TaxTMI Updates e-Newsletter
Feb 03,2026

Maintainability of writ petition in cases of fraudulent availment of Input Tax Credit - Exercise of extraordinary writ jurisdiction under Article 226 and 227 of the Constitution - Principles of natural justice - Relegation to statutory appellate remedy - HELD THAT:- We do not find a good ground to interfere with the impugned order/judgment [2025 (12) TMI 1789 - DELHI HIGH COURT] in exercise of our jurisdiction under Article 136 of the Constitution of India. Accordingly, the special leave petitions stand dismissed.

Judicial review of High Court order - special leave petition - refund directed by appellate authority - extension of time for compliance - HELD THAT:- We are not inclined to interfere with the impugned judgment and order of the High Court; hence, the special leave petition is dismissed.

However, the time to refund the amount by the respondent as directed by the appellate authority, is extended by two months from today.

Writ appeals - Division Bench precedent - Stare decisis - Identical contentions negatived - HELD THAT:- We are not inclined to interfere with the impugned order(s) [2025 (9) TMI 1738 - KERALA HIGH COURT] in exercise of our jurisdiction under Article 136 of the Constitution of India.

Special Leave Petitions are, accordingly, dismissed.

Service of notice by upload on statutory electronic portal and adequacy of communication - non-service of show cause notices uploaded on the GST portal -denial of opportunity of personal hearing and breach of principles of natural justice - maintainability of writ jurisdiction under Article 226 of the Constitution - availability of efficacious alternative statutory remedy and forum of appeal - adjudication u/s 74 - modes of service u/s 169 - personal hearing requirement u/s 75(4) - HELD THAT:- This Court further observes that the exercise of writ jurisdiction under Article 226 of the Constitution of India is discretionary in nature and ordinarily ought not to be invoked where an effective and efficacious alternative statutory remedy is available, unless exceptional circumstances such as lack of jurisdiction, violation of fundamental rights, or a patent breach of the principles of natural justice are clearly established. Thus, this Court finds that the issues raised by the petitioner can be appropriately and effectively adjudicated by the appellate authority under Section 107 of the GST Laws.

This Court, therefore, observes that the present writ petition is not maintainable at this stage and is liable to be dismissed on the ground of availability of an alternative remedy, with liberty reserved to the petitioner to avail the statutory appellate remedy in accordance with law.

Consequently, the present writ petitions stand dismissed on the ground of availability of the alternative remedy.

Validity of assessment u/s 63 - Failure to afford opportunity of hearing / principles of audi alteram partem - Quashing and remand for fresh speaking order - Appeal u/s 107 dismissal on ground of limitation and restoration/remedy - Depository condition as interim measure - HELD THAT:- In view of the consensus arrived at between the parties, the present petition is disposed of by quashing the order dated 22.12.2023 passed by the respondent No. 4 and order dated 15.10.2025 passed by the respondent No. 3. The petitioner is granted fifteen days’ time from today to submit its response to the Show-Cause Notice, and, if necessary, an opportunity of hearing be also afforded to the petitioner. Thereafter, the respondent No. 4 shall pass a fresh speaking order in accordance with law after considering the petitioner’s response. The petitioner, in the meanwhile, shall deposit 10% of the total tax payable in terms of the demand raised, with the respondents.

Needless to say that this order shall not be treated as a precedent, as it has been passed having regard to the peculiar facts and circumstances of the case and on the basis of the consent of learned counsel appearing for the parties.

The petition, along with the connected application, stands disposed of accordingly.

Summons u/s 70 as an inquiry and not the initiation of proceedings - Inherent safeguards and procedure for arrest u/s 69 - Anticipatory bail where apprehension of arrest exists - Distinction between evidence-gathering post-search and assessment/proceedings - HELD THAT:- It is submitted that all the transactions carried out by the Petitioners, are duly backed by relevant tax Invoices for which payments were made through banking channels only.

It is claimed that the fraud committed in this case, is of an extraordinary nature, characterized by a persistent and ongoing practice of fraudulent evasion of Goods and Services Tax. This type of fraud transcends ordinary offenses and poses a significant threat to the integrity of the GST system. Furthermore, the Petitioner is derailing the investigation by not cooperating with the investigating authorities. Therefore, the recourse to present Writ Petition is improper, as the Petitioner has not approached the Court with clean hands.

