TaxTMI Updates e-Newsletter
Feb 02,2026

Grant of bail - presumption of innocence - nature and gravity of offence - triable by Magistrate - cooperation with investigating authorities - HELD THAT:- It appears that the petitioner has been implicated in this case for Clause (a) to Clause (d) of Sub-Section (1) of Section 132 of the Central Goods and Service Tax Act, 2017 and the maximum punishment provided therein is for five years imprisonment. All the offences are triable by the Magistrate and do not prescribe any punishment beyond five years. Further, no material has been brought to the notice of the Court about the involvement of the present petitioner in any other case of similar nature. Besides, the petitioner is in custody since 22.08.2025 and in the meantime, complaint has already been filed against the petitioner in Court.

The nature and gravity of the offences as alleged vis-à-vis the accusation sought to be brought against the petitioner and keeping in view the period of detention of the petitioner in custody and taking into account the other circumstances on record in entirety including the inherent right of the accused to be presumed innocent until proven guilty at the trial, this Court without expressing any opinion on merits admits the petitioner to bail.

Hence, the bail application of the petitioner stands allowed and the petitioner is allowed to go on bail on furnishing bail bond

Entitlement to restoration/revocation of cancellation of GST registration under Section 30 - opportunity of being heard - writ of mandamus under Article 226 - civil consequences of cancellation - Payment of outstanding tax dues -retrospective cancellation - HELD THAT:- Section 25 provides for procedure for registration. The relevant provisions in the present facts and circumstances are Section 29, which provides for cancellation or suspension of registration, Section 30 which provides for revocation of cancellation of registration and Rule 23 of the CGST Rules, 2017.

There are two fundamental issues which would arise from the conjoint reading of the provisions/rules, firstly, on the grounds which are provided under the provisions of Section 29, it would empower the GST authorities to cancel registration. The cancellation of registration, however, certainly involves civil consequences as it would have an adverse effect on the assessee undertaking its business activities. It is for such reason that the second proviso to Section 29 provides that the officer shall not cancel the registration without giving an opportunity of being heard. Therefore, any action on the part of the authority not adhering to the proviso i.e. not affording an opportunity of being heard, would, per se, be in the teeth of Section 29, hence void ab initio.

It is not the case that authorities are powerless to pass an order of revocation of cancellation of registration. Sufficient provision in law has been made and such powers are required to be exercised in appropriate cases and in the manner as provided by law and in the facts and circumstances of the case would warrant. However, we find that all these issues are not taken into consideration as in the present case and such matters unwarrantedly reach the Court. In the facts of the present case, the Revenue has taken a clear position that there are no tax dues, as all the demands have stood satisfied.

Stanley Aphonsus D’silva Vs. State of Maharashtra [2025 (3) TMI 1025 - BOMBAY HIGH COURT], was a case where registration of the assessee was cancelled for non-filing of returns for more than six months and when the assessee was ready and willing to pay all dues along with interest on the same, the registration of the assessee was directed to be restored by the Division Bench of this Court. A similar view was taken by another coordinate Bench of this Court in Paramatma Steel Centre Vs. State of Maharashtra [2025 (7) TMI 1867 - BOMBAY HIGH COURT]. We may also refer to the decision of the learned Single Judge of the Madras High Court in the case of TVL. Saguna Cutpiece Center Vs. Appellate Deputy Commissioner (ST) (GST), Salem [2022 (2) TMI 933 - MADRAS HIGH COURT] wherein the Madras High Court was dealing with a case of cancellation of registration and the application for revocation on the cancellation. In such context, referring to the relevant circulars and the notification, the Court held that the purpose of GST registration is only to ensure that just tax gets collected and not to debar or de-recognise assessees from returning back into the GST fold. It was held that the GST enactment cannot be interpreted so as to deny the right to carry on trade and commerce. The Court in the adjudication also referred to the provisions of Rule 23 providing for Revocation of cancellation of registration and the Circulars issued in that regard by the Central Board of Indirect Tax and Customs dated 22nd December 2020.

In our clear opinion, the facts of the present case are not in dispute that there is no outstanding GST liability of the petitioner, and hence, in these circumstances, the petitioner was entitled to the benefit of the restoration of the petitioner’s GST registration and to that effect the petitioner’s application for revocation of the cancellation of its registration was required to be allowed. In these circumstances, the petition needs to succeed as respondent No. 3 has clearly not acted in consonance of the provisions of Section 30 read with Rule 23 of the CGST Rules.

The writ petition is accordingly allowed.

Challenge to orders of Appellate Authority - Availability of alternative remedy before GST Appellate Tribunal - Maintainability of writ petitions - Doctrine of alternative remedy / Judicial restraint where statutory forum exists - HELD THAT:- It is now brought to our notice by counsel on both sides that the Department of Revenue, Ministry of Finance had issued a notification on 31.07.2024 establishing the Goods and Services Tax Appellate Tribunal at Guwahati covering the State of Tripura as well (Agartala Circuit), and that personnel have been selected and allotted to the Guwahati Bench also along with other Benches in the country through an Office Order No. 03/2025 dt.26.12.2025.

Since the petitioners have now an opportunity to approach the said GST Appellate Tribunal, we are not inclined to entertain these Writ Petitions.

Writ Petitions, if any, shall also stand disposed of.

Withholding of electronic credit ledger / restriction on use of input tax credit - obligation to adjudicate upon alleged fraudulent or ineligible ITC - interim protective measure pending adjudication - Proper Officer / Assistant Commissioner of State Tax - writ jurisdiction of the High Court - HELD THAT:- The Provisions of Rule 86A of the CGST Rules, 2017/WBGST Rules, 2017 provide for conditions of use of any amount available in the electronic credit ledger of the registered tax payer. In terms thereof if the revenue authorities mentioned therein, have reasons to believe that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible for any of the reasons mentioned in Clauses (a) to (d) of Rule 86A(1) then the said revenue authorities may upon recording reasons withhold debit of an amount equivalent to such credit in electronic credit ledger for discharge of any liability by the registered tax payer.

Such a provision is clearly aimed at securing the tax apprehended to be in default either due to fraudulent availment of ITC or availment of ITC despite ineligibility. It is therefore, supposed to be an interim measure pending adjudication. Once this provision is resorted to, it cannot be said by the Proper Officer that adjudication itself cannot be done.

In such view of the matter, the Proper Officer’s observation that the act of violation is not suitable for adjudication‟ cannot be sustained.

This court is cognizant of the aspect that the restriction imposed under Rule 86A can be continued for one year but in the case at hand the Proper Officer has simply abdicated his duty to adjudicate. It is noticed that blocking of the petitioners electronic credit ledger has already been in place for a little more than seven months as of now.

By blocking the electronic credit ledger of a registered tax payer and then continuing with the same by observing that there will be no adjudication of the issues involved would be against the very grain of the said Act of 2017 itself.

In such view of the matter, the Proper Officer concerned is directed to initiate adjudication proceedings by issuing appropriate show cause notice to the petitioners within a week from the date of communication of this order.

It is made clear that if the adjudication proceedings are not concluded within the period mentioned in this order, the Proper Officer shall have to unblock the electronic credit ledger of the petitioners.

Writ petition being stands disposed of.

Consolidating various financial years/tax periods - scope for consolidating various financial years/tax period while issuing show cause notice - show cause notice u/s 74 - time limit for issuance of assessment order - tax period - HELD THAT:- True it is that the judgment of the Delhi High Court [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 has dismissed the petition in limine and not on merit.

The Division Bench of this Court in Commissioner of Income-tax, Vidarbha and Marathwada, Nagpur Vs. Smt. Godavaridevi Saraf Tumsar [1977 (9) TMI 24 - BOMBAY HIGH COURT] held that until a contrary decision is given by any other competent High Court, which is binding on Tribunal in the State of Bombay, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of land.

In the present case, since this Court has, subsequent to decision of the Delhi High Court, taken a different view, the authorities below will be bound by the subsequent judgments. The Hon’ble Supreme Court has neither stayed nor overruled the view taken in above two cases. The argument of Counsel for respondent nos. 1 to 4, therefore, cannot be accepted.

With the above liberty, and for the reasons set out in Milroc Good Earth Developers [2025 (10) TMI 867 - BOMBAY HIGH COURT] and Rite Water Solutions (India) Ltd. [2025 (11) TMI 1939 - BOMBAY HIGH COURT] the petition is partly allowed. The show cause notice dated 30/5/2025 issued by respondent no. 2 is quashed and set aside. The respondents, however, are at liberty to re-issue notice strictly in terms of the provisions of Section 74 of the CGST Act, if there is no other legal impediment.

Profiteering - Validity of Section 171 - Pass on benefit of reduced tax rate and Input Tax Credit by commensurate reduction of price - Methodology for computation of profiteering Average-to-Actual (weighted average base price compared with actual invoice-wise sale price) - Limitation of timelines for DGAP report is directory not mandatory - Rebuttable presumption that tax rate reduction ought to result in price reduction - HELD THAT:- The Notices was issued to the Respondent to file their written submissions. The Learned Counsel for the Respondent would submit that the order passed by the NAA for re-investigation is barred by limitation however, we are of the opinion that as the remand was an open remand without any specific restriction on the NAA or NAPA or the authority exercising Anti-Profiteering Jurisdiction. Quasi-Judicial Order passed by the preceding Authority to the DGAP for clarification will not attract limitation and it cannot said that the proceedings are barred by the limitation.

Once, it is held that there is a profiteering by the traders of goods and services and consumer has paid a higher price because of the fact of non-passing of the benefit of reduction of the tax, in the ultimate analyses the faceless consumer has definitely paid GST on the differential amount (higher) which have been collected by the Respondent and deposited in the Exchequer. However, this amount has to be returned to the consumer, if identified, or, in the case of unidentifiable consumer, the same needs to be deposited in Consumer Welfare fund(s). Deposit of the GST collected by the retailer (paid by the consumer) is immaterial as the benefit is not passed on to the Consumer and he paid a higher price.

In that view of the matter, we find no illegality in the fact that the profiteered amount should be charged with a applicable rate of GST and same should be borne by the Respondent concerned.

It is settled principal of law that initial presumption, as arising in this case is rebuttable presumption but such presumption can be rebutted only by cogent, unambiguous and clear materials or evidences to show that after reduction of the rate of GST from 28% to 18%, there was some cogent reasons to show that there was play of market forces which led the Respondent no. 1 to keep the MRP unchanged. So, this contention raised by the Respondent is of no substance.

