of EO was the DGFT's prerogative alone. The Customs condition referring to EO must be read with the FTP and HBP and not in isolation. Reliance on precedents (including Titan Medicals and coordinate authorities) supports that once the licensing authority has accepted fulfillment and issued EODC, Customs cannot take a different view nor refuse exemption by reinterpreting the FTP contrary to DGFT's certification. Further, CBIC Circular No.16/2017-Cus acknowledges EODC as evidence of fulfilment and directs recovery proceedings only where EODCs are not submitted; thus proceedings in presence of EODCs are contrary to that clarification. Applying these principles, the Tribunal concluded that the demand founded on alleged breach of conditions (viii) and (ix) of the Notifications does not survive where DGFT has regularized the shortfall and issued EODCs. [Paras 16, 17, 19, 21, 23]

The demand, interest, penalty and confiscation relating to alleged non-fulfilment of EO (value/quantity) are set aside insofar as DGFT had regularized the shortfall and issued EODCs certifying discharge of the EO.

Enforcement of demand under Section 143(3) of the Customs Act, 1962 - A demand confirmed under Section 143(3) of the Customs Act, 1962 cannot be enforced where the bonds executed in respect of the Advance Authorizations have been cancelled prior to enforcement. - HELD THAT: - The Tribunal observed that although the Commissioner confirmed the demand under Section 143(3), the factual matrix shows that the bonds given by the appellant in respect of the three Advance Authorizations were cancelled by Customs (albeit after the impugned order). Once those bonds stand cancelled, the mode of enforcement under Section 143(3) is not available to the Department. On this standalone ground the confirmed demand could not be enforced; consequently interest, penalty and confiscation premised on an enforceable duty demand also fall away. [Paras 25]

The demand confirmed under Section 143(3) is unsustainable and cannot be enforced because the bonds in respect of the Advance Authorizations have been cancelled.

Final Conclusion: The impugned Order-in-Original confirming duty, interest, penalty and confiscation is set aside: the demand based on alleged non-fulfilment of export obligation does not survive where DGFT had regularized the shortfall and issued EODCs, and the confirmed demand under Section 143(3) is unenforceable as the bonds were cancelled; the appeal is allowed with consequential benefits as per law.

Customs duty exemption -Wrongful availing of Customs Duty Exemption under Notification No. 84/97-Cus dated 11.11.1997 (as amended) - violation of natural justice and non-compliance with previous court directions - doctrine of prejudice - forgery and fraud allegations affecting entitlement to exemption - requirement of Project Implementation Authorisation Certificate and countersignature by concerned Line Ministry - proviso to Section 28(1) - HELD THAT:- The dispute emanates from the appellant's claim to exemption under Notification No. 84/97-Cus dated 11.11.1997. The department alleges that the exemption was claimed using forged PIAC, while the appellant contends that no Line Ministry was designated for their project, preventing them from obtaining the required certificate. The appellant also asserts a violation of natural justice, citing lack of information about the Line Ministry and denial of a personal hearing before the impugned order was issued.

The evolving concept of ‘natural justice’ and the ‘doctrine of prejudice’ came up for examination by the Supreme Court in Dharampal Satyapal Ltd Vs Dy. Commr of C. Ex., Gauhati [2015 (5) TMI 500 - SUPREME COURT]. The Hon’ble Court held that the principles of Natural Justice cannot be applied as a straight-jacket formula and included the ‘principle of prejudice’ while examining the same.

We find that the appellant in their submissions not demonstrated the prejudice caused to them by not being heard, although such opportunities were admittedly offered to them. However, considering that the allegations in the SCN relate to fraud etc and are serious in nature, it is only fair that the denial of natural justice expressed by them be cured and they may be given an opportunity to explain their case to the Ld. Adjudicating Authority in person.

Thus, we remand the matter to the Original Authority to decide the issue afresh in denovo proceedings after giving the appellant a reasonable opportunity to file written submissions, if any, and after hearing them personally.

Validity of transferred import licences/scrips obtained by fraud vis-à-vis innocent transferee importers - voidable nature of licences and requirement of cancellation by the licensing authority - distinction between forged/fake scrips and legitimately issued but fraudulently obtained scrips - precedential authority of Supreme Court and Tribunal on licence validity - inapplicability of the maxim 'fraud vitiates everything' to transferees until licence is cancelled - HELD THAT:- The Hon’ble Court held that if a licence is forged it is no licence at all, and any import of goods, of which the importation is prohibited by law, cannot be a valid import under the Act. Goods so imported cannot therefore be treated to be lawfully "imported goods" within the definition of that term in Section 2(25) of the Act. This legal issue need not detain us, since it is not relevant to the facts in issue in the impugned dispute.

Revenue has drawn attention to the Supreme Court judgment in Munjal Showa Ltd. Vs Commissioner of Cus. & C. Ex [2022 (9) TMI 1076 - SUPREME COURT] We find that the judgment is distinguished, since in that case the DEPB scrips and the Transfer Release Advices, based on which the imports were sought to be cleared duty free, were found to be forged and had not been issued by DGFT at all. It was a case of outright fraud. In view of the clear pronouncement of the Supreme Court in Titan Medical Systems [2002 (11) TMI 108 - SUPREME COURT] and in East India Commercial [1962 (5) TMI 23 - SUPREME COURT], as referred to at para 4 above, which is binding on all within the territory of India, we conclude that the impugned order merits to be set aside and the demand for duty, interest and the imposition of penalty etc. does not survive.

Accordingly, we set aside the impugned order and allow the appeals. The appellant is eligible for consequential relief as per law.

Classification under Customs Tariff - preparations of a kind used in animal feeding - imported goods described as “Squid Liver Powder / Squid Meal Powder” were reclassified from CTH 2301 to CTH 2309 90 90 - essential character of a mixture General Rules of Interpretation (Rule 1; Rule 3(b)) - sufficiency of Show Cause Notices to propose re-classification - extended period of limitation u/s 28(4) - penalty u/s 114A - confiscation u/s 111(m) - HSN Explanatory Notes and Chapter Notes interpretative role in tariff classification -

Proper classification under the Customs Tariff - HELD THAT:- In the present case, the composition of the imported product, as reflected in supplier’s literature, certificates of analysis and material on record, shows that soyabean meal constitutes approximately 40–50% of the finished product. Soyabean meal is a well-known vegetable origin protein and energy source used extensively in compound animal and aquaculture feeds. Its presence in such substantial proportion is not incidental or accessory but formative and determinative of the character of the product.