It is explained that the date of appearance was inadvertently mentioned as 03.05.2024 in the Summons dated 06.05.2024, and thus a fresh Summons dated 20.05.2024 had been issued to him. Further, the Petitioner did not comply with the said summons; instead issued an email dated 24.05.2024, attaching some Tax Invoices issued for a different month.

In any case, the Summons dated 06.05.2024, 20.05.2024 and 28.05.2024 have all been issued for taking the statement of the Petitioners, and seeking the production of documents/ invoices against the goods seized during the search procedure conducted. There is no illegality in the said Summons to this extent, and the Respondent has acted well within its powers.

Further, the Petitioner No. 2 has been released on bail vide Order dated 27.05.2024. Seeking setting aside of Summons, is essentially seeking interim protection or an anticipatory bail, during an inquiry stage, i.e. essentially at a stage when the Respondent is collecting information and evidence based on suspicion and cannot be equated with the initiation of proceedings, as discussed above.

In view of the same, the present Writ Petition, is premature and liable to be dismissed. However, the Petitioners would be at liberty to approach the appropriate forum at the appropriate stage.

Thus, this Court finds no merit in the Writ Petition which is dismissed in the aforesaid terms.

Reversal of Input Tax Credit - Duty to consider statutory returns and portal records - Abdication of appellate duty - Setting aside of adjudication and appellate orders - Remand for fresh adjudication with opportunity of hearing - Exclusion of time for limitation - Prohibition on continued recovery pending fresh adjudication - Appellate Authority u/s 107 - HELD THAT:-It is not in dispute that the facts and figures that have been indicated to the Court are all available on the relevant portal of GST authorities in the relevant return Forms i.e. GSTR-1, GSTR-9 and GSTR 3B. In such situation, the Appellate Authority ought to have considered such facts and figures as available on the portal itself and then proceeded to answer the issues that were raised before it.

There is no discussion as regards the aforesaid facts and figures in the order impugned and there is nothing to indicate why the amounts mentioned in the said return Forms should not be considered. It is noticed that Ground no. 6 taken by the petitioner in the petitioner’s appeal and Ground II taken by the petitioner in its additional submission before the Appellate Authority which clearly indicate the same argument that has been made before this Court (albeit summarily) have been extracted in the appellate order, yet the same have not been dealt with. Not having done that, there is clear abdication of duty on the part of the Appellate Authority.

It is noticed that the Adjudicating Authority/Proper Officer has also not taken into consideration the said records i.e. Form GSTR 3B and GSTR-9, which were available with it while passing the adjudication order. For such reason, the adjudication order dated 16th January, 2024 also stands set aside.

The matter is remanded to the Adjudicating Authority/Proper Officer for fresh decision on merits. Needless to mention that the petitioner shall be afforded an opportunity of hearing before passing any adjudication order.

Since both the adjudication order as well as the appellate order impugned herein have been set aside, no recovery proceedings on the strength of the said orders can be continued any further.

Opportunity of hearing - principles of natural justice - personal hearing - date, time and venue - adjournments under Section 75(5) - reasoned order / requirement to set out relevant facts and basis of decision - remand for fresh adjudication

Personal hearing - date, time and venue - opportunity of hearing - adjournments under Section 75(5) - principles of natural justice - Impugned notice/order was issued without intimating date, time and venue of personal hearing, violating the requirement of affording opportunity of hearing and principles of natural justice. - HELD THAT: - The record shows the notice in Form GST DRC-01 issued on 21.11.2024 did not specify date, time or venue for personal hearing; all three columns record 'N.A.' Three reminders were thereafter issued as required by Section 75(5), but none communicated any particulars of a personal hearing. The Court held that where details of personal hearing are not incorporated in the notice before a final order is passed, the assessee must be intimated the date, time and venue of personal hearing; absence of such intimation amounts to a breach of the opportunity of hearing and principles of natural justice. The mere fact of the assessee's non-appearance cannot cure the failure to intimate hearing particulars. [Paras 5]

Finding of procedural infirmity upheld; impugned order set aside on this ground and matter remitted for fresh adjudication after affording hearing.