The pendency of the case challenging the constitutional validity of Section 171 before the Supreme Court by itself will not in the absence of the order of Stay would anyway affect the jurisdiction of the Tribunal to decide the case of alleged profiteering. Moreover, the Hon’ble High Court of Delhi in the case of Reckitt Benckiser India (P.) Ltd. [2024 (1) TMI 1248 - DELHI HIGH COURT] has upheld the validity of the relevant provisions.

In result, we come to the conclusion the DGAP has established by preponderance of probability and evidences that Respondent no. 1 has profiteered an amount of Rs. 19,32,446/- which needs be recovered from the Respondent No. 1. Since, in this case the applicant is faceless, the said profiteering amount shall be deposited in the Consumer Welfare Fund(s).

As per our earlier judgment because of the date of amendment regarding imposition of interest and penalty are after the period of alleged profiteering by the Respondent No. 1.

In that view of the matter, we are not inclined to impose any interest or penalty on the profiteered amount as calculated by the DGAP against Respondent no. 1.

GST applicability on export of pre-packaged and labelled goods - definition of pre-packaged commodity (pre-determined quantity) - interpretation of Legal Metrology Act declarations for packaged commodities - Authority for Advance Ruling, Andhra Pradesh - advance ruling under Section 98 of the CGST Act, 2017 - export treated as inter-State supply and zero-rated supply under IGST - Notification No. 06/2022-CGST (R) dated 13.07.2022 - HELD THAT:- It may be noted that all exports are to be deemed as inter-state supplies', and as per Section 16 of the IGST Act, 2017, export of goods or services or both are to be treated as Zero Rated Supplies'. It may be noted here that the exporter has the option either to export under Bond/Letter of Undertaking without payment of tax and claim refund of unutilised input tax credit or pay IGST at the time of export and claim refund of the same, as the case may be.

We find that neither notification no 6/2022 dated 13.07.2022, nor the Legal Metrology Act, 2009 has made any differentiation with regard to applicability of GST on exports of goods/ mentioning of declarations or pre-packed commodities for export.

In the instant case, the supply of shrimps in pouches or boxes of upto 25kg, which are duly pre-packaged and labelled as per Legal Metrology Act, 2009 is a taxable supply which is neither exempted nor nil rated supply. As per the Notification no 06/2022 (CT Rate),dated 13th July 2022,GST has been made applicable on supply of such “pre-packaged and labelled” commodities attracting provisions of Legal Metrology Act, 2009.Therefore, where the quantity involved is 25Kgs or less in respect of specified commodities including shrimps (HSN 0306, as per S.No.3 of schedule 1 of notification 09/2025-central tax (rate) dated 17th September 2025) which are pre-packed, they would mandatorily get covered within the ambit of Legal Metrology Act, 2009, and the rules made there under. Accordingly, we are of the considered view that GST would be applicable on the supply of “pre-packaged and labelled” shrimps, weighing upto 25 kgs, and it will be liable for GST @ 5%, irrespective of the fact whether it is for domestic supply or for export outside the country.

Export of processed frozen shrimps packaged in printed inner pouches/boxes and placed in printed master cartons up to 25 kg qualifies as 'pre-packaged and labelled' and is liable to GST.

Deduction u/s 80IA - market value of electricity - As decided by HC [2013 (5) TMI 357 - CALCUTTA HIGH COURT] Tribunal allowed the claim for deduction u/s 80IA stating that, " AO has taken figures from units of powers sold to UPPCL at 0.89 units @ Rs.24,43,159/- as against the price of assessee i.e. inter-unit transfer @ Rs.43,02,187/- per unit. We are of the view that the figures picked up by the AO from the orders of UPPCL does not represent the open market value of electricity"

Appellant fairly submits that the issue involved in this appeal is answered by the judgment passed in M/s. Jindal Steel & Power Limited [2023 (12) TMI 417 - SUPREME COURT] and batch matters against the revenue.

HELD THAT:- The civil appeal is, accordingly, dismissed.

Appellate Authority dismissed the appeal on the ground of 88 days delay - Appellate Authority has no power to condone the delay beyond statutory period of limitation i.e. 90 days

HELD THAT:- It is correct that Appellate Authority has no power to condone the delay beyond statutory period of limitation i.e. 90 days, therefore, technically the order is correct but the High Court has power under Article 226 of the Constitution of India to condone the delay, if it is explained in the memo of appeal. The reasons mentioned in the application are reproduced below:

The applicant could not file appeal within the specified period as his mother was admitted to the hospital for treatment of breast cancer at Nagpur.

The petitioner has deposited 7.5% for filing of an appeal, therefore, there was a bonafide on the part of the petitioner in not filing the appeal within time.

Keeping in view the reasons that stay is in operation in favour of the petitioner since 06.02.2017, therefore, the order dated 25.06.2015 is set aside.

Territorial jurisdiction - legality or propriety of the Tribunal’s order rejecting the appeals on the ground of lack of territorial jurisdiction Delhi Bench was of the view that it lacked the territorial jurisdiction

HELD THAT:- We are of the view that approach of the Tribunal, Delhi Bench in dismissing the appeals and directing the assessees and the department to file fresh appeals before Lucknow Bench of the Tribunal is erroneous but still we feel that even if the Delhi Bench was of the view that it lacked the territorial jurisdiction, it ought to have placed the matters before the President for passing appropriate orders for transferring these cases to Lucknow. This kind of practice showcases the Tribunal’s overzealousness of disposing more cases.

We are informed that these (13 appeals) are not the only appeals, which Delhi Bench of the Tribunal has dismissed, there are many more. Ironically, by way of impugned order dated 20.11.2024, the Delhi Bench has been able to reduce its pendency by a number of cases but at the same time it has led to an automatic increase at Lucknow Bench and the Department & the assessee have been burdened with the onerous task of instituting fresh appeals before the Lucknow Bench, though otherwise not required.

We, therefore, set aside all the orders impugned in these petitions and restore the matters back to their original number to the dockets of the Delhi Bench of the Tribunal, to be decided on merits.

We are conscious of the fact that more than 200 appeals were transferred from the Lucknow Bench of the Tribunal to Delhi Bench of the Tribunal, by the order(s) of the President passed in 2006. Consequent to the order(s) of like nature passed by the Tribunal, the concerned parties might have filed appeals/cross-objections before the Lucknow Bench. If that be so, as a sequel to restoration of the appeals, hearing of such appeals, which have been filed at Lucknow Bench shall remain deferred. It is held that it is only the Delhi Bench of the Tribunal, which shall decide the appeals on merits.

Once such appeals are finally decided by the Delhi Bench, upon production of a copy of order of disposal, the Lucknow Bench shall close those appeal(s) as having been decided by Delhi Bench of the Tribunal.

Reopening of assessment u/s 147 - sanction u/s 151(i) from competent authority - prior approval of the specified authority is a precondition at the stage of passing an order u/s 148A(d) -grant of sanctions in comparison to the old regime -Before expiry of four years and After expiry of four years - Three years or less than three years or ore than three years have elapsed from the end of the relevant assessment year

HELD THAT:- In the present case, the period of three years from the end of the A.Y. 2016-17 read with TOLA, fell for completion on 30.06.2021. The authority specified u/s 151(i) of the new regime could have granted sanction only till 30th June 2021.

On perusal of the Notice dated 30.07.2022 issued under Section 148 of the Act, we find that the aforesaid Notice was issued after taking approval from the Principal Commissioner of Income-tax – 2, Mumbai (i.e. Respondent No. 2). Since the aforesaid Notice was issued after the expiry of three years from the end of the A.Y. 2016-17, as per the substituted provisions of re-assessment, the authority specified under Section 151(ii) of the Act i.e. the Principal Chief Commissioner (PCCIT) or Principal Director General (PDGIT), or where there is no PCCIT or PDGIT, the Chief Commissioner (CCIT) or the Director General (DGIT), was required to grant approval.

Accordingly, we conclude that in the present case, the approval has been obtained from the authority specified u/s 151(i) of the new regime instead of the authority specified u/s 151(ii) of the new regime. Non-compliance by Respondent No. 1 with the provisions contained in Section 151(ii) vitiates the jurisdiction of Respondent No. 1 to issue a notice under Section 148 of the Act.

We are clearly of the view that the present matter stands covered by the decision of Hon'ble Supreme Court in the case of UOI V/S Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] and decision of Ramesh Bachulal Mehta [2025 (8) TMI 1322 - BOMBAY HIGH COURT] We accordingly hold that the order dated 30.07.2022 passed u/s 148A(d) of the Act and the consequential notice issued under Section 148 dated 30.07.2022, are bad in law for being violative of the provisions of Section 151(ii) of the Act. Hence, they are required to be quashed and set aside. Accordingly, the consequential reassessment order dated 30.10.2025 passed under Section 147 of the Act and issuance of penalty Notice dated 07.11.2025 u/s 274 read with Section 271(1)(c) of the Act are also quashed and set aside.

Decided in favour of assessee.

Penalty levied u/s 271(1)(c) - assessee has furnished inaccurate particulars of income relating to the addition made u/s. 36(1)(iii) - making incorrect claim V/S furnishing inaccurate particulars

HELD THAT:- Though the assessing officer disallowed the expenses being capital in nature and required to be capitalized with the cost of the assets and not to be allowed as revenue expenditure. This issue has attained finality.

Assessee also submitted that in subsequent year, assessee company not made such claim and the interest expense is capitalized to the capital goods. Thus it cannot be said that the assessee has made inaccurate particulars of income.

The Hon’ble Supreme Court in RELIANCE PETROPRODUCTS PVT. LTD. [2010 (3) TMI 80 - SUPREME COURT] has held that making incorrect claim cannot tantamount to furnishing inaccurate particulars. Hon’ble Supreme Court held if we accept the contention of the Revenue then in case of every Return whether the claim is not accepted by the assessing officer for any reason, the assessee will invite penalty u/s. 271(1)(c) and which is not the clear intendment of the legislature

CIT(A) is not correct in confirming the levy of penalty u/s. 271(1)(c) of the Act, since making an incorrect claim by the assessee, cannot amounts to furnishing inaccurate particulars of income. Thus the grounds raised by the assessee is hereby allowed.

Addition invoking section 56(2)(x) - difference of stamp duty value over the purchase consideration - FMV determination - grounds of appeal taken by the assessee relates to erroneous application of section 56(2)(x) of the Act by the Assessing officer without reference to DVO - HELD THAT:- We find that the assessee has been consistent in his position that there is a title defect in the property so acquired by him and there are various other factors in terms of encroachment etc., in relation to the property so acquired and, therefore, the stamp duty value does not reflect the Fair Market Value of the property.