In Avanti Feeds [2025 (8) TMI 818 - CESTAT CHENNAI], the Tribunal categorically held that where fish or marine-origin material is blended with soyabean meal and other vegetable ingredients to achieve a nutritionally balanced feed formulation, the resultant product ceases to be a simple fish meal of Heading 2301 and squarely falls under Heading 2309 as a preparation of a kind used in animal feeding. It was further held that the decisive factor is not the predominance of a single ingredient, but the deliberate formulation and functional suitability of the product as compounded feed.

Accordingly, following the binding precedents of this Tribunal and applying the same interpretative principles, we reaffirm our conclusion that the impugned goods merit classification under Customs Tariff Heading 2309 and not under Heading 2301.

Whether re-classification and confirmation of demand are sustainable when the Show Cause Notices do not clearly and specifically propose re-classification with cogent reasons? - HELD THAT:- It is a settled principle of law that a Show Cause Notice is required to convey the substance of the allegations and the grounds on which action is proposed, and not to reproduce an adjudication order in advance. The Hon’ble Supreme Court in Collector of Central Excise v. Brindavan Beverages (P) Ltd. [2007 (213) ELT 487 (SC)] held that while a notice must not be vague or unintelligible, it is sufficient if it places the assessee on notice of the case it has to meet. In the present case, unlike the facts in Brindavan Beverages, the notices clearly identify the mis-classification, the correct heading according to the Department, and the reasons for such view.

Hon’ble Supreme Court in CCE v. ITC Ltd [2004 (9) TMI 103 - SUPREME COURT] and CCE v. Ballarpur Industries Ltd [2007 (8) TMI 10 - SUPREME COURT] has held that a demand cannot be invalidated merely on hyper-technical objections to the wording of the notice, so long as the assessee was aware of the allegations and had adequate opportunity to rebut them. The law does not require ritualistic or pedantic precision in drafting of notices; what is required is substantive compliance with principles of natural justice, which, in our view, stands fully satisfied in the present case.

Accordingly, we hold that the Show Cause Notices in the present cases contain the necessary factual foundation, legal basis, and proposed action to sustain reclassification under Heading 2309 and the consequential demands. The adjudication orders and the appellate orders have not travelled beyond the scope of the notices but have merely examined and adjudicated upon the very issues expressly raised therein.

We therefore reject the appellants’ contention that the re-classification and confirmation of demand are vitiated on account of any infirmity in the Show Cause Notices.

Whether invocation of the extended period of limitation under Section 28(4) of the Customs Act is legally permissible in the facts of the present cases? - HELD THAT:- We find merit in the Revenue’s contention that the appellants were aware, or ought to have been aware, of the classification implications of mixing squid liver paste with soyabean meal in substantial proportion, particularly when they themselves are engaged in the animal feed industry and are not lay importers. The deliberate omission to disclose such a critical fact, coupled with the availment of significant duty concessions, clearly attracts the ingredients of suppression of facts with intent to evade duty within the meaning of Section 28(4).

Thus, we hold that the non-disclosure of the presence of 40–50% soyabean meal in the impugned goods constitutes suppression of material facts. Clearance under RMS does not absolve the appellants of their statutory obligations, nor can the defence of bona fide belief be sustained in the absence of full disclosure.

Consequently, the invocation of the extended period of limitation under Section 28(4) of the Customs Act, 1962 is legally valid and sustainable.

Whether penalties under Section 114A and confiscation under Section 111(m) are sustainable? - HELD THAT:- Once the ingredients of Section 28(4) are satisfied, the imposition of penalty under Section 114A follows as a statutory consequence. In the present cases, suppression of material facts stands clearly established, and the appellants have failed to demonstrate any mitigating circumstances warranting waiver or reduction of penalty. The reliance on foreign certificates, past clearances, or outdated test reports does not negate the culpability arising from nondisclosure of the true composition of the goods at the time of import.

Once the conditions for invocation of the extended period are satisfied, penalty under Section 114A follows as a statutory consequence and is not discretionary in nature. The appellants have not shown the existence of any mitigating circumstances warranting waiver or reduction of such penalty.

As regards confiscation, mis-declaration of the composition of the impugned goods, which had a direct bearing on classification and duty liability, renders the goods liable to confiscation under Section 111(m) of the Customs Act. The case laws relied upon by the appellants, including Northern Plastics Ltd., [1989 (8) TMI 201 - CEGAT, NEW DELHI] Surbhit Impex Pvt. Ltd [2012 (7) TMI 750 - CESTAT, MUMBAI] and Finesse Creation Inc [2009 (8) TMI 115 - BOMBAY HIGH COURT], are clearly distinguishable, as those decisions turned on facts where there was either full disclosure or absence of suppression.

In the present cases, the foundational fact of substantial soyabean content was not disclosed in the Bills of Entry. We therefore uphold the penalties imposed under Section 114A and the confiscation ordered under Section 111(m).

Accordingly, all the appeals are rejected.

Classification of goods - imported "Interactive Flat Panel with inbuilt CPUAIO-VDU" - classifiable under Chapter 84 (CTH 8471 / 8473) as automatic data processing machines or under Chapter 85 (CTH 8528) as monitors - automatic data processing machines - monitors and projectors - Note 6(A) to Chapter 84 - General Rules for Interpretation (GRI) 1 - HSN Explanatory Notes - common or trade parlance test - consideration of use - burden of proof on taxing authorities - HELD THAT:- We find that CTI 8471 49 00 opted for by the appellant at the 8 digit level, pertains to other automatic data processing machines, “Presented in the form of systems”, may not be the most suitable heading for standalone automatic data processing machines. However as stated by a Coordinate Bench of this Tribunal in Pepsico Holdings Pvt. Ltd. Vs Commissioner of C. Ex. [2019 (4) TMI 320 - CESTAT MUMBAI] “we cannot decide on a classification that has not been pleaded before us. Once the classification proposed by Revenue is found to be inappropriate, that claimed, while clearing the goods, will sustain even if it may appear to be inappropriate.”. The issue being decided on merits in favour of the appellant, the question of duty, interest, confiscation, fine and penalties do not arise and merits to be set aside.

Guided by the governing principles of classification as stated by the Apex Court in WELKIN FOODS [2026 (1) TMI 348 - SUPREME COURT] the impugned goods on first principles basis are classifiable as per GRI 1 of the First Schedule to the Customs Tariff Act, 1975 under CTH 8471 and 8473 at the 4 digit level. We find that the judgments cited by revenue supporting their contention that classification depends on the primary functional character and end-use of the goods are distinguished. Moreover, in this case a discussion on the end use of the impugned goods is found not relevant. Each of the judgment cited by revenue is applicable in the setting of its own facts but is not relevant to the facts in issue in this case. While we have examined the issue independently and have not gone by precedents, our conclusion on the classification of the goods find parity with that of the Coordinate Benches in the case of Cloudwalker Streaming Technologies [2022 (1) TMI 1078 - CESTAT MUMBAI] and M/s. Ingram Micro India [2022 (2) TMI 308 - CESTAT NEW DELHI] at the four-digit level.

