TaxTMI Updates e-Newsletter
Jan 31,2026

Liability to pay GST by the supplier - issue of tax invoice within thirty days - interest on delayed payment of tax - transfer of tax burden to the recipient - penalty for failure to issue invoice - HELD THAT:- The responsibility was upon the respondent to pay the GST in terms of Section 39 of the Act of 2017 read with Rule 61 of the Rules of 2017. Secondly, the respondent was duty bound to issue invoice within thirty days in terms of the provisions quoted above. Having not done so, the expectation of the respondent that the petitioner ought to have paid GST voluntarily in terms of the agreement of lease appears to us to be a plea taken contrary to law.

We do not find from both the provisions that the petitioners were under obligation to pay GST or any other tax, without invoice of tax raised by the respondent in terms of the provisions of the Act of 2017 read with Rules of 2017. We may note here that Section 122 of the Act of 2017, provides for penalty for certain offences Clause (i) of Subsection 1 of Act of 2017, provided that where a taxable person who supplies any goods or services or both without issuance of any invoice or issues an incorrect or false invoice with regard to any such supply shall be liable to pay the penalty of Rs.10,000/- or an amount equivalent to the tax evaded or not paid, etc., whichever is higher.

This provisions would highlight importance of issuance of tax invoice by the taxable person like the respondent, who supplied the service. The non-compliance invites penalty. Further, Section 50 of the Act of 2017, provides that every person who is liable to pay tax in accordance with the provisions of this Act or Rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remained unpaid, pay, on his own, interest at such rate, not exceeding 18%.

Thus it is the respondent, who is liable to pay interest. It has however transferred the burden on the petitioners for no valid reason. Such action is apparently illegal and thus unsustainable in law.

Accordingly, we allow the petition and direct the respondent to refund the amount of Rs. 3,94,98,383/-, recovered from the petitioners towards interest.

Deposit requirement for release of confiscated goods - seized vehicle without strict compliance with Section 112(8) -Contempt for disobedience of court order - Appellate Tribunal not constituted maintainability of writ - HELD THAT:- Sub-section (8) of Section 112 mandates payment of 20% of the disputed tax in addition to the amount already deposited under sub-section (6) of Section 107 of the Act. Subsection (6) of Section 107 mandates deposit of 10% of the disputed tax before the Appellate Authority for pursuing an appeal under the said provision. It is submitted that no such deposit was made in the appeal arising out of the order passed under Section 130 of the Act.

Having regard to the pendency of the larger issue in the writ petition, we deem it appropriate to interfere with the interim order only to the limited extent of modifying the direction by requiring the respondent/petitioner to deposit a sum of ₹2,00,000/- before the Adjudicating Authority, while complying with the remaining conditions imposed by the learned Single Judge in the order dated 02.04.2025.

The Appellate Authorities are directed to release the vehicle within one week from the date of deposit of ₹2,00,000/- as directed above. The other conditions imposed by the learned Single Judge shall continue to operate till the disposal of the writ petition.

Insofar as the contempt petition alleging disobedience of the order dated 02.04.2025 is concerned, we notice that the direction for release of the vehicle was subject to the complainant executing an indemnity bond. Undisputedly, the complainant has not complied with the said condition. In the absence of compliance with the condition required to be fulfilled by the complainant himself, the contempt petition is misconceived at this stage.

In view of the order passed above modifying the order complained of, the contempt petition does not survive for further consideration. Accordingly, it stands disposed of.

Validity of show cause notice - GST levy on educational activities - compliance with interim orders - remand for re-adjudication - order-in-original - HELD THAT:- It is the case of the petitioner that despite such interim order being passed, the authorities have proceeded to adjudicate and pass an order-in-original, a copy of which is produced along with a memo.

Taking note that the order-in-original is passed during the pendency of the present petition in which there was an interim order passed on 23.12.2025, it would be appropriate to set aside the order-in-original and accordingly, the order-in-original dated 31.12.2025 passed by the Assistant Commissioner, West Division-3 is set aside and the matter is remitted to the stage of reply to the show cause notice. The petitioner is permitted to make out reply and the respondent - authorities while proceeding further are also directed to consider the legal position as asserted by the petitioner in the present writ petition and as may be placed before the authority by way of reply.

Accordingly petition is disposed of. All contentions on merits are kept open.

Profiteering and computation of profiteering - Pass-through of Input Tax Credit - Application of judicial guidelines on methodology - Director General of Anti-Profiteering (DGAP) - Pre-GST and Post-GST period comparison - HELD THAT:- Admittedly, in the present matter the flat was booked by applicant in post-GST period. As per the Judgement of High Court of Delhi in Reckitt Benckiser India Pvt. Ltd. Vs. Union of India [2024 (1) TMI 1248 - DELHI HIGH COURT], since the price of the flat would have been fixed after taking into account the ITC which has become available to the builder in the post-GST period and which was not available to him in pre-GST period no benefit of ITC to home buyer would be available.

During the investigation the DGAP, after scrutinizing the relevant documents and considering the reply submitted by the respondent, arrived at the conclusion that the respondent has not contravened the provision under section 171 of the Central Goods and Services Act 2017. The DGAP has taken into consideration the ITC availed, and the purchase value of Goods and Services during pre and post GST period.

So far as the objection made by the complainant are concerned, merely by making a confirmation, that benefit of ITC would be passed, does not create any legal right to the applicant to claim benefit of the ITC. The Judgment passed by Hon’ble High Court of Delhi, the DGAP submitted its revised report which is based on relevant data and documents.

In view of the above the objections raised by applicant does not carry any weight, therefore, they are liable to be rejected.

Passing on the benefit of Input Tax Credit - anti-profiteering - investigation u/s 171 - proceedings under Rule 129 - HELD THAT:- None appeared on behalf of the Respondent or the Applicant. DGAP submitted that the Respondent had duly passed on the benefit of Input Tax Credit to the eligible recipients, which has been duly verified by the DGAP.

The investigation report dated 28.11.2024 submitted by the DGAP has been carefully examined along with the Respondent’s compliance submission dated 15.12.2025, the buyer-wise confirmations reflected in Table-E of the DGAP Report. It is observed that although profiteering was initially determined to the extent of Rs. 25,78,971/- (comprising base amount of Rs. 23,02,653/- and GST of Rs. 2,76,318/-) on account of an incremental Input Tax Credit ratio of 2.43%, the Respondent has passed on a total benefit amounting to Rs. 42,03,560/- to all 11 eligible homebuyers. Further, with respect to the amount of Rs. 17,829/- that was required to be passed on to Shri Mukesh B. Kewalramani, it is observed that the Respondent has duly transferred the said amount through NEFT reference no. 1370645417 dated 13.12.2025. Accordingly, it is held that the Respondent has fully discharged its statutory obligation to pass on the benefit of Input Tax Credit to the eligible recipient in accordance with the provisions of Section 171 of the CGST Act, 2017.

Thus, the investigation report dated 28.11.2024 submitted by the Director General of Anti-Profiteering is accepted. Accordingly, the proceedings arising from the complaint filed by Shri Abhay Yagnesh Desai against M/s Axis Infratech LLP are hereby concluded, it being conclusively established that the Respondent has fully complied with the mandate of Section 171 of the CGST Act, 2017 in respect of construction services provided in the “24K” project at Vadodara, Gujarat, and that no further action is warranted.

Consolidation of various financial years/tax periods - show cause notice u/s 74 of the CGST Act - tax period - Jurisdiction to issue SCN - time limit for issuance of assessment order - binding effect of subsequent High Court decisions within the State - HELD THAT:- True it is that the judgment of the Delhi High Court in M/s Mathur Polymers Vs. Union of India & Ors. [2025 (9) TMI 112 - DELHI HIGH COURT]has attained finality, however, concept of merger of judgment will not apply here because the Hon’ble Supreme Court [2025 (11) TMI 1184 - SC ORDER] has dismissed the petition in limine and not on merit.

There is another reason why we find that the judgments of the High Court of Bombay will prevail. In the case of M/s. Milroc Good Earth Developers Vs. Union of India & Ors. [2025 (10) TMI 867 - BOMBAY HIGH COURT] and Rite Water Solutions (India) Ltd. [2025 (11) TMI 1939 - BOMBAY HIGH COURT] following amongst others were the reasons why the Court held that show cause notice consolidating various financial years/tax periods is not permissible.

These niceties, in our view, were not considered by the Delhi High Court.

In the present case, since this Court has, subsequent to decision of the Delhi High Court, taken a different view, the authorities below will be bound by the subsequent judgments. The Hon’ble Supreme Court has neither stayed nor overruled the view taken in above two cases. The argument of Counsel for respondent no. 1, therefore, cannot be accepted.

The Counsel for respondent no. 1 submits that to the best of her knowledge, a proposal to challenge the judgments in Milroc Good Earth Developers and Rite Water Solutions (India) Ltd.,is under consideration. Thus, it is suggested that judgments in both cases are likely to be challenged before the Hon’ble Supreme Court.

If that be so, the purpose will be served if the respondents are given opportunity to revive the petition, if the judgments passed by the High Court of Bombay in aforesaid two cases, are set aside.

The respondents, however, are at liberty to reissue notice strictly in terms of the provisions of Section 74 of the CGST Act, if there is no other legal impediment.

The petition is disposed of in above terms.

Wrongful availing or utilization of input tax credit - adjustment of input tax credit between tax heads - initiation of proceedings u/s 73 - HELD THAT:- Case of the petitioner is that, while supplying data in GSTR 3B for January, 2018, the petitioner inadvertently paid IGST input credit, despite the fact that the petitioner was not having any interstate sales. The specific case of the petitioner is that, the wrong application of input tax credit cannot be a ground to initiate proceedings under Section 73 of the CGST Act. Reliance was also placed on the decision rendered by a Division Bench of this Court in Rejimon Padikapprambil Alex [2024 (12) TMI 399 - KERALA HIGH COURT], wherein, this Court, after referring to the relevant statutory provisions, held that, the Section 73 can be attracted only when the tax has not been paid or short paid or erroneously refunded or where input tax has been wrongfully availed or utilized for any reason. If it is a case of adjustment of the input credit in a different head, the proceedings under Section 73 would not be attracted as there is no revenue loss caused.