Reasoned order / requirement to set out relevant facts and basis of decision - principles of natural justice - Impugned order was non-reasoned and failed to set out relevant facts and basis of decision as required. - HELD THAT: - The impugned order recorded only that an ample opportunity was granted and that the petitioner remained absent; it did not deal with or record consideration of materials nor set out relevant facts and the basis for the decision. Section 75(6) requires the proper officer to set out relevant facts and the basis of his decision. The Court held that absence of the assessee does not absolve the officer from the duty to pass a reasoned order after considering available materials; a cryptic or unreasoned order is liable to be quashed. [Paras 3, 5]

Impugned order quashed for being unreasoned; fresh order to be passed after due consideration and hearing.

Final Conclusion: Writ petition allowed; impugned order dated 05.02.2025 and consequent proceedings quashed and set aside. Matter remitted to the jurisdictional State Tax Officer to pass a fresh order after affording the petitioner an opportunity of hearing and in accordance with law within 12 weeks from receipt of certified copy. Rule made absolute with no costs.

Limitation and condonation of delay in statutory appeals - Powers of the High Court under Article 226 vis-à-vis statutory limitation - Appellate authority's discretion to allow delay u/s 107(4) - Pre-Show Cause Notice and recovery proceedings u/s 74 and Rule 142(1A) - Ineligibility of Input Tax Credit u/s 16(2) -HELD THAT:- Section 107 (4) of the CGST / GGST Act, 2017 grants discretion to the Appellate Authority, to allow additional one month in case he/she is satisfied that the appellant was prevented by “sufficient cause” from presenting the appeal after 90 days, but within a period of 30 days. Thus, the discretion of the Appellate authority ends on the completion of additional 30 days. Such discretion does not extend to powers under Article 226 of the Constitution on India as well. The statute, thus provides additional one month to file the appeal, and all the reasons satisfying the expression “sufficient cause” can be raised by the appellant during the extended period of one month. Similar expression is found in section 5 of the Limitation Act, 1963, and Section 29 of Limitation Act, 1963 which deals with “Savings”, which prevents the overriding the provisions of specific statutes that have their own distinct limitation periods.

The reason assigned by the appellant in his application for condonation of delay dated 08.05.2025 is appeal memo is that due to misunderstanding of the appellate order as an original order, though it was an duplicate, the delay has occurred. Whereas in the writ petition, the reason mentioned is lack of knowledge of passing the order on GSTIN portal. We do not find the reason assigned by the petitioner satisfactory, as the petitioner is supposed to verify all orders passed on the GSTIN portal since he is engaged in business and has also filed refund applications.

We clarify that even if the appellant had a valid reason and sufficient cause explaining the delay, this Court cannot condone the delay beyond 120 days. The taxpayers are supposed to remain vigilant of all proceedings and have to timely verify the orders on the portal. The taxing statutes operate within very strict time frames, and any relaxation or easing of the limitation period will have a cascading effect on the functioning of the revenue.

It is interesting to note that the petitioner is seeking to challenge the show-cause notice after his appeal has been dismissed by the Appellate Authority on the ground of delay. The petitioner did not choose to challenge the show-cause notice at the relevant time and, all of a sudden, wisdom prevailed upon him, and he has challenged the same after the dismissal of the appeal.

Thus, we are not inclined to interfere neither with the impugned show cause not nor the impugned order.

Accordingly, the writ petition fails and the same is REJECTED.

Determination of tax not paid or input tax credit wrongly availed u/s 73 - Supplying manpower to its corporate clients - Chartered Accountant fraudulently manipulated its GST filings by adjusting fake input credits and misappropriating funds entrusted to him for tax payment - Principles of natural justice and opportunity of hearing - Maintainability of writ petition where statutory remedy of appeal is available - Agency and principal-acts of agent binding on principal - Appeals to Appellate Authority u/s 107 - Rectification and error apparent on the face of record u/s 161 - HELD THAT:- It is to be noted that in the instant matter, petitioner itself accepts that it was issued the abovestated demand orders under Section 73(9) of the Haryana Goods and Services Tax Act, 2017 (for brevity, ‘State Act’) and the Central Act, while submitting that the notices and order were not brought to its notice by its Chartered Accountant. Order dated 31.12.2023, Annexure P-2 itself mentions that petitioner was served with a show cause notice dated 29.09.2023 but it did not submit any response. It is further mentioned that personal hearing in the matter was scheduled on 26.12.2023 but nobody appeared on behalf of the petitioner. It is only after providing sufficient opportunities to petitioner that impugned order dated 31.12.2023 was passed. The said order also states that if petitioner is aggrieved thereof, it may file an appeal against the same before the Appellate Authority appointed under Rule 109A of the State Act and Joint Commissioner of State Tax (Appeal), Gurugram is authorized to hear such appeal. Similarly, order dated 26.04.2024 (Annexure P-3) also mentions that despite issuance of notice in form GST ASMT-10 dated 27.06.2023 to the petitioner, it did not file any response to the same within the prescribed time. In the order Annexure P-4 also, it has been mentioned that ASMT-10 dated 05.03.2024 and notice dated 17.05.2024 with adjournments and opportunity of hearing were afforded to the petitioner but it did not submit required reply.