Thus, we find that revenue has not succeeded in discharging its burden of demonstrating that the impugned goods and their parts are taxable in the manner claimed by them. The impugned ‘Interactive Flat Panel’ remain classified at the 4digit level under CTH 8471 and their parts under CTH 8473, as self-assessed. The appeal hence succeeds and the impugned order is set aside. The appellant is eligible for consequential relief as per law. The appeal is disposed of accordingly.

Denial of preferential treatment under SAFTA - authenticity and verification of Country of Origin Certificate - classification of crude soyabean oil imported -benefit of Notification No. 99/2011 - Benefit of exemption - Presumption of genuineness of certificates - HELD THAT:- We find that in this case it is an admitted fact that the appellant has imported the goods in question which were accompanied by a valid country of origin certificate issued by the Export Promotion Bureau, Dhaka, Bangladesh issued under “SAFTA” . Admittedly in this case the Country of Origin certificate has not been rejected by the authorities below and it is not said that same is fake or not genuine.

No conclusive report has been obtained by the Revenue from the authorities who have issued certificate of country of origin to the appellant. In that circumstances, relying on the decision of this Tribunal in the case of Kanpur Edibles Private Ltd. [2024 (5) TMI 576 - CESTAT KOLKATA] the benefit of the exemption Notification No 99/2011 dated 09.11.2011 cannot be denied to the appellant.

In view of this, we set aside the impugned order and allow the appeal with consequential relief, if any.

Re-determination of assessable value under Customs Valuation - discrepancy in country of origin offered a window for access to misdeclaration with its own consequence of action -Acceptance of declared transaction value - Rejection of declared value by invoking rule 12 - Sequential application of rules for determination of surrogate value - evidentiary value of section 108 -Supplementation of declared price by loading costs under rule 10 - Surrogate value determined by recourse to rule 9 - Confiscation u/s 111 - Imposition of penalties - Interpretation and application of section 14 - HELD THAT:- There is no dispute that the declared value purports to be the ‘price for delivery at time and place of import’ and, thereby, ‘cost insurance freight’ inclusive. There is no dispute that the goods were shipped from Dubai by the seller in Dubai. However, the transaction is overarched by dispute over origin – between Zambia as claimed and Iran as held in the impugned order - and, owing to which, the ‘costs’ were held as indeterminate.

The price charged from the buyer by the seller, normally ‘free on board (FOB)’, and the costs charged on the buyer on being incurred by the seller for safe delivery, are the distinct components of the invoice by which competence to invoke rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 arise. Hence, unless the ‘proper officer’ evidences absence of such inclusion in the contracted price together with lack of plausible evidence from the importer, rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 may not be invoked to supplement ‘declared price’ or ‘surrogate value’ for enhancing assessable value.

There is no doubt that ‘LME adjusted’ value may not include freight and insurance but, in the light of costs towards undisputed shipment from Dubai being available in the invoice and undisputed for its authenticity, such loading in excess is not under authority of law. The dispute over origin bears no consequence to this cost as any transaction vis-à-vis the imported goods preceding the final shipment is inclusive of all costs, price and delivery services, unless shown to the contrary. The impugned order is deficient thereto. Moreover, there is no case for presumption over cost of shipment prior to arrival in Dubai as Zambia, accessed by ports on the east African seaboard, is much further off from Dubai than Iran. Factually, there is no valid cause for re-determination of the costs under rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

The absence of ‘identical’ and ‘similar’ goods may be acceptable even if on the presumption that appellant herein is the sole ‘sanction buster’ in India but no explanation is forthcoming on absence of recourse to rule 7 and rule 8 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. After all, if details of purported handling of goods in Iran was within the realm of investigative capacity there was no reason to accept corresponding scope for expansion of investigation of the other ‘surrogate values’ preceding the ‘residual’ adopted by the adjudicating authority.

The fastening of revised value does not find sanction of law and, owing to which, section 111(m) and 111(n) are rendered as not to be invoked. The impugned order is set aside to allow the appeals.

Approval of the Scheme of Arrangement - sustainability of the scheme - calculated attempt to bypass statutory attachments under the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 - Ld. NCLT had exceeded its jurisdiction and had approved a scheme which violates MPID Act - locus to challenge the scheme - HELD THAT:- It is evident to mention the scheme is backed by 91.35% votes in value and above 90% votes in numbers and more than 75% total number of creditors have accepted the scheme. The appellant constitutes mere 0.26% of voting rights and as such has no locus to challenge the scheme. We have already held in Manu Rishi Guptha Vs ICICI Securities Ltd and Another [2025 (11) TMI 132 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI], a person who does not meet the threshold under Section 230(4) of the Companies Act, 2013, he cannot maintain an appeal as an aggrieved person - thus, the appellant has no locus standi to object to the scheme but nevertheless we are aware of the fact the scheme of compromise must satisfy the requirement of public interest, fairness and transparency and the Court cannot sanction the scheme that defeats such statutory rights.

Now, section 230(6) of the Companies Act, 2013 makes a duly sanctioned compromise binding upon all the stakeholders viz the company and its creditors including the dissenting ones. The impugned order does not envisage the Ld. NCLT has exercised power of any authority under any other Act(s). The scheme is only for the class of creditors by virtue of which their entitlement is limited to a particular extent. The scheme does not exercise the powers of criminal or civil court to pass orders on the FIR(s) or criminal cases and it leaves it to the discretion of the concerned court/authorities under the Act(s) to deal with the matters before it.

Further in Financial Technologies Ltd, now known as 63 Moons Technology Ltd Vs State of Maharashtra [2026 (1) TMI 1168 - BOMBAY HIGH COURT], the Hon’ble Division Bench of Bombay High Court examined the scheme vis a vis the provisions of the MPID Act and High Court held 'Having perused the Scheme of Arrangement and the order dated 28.11.2025 passed by the NCLT approving the same, we find that allowing this application would be in the interest of justice and in furtherance of settlement of the outstanding claims of the creditors / investors.'

Thus the objections raised by the appellants to our mind is frivolous and coupled with the fact they have no locus standi to maintain/file objections; the NCLAT is not inclined to allow this appeal and accordingly the same is dismissed.

Application disposed off.