The issue raised in this writ petition is squarely covered in favour of the petitioner as per the decision referred to above.

Accordingly, it is ordered that, Ext.P1 shall stand quashed in the light of the principles laid down by this Court in Rejimon Padikapprambil Alex [2024 (12) TMI 399 - KERALA HIGH COURT]

Black Money - “undisclosed assets located outside India” within the meaning of section 2(11) of the BMA Act -proceedings under section 10(3) of BMA - undisclosed foreign income by applying the proviso to section 3(1) of BMA Act - fundamental condition prescribed under section 2(11) of the BMA Act for treating an asset as an “undisclosed asset located outside India” - HELD THAT:- Shares of “Baxter International Inc.” were acquired by the assessee under the Employee Stock Purchase Plan and subsequent Dividend Re-investment Plan, and that the source of such acquisition, namely dividend income, stands explained and is duly recorded by the Assessing Officer himself in the assessment order.

We further find merit in the contention of the Ld. AR that the deeming fiction contained in the proviso to section 3(1) of the BMA Act applies only to undisclosed assets and not to undisclosed income. In the present case, what has been sought to be taxed is dividend income, which by its very nature constitutes income and not an asset. The conversion of such income into further shares through an automatic reinvestment mechanism does not alter the character of the original receipt, particularly when the source thereof is neither unaccounted nor unexplained. Therefore, the invocation of section 3(1) read with section 10(3) of the BMA Act is legally unsustainable on the facts of the present case.

There is no element of tax evasion or concealment, and no prejudice has been caused to the revenue, particularly when the assessee would have otherwise been eligible to claim relief under section 90 of the Income-tax Act, 1961. The ratio laid down in Sri Srinjoy Bose [2023 (6) TMI 22 - ITAT KOLKATA], Vikash Marda [2025 (1) TMI 276 - ITAT KOLKATA] and Akhilesh Singh [2024 (7) TMI 130 - ITAT KOLKATA] squarely applies to the facts of the present case.

We hold that the shares of “Baxter International Inc.” cannot be treated as “undisclosed assets located outside India” within the meaning of section 2(11) of the BMA Act, and consequently, the addition made under section 10(3) of the BMA Act is unsustainable in law. Accordingly, the impugned order of the Ld. CIT(A) is set aside and the addition made by the Ld. AO is deleted. Decided in favour of assessee.

Settlement under Vivad Se Vishwas Scheme - Interpretation of 'dispute' for scheme purposes- scope of Section 5A of the Income Tax Act, 1961 by which a provision is made in respect of apportionment of income between spouses governed by Portuguese Civil Code - definition of ‘dispute’ - exercise jurisdiction under Article 226 of the Constitution of India - Petitioner challenges the impugned order on various grounds, including that it was passed without affording an opportunity of hearing, is arbitrary and perverse, and is contrary to the very object of the Scheme - order of Assessment passed u/s143(3) as well as the order u/s 271(1)(C) read with Section 274 - Appeal filed by the Petitioner against the Penalty Order is pending

HELD THAT:- The scheme, being a beneficial settlement legislation, the Courts have repeatedly adopted an approach that interprets it to advance the cause of settlement of disputes. It cannot be interpreted to defeat the very object and purpose of the scheme. (See Marcrotech Developers Limited [2021 (3) TMI 1089 - BOMBAY HIGH COURT], Dongfang Electric Corporation Ltd Vs. Designated Authority [2021 (9) TMI 92 - TELANGANA HIGH COURT], MUFG Bank Limited [2022 (11) TMI 1304 - DELHI HIGH COURT]. To avail of the scheme’s benefits, there must be a pending dispute. The definition of ‘dispute’ provided under Rule 2(b) of the Direct Tax “Vivad Se Vishwas Scheme”, 2020 includes an Appeal.

The definition of ‘dispute’ ought to be interpreted widely. It is not restricted to Appeals against Assessment Orders, as sought to be argued on behalf of the Revenue. The definition includes any Appeal, including the Appeal challenging the penalty order. In the present case, admittedly, the Appeal filed by the Petitioner challenging the Penalty Order is pending. Therefore, the Petitioner meets the first requirement of a pending Appeal. There is a pending dispute pertaining to the penalty in respect of the Petitioner which undoubtedly bring her within the ambit of the scheme.

Therefore, the impugned order is factually wrong and contrary to the provisions of the scheme itself. Further, when the benefit of the scheme was granted to the Petitioner’s husband, the department could not have denied the same to the Petitioner when, admittedly, the provisions of section 5A of the Act are equally applicable to both. We agree with the submission of Mr. Karpe, the Learned Counsel for the Petitioner, that when the provisions of Section 5A are admittedly applicable, there was no need for the Petitioner to file a separate Appeal challenging the Assessment Order.

Petitioner has also pleaded that due to COVID, there was a delay in the proceedings. We accept the statements made by the Petitioner and therefore reject the objection raised by the Revenue about the delay in the proceedings.

Revenue’s objection that the Scheme has now lapsed is also not a good ground because Forms 1 and 2 were filed by the Petitioner when the Scheme was in subsistence. Therefore, we agree with the submission of the Learned Counsel for the Petitioner that this is a fit case to exercise jurisdiction under Article 226 of the Constitution of India.

Validity of ICDS adjustment made in an intimation u/s 143(1) -intimation being passed without complying with the jurisdictional requirements of the first and second proviso to Section 143(1) - breach of the principles of natural justice

HELD THAT:- It is apparent from a perusal of the above reproduction that the first and second proviso to Section 143(1) of the IT Act specifically provides that no adjustment shall be made unless an assessee is given an intimation of the adjustment either in writing or in electronic mode and the response received from the assessee must be considered before making any such adjustment.

In the present case, admittedly the Petitioner has not been given any intimation of the ICDS adjustment before passing the impugned intimation. The proposed adjustment u/s 143(1)(a) of the IT Act on 14 December 2022 did not raise any issue with regard to the ICDS adjustment and no opportunity of being heard was granted to the Petitioner on this issue before the intimation was passed.

This is, therefore, a clear breach of the principles of natural justice, and in any event in contravention of the jurisdictional requirements laid down in the first and second proviso to Section 143(1).

Department in their Affidavit-in-reply have accepted the fact that no notice for the proposed adjustment was issued on the ICDS adjustment. Hence, on this ground alone the adjustment made in the intimation in respect of the ICDS adjustment is liable to be quashed and set aside.

Deduction u/s 80P - bar contained u/s 80A(5) and 80AC - assessee has not filed a return of income - contention of appellant– assessee that sub-section (5) of Section 80A is not attracted in cases where no return of income is filed is too far-fetched and cannot be accepted.

HELD THAT:- When sub-section (5) of Section 80A disentitles an assessee from claiming deduction under Chapter VI-A in the absence of such claim being made in the return of income, it would be impermissible to interpret the provision to mean that the statutory bar would not apply where no return of income is filed at all.

An assessee who has failed to file a return of income claiming deduction cannot be placed in a better position than an assessee who has filed a return of income but has failed to make such a claim therein.

Section 80AC of the Act, in continuation of the mandate under sub-section (5) of Section 80A, requires that the return of income be filed within the due date specified under sub-section (1) of Section 139 of the Act. A conjoint reading of Sections 80A and 80AC mandates that a claim for deduction under Chapter VI-A must be made in the return of income and that such return must be filed within the due date prescribed under sub-section (1) of Section 139 of the Act.

If the claim for deduction under Section 80P of the Act is to be extended without filing a return of income, the very mandate of sub-section (5) of Section 80A would be defeated and the provision would be rendered otiose.

The Kerala High Court, in Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham [2023 (3) TMI 1055 - KERALA HIGH COURT] as held that the statutory scheme permits the allowance of deduction u/s 80P of the Act only if such claim is made in a return of income recognized under the Act and that, after 01.04.2018, such return must be filed within the time prescribed under Section 139 of the Act.

Tribunal has applied the law laid down by the Kerala High Court in the aforesaid decision. Tribunal was justified in concluding that the assessee is not entitled to deduction u/s 80P of the Act.

Deduction u/s 54B - LTCG - sale consideration from sale of urban agricultural land for purchase of other agricultural land - Treatment of sale consideration as unexplained receipts u/s 69A - Meaning of transfer and purchase in relation to immovable property- valid transfer of immovable property u/s 2(47) - Claim denied property has been registered in the name of assessee on 01.10.2021 which is beyond the period of two years from the date of transfer.

Whether the agreement to sell can be considered to be an instrument of transfer of property? - HELD THAT:- Land was agreed to be purchased from Mr. Dipchand Kothari to whom consideration was paid for purchase of land but unfortunately Mr. Dipchand Jalchand Kothari expired on 17.12.2014 due to which the purchase deed of new land could not be registered but thereafter the family members of Mr. Dipakchand Kothari including his wife Surekha Dipchand Kothari and her three sons has finally registered sale deed, signed the registered sale deed on 01.10.2021.

Assessee has demonstrated that the assessee has complied to the considerations of a valid transfer of immovable property u/s 2(47) of the income tax act and the purchase consideration has been passed on to the buyer and possession of land has been received.

As gone through the decision referred by assessee and find that the decision given by coordinate Bench, Chandigarh in the case of Anil Bishnoi supra is squarely applicable[2017 (10) TMI 868 - ITAT CHANDIGARH] as held provisions cannot be interpreted in a manner to say that transfer vis-a-vis selling is complete but vis-a-vis purchase is not complete in respect of same transaction. In view of this, the word Purchase cannot be interpreted and detached from the definition of word 'transfer' as given u/s 2(47). When the transfer takes effect as per the provisions of section 2(47) of the Act, if a liability to pay tax arise in the case of the seller, the consequent right to get deduction on the purchase of property accrues in favour of the purchaser, if he otherwise is so eligible to claim it as per the relevant provisions of the Act.