In such circumstances, where the stamp duty value is disputed by the assessee, we find that appropriate course of action for the AO would have to refer the matter to DVO for determination of appropriate Fair Market Value. However, in the instant case, the matter has not referred by the AO to the DVO.

We accordingly find merit in the contentions advanced by the Ld.AR that where the stamp duty value is contested by the assessee before the AO, the proper course of action for the AO was to refer the matter to the DVO to determine the fair market value instead of applying the stamp duty valuation.

We set-aside the matter to the file of the AO to refer the matter to DVO for determination of appropriate Fair Market Value, after providing reasonable opportunity to the assessee. Appeal of the assessee is allowed for statistical purposes.

Validity of the Notice issued u/s 148 - statutory time limit for re-opening the cases - applicability of TOLA - compliance of approval in consonance of provisions of Section 151 by the AO, while passing the order u/s. 148A(b) - Effect of pre-amendment s.148 notices issued 01.04.2021-30.06.2021 as s.148A(b) show-cause notices -

HELD THAT:- Since TOLA was not applicable to AY 2016-17 as escaped income was more than Rs. 50 lakh, therefore the department could not have deemed the notice under sec 148 as notice under sec 148A(b). Thus, the proceedings in consequence thereto viz order under sec 148A(d), notice under sec 148 and order under sec 147 are invalid and beyond jurisdiction. We note that after 01.04.2021 the time limit for the re-opening the cases where the proposed addition was more than Rs. 50 lakh was 31.03.2023 and this was considered before the Hon'ble Apex Court in Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] wherein it has been held that TOLA is not applicable for A.Y.2016- 2017 where the escapement of income is more than 50 lakhs since the period has not been expired.

While passing the order u/s. 148A(b) of the Act, the AO has not taken the approval in consonance of provisions of Section 151 of the Act. The AO has passed order u/s. 148 of the Act and issued notice u/s.148 of the Act after taking approval from PCIT-5, Kolkata whereas in terms of new law operative from 01.04.2021, approval was required to be taken from PCCIT/CCIT. Even on this ground, the order passed u/s.148A(b) of the Act and notice issued u/s. 148 of the Act are invalid.

Appeal filed by the assessee is allowed.

Validity of invoking provisions of section 144C which related to a reference to the Dispute Resolution Panel - ‘eligible assessee’ under section 144C - Applicability of transfer pricing reference where no variation is made by the Transfer Pricing Officer - HELD THAT:- We find considerable cogency in the contention of the Ld. Sr. Counsel for the assessee that AO has wrongly invoked the provisions of section 144C which related to a reference to the Dispute Resolution Panel. In the instant case AO had made a request to the TPO u/s. 92CA of the Act and the TPO issued the notice to the assessee. However, the TPO has not made any variation. We find that similar issue has been decided in favour of other assessee as decided in LASSIC LEGENDS PVT LTD case [2025 (9) TMI 982 - BOMBAY HIGH COURT]

We hold that the present assessee is not an ‘eligible assessee’ under section 144C where no variation is proposed by the TPO. Thus, we quash the assessment order passed by the Assessing Officer. Appeal of the Assessee is allowed.

Eligibility for deduction u/s. 80P(2)(b) - alternative deduction u/s. 80P(2)(d) if deduction u/s. 80P(2)(b) not allowed - Assessee has received interest income from the banks - HELD THAT:- In the present case merely because the Assessee has received interest income from the above banks, it cannot be said that same is not related to the profits and gains of business of supply of milk.

AO himself has stated that if such income is not eligible for deduction u/s. 80P(2)(b), the Assessee is entitled to deduction u/s. 80P(2)(d) of the Act. By looking at the above 10 banks, find that only first 5 banks are not co-operative banks where the interest income earned is in the range of Rs. 2,500/- to 6,000/-.

All others are co-operative banksand also cooperative societies. As the Assessing Officer himself has held that if the Assessee is denied deduction u/s. 80P(2)(b), it is entitled to deduction u/s. 80P(2)(d). The AO himself has allowed further deduction u/s. 80P(2)(d) of the Act of interest income received from other co-operative societies.

Therefore, there is no reason that the Assessee should be denied deduction u/s. 80P(2)(b) of the Act. The Ld. CIT(A) has wrongly stated that such interest income is chargeable to tax under the head income from other sources. The only purpose is that if interest income is considered as income from other sources, then the Assessee is entitled to deduction only u/s. 80P(2)(d) of the Act. The Ld. CIT(A) has not given any finding that interest income earned by the Assessee cannot be treated as business income.

We do not intend to uphold the orders of the Ld. lower authorities and confirm that Assessee is entitled to the deduction of interest income u/s. 80P(2)(b) of the Act only.

Assessee is entitled to deduction u/s. 80P(2)(b) as well as u/s. 80P(2)(d) of the Act as per the opinion of the AO himself. Decided in favour of assessee.

Fringe benefits - expenditure is in the nature of consideration for employment - addition has been made to the value of fringe benefits on account of advertising, publicity and sales promotion expenses u/s 115WA - HELD THAT:- In the present case, the factual matrix on record unmistakably demonstrates that the impugned expenditure has been incurred towards third parties, namely dealers, distributors, advertising agencies, customers, and vendors such as M/s Savita Enterprises.

AO himself has not alleged, either in the original assessment proceedings or in the reassessment proceedings, that M/s Savita Enterprises or any other recipient of the payments was an employee of the assessee. On the contrary, it stands accepted that the payments were made to an outsider party for supply of promotional articles and other marketing-related services. Once this foundational fact is accepted, the inevitable conclusion follows that the expenditure cannot be regarded as a consideration for employment, nor can it be deemed as a fringe benefit within the meaning of section 115WB.

A plain reading of the proviso to section 115WB(2)(D) reveals that the legislature has consciously carved out exceptions in respect of various categories of sales promotion and publicity expenditure, including advertisement in any print or electronic media, holding of business conventions, sponsorship of events, publication of notices, and distribution of samples. The assessee’s expenditure on advertising and publicity, exhibition stall charges, sales commissions, and distribution of promotional articles to dealers and customers squarely falls within these exclusions. Even otherwise, such expenditure is incurred wholly and exclusively for the purposes of business promotion, and the benefit, if any, accrues to the business of the assessee and not to any employee.

The jurisprudence on the subject, as laid down in Kotak Mahindra Old Mutual Life Insurance Ltd. [2011 (11) TMI 497 - ITAT MUMBAI] unequivocally holds that section 115WB is a deeming provision which applies only when the expenditure is in the nature of consideration for employment, and that fringe benefit cannot arise when expenditure is incurred on persons who are not employees. Appeal of the assessee is allowed.

Assessment of trust - exemption u/s 11 - allowability of provision for gratuity and leave encashment as application of income in the hands of a charitable trust registered u/s 12A and claiming exemption under section 11

HELD THAT:- The co-ordinate Bench [2021 (8) TMI 287 - ITAT MUMBAI] while adjudicating the issue in the assessee’s own case, has categorically observed that such provisions are mandated by law, that the liability has already crystallized as on the balance sheet date, and that without making such provisions the books of account would not present a true and fair view of the state of affairs. The Tribunal has further drawn a clear and cogent analogy with depreciation, observing that although depreciation is also a book entry without actual flow of funds, it is nonetheless required to be provided for to reflect the correct profits of the entity. It has been held that in the context of section 11, the expression “applied” cannot be construed in a narrow sense as “actually spent” alone, but must be understood in its commercial sense to include necessary statutory provisions representing accrued and crystallized liabilities incurred in the course of carrying out the objects of the trust. In that view of the matter, the Tribunal had directed the Assessing Officer to allow the provision for gratuity and leave encashment as application of income for the objects of the trust and had dismissed the grounds raised by the Revenue.

Reopening of assessment u/s. 147 - addition of cash deposits - AR reiterated the submissions made before the lower authorities and submitted that the assessee is a salaried teacher and had no independent business activity. The cash deposits were not the income of the assessee but represented business receipts of his son from money transfer activity, wherein only commission income was earned.

HELD THAT:- As it is noticed that the account of the assessee has been used by his son for transfer of amounts collected from labourers to various places. In the case of the son, the amount of commission has been determined @ Rs. 40 per instrument/transaction. The assessee has also shown similar income @ Rs. 40 per instrument/transaction.

The modus operandi is clearly discernible from the bank statements, which reflect cash deposits followed by immediate transfers through banking channels. We are satisfied that the commission charged at Rs. 40/- per instrument/transaction is reasonable and correct. Since such commission income has already been offered to tax, we hold that no addition is called for in this case. Appeal of the assessee is allowed.

Validity of Reopening of assessment - reopening notice beyond three years - sanction to be granted by the Principal Commissioner v/s competent authority - HELD THAT:- The present appeal is pertaining to the Assessment Year 2018-19. The notice u/s. 148 of the Act has been issued on 05.04.2022. As per the provisions of section 151 of the Act, the sanction for issuance of notice u/s. 148 of the Act has to be granted by the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General if more than 3 years have elapsed from the end of the relevant Assessment Year.

Since the approval has been given by the Principal Commissioner in this case, and this fact has not been disputed by the Revenue, we hold that notice issued by the Revenue is vitiated, and hence the subsequent proceedings are hereby treated as null and void. Decided in favour of assessee.

Additions in applying the provision of 50C -adopting a higher value from departmental information - As argued document value and the jantri value are the same and is duly accepted by the competent authority - HELD THAT:- In this case, the addition has been made by the AO owing to a typographical mistake in the cost of the property as per the departmental information.

We have gone through the Calculation Statement of Valuation of Immovable Property issued by the Sub-Registrar, wherein the value of the property has been mentioned as Rs. 1,36,53,115/-, and the property has been sold for Rs. 1,44,00,000/-. Stamp duty has been duly paid on the value of Rs. 1,44,00,000/-. Since there is no difference between the value determined by the Sub-Registrar and the sale consideration, and the value of the property is not less than the jantri value of the Sub-Registrar as found from the document, we hereby hold that no addition is called for. Appeal of the assessee is allowed.

Addition u/s 56(2) - share allotment in excess of fair market value as determined under Rule 11UA(2) of the Income Tax Rules, 1962 - HELD THAT:- The assessee company received shares premium of Rs. 14,28,00,000/- and share capital of Rs. 12,00,000/-. Copies of agreement were filed by the assessee.