Personal liability of directors versus mere designation - attachment of personal bank accounts as well as Demat and trading accounts - violation of the principles of natural justice -Principles of natural justice - Scope of judicial review under Article 226 of the Constitution of India - Availability of alternative statutory remedy before the Securities Appellate Tribunal - Recovery and attachment powers u/s 28A - HELD THAT:- There can be no dispute with the settled legal position that personal liability cannot be fastened merely on the basis of designation, and that a director cannot be held vicariously liable in the absence of specific averments or findings demonstrating his role in the conduct of the business of the company. At the same time, it is equally well settled that proceedings under regulatory statutes such as the SEBI Act, 1992 often deal with collective conduct of the management, particularly where the alleged violation arises out of a course of action undertaken by the company and its directors acting in concert.

The correctness or adequacy of the findings recorded by the regulatory authority, the extent of individual involvement of a particular director, and the question whether such involvement was merely nominal or substantive are matters that would necessarily require an examination of facts, appreciation of evidence and scrutiny of the conclusions drawn by the regulator. Such an exercise would entail a detailed factual enquiry, which this Court does not ordinarily undertake in exercise of its jurisdiction under Article 226 of the Constitution of India.

On a careful reading of the impugned orders, this Court is not persuaded to hold that the conclusions recorded by Opposite Party No. 1 suffer from a total absence of reasons or non-application of mind. The orders deal with the nature of the violations alleged, the statutory provisions invoked, and the basis on which directions have been issued against the company and its directors. Whether such findings ultimately withstand appellate scrutiny is a matter beyond the scope of the present proceedings.

It is also of relevance that the SEBI Act, 1992 provides a comprehensive statutory mechanism for redressal of grievances arising from orders passed by the Board. Section 15T of the Act provides for an appeal to the Securities Appellate Tribunal against orders passed under the Act, including orders relating to recovery under Section 28A.

While the existence of an efficacious alternative remedy does not, by itself, operate as an absolute bar to the exercise of writ jurisdiction, it is well settled that where the impugned action is taken in exercise of statutory powers, the orders are reasoned, and the challenge involves disputed questions of fact and evaluation of regulatory findings, this Court would ordinarily decline to exercise jurisdiction under Article 226 of the Constitution of India. The present case does not present circumstances warranting a departure from the said restraint.

This Court, therefore, is of the considered view that the petitioner ought to pursue the statutory remedy available under the SEBI Act, 1992. All contentions raised by the petitioner are left open to be urged before the appropriate forum, which shall consider the same on their own merits, in accordance with law.

Writ Petition is, accordingly, disposed of, granting liberty to the petitioner to avail the alternative statutory remedy in accordance with law.

Amicable settlement - Disposition on merits - Independent adjudication by Tribunal - National Company Law Tribunal - National Company Law Appellate Tribunal - HELD THAT:- We dispose of this appeal with a direction to the National Company Law Tribunal [NCLT] to now proceed with the hearing of the Company Petition and see to it that the same is disposed of on its own merits within a period of three months from today.

If any such applications are filed, it will be for the NCLT to look into and decide whether to grant such amendment or not in accordance with law.

With the aforesaid, this appeal stands disposed of.

Preferential transactions - transaction audit report - Avoidance and restitution u/s 44 - Reliance on transaction audit report - Onus to establish 'ordinary course of business' u/s 43(3) - Non-cooperation of suspended directors and power u/s 19(2) - Initiation of liquidation and assignment of claims u/s 33 - HELD THAT:- Having perused the report prepared by the Transaction Auditors we are satisfied that cautious and diligent exercise has been done by the Transaction Auditors. So far as the objections raised by the appellants with regard to the insufficiency of the material available with the Transaction Auditors and various disclaimers given by the Transaction Auditors in their report, is concerned the same in our considered opinion are not sufficient to discard the otherwise diligent report prepared by the transaction auditor.

Since, the Suspended Directors of the CD including the appellants were at fault, in not providing the documents/financial statement of the CD to the IRP/RP, they cannot take this defense that the material available with the Transaction Auditors was not sufficient. Before the Ld. Tribunal as well as in the memo of appeal preferred before us we have not found any fact by which the appellants have justified the transactions highlighted by the Transaction Auditor.

Section 44(1)(d) of the Code contemplates a direction requiring any person to pay such sums in respect of benefits received by him from the Corporate Debtor as Adjudicating Authority may direct. Thus as observed above, the provision of Section 44 is aimed at reversing the effects of preferential transactions and when the effects of preferential transaction are reversed, the person who has received benefits from the transactions, can be required to pay the sum which he has received under the preferential transaction.

It is an admitted situation that Appellant No.1, to whom the direction has been given to pay the aforesaid amount, was admittedly the Director of the CD at relevant time and is also the son of the deceased Late Kamal Kishore Toshniwal and also his legal representative and heir apparent. The term legal representative has not been defined in the Code, therefore reference of it may safely be borrowed from the definition provided to it under Section 2(11) of the Code of Civil Procedure.

A person who in law represents the estate of a deceased person and the person who inter meddles with the estate of the deceased are his LRs. The RP after the death of late Kamal Kishore Toshniwal get the heirs of the deceased impleaded as legal representative, including the appellant No.1 and since he is to inherit the property and asset from the deceased father he could be held liable to part that much of the amount by which the deceased/ Proprietor Kamal Kishore Toshniwal was benefited by the impugned preferential transaction.

We are also of the considered view that appeal is the continuation of the proceedings of the subordinate court and if any infirmity with regard to the calculation of the amount has been committed by Ld. Adjudicating Authority the same may be corrected by the Tribunal as well as by this Appellate Tribunal in appeal. Thus, in our considered view the figure shall be read only to the extent the reliefs have been granted by the Ld. Adjudicating Authority, as affirmed by this Appellate Tribunal.

At the cost of repetition we reiterates that the transaction auditor in its report has classified the entities as related parties which has not been disputed by the appellants and the transactions which have been highlighted by the transaction auditor are based on the bank account statements of the CD and even these transactions have not been disputed by the appellants and the only objections which are being raised are of hyper technical nature and are centered around the mentioning of wrong figure in the prayer clause of the application moved by the RP before the Ld. Adjudicating Authority, however, no justification or explanation has been provided as to how these transactions could be deemed to have been performed in regular course of business.

Once, it was established that money has been transferred to related entities a reciprocal onus had tilted towards the appellants who were the Directors of the CD at that point of time to explain as to why these transactions may not be treated as preferential transactions. We do not have any hesitation in stating that no explanation at all has been given by the appellants pertaining to these transactions being done in the ordinary course of business and thus no illegality appears to have been committed by Ld. Tribunal in labelling these transactions as preferential and in issuing consequential directions for deposition of these amounts in the account of the CD.