Assessee has duly complied to the consideration provided u/s 54B and has utilized the sale consideration from sale of urban agricultural land for purchase of other agricultural land within a period of two years from the date of transfer of land and thus has made a valid claim u/s 54B - We therefore set aside the findings of Ld. CIT(A) and allow the grounds of appeal raised by the assessee.

Denying deduction u/s 80P - interest earned by the appellant society on deposits with other cooperative banks - assessee is a registered cooperative society and is providing credit facilities to its Members and derived interest income on investments kept with Cooperative Societies/Banks

HELD THAT:- The provisions of section 80P(2)(d) of the Act, provides for deduction towards any income by way of interest or dividend derived by a co-operative society from its investment with any other co-operative society. The term Cooperative Society has been defined u/s. 2(19) of the Act, which includes a co-operative society registered under the Cooperative Societies Act, 1912 or under any other law for the time being in force in any state for the registration of cooperative societies.

Perusal of the aforesaid definition would make it clear that cooperative Society means a cooperative society registered under Cooperative Societies Act, 1912 as defined under the Act, be it a co-operative society carrying on banking business or cooperative society carrying on the other business or a cooperative bank. Interest/dividend income earned from a cooperative society from its investment with other cooperative societies, whether such society is cooperative bank or not is to be considered for allowing deduction u/s. 80P(2)(d) of the Act.

As assessment order mentions that the assessee derived interest income from deposits kept with Kolhapur District Central Cooperative Bank Limited, Aman Sahakari Bank, S.S.S. Alase Kurundwad Urban Cooperative Bank respectively.

In the case of Thorapadi Urban Co- op Credit Society Ltd & Others vs ITO [2023 (11) TMI 779 - MADRAS HIGH COURT] which the assessee relied upon, as following case of The Salem Agricultural Producers Co-operative Marketing Society Ltd [2016 (9) TMI 699 - MADRAS HIGH COURT] held that a cooperative society is entitled to avail the benefit u/s. 80P(2)(d) of the Act. In light of the above, interest income earned from deposits with other co operative bank u/s. 80P(2)(d) of the Act deserves to be allowed - Appeal of the assessee is allowed.

Validity of the assessment order on the ground of limitation as per the provisions of section 144C(13) r.w.s. 153 - Limitation for passing final assessment order - Interplay of Sections 144C and 153 - HELD THAT:- Limitation for passing the final assessment order u/s 144C(13) of the Act is to be seen only with reference to the timeline specified u/s.144C of the Act only without referring to provisions of section 153 of the Act.

We find that identical submissions were made by the Department in the case of Roca Bathroom Products P. Ltd.[2021 (4) TMI 355 - MADRAS HIGH COURT] rejected the arguments of the Department and held that provisions of section 144C and 153 of the Act are mutually inclusive as both contain provisions relating to section 92CA of the Act and are inter-dependent and are overlapping. Hence, the period of limitation for passing the final assessment order u/s. 144C(13) of the Act has to be determined with reference to section 144C r.w.s 153 of the Act.

A perusal of dates for passing the final assessment order in the impugned assessments years would clearly show that the final assessment order for the respective assessment years have been passed by the AO beyond the period of limitation u/s. 144C(13) r.w.s. 153 of the Act. Thus, following the ratio laid down in Roca Bathroom Products P. Ltd. (supra), we hold that final assessment orders for AYs 2010-11 & 2011-12 passed beyond the period of limitation are without jurisdiction. Consequently, the assessment orders for AYs 2010-11 & 2011-12 are quashed.

Validity of the assessment order on the ground of limitation as per the provisions of section 144C(13) r.w.s. 153 - Limitation for passing final assessment order - Interplay of Sections 144C and 153

HELD THAT:- Limitation for passing the final assessment order under section 144C(13) of the Act is to be seen only with reference to the timeline specified u/s. 144C of the Act only without referring to provisions of section 153 of the Act.

We find that identical submissions were made by the Department before the Hon’ble Madras High Court in the case of Roca Bathroom Products P. Ltd. [2022 (6) TMI 848 - MADRAS HIGH COURT] rejected the arguments of the Department and held that provisions of section 144C and 153 of the Act are mutually inclusive as both contain provisions relating to section 92CA of the Act and are inter-dependent and are overlapping. Hence, the period of limitation for passing the final assessment order u/s. 144C(13) of the Act has to be determined with reference to section 144C r.w.s 153 of the Act.

A perusal of dates for passing the final assessment order in the respective appeals would clearly show that the final assessment order in the respective appeals have been passed by the AO beyond the period of limitation u/s. 144C(13) r.w.s. 153 of the Act. Thus, following the ratio laid down in the case of Roca Bathroom Products P. Ltd. (supra), we hold that final assessment orders in the appeals by different assessee’s passed beyond the period of limitation is without jurisdiction. Consequently, the final assessment orders in the respective appeals are quashed.

Bogus purchases - expenditure incurred by the assessee towards purchase of gold coins - claimed as business promotion and staff welfare expenditure - claim disallowed u/s 37(1) by treating the purchases as bogus

HELD THAT:- Once the transactions have been examined threadbare and accepted as genuine in the hands of the seller by the Tribunal, it would be wholly incongruous to hold that the very same transactions are bogus in the hands of the buyer, namely the assessee. The Revenue has not brought on record any independent or tangible material to demonstrate that the assessee did not receive the gold coins or that the expenditure was not incurred for business purposes. The entire disallowance rests on third-party information and a statement which has already been retracted and judicially discredited in the seller’s own case.

The objection of the AO regarding non-maintenance of a stock register also does not advance the Revenue’s case. The assessee is not a dealer in gold, the gold coins were not held as stock-in-trade and were admittedly distributed immediately (list of persons to whom gold coins were distributed for business promotion with quantity of gold distributed and identity of each recipient of gold coin was placed before CIT(A). In such circumstances, the absence of a stock register cannot be a determinative factor to hold the purchases as bogus.

AO has failed to discharge the burden of establishing that the expenditure was not incurred wholly and exclusively for the purposes of business. CIT(A) also erred in confirming the disallowance by ignoring the binding Tribunal orders in the case of the seller and by placing undue reliance on a retracted statement without independent corroboration.

Accordingly, the disallowance made u/s 37(1) on account of purchase of gold coins for all the assessment years under consideration cannot be sustained on merits and is liable to be deleted.

Reopening of assessment - Taxation of dividend income claimed as exempt u/s 10(34) - There is no allegation by the Assessing Officer that the dividend income does not qualify for exemption, nor is there any reference in the reassessment order to deny the exemption claimed by the assessee.

As evident from the reassessment order that the Assessing Officer has not made any conscious or reasoned addition of dividend income in the body of the order. The addition appears only in the computation sheet attached to the assessment order, resulting in a contradiction between the assessment order and the computation.

It is well settled that where there is a conflict between the reasoning recorded in the assessment order and the computation sheet, the findings recorded in the assessment order must prevail. An addition cannot be sustained merely on the basis of a computational adjustment, in the absence of any discussion or finding by the Assessing Officer justifying such addition.

Thirdly, even otherwise, once the dividend income is exempt under section 10(34), the same cannot be brought to tax indirectly by reducing the business loss, without any statutory sanction. The action of the Assessing Officer amounts to taxing exempt income through the back door, which is impermissible in law.

Thus, addition of dividend income made in the computation sheet is patently erroneous and unsustainable. The CIT(A) erred in confirming the same without appreciating that no such addition was made in the reassessment order itself and that the income was admittedly exempt.

Non Grant of credit for advance tax and TDS - We direct the Assessing Officer to verify the claim of the assessee with reference to Form 26AS and grant due credit in accordance with law while giving effect to this order. These grounds are allowed for statistical purposes.

Disallowance of deduction u/s 54B - additional claim before the appellate authorities - Alternate claim for deduction under section 54F - assessee has already availed deduction u/s 54B in assessment years 2014-15, 2015-16 and 2016-17 - assessee during the year has again claimed the deduction u/s 54B of the Act on account of purchase of agricultural land which is after a period of 2 years since the date of transfer as per JV agreement and as per the transfer of capital asset in stock in trade is dated 20.01.2011 and the assessee has purchased the agricultural land on 23.03.2017

HELD THAT:- It is an admitted fact that the assessee is neither entitled to any deduction either u/s 54B or u/s 54F. The assessee is liable for capital gain tax on the income that arose on the sale of flats during the impugned assessment year i.e. assessment year 2017-18.

It is the submission of assessee that once the assessee has entered into a registered JV agreement on 20.01.2011 the asset was transferred and the share of the assessee being 34% of the constructed area is the capital asset in the hands of the assessee and the same is liable for capital gain.

Since the land sold was an agricultural land, the capital gain in the hands of the assessee during the assessment year 2011-12 does not arise. However, when the flats are sold during the impugned assessment year, the capital gain has to be computed by deducting the cost of acquisition from the sale price and the resultant capital gain, if any, is liable to tax.

We hold that the assessee is entitled to raise an additional claim before the appellate authorities and the appellate authorities have the jurisdiction to entertain such a new claim.

Since the Assessing Officer in the preceding years has already given a finding that the date of transfer of the land as per the JV agreement is 20.01.2011, therefore, the transfer of the land has taken place in assessment year 2011-12. Further, the flats were handed over to the assessee on 23.12.2014 as per the occupancy certificate. Thus, the market value of the share of the assessee towards the flats is the cost of acquisition in the assessment year 2015-16. Once the assessee sells the same in assessment year 2017-18, the capital gain that can be brought to tax is the difference between the sale price and the cost of acquisition. Since the assessee has filed a revised computation for determination of the correct tax liability on account of capital gain, therefore, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to verify the computation of long term capital gain and determine the correct tax liability in the hands of the assessee. grounds raised by the assessee are accordingly allowed for statistical purposes.