AO summoned the parties but they failed to appear. On basis of irregularities found, DCF method submitted by the Department, assessee remained unsubstantiated and was rejected. Fair market value of the shares was assessed and addition of Rs. 14,26,48,000/- was made. Therefore, order of CIT(A) being not just, fair, reasonable and legal is set aside. Accordingly, ground of appeal is accepted. Appeal filed by the Department of Revenue is allowed.

De-bonding of 100% Export Oriented Unit - application of Condition 10 of the Standard Conditions attached to Industrial License for EOUs - treatment of suo-moto de-bonding order as final date of exit - obligation of appellate authorities to conduct de-novo enquiry and apply judicial mind - remand for de-novo consideration - Section 7 of the Customs Act, 1992 - Section 28(A)(a) of the Customs Act read with notification No.33/1995 CUS (NT) - HELD THAT:- The main contention raised by the learned Senior Counsel appearing for the appellant is that by virtue of the clarification issued by the Deputy Development Commissioner, Government of India, Ministry of Commerce and Industry vide letter, dated 10.05.2019, the unit was issued suo-moto de-bonding order on 08.08.2006 and the same may be treated as final date of exit of the unit and there upon condition No.10 of the Standard Conditions attached to Industrial License in respect of 100% Export Oriented Undertaking would come into play.

As and when the CESTAT remanded the matter for fresh consideration and to conduct de-novo consideration, the Commissioner (Appeals) has to consider the entire issue on merits. As such, the Commissioner (Appeals) finding that he would not entitle to modify or over-rule the order of his predecessor (which was set aside by the CESTAT while remanding for conducting de-novo enquiry) is illegal and unsustainable. The CESTAT also without going into the merits of the case simply extracted the findings of the Commissioner (Appeals) and dismissed the appeal without assigning reason, which is illegal and unjust.

On careful perusal of the order, dated 11.09.2017 of the CESTAT, it is established that without assigning any reasons for non-considering the claim of the petitioner in the light of the de-bonding order, dated 08.08.2006 passed by the VSEZ, Development Commissioner, Visakhapatnam and the application of the condition 10 of the Standard Conditions attached to Industrial License in respect of 100% Export Oriented Unit, in mechanical way dismissed the appeal filed by the appellant. As such, the order, dated 10.08.2004 passed by the Commissioner (Appeals) and the order, dated 11.09.2017 passed by the Customs, Excise and Service Tax Appellate Tribunal are unsustainable under law and liable to be set aside.

Considering the facts and circumstances of the case and in the light of the clarification issued by the Deputy Development Commissioner, Vizag, dated 10.05.2019 wherein it is clarified that that the suo-moto de-bonding order on 08.08.2006 is to be treated as final date of exit of the unit, in our considered view, it is appropriate and reasonable to remand the matter to the Commissioner (Appeals) for fresh consideration and for passing appropriate orders in accordance with law by following due process of law, to meet the interest of justice.

There shall be no order as to costs.

Amendment to Import General Manifest (IGM) - title/ownership of imported goods - confiscation of goods - payment of duty under protest and deposit of interest - waiver of detention and demurrage - condonation of delay in filing appeal - CESTAT - Commissioner (Appeals) - Directorate of Revenue Intelligence (DRI) - HELD THAT:- The fact that the IGM has been amended in respect of all the 4 Bills of Lading in dispute, it is not necessary for us to examine whether the Appellant can be said to have been aggrieved by the impugned order of the CESTAT or whether the above appeal raises a substantial question of law or that the subject goods were rightly confiscated or not. The contentions of both sides are kept open.

We are of the opinion that let the Respondent pay or cause to be paid an amount equal to interest on the amount of basic customs duty to be determined by the Appellant pursuant to this order “under protest” along with the duty. The said amount [towards interest] shall be treated as a deposit with the Appellant. The Respondent shall be permitted to contest the payment of interest before the CESTAT in the appeal proposed to be filed by the Respondent. In the event, the appeal filed by the Respondent is allowed, the Appellant shall refund the amount equal to interest paid by the Respondent as set out hereinafter.

In view of the judgment of this Court in the case of A. R. Sulphonates Private Limited [2025 (4) TMI 578 - BOMBAY HIGH COURT] no interest is payable on the IGST component.

It is clarified that we have not examined the merits of the case and this order is restricted only to clearance of 200.58 Metric Tons of Copper Wire Rod 8MM Electrolytic Tough Pitch Copper Wire Road as per ASTM B49 of which the Respondent is the owner and without in any manner affecting the liability of all other Noticees, including M/s Shine Metals, arising out of the Order-in-Original dated 10.06.2025. In other words, none of the Noticees shall be able to contend that they are discharged or derive any benefit pursuant to this order.

In view of the disposal of this Appeal, nothing survives in the above Interim Application and it is disposed of accordingly.

Transaction value - contemporaneous price - related persons - payment under protest - imports from a related foreign principal - contemporaneous prices of third-party imports - Whether the department was correct rejecting the transaction value and in re-determining the assessable value by relying on certain contemporaneous prices or otherwise. - HELD THAT:- We find that the Original Assessing Authority has taken into consideration the order of the SVB dt.13.04.2011, as also, the order dt.30.01.2015. The authority felt that the SVB order was valid up to 20.01.2013 only, which is not factually correct as it was valid for three years.

Insofar as the observation that it was due for review on 20.01.2013 is factually wrong as the order dt.13.04.2011 was valid for three years and there was no such observation made in the SVB order as was made later in the order dt.30.01.2015. Therefore, 10 BoEs were clearly covered under the earlier order as imports have been made prior to 12.04.2014.

It was also considered that the declared value in respect of 21 consignments was in huge variation with the contemporaneous price and therefore, cannot be said to represent true transaction value in terms of Rule 3(1) of the Customs Valuation (Determination of the Price of Import Goods) Rules, 2007 (hereinafter referred to as the Rules) read with section 14 of the Customs Act, 1962 (hereinafter referred to as the Act) and therefore, rejected the said transaction value. After rejecting the transaction value, he proceeded sequentially through Rule 4 to 9 of the Rules to determine the value of goods and after rejecting Rule 4 & 5 as well as Rule 7 & 8 and adopted Rule 9 for determining the assessable value.

Since the SVB has already taken into consideration the declared assessable value being correct i.e., the transaction value has been rightly adopted for discharge of customs duty, the Assessing Officer’s reliance on certain observations in the SVB order dt.30.01.2015 is not correct for rejecting the transaction value as it is clearly held that the value declared has not been influenced by the relationship between the appellant and the principal. The SVB has taken into account various factors in the case of related transaction including variations in price and non-inclusion of certain elements, etc., and thereafter came to the conclusion whether the transaction value is acceptable or not.

Once having decided that transaction value is correct, its rejection by the Appraising Officer, per se, is not sustainable despite having made certain observation in this regard by the SVB in the order dt.30.01.2015. Moreover, even for the sake of argument it is accepted that the Appraising Officer was free to re-determine the assessable value by rejecting the transaction value, having regard to the fact that certain so called ‘contemporaneous price’ was in existence and by applying the said contemporaneous price, this adoption itself is also not correct and tenable on two grounds. Firstly, while the goods are identical/similar, the appellants and the third party are not in the same class of buyers. Secondly, there is demonstrable difference between the quantity of import made by the appellants as well as the third party. Further, the difference in the value declared is not substantial considering that the importer/appellant is required to undertake resale of the said consignment, which involves various overheads and costs and therefore, it falls within the reasonable margin and permissible discount. This aspect has been examined by the SVB itself and they have made an observation that the relationship has not influenced the import price. Therefore, in the factual matrix, the Appraising Officer could not have adopted the value of third party as contemporaneous price for the purpose of loading/redetermining the assessable value of the appellant. We also note that the appellants had contested the loading and adoption of contemporaneous price and paid the duty under protest.

Thus, we do not find the Order of the Commissioner (Appeals) sustainable and is accordingly, set aside.

Appeal is allowed with consequential relief, if any, as per law.

Rate of interest on refund of pre-deposit - interest payable where pre-deposit relates to duty - Tribunal's remedial directions and Rule 41 CESTAT Procedure Rules, 1982 - Notifications issued u/s 11BB of the Central Excise Act and Section 129EE of the Customs Act - Notification No. 70/2014 rate of interest at 6% per annum -HELD THAT:- It is observed that there is Notification No. 67/2003-CE followed by Notification No. 70/2014 nothing that the rate of interest to be awarded as per statute as to vary within the range at the rate of 5% to 30%, as at the rate of 6% only.

Hon’ble High Court of Delhi in the case of Commissioner of Customs Vs. M/s. D.D. International Pvt. Ltd. [2023 (12) TMI 1340 - DELHI HIGH COURT] has held that the notification issued in exercise of power under Section 129EE of Customs Act, 1962 which is in pari materia to Section 11BB of the Act, since is in existence, the interest shall be computed and paid at the rate of 6% per annum as mentioned in the said notification.

No reason to differ from those decisions. Though the appellant has impressed upon the delay of eight years as has occurred due to delay apparent on part of the department. But the Tribunal being creature of statute is not vested inherent powers. It is bound by the statute. Since the Notification No. 70/2014 has been issued squarely under the statutory mandate, I find no reason to not to accept reasoning given by Commissioner (Appeals). The decision in the case of Bird Audio Electronics [2022 (3) TMI 101 - CESTAT NEW DELHI] is held not applicable to the present case because in that case even refund claim was rejected. The decision of Parle Agro Pvt Ltd [2021 (5) TMI 870 - CESTAT ALLAHABAD] is also not applicable to the present case because in the said case the Notification of 2014 was not brought to the notice of the court, also for the reason that the delay in the present case is actually on part of the appellant who delayed in filing appeal against the initial order of denial of interest to the appellant.

In totality of the above discussion, the order under challenge is hereby upheld. Consequent thereto, the appeal is dismissed.

Classification of goods - imported Manifold Absolute Pressure and Air Temperature sensors (MAP & AT sensors) - Interpretation of Chapter and Heading explanatory notes and essential character test - Admissibility of internet material in classification proceedings - First Appellate Authority and Adjudicating Authority findings - Authority for Advance Rulings precedents and co-ordinate Bench decisions -Note 2(a) to Chapter 90 - Note 2(g) to Section XVII - HELD THAT:- From the two orders i.e. SPM India Ltd. [2006 (12) TMI 368 - CESTAT, BANGALORE] and Bosch India Ltd. [2020 (7) TMI 239 - CESTAT BANGALORE], we find that though in that case no contention was raised that the goods were classifiable under CTH 8708, there are findings sufficiently supporting their classification under CTH 9026. We further find that while the goods are not identical in those cases to the present case, the essential characteristic, i.e., the goods being precision measuring equipment, is a common factor. We therefore consider ourselves bound by the orders of those two co-ordinate Benches. In any case, CTH 9026 is the more specific heading than CTH 8708. We are thus satisfied that the imported goods are covered by CTH 9026.