Thus, we do not find any good ground to interfere in the findings recorded by the Tribunal in the impugned judgment and therefore the Appeal appears to be devoid of merits and dismissed as such.

Condonation of delay - Sufficient cause - limitation for filing an appeal u/s 61(2) - benefit u/s 12 of the Limitation Act, 1963 - computation of limitation from date of pronouncement and e-filing - jurisdiction of the Appellate Tribunal to condone delay -

Condonation for 9 days delay in filing of the appeal - HELD THAT:- It is well settled that for the purpose of computation of limitation, the date of e-filing of the Appeal is to be treated as the date of filing and we notice that the present appeal was e-filed on 29.03.2025. For counting the statutory period of 30 days for filing the appeal, the same is to be counted from the day after the date of pronouncement of the impugned order. Calculated accordingly, the statutory period of 30 days for filing the appeal in the present case stood expired on 05.03.2025. The further extendable period of 15 days in terms of proviso to Section 60(2) ended on 20.03.2025. However, since the present appeal has been e-filed on 29.03.2025, it clearly lies beyond the outer limit of thirty plus fifteen days provided under Section 61(2) of the IBC.

Since the certified copy of the impugned order was sought by the Appellant on 06.03.2025 which date was clearly after the expiry of the 30 days limitation period, the benefit under Section 12 of the Limitation Act does not accrue to the Appellant in the present case.

Appeal has been filed beyond the condonable period of 15 days. The jurisdiction of this Appellate Tribunal to condone delay being strictly limited by statute, we are unable to condone the delay in filing the Appeal.

Condonation for 11 days delay in filing of the appeal - The present appeal was e-filed on 31.03.2025, the date of filing is clearly beyond the condonable period of 15 days and therefore beyond the condonable jurisdiction of this Appellate Tribunal.

Both the Appeals have been filed beyond the condonable period of 15 days. The jurisdiction of this Appellate Tribunal to condone delay being strictly limited by statute, we are unable to condone the delay in the filing of both these Appeals. Accordingly, the delay condonation applications are dismissed.

Expungement of observations - membership of Committee of Creditors - requirement of material evidence for adverse findings - opportunity of being heard before exclusion from CoC - identification of group companies and corporate relationship - inadmissibility of findings without supporting record

Inadmissibility of findings without supporting record - expungement of observations - The observation that IDBI Bank had challenged the resolution plan on the ground of wrongful inclusion of IL&FS group companies in the CoC was erroneously recorded and is to be expunged. - HELD THAT: - The Appellate Tribunal examined the impugned order and the record and found no material to show that IDBI Bank had challenged the resolution plan on that ground before the Adjudicating Authority. Both the Resolution Professional and the Committee of Creditors stated that the statement attributing such a challenge to IDBI was incorrect. The Tribunal concluded that the name of IDBI Bank had been inadvertently included alongside the challenges made by Respondent No.1, and such an incorrect recital amounted to an unfounded adverse observation. Given the absence of any record or submission by IDBI on this issue, the Tribunal held the observation unsupportable and liable to be removed from the impugned order. [Paras 28]

Portion of para 25 recording that IDBI Bank challenged the resolution plan is expunged.

Identification of group companies and corporate relationship - requirement of material evidence for adverse findings - opportunity of being heard before exclusion from CoC - expungement of observations - The observations that the appellant and related IL&FS entities are group companies of IL&FS Financial Services Ltd. and are subject to Enforcement Directorate moneylaundering investigations were made without supporting material and are to be expunged. - HELD THAT: - The Tribunal reviewed the Adjudicating Authority's finding in para 28 and identified two linked conclusions: (a) that the IL&FS entities in this case were group companies of IL&FS Financial Services Ltd., and (b) that moneylaundering cases had been initiated by the Enforcement Directorate against those entities, warranting their exclusion from the CoC. The Appellate Tribunal found no material before the Adjudicating Authority to support either conclusion. The Tribunal noted the IEDCL annual report (FY 201920) filed in these proceedings, which shows the appellant companies as subsidiaries of IL&FS Energy Development Company Ltd. and indica tes that IL&FS Financial Services Ltd. (IFIN) is a fellow subsidiary, not the holding company of those entities. The appellant had specifically denied any ED investigation relating to these companies and no ECIR or other evidence of ED proceedings was placed before the Adjudicating Authority. During the hearing, Respondent No.1 failed to produce any document substantiating the alleged ED investigation. The Tribunal emphasised that exclusion of a CoC member is a serious step requiring material evidence and opportunity to be heard, and therefore the adverse observations in para 28 were unsustainable. [Paras 30, 31, 33, 36, 39]

Portions of para 28 recording that the appellant and related companies are group companies of IL&FS Financial Services Ltd. and are subject to ED moneylaundering investigations are expunged.

Final Conclusion: The appeal is allowed; the specified portions of paragraphs 25 and 28 of the impugned order are expunged for lack of supporting material and on account of inadvertent or unsustainable adverse observations. No order as to costs; pending interlocutory applications, if any, are closed.

Continuing offence - proceeds of crime - offence of money-laundering - retrospective operation / Article 20(1) of the Constitution - discharge u/s 227 Cr.P.C. - revisional jurisdiction under Sections 397, 401 & 482 Cr.P.C. - Special Court under the PMLA - attachment under Section 5(1) PMLA- Whether the offence punishable u/s 467 of the IPC is a scheduled offence or not and when it was included in the PMLA. - HELD THAT:- It is not a dispute that the FIR was registered for offences under sections 120b/409/419/465/467/468/471/and 474 of the IPC, and that, upon receipt of the FIR and relevant materials, the ED registered an ECIR on 21.12.2009 and proceeded to investigate the offence of money-laundering under section 3 of the PMLA and complaint was filed before the designated Court in the year 2013. It is equally undisputed that section 467 of IPC stood included as a scheduled offence under Part A of the Schedule to the PMLA by virtue of the 2009 Amendment, which came into force on 1st June, 2009.

The prosecution is not predicated upon retrospectively criminalising the acts constituting forgery under Section 467 IPC. Rather, the proceedings are founded upon the allegation that after Section 467 was included in the Schedule, the accused continued to possess, use, and project the proceeds derived from such offence as untainted property. Such application of the Act does not offend Article 20(1) of the Constitution, as clarified in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] since the penal consequence attaches to the continuing laundering activity and not to the past commission of the predicate offence per se.

The attachment of property under Section 5(1) of the PMLA was also erroneously set aside on the assumption that attachment proceedings are purely penal in nature. The Supreme Court has categorically held that attachment and confiscation proceedings under the PMLA are civil and preventive measures, intended to deprive the offender of the benefits of crime, and are not rendered invalid merely because the scheduled offence predates the enactment or amendment, so long as the proceeds of crime subsist and are traceable.