Validity of the assessment order on the ground of limitation as per the provisions of section 144C(13) r.w.s. 153 - Limitation for passing final assessment order - Interplay of Sections 144C and 153 - Limitation for passing final assessment order - maintainability of reliance on precedent pending Larger Bench reference - whether we can proceed with the hearing of issue in appeal when on a similar issue the operative portion of the judgment passed by the Hon’ble High Court in the case of Shelf Drilling Ron Tappmeyer Ltd. [2023 (8) TMI 460 - BOMBAY HIGH COURT] has been stayed by the Hon’ble Supreme Court of India [2025 (8) TMI 698 - SUPREME COURT]?

HELD THAT:- It is a well settled legal proposition that when the operation of a specific order is stayed by the Higher Court, then its enforcement is stayed but the ratio decidendi of such order/judgment is not nullified unless explicitly set aside.

The Hon’ble Supreme Court of India in the case of Shree Chamundi Mopeds Ltd. v. Church of South India Trust [1992 (4) TMI 183 - SUPREME COURT] has held that an order of interim stay does not result in quashing of the impugned order. It only means that the order will not be operative from the date that it is stayed. In the case of Govt of AP vs. N. Rami Reddy & Others [2000 (12) TMI 934 - HYDERABAD HIGH COURT], one of the issue for consideration before the Hon’ble High Court was; Whether the interim stay of a High Court order by the Hon’ble Supreme Court of India has the effect of wiping out the ratio of the High Courts order or otherwise nullifying the precedent relied upon by the petitioner? The Hon’ble High Court held that the ratio of judgment represents the reasons assigned in support of the conclusion.

An order of interim stay actually stays the operative part of the decision, but does not wipe out its ratio decidendi.

Be that as it may, the assessee has not placed reliance on the judgment rendered in the case of Shelf Drilling (supra) but has pleaded its case following the decision rendered in the case of Roca Bathroom Products P Ltd. [2021 (4) TMI 355 - MADRAS HIGH COURT] in which there is no stay order. Therefore, in our humble opinion there is no impediment in hearing the appeal of the assessee on the issue of “limitation in passing the final assessment order with reference to the provisions of section 144C r.w.s. 153 of the Act”. Thus, the preliminary objection raised by the Department is rejected.

Whether limitation for passing the final assessment order under section 144C(13) of the Act is to be seen only with reference to the timeline specified u/s. 144C of the Act only without referring to provisions of section 153 of the Act? - We find that identical submissions were made by the Department before the Hon’ble Madras High Court in the case of Roca Bathroom Products P. Ltd. [2021 (4) TMI 355 - MADRAS HIGH COURT] as rejected the arguments of the Department and held that provisions of section 144C and 153 of the Act are mutually inclusive as both contain provisions relating to section 92CA of the Act and are inter-dependent and are overlapping. Hence, the period of limitation for passing the final assessment order u/s.144C(13) of the Act has to be determined with reference to section 144C r.w.s 153 of the Act.

A perusal of sequence of dates for AY 2018-19 & 2020-21 would clearly show that the date on which final assessment order is passed by the AO is beyond the period of limitation for passing the order u/s.144C(13) r.w.s. 153 of the Act. Thus, following the ratio laid down in Roca Bathroom Products P. Ltd. (supra), we hold that where the final assessment order passed by the AO is beyond the time limit as determined u/s.144C r.w.s.153 of the Act, the final assessment orders are barred by limitation, hence, are quashed.

Addition u/s 68 - alleged unexplained share premium and share capital - Onus to prove - AO observed that the assessee the identity and creditworthiness of the investors are suspicious and need detailed enquiries - CIT(A) also confirmed the income of the assessee by invoking the section 56(2)(viib)

HELD THAT:- The details clearly establishes that the assessee has fulfilled the ingredients of the section 68 of the Act by proving the initial burden cast upon him. Once the assessee proves the ingredients of section 68 of the Act, the burden shifts on the revenue. In the present case lower authorities have not brought anything on record to prove otherwise and in a such circumstances, the authorities are precluded from making any other addition on this count in the absence of contrary materials.

We placed reliance on the judgment of the Supreme Court in the case of PCIT vs. Rohtak Chain Co. [2019 (10) TMI 931 - SC ORDER] wherein held that once the genuineness creditworthiness and identity of investors are established, no addition could be made as cash credit on the ground that the shares are issued at excess price.

In the present case the assessee has provide the sufficient materials to prove the genuineness of the shareholders apart from giving the PAN Card bank account, name and ROC details.

AO and CIT(A) has committed an error in rejected the valuation done by the assessee from prescribed expert as per the prescribed method. We delete the protective addition made by the AO and confirmed by the Ld. CIT(A).The ground raised by the assessee is allowed.

Enhancement of income by CIT(A) - AR submitted that the CIT(A) enhanced the income without giving a mandatory notice required u/s 250(1) - HELD THAT:- CIT(A) has the power to enhance income in the appeal. In the present case no such notice was issued to the assessee. Therefore, the action of the Ld. CIT(A) in enhancing the income of the is found erroneous.

Disallowance of business expenditure - business expenses incurred in a year when business activity was limited - assessee submitted that has running its business since the date it came existence but during the year, due to fall in business activities, the assessee could not carry on its business activities - HELD THAT:- In the case of M/s Saurashtra Cement and Chemical Industries Ltd. [1972 (8) TMI 19 - GUJARAT HIGH COURT] held that business is said to have commenced as an essential activity of that business is started. In our opinion once the business of the assessee is set up and the expenditure incurred thereafter deserves to be allowed as business expenditure. The business activity is a continuous process and it cannot be said that as soon as setting up of the business, the income will be generated and should yield income in all years. The assessee is entitled to get the disallowances of the business expenses. The ground raised by the assessee is allowed.

Difference in receipts shown in the ITR as compared to Form 26AS - HELD THAT:- It is evident from the ITR that the assessee has shown receipts of Rs. 7,92,546/- on account of interest instead of Rs. 7,29,546/-, which was taken by the AO. This issue was not dealt with separately by the Ld. CIT(A). AO made the addition on the wrong amount, therefore addition is deleted. The ground raised by the assessee is allowed.

Addition u/s 68 - addition as commission income at 2% - material found during the course of search, post search investigation and assessment clearly established that the assessee is just into the business of providing accommodation entries in lieu of commission - HELD THAT:- As it is evident on record that the assessee company was not a paper company. Therefore, finding of CIT(A) regarding deletion of addition are upheld.

Disallowance of bad debts - As assessee had provided documents and address as well as PAN of the parties in respect of whom he claimed bad debts. Therefore, the findings of CIT(A) regarding deletion of addition on account of disallowance of bad debts are upheld.

Appeal of Revenue is dismissed.

TDS u/s 195 - corporate charges paid by the assessee to company in Singapore - income chargeable to tax in India so as to attract withholding obligation u/s. 195 - “make available” any technical knowledge, experience, skill, know-how or processes to the assessee - Permanent Establishment - disallowance under section 40(a)(i) on non deduction of TDS -

HELD THAT:- It is a settled position of law that the obligation to deduct tax at source u/s. 195 arises only when the sum paid to a non-resident is chargeable to tax in India.

From the material on record, it is evident that these services do not “make available” any technical knowledge, experience, skill, know-how or processes to the assessee so as to enable it to apply such technical knowledge independently in future. Therefore, the payments do not qualify as Fees for Technical Services within the meaning of Article 12 of the India–Singapore DTAA.

Once the DTAA is applicable, the provisions of the treaty, being more beneficial to the assessee, override the provisions of the Act by virtue of section 90 of the Act. Since the impugned payments are not taxable as FTS under the DTAA, the same can at best be regarded as business profits in the hands of the recipient.

As regards the finding of the CIT(A) that Anixter Singapore constituted a Permanent Establishment in India, we find that the said conclusion is not supported by cogent material on record. There is no evidence to establish the existence of a fixed place PE, nor is there any material to demonstrate that Anixter Singapore was carrying on business in India through a dependent agent satisfying the conditions prescribed under the India–Singapore DTAA.

Mere rendering of support services from outside India or coordination activities cannot, by itself, give rise to a Permanent Establishment. The finding of PE recorded by the Ld.CIT(A) is thus unsustainable and based on surmises and conjectures.

In the absence of a Permanent Establishment in India, the business profits of Anixter Singapore are not taxable in India under Article 7 of the DTAA. Consequently, the payments made by the assessee are not chargeable to tax in India and no obligation to deduct tax at source under section 195 arises.

We hold that the Assessing Officer was not justified in invoking the provisions of section 40(a)(i) - Appeal of the assessee is allowed

Additions u/s. 41(1) - cessation of liability - Assessee submitted that transactions took place during F.Y. 2009-10 and not during F.Y. 2004-05 as referred by the AO and even the limitation period of three years did not expire and the outstanding liability is still active - HELD THAT:- The documents also states that the amount is not forgone by the software supplier EBZ Online Pvt.Ltd. and is still payable to them. Considering the fact that the transaction took place during F.Y. 2009-10 and the assessment year under consideration is 2011-12, clearly indicates that even the limitation period of three years did not expire and the very basis of the addition made by the Assessing Officer of the transaction pertains to A.Y.2004-05 is factually incorrect and that the liability of making the payment to M/s. EBZ Online Private Limited is still active and therefore the provisions of section 41(1) of the Act on account of cessation of liability cannot be invoked in the facts of the present state of affairs. Therefore, the impugned addition is deleted. Decided in favour of assessee.

Addition u/s. 41(1) on account of loan from Shree Suvarna Sahakari Bank Ltd. - whether the alleged liability ceased to exist? - HELD THAT:- Section 41(1) could be invoked only when the assessee is no more liable to pay the outstanding trading liability but under the given facts and circumstances since the liability as on 31.03.2012 is active and the assessee is liable to pay the alleged outstanding loan, therefore, in our considered opinion, section 41(1) should not have been invoked. Finding of CIT(A) is reversed. Ground raised by the assessee is allowed.