Having held so, we are supported (though not bound) by the reasoning of the Authority for Advance Rulings In Re: Mahindra and Mahindra Ltd. [2024 (8) TMI 616 - AUTHORITY FOR ADVANCE RULINGS CUSTOMS, MUMBAI]. There too, there were pressure sensors, although not for the same purposes, but in automobiles.

Thus, we are of the view that the impugned order cannot sustain for which reason we set aside the same. In the result, Appeal is allowed with consequential benefits, if any, as per law.

Scope and applicability of statutory safeguards in section 155 of the Customs Act, 1962 - Validity of a show cause notice u/s 124 being treated as notice u/s 155(2) - Duty of subordinate adjudicating authorities to follow appellate rulings and the principle of judicial discipline - Remand limited to identification of the triggering event and computation of limitation u/s 155(2) - Remedies for executive review u/s 129D - Appellate and administrative supervisory provisions - HELD THAT:- It is apparent that the determination by the Tribunal had not been challenged in appeal either on point of law before the jurisdictional High Court or as arising from a dispute involving, among other things, value before the Hon’ble Supreme Court. Consequently, that had attained finality on the legality of show cause notice not sufficing as notice for purposes of section 155(2) of Customs Act, 1962 and on resumption solely to ascertain compliance by way of determining the trigger and the time-line within which notice under section 155(2) should have been issued. Failure to comply with the law so determined, and ascertainment so directed, taints de novo proceedings. Doubtlessly, that has to be tested and determined in appeal. As it should it be.

It is neither open to questioning as tenable nor to be reviewed by revival of the discarded proposition in fresh proceedings. That is not only anathema to judicial decorum but also evincing of contempt for law and its institutions. It is also contempt for superior executive authority who have, whether the original authority is pleased or displeased thereby, accepted the law as set out inspite of opportunity available for mounting challenge under the empowerment in section 129D of Customs Act, 1962. For an adjudicating authority, who voluntarily subordinated himself to appellate jurisdiction by adjudicating on a single aspect of the proceedings, to blind himself to the law so settled and for that to pass unhindered through judicial process is to tolerate incipient chaos in the governance of customs law. For an adjudicating authority to, first, delegate a proposition upward for judicial determination and then to pretend that such determination had not occurred is insinuation that rule of law does not attend upon statutory creations. For an adjudicating authority, probably from inability to comprehend the judicial determination, to erase such determination is improper conduct in the face of possible recourse to express resolution from that same appellate authority, through section 129B (2) of Customs Act, 1962, is to arrogate overwhelming supremacy in administering a law. For an adjudicating authority to ignore the voluntary acceptance of jurisdiction of the ruling of the Tribunal, by recourse to section 129A(4) of Customs Act, 1962 on the part of his executive superiors, is to imperil administrative discipline.

Applications are disposed off accordingly.

Confiscation and penalty for mis-declaration - Classification of imported goods and entitlement to duty exemption- Rice Bran Oil - Redemption fine consequent to confiscation - FSSAI conditional clearance - Customs duty and interest - Notification granting duty exemption - HELD THAT:-

From the above documents, we find that even these documents specify that the goods were not refined. These documents had been submitted by the Appellant along with their Bill of Entry at the time of imports. Therefore, we do not find that the Appellant had any intention to mis-declare the goods. They were simply interpreting the exemption under the Notification and had taken the view that they would be eligible for Nil rate of Customs duty. It is an admitted fact that the Appellant has also paid the demanded Customs duty along with interest which is not being contested by them now. Therefore, we do not see any reason for confiscation of the goods and imposing of penalties on account of mis-declaration.

7. It is being made clear that the Customs duty along with interest paid by the Appellant is being held by this Bench to be validly paid by them and as not being contested by them. The Ld. Advocate has also assured the Bench that no claim of refund shall be made by the appellant towards the Customs Duty and Interest already paid by them.

Thus, we set aside the confiscation order and consequent redemption fine imposed on them. We also set aside the penalty imposed on the Appellant. The Appeal stands disposed off thus.

Transaction value - classification of goods - principle of exclusion and "pull in" construction - assessment under protest and orders u/s 17(5) - Validity of enhancement of assessable value and acceptance of declared transaction value - HELD THAT:-We find that in respect of both the issues, with regard to valuation as well as classification, the Tribunal in the appellant’s own case, has considered and passed the following Final Order [2024 (9) TMI 1428 - CESTAT KOLKATA], held that- " 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.

We also find that the controllers are not covered under the CTH 8708 as per the explanatory notes to Section XVII. It is also pertinent to note that the Notes to CTH 8503 covers the parts to be used with motor and as such merits the classification of the goods under CTH 8503. Thus, we hold that the goods imported by the Respondent are rightly classifiable under Chapter heading 8503 0090 as claimed by them in the respective Bills of Entry.

The correct classification of the goods in question is CTH 8503 0090. Therefore, hold that the Ld. Commissioner (Appeals) has rightly held the classification of the impugned goods under CTH 8503 0090. "

We find the above decision squarely covers the issue on hand and hence following ratio laid down in the cited decision, we uphold the impugned order.

We also find force with the appellant’s argument that Note No. 2(f) to Section XVII specifically excludes electrical machinery or equipment falling under Chapter 85, from being included within the Chapter 87 goods.

Identical issue was decided by this Tribunal in the appellants own case vide Final Order [2025 (11) TMI 1216 - CESTAT KOLKATA].

As a result, the appeals filed by the Revenue stand dismissed.

Condonation of delay - HELD THAT:- Having heard appellant, we do not find any sufficient cause to condone the delay in filing the present appeal against the impugned judgment and order of CESTAT. Hence, the present Civil Appeal is dismissed on the ground of delay.

Levy of Service Tax - Negative List of Services - Reliance on third-party income tax returns/Form 26AS - Remand to stage of reply to the show-cause notice - Dismissal of appeal for non-payment of pre-deposit - Maintainability and reconsideration of adjudication - Notification No. 25/2012-ST - HELD THAT:- The factum of Service Tax being levied on the basis of income derived as is inferred, through income tax returns appears to be uncontroverted.

It is also clarified that disposal of present petitions must not be construed as having adjudicated any of the contentions including jurisdiction. All contentions of both sides on merits are kept open.

It is not in dispute that the Order in Appeal is a mere order of dismissal of appeal due to non-compliance of statutory requirement of pre-deposit. The order of adjudication itself requires reconsideration taking note of the order [2024 (9) TMI 64 - KARNATAKA HIGH COURT] connected petitions, the relevant portions of which are extracted hereinabove.

The Court set aside the Order-in-Original, the appellate order dismissed for non-deposit and the recovery notice, and remitted the matter to the designated authorities for fresh consideration from the stage of reply to the show-cause notice in accordance with the observations in the earlier order; the petitioner is permitted to file fresh pleadings and to appear before the authority on the specified date.

Levy of service tax on construction services - Classification as Works Contract Service (WCS) vis-à-vis Construction of Residential Complex Service (CRCS) - Exclusion for construction for personal use under definition of residential complex - Non-leviability of service tax prior to 01.07.2010 - Relief from penalty and inapplicability of extended period for assessment in absence of mala fide - Determination of taxable value and exclusion of non-taxable receipts under Rule 5(2) - Requantification of demand under Rule 2A(ii) - Benefit of composition scheme and cum-tax benefit under section 67(2) - HELD THAT:- as service tax liability prior to 01.07.2010 is concerned, there is no dispute, as it is now no longer res integra that no service tax can be levied on construction services irrespective of its being classified under WCS or Construction of Residential Complex Service. It is also not in dispute that in this appeal, the services were provided by the appellant in which material portion was also involved and therefore, it would be appropriately covered under the category of WCS. Therefore, we find that no service tax can be levied for the period prior to 01.07.2010.

Insofar as service tax liability beyond 01.07.2010, we find that the appellants have submitted to the adjudicating authority that they, inter alia, first sell the undivided portion of land along with the semi-constructed flat on which applicable stamp duty is also paid. - There were lot of disputes regarding proper classification of such service, as also leviability thereon, which was finally clarified by the Board by various circulars including circular dt.29.01.2009 and circular dt.10.02.2012. Therefore, malafide intent cannot be imputed and therefore, neither extended period can be invoked not penalty can be imposed under section 78 of the Act.

Thus, in view of the fact that they have been able to establish that construction was in relation to the personal use of the individuals with whom they had entered into separate agreement in addition to sale of semiconstructed flat, it would not be leviable to service tax.

As regards non-leviability of service tax on certain amounts viz., corpus fund and VAT, it is not clear as to how this demand has been confirmed as the entire demand has been confirmed under the category of CRCS. This aspect is not clear, however, as we find that since the entire demand has been made under CRCS and since the entire demand has been found to be not sustainable, as discussed supra, therefore, this aspect is not required to be further discussed separately. Further, as the entire demand is not sustainable, the penalty is also not sustainable and therefore, there is no need to examine the request for waiver of penalty under the provision of section 80 of the Finance Act, 1994.

Appeal allowed.

Export of services where benefit accrues outside India - Classification as Technical Testing and Analysis Service vis-à-vis Scientific or Technical Consultancy Service - Interpretation of 'used outside India' in Export of Service Rules - Sub-rule 4 of the Export of Service Rules - Notification No.05/2008-ST dated 01.03.2008 (second proviso to Rule 3(1)(ii)) - HELD THAT:- We find that these services were commissioned by the clients abroad for its utilization abroad and therefore, it has been effectively used and enjoyed outside India. Thus, in terms of Rule 3(2) of the Rules, the taxable service has to be treated as export of service, if such service is provided from India and used outside India. Therefore, the term ‘used outside India’ has to be interpreted to mean that the benefit of service should accrue outside India even when all the relevant activities have taken place in India, so long as the benefit of these services accrues outside India.

We find that this second proviso is in addition to first proviso and not in substitution thereof. It only further extends the scope when the specified service including under sub-clause (zzh), is provided to goods or material or any immovable property, which are located outside India through internet or an electronic network etc., then even if it is not performed outside India, it will still be treated as performed outside India. Clearly, this is not the case here, as the services have not been provided through internet or an electronic network. The delivery, both physical and online of the activities and the results thereof, outside India is to be treated as performed outside India and hence covered under the scope of first proviso itself.