The Court failed to appreciate the distinct scope, object, and operation of the offence of money- laundering, and erroneously conflated the date of commission of the scheduled offence with the commission of the offence under Section 3 of the PMLA.

Accordingly, this Court is of the considered view that the discharge of the accused was founded on an incorrect understanding of the statutory scheme of the PMLA and runs contrary to the binding ratio of Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] At the stage of consideration of discharge, the allegations disclose sufficient material to prima facie indicate continuing laundering activity after the inclusion of Section 467 IPC as a scheduled offence, warranting a full-fledged trial.

The date of commission of the scheduled offence is, therefore, not determinative. The continuation of laundering activity or the enjoyment of proceeds of a crime after the enforcement of the Act or the relevant amendment, is of utmost importance.

The Order passed by the Learned Special (CBI) Court No. 1, Calcutta and Special Court of PMLA, Calcutta in ML Case, whereby the accused persons were discharged and directed the return of the articles confiscated and seized from them upon allowing their petition under Section 227 of the Code stands set aside. The Trial Court is requested to proceed with the proceedings in accordance with law independently and take to its logical conclusion.

Permission to travel during pendency of trial - effect of stayed/paused proceedings on personal attendance - acquisition of foreign citizenship by accused - Change of citizenship and custody of process -Special Court under the Prevention of Money Laundering Act, 2002 - trial by video conferencing and electronic mode - HELD THAT:- It was noted that the petitioner had not committed any default concerning the conditions imposed by the Court allowing him to travel and stay in Canada, but his act of moving repeated applications seeking extension of stay there was taken exception to while dismissing the application.

It is a fact not disputed that during his stay there he has been regularly appearing before the Special Court through video conferencing, with his counsel appearing physically without fail. It has also been noted by the Special Court that the petitioner has not “committed any default concerning the conditions imposed” by the Court while permitting him to travel and stay abroad. His bona fides are thus not in dispute, nor can he be termed a flight risk only because he has accepted the Canadian citizenship, as notwithstanding this changed status, he has not breached any direction of the Court. The ED on its part has failed to produce any material which can indicate even prima facie that there is any apprehension of his fleeing the course of justice. And there have been precedents permitting the accused who acquire foreign citizenship during pendency of the case, to travel abroad refer Srichand P. Hinduja [2001 (5) TMI 977 - SUPREME COURT]. In view of these peculiarities, this Court is inclined to accept the prayer made.

Accordingly, the petition is allowed and the petitioner is permitted to travel to Canada and stay there for a period of six months, with a direction to return to India on or before 31.07.2026, subject to furnishing adequate surety and bank guarantee of ₹1 crore to the satisfaction of the trial Court. Upon the petitioner’s return to India, the surety bond(s) and bank guarantee will be discharged/released.

During his stay in Canada, he shall appear before the Court virtually and his counsel shall be physically present on every date of hearing.

Non-payment of service tax on Banquet Bill - in respect of the food and beverages (catering) provided by the appellant in the banquet halls, the appellant had collected amounts separately as “Banquet Bill” and has not paid service tax on such amounts - requirement to discharge service tax inclusive of the value of food that has been sold on which appropriate VAT has been discharged - HELD THAT:- As rightly contended by the Appellant, this issue has arisen for consideration by a coordinate bench of this Tribunal in the case of Jindal Hotels Ltd v. CCE & ST, Vadodara-I, [2024 (1) TMI 521 - CESTAT AHMEDABAD] and was decided in favour of the appellant therein.

Given that in the present case too it is clear from the appeal records that the appellant had evidenced that the relevant invoices reflect the charges separately for the mandap keeper service and for the sale of food to the customers, hence, as has been held in the decision in Chokhi Dhani Resorts, [2020 (1) TMI 675 - CESTAT NEW DELHI], the requirements of the N/N. 12/2003-ST have been duly complied with and therefore the service tax demand as has been confirmed by clubbing the value of food items sold to the mandap keeper service provided, is decidedly untenable. That apart, the appellant’s contention on limitation too prima facie are tenable and the decision in Jindal Hotel case also settles the matter in the appellant’s favour.

The impugned order is liable to be set aside - Appeal allowed.

Refund claim of service tax paid on “Security Agency Services” - “Rent-a-cab Operator Services”, “Outdoor Caterer’s Services”, “Customs House Agent Services used for clearance of goods to Domestic Tariff Area” and “Services used for DTA clearance” - Approval Committee authorisation of services - Services consumed wholly within SEZ and the interaction between refund route and exemption - Entitlement to refund where invoice addressee differs from actual service recipient - Reliance on precedential Tribunal and High Court decisions - Notification No. 9/2009-ST - Notification No. 15/2009-ST - HELD THAT:- Identical issues came up for consideration in the case of Nokia India Private Ltd. Versus Commissioner of Service Tax, Chennai [2016 (12) TMI 38 - CESTAT CHENNAI], where the facts are similar to the case on hand except that the appellant therein did not dispute the rejection of refund claim in respect of invoices relating to addresses other than SEZ but contested the disallowance of refund.

There, the refund claimed on service tax paid on “Maintenance and Repair Service” and “Business Support Service” was rejected by the Department on the ground that the services were consumed within the SEZ and the refund of service tax on “Rent-a-Cab Operator Service” and “Outdoor catering service” was rejected by the Department on the ground that the services were not essential input services for authorized operations. On appeal, the Tribunal ruled in favour of the Appellant by relying upon the judgments in the case of Intas Pharma Ltd. Vs CST Ahmedabad [2013 (7) TMI 703 - CESTAT AHMEDABAD] and Nokia Solutions and Networks India Pvt. Ltd. [2016 (10) TMI 1026 - CESTAT CHENNAI]

There is no substance in the claim of the Appellant that they are the service recipient in respect of Services for which invoices were not raised on the Appellant. Therefore, rejection of refund claim respect of Services for which invoices were raised on Gurgaon unit of the Appellant is in order.

Appeals are partly allowed as above and the impugned Order-in-Appeal Nos. 50-54/2015 (STA-I) dated 19.02.2015 is modified to allow all the five refund claims of the appellant fully, except the refund claim.