Addition u/s. 68 - share application money pending allotment - assessee has contended that alleged sum has not been received during the year - HELD THAT:- As in absence of any amount received during the year towards share application money pending allotment, we are of the considered view that ld. AO erred in invoking section 68 of the Act. Ground raised by the assessee is allowed.

Principles of natural justice - relevancy of statements and cross-examination of witnesses - vitiation of adjudication for non-provision of cross-examination -Whether the Tribunal's finding that the adjudication was vitiated for not following the procedure u/s 138B was supported by material evidence concerning the availability of cross-examination - HELD THAT:- In the present case, the appellants have categorically submitted that at no point was a request made for cross-examination of two witnesses, and therefore, there was no question of violation of the principles of natural justice. This particular fact has not been answered specifically by the Tribunal, and without answering the said question as to whether a request was made for cross-examination, the finding of the Tribunal that the principles of procedure established under Section 138-B of the Act, 1962 have been vitiated, in our view is against the principles established in law. It was incumbent upon the Tribunal to first come to a finding as to whether a request was made by the noticee. If the answer was in the affirmative, then only the Tribunal could have held that the procedure prescribed under Section 138-B of the Act, 1962 was not followed. However, if the answer to the above question were to be in the negative, we are of the view that the finding of the Tribunal that the procedure prescribed under Section 138-B of the Act, 1962 was not followed, would be incorrect.

Though, the appellants have herein brought on record certain documents to indicate that no request for cross-examination was made, we are of the view that since the Tribunal is the last fact finding body, this issue should be decided by the Tribunal upon calling for the records of the adjudicating authority and other relevant records.

Thus, we quash and set aside the order dated April 24, 2025 and direct the Tribunal to come to an appropriate finding with regard to the issues raised in the present judgment.

Entitlement for the benefit of ‘Nil’ basic customs duty in terms of Notification No. 46/2011-Cus. read with customs Notification No. 189/2009-Cus.-Operational certification and verification procedure for certificate of origin under Annexure III and Rule 13 of the 2009 Rules - Verification obligation of importing Customs and duty to refer doubts to issuing authority in exporting country - Invokation of Section 17(3) - HELD THAT:-No inquiry as mandated by the Notification was conducted with respect to the said Country of origin Certificate which otherwise has been issued by the Competent Authority of one of ASEAN country as mentioned under Appendix I of the Notification No. 46/2011 dated 01.06.2011. In the given circumstances, it was highly unreasonable that the Certificate should not have been accepted. Once all documents as required under Notification No. 046/2011-Cus dated 01.06.2011 have been provided by the importer and their authenticity has not been challenged by the verifying Customs officers nor got verified from the issuing authority, there is no reason for the said Customs officer to hold that said certificate is not genuine. Demand of duty based upon reassessment ordered is actually not sustainable

The impugned Notification is a kind of preferential trade arrangement between States of Association of Southeast Asian Nations (ASEAN) and the Republic of India in order to facilitate free movement of trade. If the exemption sought under the applicable rules is denied on one or the other pretext that too based merely on assumptions and presumptions, it will hamper the free movement of trade between agreeing nations. Same is highly uncalled for and would rather render the entire exemption Notification otiose more so when on the face of the record, the Certificate of Origin is otherwise not disputed. Above all, the substantial benefit as that of exemption from payment of duty shall not be denied merely based on procedural lapse.

Apparently and admittedly, the respondent-department which is competent authority, has failed to conduct the said verification. In the given circumstances, considering the negative response as not response by the department and denying the benefit of nil rate of duty which were otherwise available to the appellant under free trade agreement among ASEAN countries is held to have been wrongly denied; the provisions as that of Rule 16(b) of 2009, Rules and Section 17 (3) of Customs Act, 1962 are therefore held to have been wrongly invoked. There is, otherwise, no iota of evidence on record to disprove the authenticity of the certification of origin produced by the appellant before the customs authorities.

In the totality of entire above discussion, appellant is held entitled for the benefit of ‘Nil’ BCD. The issue framed above therefore stands decided in favour of the appellant. Resultantly, the order of Commissioner (Appeals) which is order under challenge confirming demand of customs duty is hereby set aside. Consequently, both the appeals are hereby allowed.

Tariff classification of goods - flat-rolled stainless-steel products - structures and parts of structures - residuary classification: other articles of iron or steel - General Rules for the Interpretation of the Import Tariff- Classification of the imported Architectural Decorative Designer Wall Panel Articles of stainless steel under the Customs Tariff - HELD THAT:- Applicant has restricted the question for advance ruling to classification under Headings 7308 and 7326. However, it is a settled position of law that the Authority for Advance Rulings is not bound by the tariff headings suggested by the Applicant and is required to determine the correct classification in accordance with the Customs Tariff Act. 1975, the General Rules for Interpretation and existing legal positions in terms of relevant case laws.

The subject goods are manufactured from flat- rolled stainless-steel sheets. These sheets are cold-rolled and thereafter subjected to cutting to size and various surface finishing processes such as mirror polishing, hairline finish, satin finish. embossing, etching, vibration finish, sand blasting, anti-fingerprint coating and Physical Vapour Deposition (PVD) coating. Protective PVC film is applied to prevent surface damage during transportation and handling.

The goods are imported in the form of flat panels of stainless-steel having uniform thickness, ranging approximately from 0.4 mm to 3 mm, and supplied in rectangular, square, circular or triangular shapes. Notwithstanding the surface finishing and decorative treatments, the essential character of the goods remains that of flat-rolled stainless-steel products.

Applicability of Heading 7308. Heading 7308 covers structures and parts of structures of iron or steel. As clarified in the HSN Explanatory Notes, this heading applies to goods which are identifiable as structures or parts of structures performing a structural or constructional function. I find that the subject goods are not beams, columns, frames, trusses or other structural components. Mere use of flat stainless-steel sheets for cladding or decorative applications on walls, facades or interiors does not render them parts of structures for the purpose of Heading 7308. Accordingly, classification under Heading 7308 90 90 is not tenable.

Applying Rule 1 of the General Rules for Interpretation, classification is to be determined according to the terms of the headings and the relevant Section and Chapter Notes. As the subject goods are flat-rolled products of stainless steel, they are squarely classifiable under Heading 7219. The application of Rule 3 does not arise in the present case. Applying Rule 6 at the sub-heading level, the appropriate classification is under Customs Tariff Heading 7219 90 90.

The goods proposed to be imported by the Applicant are correctly classifiable under Customs Tariff Heading 7219 90 90 and not under I leadings 7308 or 7326 as claimed by the Applicant.

Transaction value and valuation u/s 14 and Valuation Rules - imported item described as "Motor Controller" - classifiable under Customs Tariff Headings 8503 and 8708 - principle of following earlier tribunal decision in the same respondent's case - Assessing Officer's reassessment u/s 17(5) - Notes to Section XVII and exclusion by Note No.2(f) - HELD THAT:- We find that the issue involved in the present appeal is no longer res integra as the same has already been dealt with by this Tribunal in the case of the very same respondent [2026 (1) TMI 1019 - CESTAT KOLKATA] held that " we hold that the enhancement of assessable values by the ld. adjudicating authority is liable to be struck down and set aside and the impugned bill of entry is to be assessed at values declared by the Respondent. We observe that the Ld. Commissioner (Appeals) has given categorical findings to reject the enhancement of value by the assessing officer and we find no reason to interfere with the same. Accordingly, we uphold the impugned order passed by the Commissioner (Appeals), accepting the transaction value declared by the Respondent in the respective Bills of Entry.

As per the terminology of CTH 8708, the goods covered should be the parts and accessories of motor vehicles under CTH 8701 to 8705 and as per the point 3 of the Notes to Chapter XVII, the said goods having the description in two or more of the headings of those chapters is to be classified under that heading which corresponds to the principle use of that part of accessory. As per the reading of point 3 of Notes to Section XVII and the explanatory notes covering both CTH i.e. 8503 & 8708, the said goods are imported under the description of 'controller' and there is no declaration by the respondent that the said goods are the spare parts of e-rickshaw.

The order of the lower authority is maintained and the appeal filed by the Revenue stands dismissed."

Therefore, in view of the above, we do not find any infirmity in the impugned order passed by the Ld. Commissioner (Appeals) and hence, the same is upheld.

In the result, we do not find any merit in the appeal filed by the Revenue and consequently, the same is dismissed.

Classification of parts of machinery - imported Nozzle Connector used in fully automatic front-load washing machines - identifiable parts suitable for use solely or principally with a particular machine - Note 2 to Section XVI - General Rules for the Interpretation (GIR) Rule 1 - Note 1 to Section XVI - residuary heading for articles of plastics - Customs Authority for Advance Rulings - Section 28H of the Customs Act, 1962 - HELD THAT:-The nozzle connectors are not specifically covered as goods under any of the headings under Chapter 84 or 85. Therefore application of Note 2(a) can be ruled out. The nozzle connectors in question are indispensable in their use as a water diffusing nozzle at the end of the water input valve. The Nozzle connector is specifically designed to be fitted to the water input valve of the washing machine. The Nozzles in question play an important role in directing water into the tub of the washing machine. Therefore, there can be no dispute that the nozzle connector is an identifiable part of the washing machine.

In the instant case, the subject goods are specifically shaped and designed for a washing machine application and not interchangeable with general plumbing or industrial fittings. Its design, dimensions, and connection interface are machine specific, not a general part. The subject goods are solely to be used with the household washing machine only.

As an identifiable part of a household washing machine, meant for use solely or principally with washing machines, classification of the nozzle connector in question will squarely fall within Note 2(b). Therefore, classification of the nozzle connector in question under CTH 845090 as identifiable parts of washing machine will be appropriate in terms of Note 2(b) ibid read with GIR 1.

Conclusion - Nozzle connector meant for use solely or principally with washing machines is classifiable under CTH 8450, more specifically under CTI 845090 (as parts) of the First Schedule of the Customs Tariff Act, 1975.