Thus, we find that in this case, in the given factual matrix, the services provided to their foreign clients has to be treated as export of service and therefore, not leviable to service tax. Accordingly, the impugned order is liable to be set aside and is therefore, set aside.

Appeal allowed.

Classificationof goods - services as Health care services vis-à-vis Cosmetic and Plastic Surgery - Benefit of Mega Exemption Notification in relation to clinical establishment and authorised medical practitioner - Best judgement assessment - Reliance on provisional or kachcha records - Extended period of limitation and suppression/misstatement - Entitlement to cum-tax benefit - Notification No.25/2012-ST - HELD THAT:- There is no doubt that the appellant is a ‘clinical establishment’ as it provides services or facilities requiring diagnosis, treatment/care for illness, injury, deformity and abnormality. Secondly, the appellant is an ‘authorised medical practitioner’ and the treatments are administered by doctors, who are registered with the Medical Council of India.

It is apparent that there is a fine line of distinction in between an activity to be covered either as a cosmetic and plastic surgery or as a Healthcare service. The Commissioner has not examined the true nature of each of the services rendered by the appellant. It is necessary to set out the details of the diagnosis or procedure as well as the post treatment care which may be provided to the patient. The definition of healthcare service although specifically excludes hair transplant or cosmetic or plastic surgery but still covers the same when undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma. Perusal of the impugned order shows that the Commissioner has mainly taken an overall view that these procedures result in physical enhancement and beauty without analysing the respective services. We, therefore, find it appropriate to remand the matter to the adjudicating authority to give reasoned findings on each of the services rendered by the appellant.

The appellant was, therefore, directed to show cause as to why service tax be not recovered from them under proviso to Section 73(1) read with Section 66/66B and Section 68 of the Act. We, therefore, hold against the appellant on this submission.

The grievance of the appellant for invocation of best judgement assessment under Section 72 needs to be rejected as the pursuant to the enquiry, details/data was sought from M/s. Urenok Software, who owned the software Zenoti, but they refused to furnish and the option available with the Department was to resort to best judgement under Section 72 of the Act.

Denial of cum-tax benefit u/s 67(2) - HELD THAT:- We do not find merits in the submissions of the Revenue for the simple reason that the appellant had filed all the ST-3 Returns and maintained the audited accounts. The Department had resorted to best judgement assessment under Section 72, and therefore, in view of the decision of the Tribunal in G.D. Goenka Pvt. Ltd. Vs. Principal Commissioner, CGST [2023 (8) TMI 995 - CESTAT NEW DELHI] the error, if any, was on the part of the officer, who was responsible for the assessment. Further, there is no doubt that the issue is one of interpretation as to whether the service rendered by the appellant would fall under the health care service and would therefore, be entitled to exemption or they would be covered under the cosmetic and plastic surgery leviable to service tax. It is a settled principle of law that where the issue is one of interpretation, the element of suppression or misstatement cannot be attributed on the assessee and therefore, the extended period cannot be invoked.

Thus, the Adjudicating Authority is required to recalculate the duty liability, accordingly. For the reasons stated above, the impugned order is hereby set aside. The appeal is allowed by way of remand.

Extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 - reverse charge mechanism / liability of service recipient - burden of proof on Revenue to establish fraud, collusion, wilful misstatement or suppression of facts - HELD THAT:-Appellant is a service provider providing manpower supply/security services. Service tax in respect of these services as per Notification No.30/2012 as amended by Notification No. 07/2015 dated 01.03.2015 is to be paid by the recipient of the services and not the service provider. Appellant by in his ground of appeal before Commissioner (Appeals) specifically taken this point and he also produced certain documents as per which he claimed that the service tax was to be deposited by the serve recipient and who has duly deposited the same.

In case of reverse charge mechanism, law is very categorically clear and it is in cases where service tax is to be paid by the service recipient and liable to pay service tax by the service recipient is completely distinct from the liability of service provider to pay service tax.

It is clear that in respect of the services where the service tax is to be paid 100% on reverse charge basis, service provider is not required to pay in respect of liabilities of service recipients. Even if no service tax has been paid by the service recipient demand could not have been demanded from service provider i.e. appellant.

There is enough sufficient ground for the appellant to entertain bonafide belief that he was not required to pay any tax in respect of the consideration received for the provision of taxable services on which service tax was to be discharged by service recipient on reverse charge. That being so the demand made against the appellant by invoking extended period of limitation could not have been sustained. Appellant had specifically taken ground to this effect in their appeal before Commissioner (Appeals) and Commissioner (Appeals) failed to record any finding in this regard.

Demand made by invoking extended period cannot be upheld. Thus, find no merits in the impugned order and the same is set aside.

Appeal is allowed.

Supply of Tangible Goods for Use (STGU) service - transfer of right to use goods / deemed sale under Article 366(29A)(d) - possession and effective control test for distinguishing sale from service - payment of VAT as indicium of deemed sale - application of Bharat Sanchar Nigam Ltd. attributes for transfer of right to use

Supply of Tangible Goods for Use (STGU) service - possession and effective control test for distinguishing sale from service - payment of VAT as indicium of deemed sale - application of Bharat Sanchar Nigam Ltd. attributes for transfer of right to use - Whether supply of site analyser machines on hire to clients amounted to a taxable STGU service or constituted a transfer of right to use/deemed sale attracting VAT so as to exclude service tax liability - HELD THAT: - The Tribunal examined the contractual and factual matrix and applied the tests laid down in Bharat Sanchar Nigam Ltd. and allied authorities to determine whether right of possession and effective control passed to the recipients. The Tribunal noted that the machines were supplied for use for specified periods, recipients exercised operational control (including directions to operators, provision of fuel, restrictions on movement without customer pass), and VAT was paid by the appellant on hire charges. Reliance was placed on earlier Tribunal decisions (including Express Engineers, Lindstrom, MSPL and others) and departmental circulars which treat payment of VAT and the transfer of possession/effective control as strong indicators of a deemed sale under Article 366(29A)(d). Applying these principles to the facts, the Tribunal found that the right of possession and effective control stood transferred to the clients, the transactions were treated as sale/deemed sale for VAT purposes, and therefore did not constitute taxable STGU service under the Finance Act for the periods in dispute. [Paras 6, 7, 11, 12]

Impugned order confirming service tax demand, interest and penalties was set aside; appeal allowed with consequential relief.

Final Conclusion: On the facts and consistent authority, the supply of site analyser machines to clients was held to involve transfer of right of possession and effective control and to have been treated as a deemed sale (VAT paid); consequently, no service tax under the STGU category was leviable for the periods in dispute and the impugned order is set aside.

Exemption under Notification No.13/2003-ST - Classification as Business Auxiliary Services - Validity of Board Circular No.66/15/2003-ST - Commission as commission agent for distribution of mutual fund units - Section 65(50) of the Finance Act, 1994 - HELD THAT:- After going through the appeal papers and factual details produced before, it is find that undoubtedly the amount earned by the Appellant is only on account of commission received for distribution of mutual funds. This issue stands squarely covered by the decision of the Principal Bench, New Delhi in the case of Commissioner of Service Tax, Delhi v. P.N. Vijay Financial Services (P) Ltd. [2008 (9) TMI 72 - CESTAT, NEW DELHI],wherein the Principal Bench has taken the view that no Service Tax is required to be paid.

Following the ratio laid down and the above decision, I set aside the impugned order. The Appeal filed by the Appellant stands allowed along with consequential relief, if any, as per law.

Definition of "service" under Section 65B(44) - levy of service tax under Section 66B - declared service under Section 66E(e) - agreement to do or refrain from an act - distinction between assignment/transfer of copyright and provision of a service - consideration for an activity and its role in constituting a taxable service

Definition of "service" under Section 65B(44) - levy of service tax under Section 66B - distinction between assignment/transfer of copyright and provision of a service - consideration for an activity and its role in constituting a taxable service - Whether the activities undertaken by the appellants in acquiring, monetising and promoting music/song-video rights amount to a "service" liable to service tax under Section 66B read with Section 65B(44) for the period April, 2016 to June, 2017. - HELD THAT: - The Tribunal found that the appellants acquired exclusive copyrights and became rightholders under contractual assignments; the activities of monetisation and promotion were undertaken for exploiting rights acquired by the appellants themselves and not in a provider-client relationship as required by the definition of "service". Examination of the assignment agreement (Articles 2, 10 and 14) showed the appellants' obligations and receipts arise from exercising assigned rights and recoupment mechanics, not from providing services to the assignors. The Tribunal emphasised the factual and commercial distinction between promoting music/song videos and promoting films, and that marketing undertaken to commercially exploit acquired rights benefits the appellants, not the assignors. Consequently, treating marketing expenditures or recouped amounts as consideration for a service was incorrect; absent a service, such amounts cannot be recharacterised as taxable value under Section 66B. The Tribunal relied on precedent and reasoning distinguishing principaltoprincipal commercial transactions from service relationships, and concluded the adjudicating authority's characterization was not supported by the agreement or evidence. [Paras 6, 9]

Activities of acquiring, monetising and promoting the music/songvideo rights by the appellants do not constitute a "service" for levy under Section 66B read with Section 65B(44); the demands confirmed in the impugned order on this ground are set aside.

Declared service under Section 66E(e) - agreement to do or refrain from an act - consideration for an activity and its role in constituting a taxable service - Whether the contractual obligation to incur marketing and promotion expenditure (described in the agreements) falls within declared service under Section 66E(e) and thus attracts service tax. - HELD THAT: - The Tribunal examined the scope of Section 66E(e) and authorities holding that clause (e) applies only where the purpose of the agreement is to tolerate or refrain from an act and there is an agreement to that effect. The Tribunal observed that mere contractual obligations to spend for marketing as part of consideration for assignment do not, by themselves, create an independent agreement to do or tolerate an act for the benefit of the assignor. Reliance was placed on prior tribunal and appellate decisions which disallowed treating penal/recoupment or marketing obligations as consideration for declared services under Section 66E(e) when the true commercial intention was transfer/exploitation of rights by the assignee. Applying those principles to the assignment agreements, the Tribunal concluded there was no separate agreement to do or tolerate an act that would convert the marketing obligation into a declared service. [Paras 8, 10, 14]

The contractual marketing/promotion obligation does not qualify as a declared service under Section 66E(e); the levy on that basis cannot be sustained.