Definition of "Service" excluding transfer of rights in immovable property - exemption under Notification No.13/2003-ST for commission on export of agricultural produce - extended period invocable where suppression with intent to evade is established - remand for factual verification of creation and transfer of rights under banakhat

Exemption under Notification No.13/2003-ST for commission on export of agricultural produce - Validity of denial of exemption for commission receipts claimed to arise from sale of Indian raw cotton to an exporter. - HELD THAT: - The Tribunal found that the appellant produced only unilateral debit letters to M/s. S Raja Exports Pvt. Ltd. without any corroborative agreement or confirmation from the buyer. The lower authorities' conclusion that the documents were insufficient to establish that the commission related to export of Indian raw cotton was sustained. The Tribunal was not persuaded by the appellant's submissions and accordingly upheld the Commissioner (Appeal)'s denial of exemption under Notification No.13/2003-ST for the commission amounts claimed for 2010-11 and 2011-12. [Paras 5, 6]

Order denying exemption under Notification No.13/2003-ST for the commission amounts of 2010-11 and 2011-12 is upheld.

Extended period invocable where suppression with intent to evade is established - Whether the extended period of limitation could be invoked for assessment of service tax for 2010-11 and 2011-12. - HELD THAT: - The Tribunal observed that the appellant had shown commission receipts in its books but failed to disclose them in ST-3 returns, producing a mismatch between book entries and statutory returns which was discovered during audit. On these facts the Tribunal concluded that there was suppression with intent to evade payment of service tax, and therefore the invocation of extended period was justified. The appellant's reliance on Uniworth Textile (that mere non-payment is not necessarily collusion or suppression) was distinguished on factual grounds. [Paras 5, 6]

Invocation of the extended period was justified and is upheld.

Definition of "Service" excluding transfer of rights in immovable property - remand for factual verification of creation and transfer of rights under banakhat - Whether the premium/consideration received for transfer of appellant's alleged right in land (banakhat) is outside the definition of service and not taxable as Business Auxiliary Service. - HELD THAT: - The Tribunal recognised that transfer of rights in immovable property may fall outside the definition of "service" and cited authorities to that effect, but found factual gaps in the record: uncertainty as to whether the banakhat created a transferable right prior to receipt of monies, whether condition No.3 (obtaining non-agricultural permission within six months) was satisfied, the date of execution of the banakhat, and why the registered sale deed between owner and purchaser was delayed until 01.08.2012 despite payments having been received by December 2010. Because these material questions require examination under Gujarat law and documentary verification, the Tribunal did not decide the taxability on merits and remitted the matter to the adjudicating authority for fresh consideration, allowing the appellant to produce documentary evidence in the remand proceedings. [Paras 5, 6]

Matter remitted to the adjudicating authority for examination of whether the banakhat created transferable rights and related factual/legal questions under Gujarat law; appellant permitted to produce evidence.

Final Conclusion: Appeals disposed: denial of exemption for the commission receipts for 2010-11 and 2011-12 and invocation of the extended period are upheld; the question of taxability of the premium/consideration received on transfer of alleged rights under the banakhat is remitted to the adjudicating authority for factual and legal examination under Gujarat law, with liberty to the appellant to produce evidence.

Classification of services - Construction of Residential Complex Service or Works Contract Service? - respondent had rendered taxable services but not paid service tax - HELD THAT:- The learned Commissioner has wrongly dropped the demand against the respondent considering that the services rendered by the respondent are in the nature of ‘Construction of Residential Complex Service’ and ‘Works Contract Service’ are not leviable to service tax prior to 01.07.2010.

This issue is no longer res integra and stands settled by various decisions of this Tribunal. In a similar set of facts and circumstances, this Tribunal in the case of CCE & ST vs. Desi Homes [2025 (3) TMI 123 - CESTAT BANGALORE] observed that 'it is well settled legal position that whether the service is rendered as service simpliciter or as a works contract, no Service Tax can be levied on construction of residential complex prior to 1-7-2010.'

The impugned order is upheld and the appeal filed by the Revenue is dismissed.

Failure to discharge service tax - amount received from the client for providing the service of renting of immovable properties - period of dispute is from June 2007 to March 2008 - HELD THAT:- It is found that the lease is for operating a luxury hotel. Explanation clearly excludes renting of immovable property used for the purposes of accommodation, including hotels, hostels etc. and therefore, the question of paying service tax on the income received by the appellant is not justified. The Commissioner (A) has confirmed the demand based on Explanation 2 in the definition ignoring the fact that it is excluded vide Explanation 1 of the definition.

This fact is also discussed and deliberated by the Tribunal in the case of Jai Mahal Hotels Pvt. Limited Versus Commissioner of C.EX., Jaipur [2014 (7) TMI 540 - CESTAT NEW DELHI], wherein the Tribunal has observed that 'renting of buildings used for the purpose of accommodation including hotels, meaning thereby renting of a building for a hotel, is covered by the exclusionary clause and does not amount to an “immovable property”, falling within the ambit of the taxable service in issue.'

The impugned order is set aside and appeal is allowed.

Legality Of rejection of M.R.P. assessment u/s 4A - Valuation - Abatement on MRP - institutional consumer - re-assessment -Confiscation - Deemed retail sale price -manufacturers of Table Top Wet Grinders which are notified u/s 4A of the Central Excise Act, 1944 read with Notification No.49/2008-CE - valuation mechanism as prescribed u/s 4A ibid after availing 35% abatement on the M.R.P -Jurisdiction of Commissioner - applicability or otherwise of M.R.P as per Rule 3 and 6 of Legal Metrology (Packaged Commodity) Rules, 2011.

HELD THAT:- Ld. Advocates submitted at the outset, that the issue involved in these Appeals is no more res integra as the same stands accepted by this very Bench in the cases.

In the latest order of this Bench i.e. in the case of Ponmani Industries [2023 (4) TMI 1072 - CESTAT CHENNAI] this Bench after considering all the other judgements / orders has set aside the demand raised under Section 4 of the Central Excise Act, 1944.

The assertion of the Ld. Advocates is correct inasmuch as the issue involved in these Appeals has been considered and laid to rest in the above judgments / orders and in the absence of any decision/s to the contrary, we do not find any reasons to deviate from the above rulings.

Jurisdiction of Commissioner of Central Excise to decide the applicability or otherwise of M.R.P as per Rule 3 and 6 of Legal Metrology (Packaged Commodity) Rules, 2011 - We do not propose to decide the above issue since according to us, it is only an academic in nature and hence, there is no separate finding is required to be given on this issue since on merits, the issue already stands decided in favour of the Assessee.

Recovery of CENVAT credit alongwith appropriate interest and equal penalty imposed under Rule 14 and Rule15 (2) of the Cenvat Credit Rules - credit had already been reversed prior to issuance of SCN - HELD THAT:- When appellant had reversed Rs. 2,87,502/- after such availment of allegedly inadmissible credit that was pointed out by the Department through audit, notice of recovery should remain confined to the balance amount. Further, it is acknowledged in both Order-in-Original and Order-in-Appeal that such amount was reversed prior to issue of SCN and they appropriated the same amount through their order but ultimately imposed interest and equal penalty on the same, which appears to be contrary to the provision containing Section 11A(2) of the Central Excise Act, 1944 and appellant’s ascertation that the interest was not payable since amount was reversed from the Cenvat Credit account where amount was lying balance, is acceptable.