Classification of goods and applicability of exemption notification - Interpretation of 'Carbon Fibre' versus 'articles of carbon fibres' and scope of 'raw materials' and 'parts' - Doctrine that a part of a part is a part of the whole - Customs Authority for Advance Rulings (CAAR) - Section 28H(2) of the Customs Act, 1962 - Notification No. 50/2017-Customs dated 30.06.2017 and its amendment Notification No. 05/2025-Customs dated 01.02.2025 -HELD THAT:- In the present case, the subject goods are Carbon Pultruded Plates, that is made from carbon fibre. Carbon Pultruded Plates are articles of carbon fibre and the applicant itself classified the subject goods under heading 68151900 as other articles of carbon fibre whereas the notification benefit is exclusively available to Carbon Fibre, not to “articles of carbon fibre”. In trade parlance, “Carbon Fibre” refers to continuous filaments or tows, generally 5-10 microns in diameter, supplied as raw material. Pultruded Plates are significantly different -- they are resin- impregnated, cured, cut, and dimensionally stabilized articles. Carbon Pultruded Plates, though made from carbon fibre, have acquired a distinct identity and would fall outside the ambit of “Carbon Fibre” as such under the entry description at sr. no. 5 in the said exemption notification.

It is evident that spar caps are integral part of a rotor blade and carbon pultruded plates are used in manufacturing of the spar cap therefore, it can be implied that the subject goods “carbon Pultruded Plates” are part of spar cap. Further, it is a settled principle of law that “a part of a part is a part of the whole” i.e., a sub-component of a component of a machine/apparatus is to be categorized as a component of the machine.

In the instant case, the “Carbon Pultruded Plates” are sub-parts meant to be used in manufacturing of spar cap and accordingly shall qualify as parts of rotor blade.

It can be observed that carbon pultruded plates are used as spar cap in rotor blade to provide greater efficiency, reduction in weight, better design and aerodynamic profile. The Plates also provide strength, rigidity, and durability to the working of Rotor Blade. Hence, it can be ruled that carbon pultruded plates are parts of rotor blade that are embedded in Rotor Blades in such a manner that these cannot be easily removed at any given instance significantly damaging the blade’s integrity which is not a feasible or safe process. Therefore, the Plates embedded in the Rotor blades become an inseparable part of the entire structure of WOEG.

In view of the above, the carbon pultruded plates are not the raw carbon fibre but these plates are indispensable parts of the rotor blade and the Applicant is entitled to claim the benefit of concessional rate of BCD in terms of Sr. No. 405(4) of the exemption Notification.

In view of the above discussions and findings, my answers in respect of the questions asked in the present application are as follows:

“Carbon Pultruded Plates” which are classifiable under CTI 68151900 of the Customs Tariff Act, 1975 with 10% BCD.

i. Not eligible under Sr. No. 405(5) of Notification 50/2017-Cus, since that covers only raw carbon fibre or balsa wood.

ii. Eligible under Sr. No. 405(4) as “parts for rotor blade manufacture”. concessional BCD @5%.

Search and seizure - Compliance with the 180-day limit and prima facie satisfaction - Section 20 substantive and mandatory - Requirement of recorded "reason to believe" for retention - Retention order and forwarding to Adjudicating Authority - Confirmation u/s 8(3) is contingent on prior Section 20 compliance - Seizure u/s 17 does not itself authorize retention - Adjudicatory oversight by the Appellate Tribunal/Adjudicating Authority - Infringement of right to property under Article 300A - HELD THAT:- Though the learned counsel for the respondent submits that the respondent is in the process of challenging the said judgment before the Hon’ble Supreme Court and that we should await the outcome of the same, however, we are not inclined to do so as the case involves attachment of property, leading to deprivation of the same for the appellant.

As we are bound by the judgment in Anirudh Pratap Agarwal [2025 (10) TMI 12 - DELHI HIGH COURT] with which we agree, we see no reason to adjourn the matter any further.

Accordingly, the appeal is allowed, and the order dated 17th March, 2025, passed by the learned Appellate Tribunal, is hereby set aside. The pending application also stands disposed of.

Investment in mutual funds is not trading of securities - exempted services under Rule 2(e) of the CENVAT Credit Rules, 2004 - obligation to reverse CENVAT credit under Rule 6 of the CENVAT Credit Rules, 2004 - prospective operation of Explanation 3 inserted by Notification No.13/2016 (w.e.f. 01.04.2016) - definition of "service" under Section 65B(44) of the Finance Act, 1994 - requirement of actual use of inputs or input services to attract reversal under Explanation 3

Investment in mutual funds is not trading of securities - exempted services under Rule 2(e) of the CENVAT Credit Rules, 2004 - definition of "service" under Section 65B(44) of the Finance Act, 1994 - Whether the appellants' investment in mutual funds amounts to trading/exempted service and attracts reversal under Rule 6 for the period prior to 01.04.2016. - HELD THAT: - The Tribunal held that mutual fund transactions (subscription/redemption) are NAV-based creations/extinguishments of units effected with the mutual fund/AMC and are not analogous to stock exchange trading which requires buyer-seller matching, intraday price discovery and transfer of title between distinct parties. The statutory definition of "service" requires an activity carried out by a person for another for consideration; here the appellants did not provide any service to the AMC but were investors and any fund-management activity was performed by the AMC (service provider). Consequently, dealings in mutual fund units prior to the amendment cannot be equated with trading in goods/securities so as to attract the exemption framework in Rule 2(e) and the embargo in Rule 6. Further, the Tribunal found that Explanation 3 (inserted by Notification No.13/2016, effective 01.04.2016) expanded the scope of "exempted services" and, being not declaratory or curative and not expressly made retrospective, must be applied prospectively; therefore demands based on Explanation 3 cannot be sustained for periods before 01.04.2016. [Paras 8, 10, 11, 13]

Investment in mutual funds does not constitute trading/exempted service for the pre-amendment period; Explanation 3 operates prospectively and demands for 01.07.2012 to 31.03.2016 are set aside.

Prospective operation of Explanation 3 inserted by Notification No.13/2016 (w.e.f. 01.04.2016) - requirement of actual use of inputs or input services to attract reversal under Explanation 3 - obligation to reverse CENVAT credit under Rule 6 of the CENVAT Credit Rules, 2004 - Whether, for the period April 2016 to March 2017, Explanation 3 applies and, if so, whether revenue proved use of inputs/input services by the appellants so as to sustain reversal under Rule 6. - HELD THAT: - The Tribunal accepted that Explanation 3 could, prospectively, bring certain non-service activities within the scope of 'exempted services' for Rule 6 purposes. However, its application requires proof that inputs or input services were actually used for provisioning the activity treated as exempted. The adjudicating authority did not produce evidence to show that appellants had used specific input services for the investment activity; the appellants' reply stated no such input services were used and that common services relied upon by Revenue related to regular business operations irrespective of investment activity. In absence of evidence that inputs/input services supported the disputed investment activity, Explanation 3 could not be invoked to justify reversal under Rule 6 for April 2016-March 2017. [Paras 12, 14, 15]

For April 2016 to March 2017, Revenue failed to establish use of inputs/input services for the investment activity; demands based on Explanation 3 and Rule 6 are unsustainable and are set aside.

Final Conclusion: The impugned OrderinOriginal confirming demands for the periods covering 01.07.2012 to 31.03.2016 and April 2016 to March 2017 is set aside; the appeals are allowed in favour of the appellants.

Demand determination based on third-party data and reconciliation of ITR/26AS with ST-3 returns - Suppression of facts with intent to evade and invocation of extended period of limitation - Claim of exemption/abatement and burden of proof to establish entitlement - Validation of adjudication under saving clause and jurisdiction of Central Excise officer - Penalty for failure to pay service tax for reasons of fraud, etc. - Interest on confirmed demand - Late fee and penalty for non-filing of returns - HELD THAT:- It is not in dispute that appellant was registered with the Service Tax Department and was paying service tax on the basis of self-assessment made during the course of scrutiny of the information received from the Income Tax Department discrepancies were observed in the amount shown in ITR and the 26AS of the appellant. In ITR, amount of Rs.26,11,508/- was shown as receipt towards the services provided, in 26AS the same were shown as Rs.41,35,964/-. On comparison of figures with ST-3 returns filed by the appellant it was observed that appellant has during the said period paid service tax on the gross value of Rs.16,86,173/- in ST-3 return and they were required to pay service tax on the remaining amount.

No hesitation in holding that the total value of the receipts towards provisions of services during the period of 2016-17 was Rs.26,11,508/- and service tax was required to be paid on the said amount. I also find that undisputedly appellant has declared this amount as receipts towards the sale of services in their ITR for the said period. Therefore, do not find any merits in the demand made by taking the gross receipts for 2016-17 as Rs 41,35,964/-.

Appellant is required to pay the differential amount of the admitted liability and the amount deposited towards service tax along with the interest due on the same amount. Thus, uphold the demand of differential amount of Rs.18,063/- (Rs.3,89,443/- - Rs.3,71,380/-) confirmed along with interest.

Appellant has short paid the service tax by suppressing the correct value of the services provided. In their ST-3 return they had declared the gross receipts towards the services as Rs 16,86,173/-, whereas the total value of services provided was 26,11,508/-. It is also evident from the facts as they unfold that they had collected service tax amounting to Rs 3,89,443/- from the service recipients.

The intention to evade payment of tax by suppressing the value of services is thus evident. However I observe that the appellant has paid against the amount of service tax due from them an amount of Rs 3,71,380/- much prior to issuance of the show cause notice dated 05.10.2021. Accordingly, penalty imposed under Section 78 of the Act is upheld but limited to the amount of demand of service tax confirmed.

Thus, in case appellant deposits the entire amount along with penalties as per Section 78 of the Act then the benefit of the payment of penalty be calculated to 25% of the demand confirmed would be leviable to the appellant.

Also uphold the late fee imposed upon the appellant for late/non filing of service tax return under Section 70 of the Finance Act read with Rule 7 of Service Tax Rules, 1994 and the penalty imposed under Rule 7 of Service Tax Rules 1994 read with Section 77(1)(c) of Finance Act, 1994.