No doubt, petitioner claims that its Chartered Accountant has cheated it and its partners but the fact remains that it is the case of petitioner itself that the said Chartered Accountant was acting on its behalf in respect of GST and other matters with the respondents. In that view of the matter, the said Chartered Accountant necessarily acts as an agent of the petitioner.

It is settled position that anything done by an agent on behalf of his principal is to be treated as done by the principal himself. Abovesaid impugned orders demonstrate that notices were served upon petitioner through the said Chartered Accountant, whom the petitioner has admitted to be acting on its behalf.

Furthermore, it is not the case of petitioner that it was not liable to pay the taxes/amounts mentioned in the impugned orders. What petitioner asserts is that it had, in fact, transferred the amount due to the department, to its Chartered Accountant who instead of depositing the same with respondents has misappropriated part thereof. If that be so, remedy of petitioner in respect thereof clearly lies elsewhere and not before this Court, which the petitioner is at liberty to avail in accordance with law.

Moreover, the ground as raised is a disputed question of fact which cannot be adjudicated upon in present proceedings and cannot be taken to be an extra-ordinary circumstance which calls for interference in the present writ petition. Insofar as challenge to order dated 05.05.2025 (Annexure P12) rejecting petitioner’s application for rectification is concerned, the same has been correctly passed. It has been rightly held by the authority that request for rectification cannot come under the purview of error apparent on the face of record as per Section 161 of HGST/CGST Act, 2017.

Writ petition is, accordingly, dismissed being devoid of merit.

Maintainability of writ petition under Article 226 when alternative statutory remedy exists - Relegation to statutory appeal and appellate remedy under the GST appellate scheme - Challenge to assessment/assessment order and show cause notice after participation in adjudication - HELD THAT:- Petitioner has effectively participated before the Competent Authority, and thereafter, the final order dated 16.10.2025 under Section 74 of the GST Act has been passed. Therefore, now the petitioner cannot challenge the validity of the show cause notice dated 18.08.2025 as well as the audit report ADT-02 issued on 29.07.2025 for the financial year 2020-21 and 2022-23. The Hon’ble Apex Court in the case of "State of Maharashtra & Others v/s Greatship (India) Limited" [2022 (9) TMI 896 - SUPREME COURT] has held that the High Court has seriously erred in entertaining the writ petition under Article 226 of the Constitution of India against the assessment order and ought to have relegated the writ petitioner to avail the statutory remedy of appeal.

Accordingly, all the grounds raised by the petitioner in this petition are liable to be raised before the Appellate Authority and thereafter, the petitioner shall have further remedy of approaching the GST Tribunal.

Petition is dismissed.

Regular bail- completion of investigation and filing of charge-sheet - documentary and electronic evidence - absence of criminal antecedents - economic offence - conditions of bail -work of filing of GST return as accountant -Offences punishable under Sections 132 (1) (a) - (d) of the CGST Act, 2017 read with Section 69 of the CGST Act, 2017 - HELD THAT:- It appears that petitioner was arrested in the present case on 14.10.2025 and investigation has been completed. There are no antecedents of petitioner and punishment for the alleged offence of evasion of tax is to the extent of five years and fine as prescribed under Section 132(1) of the CGST Act, 2017. The Hon'ble Supreme Court in case of Ratnambar Kaushik [2022 (12) TMI 263 - SUPREME COURT] released the petitioner therein on bail after undergoing incarceration period of more than four months and in view of fact that conclusion of trial will take some time, in totality of facts and circumstance and observation made by the Apex Court, without commenting on merits of the case, this Court deems it just and proper to release present applicant on ball.