Final Conclusion: The appeal is allowed. The Tribunal set aside the impugned order dated 18.07.2024 to the extent it confirmed servicetax demands and penalties; the activities in question are not taxable services under the Finance Act, 1994 for April 2016-June 2017 and the assessed demands are withdrawn.

Admissibility of Cenvat Credit on tower materials, PSC poles and AAA conductors as input or capital goods - CESTAT Kolkata appellate review of revenue demand confirmed by Commissioner - Explanation 2 to Rule 2(k) of the Cenvat Credit Rules, 2004 - HELD THAT:- The Appellant filed detailed replies wherein it was explained that the Appellant has rightly availed Cenvat Credit on the items under dispute. It was further submitted that the demand for recovery of credit to the tune of Rs. 1,10,54,404/- reflected as opening balance in the books pertains to the period prior to the year 2009 and is therefore, time-barred being prior to the five years limitation period.

Considering the fact that the said issue has been examined in this Tribunal in appellant’s own case [2023 (7) TMI 303 - CESTAT KOLKATA]., held that- " hold that it satisfies the definition of 'input' as defined under Rule-2(k) of the said Rules. In this regard, we agree with the findings of the adjudicating authority. Since the department has accepted the payment of duty on Towers by considering them as 'excisable goods', the credit availed on the inputs used in manufacturing the excisable goods cannot be denied. Thus we hold that the Commissioner has rightly dropped the demand in the impugned order and the dropping of the demand is sustainable."

Thus, we hold that the appellant is entitled to take Cenvat Credit for providing cellular telephone services. In view of this Cenvat Credit cannot be denied to the appellant. Therefore, impugned order is set aside and appeal is allowed with consequential relief, if any.

Tour operator service - CENVAT credit - extended period of limitation - suppression of facts - stage carriage - Suppression of facts - Show cause notice (SCN) - ST-3 return scrutiny -Non-payment of service tax on tour operator services. - HELD THAT:- The dispute is not with regard to the services provided by the appellant operating stage carriage buses. In addition to the stage carriage buses, the appellant had entered into an agreement with RTDC according to which in order to promote tourism within Rajasthan and also from point to point between Jaipur and Delhi and Jaipur and Agra, the appellant operates buses. RTDC provides hotel accommodation, food etc., at specific points. The entire amount of money collected by the appellant for transporting people from point to point between Jaipur and Delhi and Delhi and Agra and also from point to point within Rajasthan is retained by the appellant. A token amount of 10 paise is given to the RTDC. The question which arises is whether running of buses in this fashion from point to point is covered by definition of tour operator service. According to the appellant, it does not amount to providing tour operator service and hence no service tax needs to be paid. Appellant relied on the decisions indicated above.

According to SVR Tour & Travels [2016 (6) TMI 774 - CESTAT HYDERABAD] only if a tour is organized for a group through a common planning, scheduling etc., service tax as a tour operator service is payable. If a vehicle merely transports passengers from one place to another without a common contract and charges each passenger a fare it is more akin to transportation of passengers than a tour operation.

Wrong availment of CENVAT credit - HELD THAT:- No CENVAT credit can be availed on inputs and input services used in manufacture of exempted goods or for providing non-taxable services. The service provided by the buses is undisputedly not taxable. Therefore, service tax paid on third party insurance of buses which are used for carrying passengers cannot be taken by the appellant. Therefore, the denial of CENVAT credit on this count needs to be upheld.

Limitation - HELD THAT:- Once the ST-3 returns are filed or even if they have not been filed by the due date, it is for the Range officer to scrutinize the ST-3 Return, call for any additional information or accounts required. Since the Range officer must be already aware of the issues in dispute, it is incumbent upon him to scrutinize the Returns and raise demands within the normal period of limitation. The department cannot say that it was not aware about the activities of the assessee and claim suppression of facts or mis-statement to invoke extended period of limitation. This is the law laid down by the Supreme Court in Nizam Sugar Factory versus Collector of Central Excise, [2006 (4) TMI 127 - SUPREME COURT].

Cenvat credit on input services - forfeiture / cancellation charges as consideration - burden of proof on Revenue to establish personal consumption - exclusions in Rule 2(1) of service tax / definition provisions - HELD THAT:- As regarding cenvat credit availed inputs services such as club membership fee, catering service and cab services, this issue is no longer res integra and is squarely covered by the decision of CCE vs. Sony Pictures [2024 (6) TMI 1109 - BOMBAY HIGH COURT] While considering the issue, Tribunal in the mater of Sony Pictures Networks India Pvt. Ltd. vs. CST, Mumbai [2019 (12) TMI 1171 - CESTAT MUMBAI]

Fact being so, denial of cenvat credit as ineligible is not supported by any admissible evidence that these services are not utilised for the output services and cannot be denied.

With regard to the forfeiture amount, which is received as compensation towards cancellation of bookings by the customers, this issue was considered by this Tribunal in the case of TATA Housing Dev. Co. Ltd. vs. CGST [2025 (5) TMI 1019 - CESTAT BANGALORE] and by following the Circular No.214/1/23 dated 28.2.2023 it is held that the amount received is only a compensation and not consideration for any service rendered by the appellant. Hence, demand on this count is also set aside.

In view of the above discussions, the impugned order is set aside and the Appeal is allowed.

Condonation Of Delay - HELD THAT:- Delay condoned.

No case is made out for interference with the impugned order [2025 (10) TMI 1128 - CESTAT CHENNAI] passed by the Customs, Excise and Service Tax Appellate Tribunal, Regional Bench, Chennai.

The appeals are, accordingly, dismissed.

Condonation Of delay - beyond time by 308 days - HELD THAT:- We do not find any satisfactory explanation to condone the delay. Accordingly, the appeal is dismissed on ground of delay.

Valuation of excisable goods - Transaction value - Related person - Inter-connected undertaking - Mutuality of interest - HELD THAT:- In the present case, it is not in dispute that they are not selling only to their related undertaking but also to some other unrelated parties. Though the adjudicating authority has not appreciated this aspect by considering that no distinction can be made and since no goods were cleared to unrelated parties, however, there is nothing in the SCN to allege that they were clearing goods only to their inter-connected undertaking or for that matter, it was merely a stock transfer.

Mutuality of interest cannot be taken for granted just because the interconnected undertakings are subsidiaries of the same holding company.

We also note that in the case of Ispat Industries Ltd Vs CCE [2007 (2) TMI 5 - CESTAT, MUMBAI-LB], it was held that Rule 9 and 10 cannot be invoked where the goods are sold to both related and unrelated parties.

We find that an attempt has been made by the adjudicating authority to hold that even if Rule 9 and 10 of Central Excise Valuation Rules were not applicable, the valuation in the case should be under clause (b) of subsection (1) of section 4 as there was no sale between the appellant and their interconnected undertaking and it was mere stock transfer and further, he assumed that since Rule 9 and 10 of Valuation Rules were not directly applicable, he resorted to Rule 11 to decide the valuation. Firstly, in this regard, we find that the department has charged that the valuation should be done as per Rule 9 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 read with section 4(1)(b) and has not proposed invocation of Rule 10 or 11. Therefore, confirming the demand invoking Rule 11 is not applicable. It is a case where clearly the demand was proposed based on valuation under Rule 9, where the goods were required to be sold only through the related person prior to 01.12.2013, which is not the case in the present appeal and post amendment, while it is covered as part sale is also included under Rule 9, but the same interconnected undertaking is also required to be related in the manner specified in either of sub-clauses (ii), (iii) or (iv) of section 4(3)(b). We find that the department has not been able to establish that they were otherwise also related in terms of said sub-clauses.

Therefore, we do not find that demand is sustainable on merit and therefore, the impugned order is set aside and the appeal is allowed. Since the demand is not sustainable on merit, penalty, etc., is also not sustained and the issue of limitation is also not examined and is left open.

Appeal allowed.

Clearance of packing materials as 'scrap' - mis-declaration and suppression with intent to evade duty - invocation of extended period of limitation - burden of proof on the claimant/assessee - conditional notifications and requirement of prior permission under Board circular - Notification No.52/2003-Cus - 22/2003-CE - Board's Circular F.No.305/68/86-FTT dated 15.07.1986 - HELD THAT:- We find that the period is from October 2009 to May 2014 for which SCN dt. 03.11.2014 was issued under Section 28 (4) of the Customs Act, 1962 and the allegation in the SCN is that they have also suppressed the fact of clearance of packing material as such in the guise of ‘scrap’ and mis-declared the same as ‘other organic compounds’ but however, nothing was brought on record establishing the fact of suppression with an intention to evade payment of duty.

From a perusal of the pleadings advanced by the Appellant both before the lower authorities as well as before us, it is their case that the mention of CETH (as 29420090) was by mistake in their returns since the above classification was for their final product.

However, the Department would normally go by the returns (E.R.2) filed which is the foundation and hence, it is not expected of an Assessee to declare something and claim bonafides, because going by the very such returns, the Department would start the proceedings as prescribed under the statute, if required. It may be therefore that such declaration is by taking a chance that the Department might accept which would ultimately result in loss to the exchequer. Hence, we do not agree with the contentions of the Appellant that there was no suppression as according to us, the same was very much evident from their own returns which lead or mislead the Department into initiating the proceedings which has resulted in demand of lawful duty.

Thus, we do not find any merit in the Appeal and hence, we dismiss the same.

Place of removal - clearances made to OEMs - CENVAT credit on outward transportation (GTA services) - extended period of limitation - interest under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 - penalty u/s 11AC of the Central Excise Act, 1944 -

Whether, the place of removal for clearances made by the appellant to OEM customers is the factory gate of the appellant or the premises of the OEM customers, when the supplies are made on FOR destination basis. - HELD THAT:-

Since the determination of the place of removal is foundational to the dispute and depends upon verification of primary contractual documents, the matter requires to be remanded for limited factual verification.

Accordingly, the matter is remanded to the original adjudicating authority only for the limited purpose of verifying, contract-wise and transaction-wise, whether the clearances to OEM customers were effected on FOR destination basis.

Where, upon such verification, the clearances are found to be on FOR destination basis, the OEMs’ premises shall be treated as the place of removal.

Where any clearance is found to be on ex-factory basis, with transfer of property at the factory gate, such clearances shall be treated accordingly, after recording specific findings.