Leviability of service tax on excess income / profit share - Business Auxiliary Service - Principal-to-principal multimodal freight forwarding / joint delivery of service - Section 65(19) of the Finance Act, 1994 - Whether service tax is leviable on the excess income earned out of the ocean freight amount under the category of “Business Auxiliary Service”. - HELD THAT:- It is seen that this is a continuing SCN and the Order of the Commissioner confirms the demand. Previous Order on the earlier SCN has been set aside by this Tribunal. It is also seen that the Appellants have relied on other decisions also on the issue of levy of Service Tax on “Profit Share”. The common thread running in all these Tribunal decisions relating to “Profit Share” on Freight Forwarding Services, is that, the “Business Profits” cannot be taxed to Service Tax and also that when the two Partners are jointly delivering the service in multi modal transport, operating in different geographical locations, such sharing of Profit cannot be taxed to Service Tax.

We find that the above issues challenged in the present appeal is no longer res integra with regard to the leviability of service tax on the excess income earned under the category of “Business Auxiliary Service.” The said issue stands settled by various decisions as cited by the Appellants.

Further, we find that the very same issue, in the Appellant’s own case for an earlier period, has already been decided in favour of the Appellants by this Tribunal vide Final Order [2018 (6) TMI 723 - CESTAT CHENNAI], wherein it was held that service tax is not leviable on such excess income earned.

Therefore, we find that there is no reason for us to deviate from the decision of this Tribunal (supra) rendered in the Appellant's own case for the earlier period.

Thus, we hold that the Appellants are not liable to pay service tax on the excess income earned under the category of “Business Auxiliary Service.”

Business Auxiliary Service - principal-to-principal sale - incentives/discounts not consideration for service - reliance on precedent decisions of the Tribunal

Business Auxiliary Service - principal-to-principal sale - incentives/discounts not consideration for service - Whether incentives/discounts received by the authorised dealer from vehicle manufacturers constitute consideration for Business Auxiliary Service and are taxable under the Finance Act, 1994. - HELD THAT: - The Tribunal examined the commercial relationship between the manufacturer and the dealer and found that vehicles were purchased and resold on a principal-to-principal basis and that the incentives/discounts were granted as adjustments in the sale transaction based on performance criteria known to both parties. Reliance was placed on earlier Tribunal decisions holding that such performance-based discounts granted by manufacturers to dealers form part of the sale transaction and are not consideration for provision of any service by the dealer to the manufacturer. Applying that line of authority, the Tribunal concluded that the amounts characterised as incentives/discounts cannot be treated as consideration for Business Auxiliary Service and therefore are not liable to service tax. Having decided the matter on merits in favour of the appellant, the Tribunal did not address the separate contention on limitation. [Paras 5, 9]

Demand of service tax on incentives/discounts received by the appellant is set aside; no service tax is leviable thereon.

Final Conclusion: Appeals allowed; impugned Order-in-Original confirming service tax demand on incentives/discounts (for the period October 2013 to June 2017) set aside as not exigible under Business Auxiliary Service.

Forfeiture of security deposits and liquidated damages as not constituting consideration - Penalties and fines recovered for breach of contract as non-taxable penal charges - Definition of "service" and "consideration" under Section 65B(44) and Explanation (a) to Section 67 - Whether the amounts collected by the appellant in the nature of forfeiture of security deposits/earnest money and fines/penalties, liquidated damages against delayed completion of works is chargeable to service tax under Section 66E(e) of the Finance Act, 1994 - HELD THAT:- As noted in the earlier decisions, the Department has issued Circular No.214/1/2023-ST dated 28.02.2023 analysing the provisions of Section 66E(e) read with 66B(44) and clarified that the activities contemplated under Section 66E(e), ‘when one party agrees to refrain from an act, or to tolerate an act or a situation, or to do an act, are the activities where the agreement specifically refers to such an activity and there is a flow of consideration for this activity’. In view thereof, the amount in question is not a consideration for providing any services.

The present case is clearly covered by the earlier decisions and therefore, the amount collected by the appellant is not towards rendering ‘declared service’. The impugned order is unsustainable and is hereby set aside. The appeal is, accordingly, allowed.

Demand of Service - Value of freesupplies not includible in taxable service - Consideration under Section 6 of the Finance Act, 1994 - Extended period and recovery under Section 73(1) of the Finance Act, 1994 - whether the value of Oxygen supply free of cost by the service recipient to the appellant is to be included in the value of taxable service for payment of Service Tax or not. - HELD THAT:- The said issue has been examined by the Hon’ble Apex Court in the case of M/s. Bhayana Builders (P) Ltd.[2018 (2) TMI 1325 - SUPREME COURT] wherein the Hon’ble Apex Court held that the value of free supplies made under the contractual arrangement by the service receiver to the service provider cannot be added to the value of taxable service provided by the service provider.

Thus, we hold that the value of Oxygen supply free of cost by the service recipient to the appellant is not to be included in the value of taxable service. Therefore, we do not find any merit in the impugned order. The same is set aside.

In result appeal is allowed with consequential relief, if any.

Transfer of right to use - deemed sale - classification supply of tangible goods service - VAT versus service tax - effective possession and control - precedent and coordinate bench decisions - Appellate Tribunal (CESTAT) - Finance Act, 1994 Section 65(105)(zzzzj) - Article 366(29A)(d) of the Constitution - taxable event under the sales law section 5-E - HELD THAT:- According to the Department, there was no transfer of right of possession and effective control when such plastic crates and bottles were sent by the respondent to the distributor and customer and thus, it would be covered under supply of Tangible Goods Service.

We find that exactly similar factual matrix in respect of same appellants, as well in relation to another bottler namely M/s Bengal Beverages Pvt Ltd.[2020 (11) TMI 580 - CESTAT KOLKATA], was examined by the Co-ordinate Benches examined this issue and have held that in these transactions it can’t be said that there is no transfer of right to use, hence, such transactions would be deemed sales leviable to VAT and not service leviable to Service Tax.

Therefore, we find that this issue is squarely covered by the judgment of the Hon’ble High Court of the Andhra Pradesh, as also by the Co-ordinate Benches at Delhi and Kolkata cited, supra, and, therefore, we do not find any merit in the appeal filed by the Department against impugned order. Accordingly, the appeal filed by the Department is liable to be dismissed.

Appeal dismissed.

Refund of cenvat credit - bar of limitation under Section 11B - definition of "relevant date" - Section 11B of the Central Excise Act, 1944 - Whether the CESTAT was correct in holding that refund claim of cenvat credit pertaining to deemed export of goods under rule 5 of the Credit Rules for the quarter October to December, 2009 is hit by the bar of limitation u/s 11B of the Act? - HELD THAT:- In the present case, refund is claimed for the quarter from October, 2009 to December, 2009. Last date of quarter is 31.12.2009. The petitioner could have claimed refund within one month therefrom. If for some reason, the refund is not claimed, the same can be claimed in extended period. The extended period for filing refund as stipulated in Section 11B of the Act of 1944 will have to be considered on the touchstone of notification prescribing procedure for claiming refund. In that sense, we find that relevant date for the purpose of Section 11B will be the last day of period for which refund is claimed.

As stated earlier, application for refund could have been filed in the first month immediately after expiry of quarter for which refund was claimed. Thus, the earliest possible opportunity available to the appellant was to file refund in January, 2010, failing which the concept of extended period will come into play. The procedure then existing had a provision that the application for refund of input credit should be made within the time stipulated under Section 11B of the Act of 1944.

Undisputedly, Section 11B provides for period of one year from relevant date which, in our view, is more than a reasonable time. The relevant date, in the present case, will be 31.12.2009. The period of one year will conclude by 31.12.2010. The application is filed in March, 2011. The same is, therefore, barred by limitation. Appellate Tribunal has correctly held that refund claimed on cenvat credit pertaining to deemed export of goods under Rule 5 of the Credit Rules for the quarter October to December, 2009 is hit by bar of limitation under Section 11B of the Act of 1944. The substantial question of law is accordingly answered in the affirmative.

Having said so, there is no merit in the appeal. The appeal is accordingly dismissed.

Remission of duty - Place of removal - removal of the scrap/wastage -Extended period of limitation - CESTAT - Rule 21 of the Central Excise Rules, 2002 - Notification No.22/2003-CE - Notification No.52/2003-Cus - Section 3(1) of the Central Excise Act, 1944 - HELD THAT:- The appellant has agreed to discharge duty on the scrap value of the returned 288 nos. of finished goods after being destroyed in the premises which they did in similar circumstances in the year 2008.

The ‘place of removal’ in case of export of goods has been considered to be at the port in a series of cases. The Larger Bench of this Tribunal in the case of Honest Bio-Vet Pvt. Ltd. Vs. CCE [2014 (11) TMI 579 - CESTAT AHMEDABAD] confronted with conflicting views on the subject and set at rest the controversy after following the judgment of the Hon’ble Gujarat High Court that the ‘place of removal’ in such cases would be the port of export.

We find that the present demand notice also comprises of the clearances made in the year 2008 where the goods meant for export were returned to the factory being damaged during the course of transit. The appellant approached the Department for destruction of the returned goods damaged since it became irreparable and the Department accorded permission; accordingly under the physical supervision of the Departmental officers, the goods were scrapped and applicable duty on the scrap value had been discharged on its clearance to DTA. The said assessment discharging duty on the scrap has been accepted by the Department. Now, demanding duty on the said damaged goods invoking extended period of limitation cannot be sustained.

Thus, we do not find merit in the impugned order. Consequently, the same is set aside and the appeal is allowed with consequential relief, if any, as per law.

CENVAT credit entitlement and legality of denial - Classification of Business Support Service and existence of taxable service - Limitation in issuance of show cause notices - Doctrine credit allowed where service tax collected and deposited by service provider -HELD THAT:- Services, on which taxes are leviable under Finance Act, 1994, cannot be mapped physically in the manner in which goods may be. Its passage is determined by consideration purportedly made, or agreed to be made, over as quid pro quo. That such remittance has been made from appellant’s end is not in dispute just as the uncontroverted invoices evidence inclusion of tax in addition to the cost and there is no allegation that the taxes so collected were not deposited with the exchequer.