The Appellant may feel duty bound to pay back the said amount of Rs. 51,294/- but since it is a composite contract in which all varieties of work are also mentioned in the invoice including erection, commission, design supply satisfactory trials etc., it can be considered as an erroneous understanding of the provision of Cenvat Credit Rules 2004 about such credit on erection part which has been categorically mentioned to be inadmissible in the said Rule but such a erroneous understanding or erroneous interpretation of the provision can never be equated with intention to evade payment of duty so as to invoke the extended period, apart from the fact that said invoice pertains to a period which is not covered in the show-cause notice.

Appellant, since agrees that such availment of Cenvat Credit of Rs. 51,294/- was not admissible, it is at liberty to pay the same with interest to the credit of the Respondent Department on its own volition without any compulsion to establish its credibility as a good participant in nation building process - the impugned order is set aside - appeal allowed.

Transaction value (related party) - manufacture and clearance of P&P medicaments falling under Chapter 30 of the Central Excise Tariff Act, 1985 - Assessment of assessable value for DTA clearances by a 100% EOU - Valuation - Related party transactions and transaction value - MRP less abatement -Whether the assessable value for DTA clearance for computing Basic Customs Duty (BCD) be determined taking into consideration the MRP less abatement or the transaction value at which the manufactured goods are sold by the appellant to their holding company. - HELD THAT:- Explaining the price difference, it has been stated by the appellant that earlier, the value adopted by them was MRP based value from which the abatement was reduced to arrive at the assessable value on which the BCD as well as CVD had been calculated and discharged accordingly; but post-2012 realising that the BCD paid by them was in excess, accordingly they declared the transaction value and paid duty and continued to pay CVD on MRP less abatement.

No doubt, we agree with the contention of the appellant that MRP less abatement cannot be the basis for determination of assessable value for the purpose of computation of BCD as held by this Tribunal in the case of Maneesh Export Vs. CCGST & CE, Belapur [2024 (4) TMI 224 - CESTAT MUMBAI] However, it is equally true that the claim of the appellant that the comparable price be that of the FOB value of same or similar goods cleared for export be considered to ascertain the transaction value cannot be adopted in view of the judgment of the Hon’ble Supreme Court in the case of CCE, Nagpur Vs. Morarjee Brembana Ltd. [2015 (4) TMI 354 - SUPREME COURT] In the said case, endorsing the view adopted by the Tribunal that the sale price charged to customer in India of the goods under assessment cannot be considered as a price in the course of international trade, the matter was remanded to the Tribunal to determine the assessable value in accordance with the provisions of Customs Valuation Rules, 2007.

The determination of assessable value applying the MRP less abatement cannot be acceptable; however, the assessable value be determined by applying Rule 4 to 8 of Customs Valuation Rules, 2007 in absence of evidence / documents to show the transaction value is the genuine one in view of the relationship between the appellant and the purchasers. In the result, the impugned orders are set aside and the appeals are remanded to the adjudicating authority for de novo consideration. Appeals are disposed of by way of remand.

Classification of goods as Brass Billets versus Brass Ingots - Entitlement to small scale exemption under Notification No. 08/2003-CE - Reliance on expert opinion and its contemporaneity, completeness and admissibility - Requirement of sampling and laboratory testing to determine product characteristics - Notification No. 08/2003-CE - HELD THAT:- The period involved in the present case is April 2005 to June 2005 and the allegation of the department is that the product in question manufactured by the Appellant is ‘Brass Ingots’ and not ‘Brass Billets’ and therefore the Appellant are not entitled to small scale exemption provided under Notification No. 08/2003-CE dated 01.03.2003. Further, we find that the Original Authority in this case has examined all the steps/facts and has come to the conclusion that the product in question is ‘Brass Billets’ because the weight of the product is less than 5 kgs.

We find that on identical facts, show cause notice was issued to M/s Usha Impex, which was finally decided by the Tribunal in favour of M/s Usha Impex [2010 (3) TMI 687 - CESTAT, NEW DELHI] in the said case, the Tribunal has held that the expert opinion, on the basis of which the case was made, cannot be relied upon because the opinion was incomplete and there was no examination of the characteristics of the goods; the said order of the Tribunal has not been challenged by the department so far. Further, we find that in the Appellant’s own case for the earlier period i.e. from 01.04.2000 to 05.07.2000, the Commissioner (Appeals) vide Order-in-Appeal dated 29.06.2007, has dropped the demand on the identical facts.

Thus, we are of the considered opinion that the impugned order is not sustainable in law and accordingly, we set aside the same and allow the appeal of the Appellant with consequential relief, if any, as per law.

Sale in the course of import - inextricable link between contract and import - privity of contract - Penalty for suppression and bona fide disclosure - reliance on precedent - HELD THAT:- As noticed, there is a link between the purchase order placed by the 4th respondent, import effected by the petitioner, and the ultimate sale effected by it. This Court also notices the Judgment of another Division Bench of this Court in BPL Telecom Ltd. v. State of Kerala [2008 (10) TMI 613 - KERALA HIGH COURT] wherein also an almost similar circumstance has been considered and the claim of exemption under Section 5(2) of the CST Act extended, even in a situation where the importer had filed the Bill of Entry with the customs.

As rightly pointed out by the learned counsel for the petitioner, the assessment of the petitioner has already been completed by the order dated 15.03.2021 extending the benefit of exemption, even on the face of the penalty order impugned in this writ petition. True, the afore order has not been placed on record. However, a copy of this order has been circulated, on the basis of which this Court notices that the contention raised has been accepted with reference to the Division Bench Judgment in Seimens Ltd. [2015 (6) TMI 1154 - KERALA HIGH COURT]

The penalty under Section 67 of the KVAT Act cannot be imposed for an additional reason. Admittedly, as noticed earlier, in the return filed at Ext.P18, the transaction has been declared; however, an exemption is claimed. In other words, there was no suppression whatsoever from the side of the petitioner. It is on the bona fide belief that it was entitled to exemption that such a return was filed. When that be so, with reference to the principles laid down by a Division Bench of this Court in M/s. U.K. Monu Timbers v. State of Kerala. [2012 (6) TMI 795 - KERALA HIGH COURT] the imposition of penalty cannot be sustained.

Writ petition would stand allowed, setting aside Ext. P27 order passed by the 1st respondent.