Admissibility of CENVAT Credit on Outward Transportation - HELD THAT:- It is a settled legal position that where the buyer’s premises are held to be the place of removal, outward transportation up to such premises qualifies as an eligible input service, as held in CCE v. ABB Ltd. [2011 (3) TMI 248 - KARNATAKA HIGH COURT], CCE v. Vasavadatta Cements Ltd. [2010 (9) TMI 865 - KARNATAKA HIGH COURT] and Sanghi Industries Ltd. v. CCE [2019 (2) TMI 1488 - CESTAT AHMEDABAD]

In this case, the Tribunal examined whether CENVAT credit on outward GTA services was admissible where cement was cleared on FOR destination basis. The Tribunal held that where freight and insurance were borne by the assessee, risk remained with the seller during the transit, and delivery was completed at the buyer’s premises, such premises would constitute the place of removal. On facts, it was found that the sale was completed only upon delivery at the buyer’s premises, and therefore credit on outward transportation was admissible.

Since the place of removal itself is remanded for verification, the admissibility of CENVAT credit on outward GTA services must necessarily follow such verification.

We therefore refrain from recording a final conclusion on Issue and leave the same to be decided consequentially, within the limited scope of remand.

Limitation – Invocation of Extended Period - HELD THAT:- In view of the settled law laid down by the Hon’ble Supreme Court in Chemphar Drugs & Liniments [1989 (2) TMI 116 - SUPREME COURT], Pushpam Pharmaceuticals [1995 (3) TMI 100 - SUPREME COURT], Continental Foundation [2007 (8) TMI 11 - SUPREME COURT] and Uniworth Textiles [2013 (1) TMI 616 - SUPREME COURT] we hold that mere non-acceptance of the appellant’s legal interpretation cannot be equated with suppression or wilful misstatement. Consequently, invocation of the extended period of limitation cannot be sustained mechanically and must be preceded by clear and specific findings establishing intent to evade duty.

Accordingly, we hold that the invocation of the extended period shall be re-examined by the adjudicating authority only in respect of those transactions, if any, which are found to be ex-factory clearances upon remand, and only after recording clear and reasoned findings of suppression or wilful misstatement in accordance with the law laid down by the Hon’ble Supreme Court.

Interest and Penalty - HELD THAT:-

In the present case, the appellant is a large, registered manufacturer, regularly filing statutory returns and subjected to departmental audits. The availment of CENVAT credit on outward GTA services was reflected in the records maintained by the appellant, and the dispute has arisen only on account of a different interpretation adopted by the Department during audit. In such circumstances, no element of mens rea can be presumed.

The adjudicating authority, while passing the order on remand, shall therefore re-examine the issue of interest and penalty only as a consequential exercise, strictly confined to the limited scope of remand and in accordance with the legal principles set out as above.

Thus, the appeals are allowed by way of remand.

Eligibility for SSI exemption - manufacturing unit being located in a rural area - Interpretation of "brand name" and usage of another's brand - Location in rural area for entitlement to SSI exemption - Burden of proof on Revenue to establish ownership of brand - Requirement of mens rea for imposition of penalty - HELD THAT:- It is observed that LAA has not found that the document submitted is forged or fake. Absence of letter head of the issuing authority or name stamp of the signatory etc. are reasons which are sufficient to suspect the genuineness of the document but are not sufficient to hold that the document is not authentic or genuine. The impugned order passed by LAA not only fails to mention whether the document submitted by the Appellant before the LAA is sufficient if the same is found to be genuine but also fails to specify the documents that are needed to establish that the manufacturing unit of Appellant is located in rural area.

Thus, it is found that the Appellant unit is located in rural area and consequently, the Appellant is eligible for exemption under notification No. 8/2003-Central Excise dated 01.03.2003 applicable to SSI units.

In the instant case, it is alleged that the goods manufactured by the Appellant bear brand names which are owned by Ozonic Health Care and Aksaya Agencies. It is an undisputed fact that the proprietor of Ozonic Health Care, viz. Shri J. Somasundaram, is the Managing Director of the Appellant firm and the proprietrix of Aksaya Agencies, viz. Mrs. Somasundaram, is a Director of the Appellant firm as evident from the following observation made by the original adjudicating authority in para 34 of the order-in-original dated 30.03.2016.

Both the substantive issues for consideration in this appeal are decided in favour of the Appellant and against Revenue. Therefore, the demand of Central Excise duty along with interest thereon is set aside and consequently, the penalties on the Appellant and the co-appellant Mr. J. Somasundaram, MD of the Appellant are also set aside. Since demand is set aside on merits, there is no need to go into the Appellant’s contentions regarding error in quantification of demand and accordingly, the same are not taken up for discussion.

Thus, the appeals are allowed with consequential relief, if any, as per the law.

Valuation of captively consumed goods - Whether the clearances made by the appellant to its own units for captive consumption is to be valued in terms of Rule 8 of the Valuation Rules or on the basis of the price, on which, the sales are made to independent third party buyers in terms of Rule 4 of the Central Excise valuation (Determination of price of excisable goods) 2002 read with Section 4(1)(b) of the Central Excise Act, 1944. - HELD THAT:- The issue has been examined by this Tribunal in the case of Jindal Steel & Power Limited Vs. Commissioner of CGST & Central Excise, [2026 (1) TMI 648 - CESTAT KOLKATA] " hold that the appellant has correctly valued their goods in terms of Rule 8 of the Valuation Rules and therefore, the demand of central excise duty by adopting Rules 4 and 11 of the Valuation Rules is not sustainable.”

In view of this, we hold that the appellant has rightly paid the duty in terms of Rule 8 of the Valuation Rules, 2000. Therefore, the demand of Central Excise duty as per the impugned order is not sustainable. Accordingly, the impugned demand is set aside and the appeal is allowed with consequential relief, if any.

CENVAT credit for duty paid on finished goods at de-bonding of 100% EOU - Extended period of limitation and invocation - Imposition of penalty and demand of interest - Rule 15(2) of the CENVAT Credit Rules, 2004 - HELD THAT:- It is a fact that at the time of de-bonding, the appellant had paid duty on the finished goods lying in stock as per the de-bonding permission granted by the Development Commissioner. Once the unit becomes a DTA unit, all these inputs and finished goods become inputs in the DTA unit, on which the appellant will be undertaking further manufacturing process or will clear them on payment of appropriate duty. Thus, we do not find any infirmity in the availment of credit on the finished products on which appropriate duty has been paid by the appellant at the time of de-bonding.

Therefore, we do not find any merit in the impugned order denying the credit to the appellant. Consequently, we set aside the impugned order and hold that the appellant has rightly availed CENVAT Credit on the finished goods, on which appropriate duty had been paid at the time of de-bonding of the 100% EOU.

Thus, we take note of the fact that the de-bonding of the 100% EOU and the payment of duty was well within the knowledge of the Department. In fact, the debonding was done and duty was paid, which was acknowledged by way of ‘No Dues Certificate’ issued on 02.08.2012. However, the Show Cause Notices in question were issued by invoking the extended period of limitation, on 28.04.2017 and 01/02.08.2017. Thus, we find that the appellant have not suppressed any information from the Department. Therefore, we agree with the submission made that the demand raised by invoking the extended period of limitation cannot sustain. Accordingly, we set aside the demand raised by invocation of the extended period of limitation.

Thus, the appellant succeeds on merits as well as on limitation.

As the disallowance of CENVAT Credit itself is not sustainable, the question of demanding interest or imposing penalty does not arise. Accordingly, we set aside the demand of interest as well as the imposition of penalty in the impugned order.

In the result, we set aside the impugned order and allow the appeal filed by the appellant, with consequential relief, if any, as per law.

Vicarious liability of directors u/s 141 of the Negotiable Instruments Act, 1881 - Statutory presumption - legally enforceable debt - prima facie case under Section 138 NI Act - invalidity of instrument for violation of bank mandate - mastermind/fraud defence as triable issue - holder in due course - forum shopping and abuse of process - inherent jurisdiction of the High Court - summoning at threshold versus trial on evidence - HELD THAT:- It is a settled principle of law that a litigant cannot pursue parallel remedies for the same relief in different forums. The Apex Court in Krishnan vs. Krishnaveni [1997 (1) TMI 529 - SUPREME COURT] held that while the High Court's inherent power under Section 482 CrPC (now 528 BNSS) is wide, it should be exercised sparingly, especially when a Revision has been filed.

The Petitioners failed to disclose the filing/pendency of the Revision Petition in their initial pleadings before this Court, which indicates a lack of bona fides. Moreover, it is a settled principle, as held in the case of Tejram Mahadeorao Gaikwad v. Smt. Sunanda Tejram Gaikwad [1995 (8) TMI 354 - BOMBAY HIGH COURT] that ordinarily the petitioner must approach the first Revisional Court before approaching the High Court under s.481 CrPC.

Consequently, the defense of ‘Violation of Bank Mandate’ is a triable issue and a probable defense that may be proved during the course of the trial. At this stage of summoning, with no denial that the impugned Cheques had the signatures of Mr. Ramakant Pilani, the statutory presumption remains in favor of the Complainant.

The drawer of the cheque is the Company. Under Section 141 of the NI Act, every person who was in charge of the Company at the time of the offence is deemed guilty. The internal dispute regarding whether Mr. Ramakant Pilani exceeded his authority, is a matter for the Company to settle through its own civil or criminal remedies against him, for which it has already got the FIRs registered, but it does not extinguish the prima facie liability under Section 138 NI Act towards the lender.

In the present case, the Complainant has placed on record a Facility Agreement dated 26.10.2023 and an Addendum dated 30.01.2024, which documents the contractual basis of the debt. They have also provided evidence of disbursement of over Rs 21.54 Crores. The Petitioners’ argument that they did not benefit from this disbursement because of internal siphoning, is a matter of corporate audit and criminal investigation by the EOW, but it does not ipso facto invalidate the lender’s claim against the Petitioners, at the threshold.

The contentions raised by the Petitioners, that Mr. Ramakant Pilani, committed fraud, opened fake accounts, and signed cheques without authority, are factual defenses. Whether the Board Resolutions were forged or genuine, and whether the Company is a victim or a participant, requires evidence. The ‘Mastermind Theory’ presented by the Petitioners falls squarely within the category of a defense that is required to be tested during the Trial.

The Petitioners’ contentions essentially entail conducting of a ‘mini-trial’ by evaluating the merits of their FIRs and the findings of the EOW investigation, to override the Complainant’s case. It is a settled principle that at the stage of summoning, the Ld. Magistrate is only required to see if a prima facie case is made out. The truthfulness of a defense, however plausible, is a matter for trial.

The grounds raised by the Petitioners involve disputed questions of fact, which can only be adjudicated after leading evidence during the trial.

The High Court declined to quash the Summoning Orders.