The decision in re Maruti Suzuki Ltd [2009 (8) TMI 14 - SUPREME COURT] pertained to the scheme of credit preceding CENVAT Credit Rules, 2004 and was concerned with ‘inputs’ used for generation of power, a non-excisable good, that was not captively consumed but transmitted to others. The dispute in this appeal deals with taxable services deployed for manufacturing activity. The availing of credit of duty paid on ‘inputs’ that were not used for manufacture of excisable goods is far removed from the factual matrix of the dispute before us. In re Manikgarh Cement, the issue under dispute was nexus of taxable service with manufacturing activity while, here, it is the lack of service – an existential issue – that is in dispute. Both these decisions have no bearing in resolution of this issue.

In view of the above, the impugned order is set aside to allow the appeal.

Cenvat credit - input service - ER-1 return as disclosure - suppression / mis-declaration - extended period of limitation - penalty and personal penalties

Cenvat credit - input service - ER-1 return as disclosure - suppression / mis-declaration - extended period of limitation - penalty and personal penalties - Validity of cenvat credit availed on service tax paid by the Pune unit for drawings and designs and whether extended period of limitation and penalties could be invoked for its recovery. - HELD THAT: - The Tribunal found on the record that the Pune unit had discharged service tax on the design/drawing invoices, had not availed cenvat credit itself, and the invoices expressly stated that the service tax related to services to be used as input service by the Bangalore manufacturing unit. The appellant notified the department by a letter dated 23.03.2009 about availing cenvat credit on those invoices and also reflected the availment and the nature of the input service in the ER-1 return for January 2009. The Commissioner's findings that the letter was addressed to Service Tax authorities (and not Central Excise) and that the ER-1 remarks were insufficient were rejected: the department did not deny receipt of the letter and the ER-1 return clearly disclosed the availment and amortisation of design cost. Because the material facts were disclosed and not suppressed or mis-declared, invocation of the extended period of limitation was held to be unsustainable. Consequentially, the demand confirmed and the penalties, including personal penalties imposed on directors and employees, could not be sustained.

Demand, interest and penalties (including personal penalties) set aside and appeals allowed.

Final Conclusion: The cenvat credit availed in January 2009 on service tax paid by the Pune unit for drawings and designs was held to have been properly disclosed (by letter and ER-1 return); there was no suppression to justify extended limitation or penalties, and the impugned demand and penalties were set aside.

Admissibility of Cenvat credit on capital goods, components, spares and accessories - Admissibility of Cenvat credit as inputs - Invokation of extended period of limitation u/s 11A(4) - Levy of interest and penalty for inadmissible credit - Interpretation of Rule 2(a) of the Cenvat Credit Rules, 2004 - Interpretation of Rule 2(k) of the Cenvat Credit Rules, 2004 - Appellate Tribunal (CESTAT) - Doctrine of payment by supplier and availment of credit by recipient - Rule 14 of Cenvat Credit Rules, 2004 - HELD THAT:- While considering the issue of admissibility of Cenvat credit in respect of these capitals goods impugned order solely relied upon the (i) of the definition of the capital goods as per Rule 2 (a) of the CENVAT Credit Rules, 2004. It does not consider the (iii) of the definition. The claim of the Appellant before for lower authorities was not under sub-clause (i) but was under sub-clause (iii) as it was their submissions that impugned goods are the parts, components, spares & accessories of capital goods which used by them.

It is evident from the above definition that the issue of the classification under the Chapters specified is provided only in respect of (i) and not (iii) if this in case of part, components, spares and accessories etc., not necessary that the goods should have been classified under any of these Chapters specified in (i). Undisputedly these goods have been used within the factory of the Appellant. If in any case credit was not to be allowed under the category of capitals goods the same would be admissible as inputs.

In respect of Cenvat credit taken against Education Cess and Secondary & Higher Education Cess I observe that undisputedly Appellant had paid this amount as a cess and bill entry during the relevant period as they have paid the amount there was no bar in availing the Cenvat credit. It is not for the Authorities at this end to decide upon the admissibility of any exemption Notification or not while allowing the Cenvat credit. The only test to check them for required to undertake in respect of actual payment of these cesses as the Appellant has paid these amounts.

Appellant have specifically raised the ground of limitation before the Original Authority as well as before the first Appellate Authority. Order of first Appellate Authority is totally silent as to why extended period of limitation could have been invoked for making this demand. The Original Authority have not recorded any reasons to arrive at a finding as to why extended period is invoked. After reproducing the provisions of Section 11A(4) he has concluded that the Appellant have taken this credit fraudulently by suppression etc. Such finding cannot be a finding of the fact in law.

It is settled law that for invocation of extended period specific evidence needs to be recorded as to existence of various ingredients leading to the invocation of extended period. Thus, the demand is also hit by limitation as extended period could not have been invoked.

Demand made the penalties imposed upon the appellant are also set aside.

Appeal allowed.

Eligibility for cenvat credit on capital goods assembled at site - Eligibility for cenvat credit on input services for setting up/installation - Denial of credit on ground of goods becoming immovable - Board Circular on plant and machinery assembled at site - Definition of Capital Goods under Rule 2(a) of the CENVAT Credit Rules, 2004 - Amendment to Cenvat Credit Rules w.e.f. 01.04.2011 - whether the appellant is eligible for cenvat credit on the capital goods used in plant and machinery assembled at site and the period of dispute is from May 2013 to September 2014. - HELD THAT:-

We find that the reliance placed on by the authorities on the Circular is misplaced since the Circular is about classification of goods that are embedded to earth and not on denial of cenvat credit. The definition of ‘Capital Goods’ categorically specifies that used in the factory of the manufacturer of the final products. There is no dispute that the plant and machinery is used in the manufacture of dutiable goods, therefore, the question of denying the cenvat credit on the ground that the plant and machinery are embedded to earth cannot be justified.

Thus, the question of denial of cenvat credit does not arise, hence, we do not find any justifiable reasons to deny the cenvat credit on ‘Capital Goods’; accordingly, the demand confirmed against denial of cenvat credit on ‘Capital Goods’ stands set aside.

Denial of cenvat credit on ‘input services’ for setting up of factory - In a similar set of facts, the Tribunal in the case of Mangalam Cement Ltd. Versus Commissioner, Central Goods, Excise & Service Tax, Udaipur [2023 (4) TMI 601 - CESTAT NEW DELHI]

Thus, denial of cenvat credit on ‘input service’ also cannot be sustained; accordingly, the demand on this count is also set aside.

Priority of secured creditor's dues over all other dues - Registration of security interest with the Central Registry (CERSAI) - Security interest enforcement and non-obstante clauses - HELD THAT:- It is correctly pointed out by the learned counsel appearing for the Petitioner-Bank that the full bench of this Court comprehensively considered rival submissions, with the focal point being on the expression “priority” used in the relevant provisions of the Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 and the Rules framed thereunder.

We are of the opinion that in the light of the aforesaid sweeping observations made by the full bench of this Court while clarifying the position of law as regards the priority of dues of secured creditors, the artificial distinction now sought to be made by the learned AGP cannot be accepted. Thus, according to us, the ratio of the full bench judgment applies on all fours to the facts concerning Writ Petition (L) No. 172 of 2026 also.

The dues of the Petitioner-Bank clearly have priority over the claims made by the Respondent-State Authorities, in the facts and circumstances of both the Writ Petitions.

Offence under Section 138 of the Negotiable Instruments Act - Privity of contract - Liability of partners for acts of the firm - Requirement of specific averments against directors/partners in the complaint - Appellate interference in acquittal - reappreciation of evidence and double presumption

Offence under Section 138 of the Negotiable Instruments Act - Privity of contract - Whether, absent evidence that the cheque was issued in discharge of a liability of a third party and in the absence of privity, the offence under Section 138 NI Act was made out. - HELD THAT: - The Court examined the testimony of the complainant and other prosecution witnesses and found no reliable evidence that any of the accused had undertaken the liability of Mr. Pagaria. The complainant's chief-examination contained a blanket statement that the accused accepted liability, but his cross-examination showed he could not identify which accused was in charge of the firm or prove acceptance of liability. There was no document or contemporaneous record evidencing assumption of debt, and the complainant failed to explain the increase from the stated loan amount to the cheque amount. On reappreciation of evidence, the Sessions Court's finding that there was no privity of contract between the complainant and the accused is correct and not vitiated by patent perversity or omission to consider material evidence. [Paras 10, 11, 12, 13]

The prosecution failed to prove that the cheque was issued in discharge of a liability owed to the complainant by the accused; conviction under Section 138 NI Act could not be sustained on that basis.

Liability of partners for acts of the firm - Requirement of specific averments against directors/partners in the complaint - Whether partners can be prosecuted and convicted in the absence of specific averments and evidence showing their role or participation in the affairs of the firm related to the liability. - HELD THAT: - The complaint contained only a bald averment that certain partners were responsible for day-to-day affairs of the firm; there were no specific allegations identifying the role or participation of individual partners in the transaction. Citing precedent that mere designation is insufficient, the Court held that to sustain prosecution against partners (or directors) there must be clear and unambiguous allegations and evidence about the part played by them. The record lacked any evidence showing which partner assumed the liability of Mr. Pagaria or participated in the transaction, and consequently the Sessions Court's conclusion that the complaint did not establish individual culpability is unimpeachable. [Paras 14, 15]

In the absence of specific averments and evidence of individual partners' responsibility or participation, prosecution and conviction of the partners could not be maintained.

Final Conclusion: On reappreciation of the evidence the High Court found no perversity or omission in the Sessions Court's conclusions that there was no privity between the complainant and the accused and that the complaint lacked specific averments against the partners; the acquittal was upheld and the appeal dismissed.