Accordingly, it is directed that applicant be released on bail on his furnishing a personal bond in the sum of Rs. 5,00,000/- (Rupees Five Lacs only) with two solvent sureties in the like amount to the satisfaction of the trial Court, for his regular appearance before the trial Court during trial with a condition that he shall remain present before the concerned Court on all the dates fixed by it during trial. He shall abide by all the conditions enumerated under Section 480(3) of BNSS.

It is being made clear that in case of bail jump and in violation of any of conditions imposed herein above, this order shall become ineffective and Investigation Officer/Trial Court shall be at liberty to proceed against the applicant as per law.

GST neutralization- entitlement to reimbursement of GST paiyment - no claim certificate - final bill - supplementary agreement - Clause 11 of JPO dated 25.01.2018 - policy dated 27.10.2017 - Article 226 of the Constitution - HELD THAT:- From perusal of record it is evident that the payment of GST by the petitioner is duly verified by the respondent no.3 from the GST department and there is no dispute that the same was deposited by the petitioner. Therefore, there was no occasion for the respondents to deny the claim of the petitioner on mere technicalities. The supplementary agreement which was submitted by the petitioner was also forwarded by the respondent no.3 to the accounts department. The only plea that has been raised by the respondents in the reply is that the claim of the petitioner for GST neutralisation cannot be admitted after passing of final bill and submission of no claim certificate. Admittedly, the GST amount has to be paid by the respondents which in the instant case was paid by the petitioner as was confirmed by the GST Department. Respondent Department could not point out any legal ground due to which the petitioner should be denied his claim of GST neutralisation.

So far as the contention of the respondents that supplementary agreement is to be entered by the Executive with the Contractor is concerned, it is apparent from record that the supplementary agreement was presented by the petitioner with due signature but the same was not signed or executed by the respondents Department, a copy whereof is enclosed along with annexure P/4, therefore, it cannot be said that there was fault on the part of the petitioner.

Thus, in view of the foregoing discussion, the petitioner is entitled for reimbursement of the GST amount paid by him. Moreover, in view of the fact that in identical situation, the SEC Railway, Nainpur and SEC Railway Chhindwara has accepted the GST neutralisation claim of the petitioner after issuance of certificate of completion, which are marked as annexure P/14 and P/15 and completion certificate and GST neutralisation dated 18.8.2022, annexures P/16 and P/17, the petitioner in the instant case is also liable to get the GST reimbursement from the respondent/Department.

Thus, the petition is allowed and the respondent Department is directed to accept the GST neutralisation claim of the petitioner and reimburse the amount as per his entitlement.

Clubbing of multiple tax periods in a single show cause notice - quashing of show cause notice and consequent adjudication - jurisdictional validity of composite show cause notice - doctrine of liberty to initiate fresh proceedings in accordance with law - HELD THAT:- Taking note of the show cause notice issued in the present case at Annexure-’G’, which relates to the period spanning between April 2018 to March 2022 as well as on perusal of the order of adjudication, which happens once in a year and the tax period spans from 2017-2018 to 2021-2022 and in light of the decision in M/s. Pramur Homes And Shelters v. The Union of India and Others [2025 (12) TMI 1188 - KARNATAKA HIGH COURT], the show cause notice issued is defective. If that were to be so, the order of adjudication requires to be set aside.

Accordingly, the Order-in-Original at Order-in-Original at Annexure-’L’ dated 31.12.2024, Form GST-DRC-07 at Annexure-‘L1’ dated 16.01.2025, show cause notice dated 18.06.2024, dated 31.01.2025 and Form GST-DRC-01 dated 05.08.2024 at Annexure-’G’ are set aside as well as the consequent proceedings.

Condonation of delay in statutory appeals - constitutional jurisdiction under Article 226 - right to appeal as a valuable statutory right - appellate authority's jurisdictional limits under the CGST regime - principle against rendering remedies illusory - limit prescribed by Section 107(4) - Section 5, Limitation Act, 1963 - Whether the High Court, in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India, is precluded from granting relief merely because the statutory period of limitation prescribed under Section 107 of the Central Goods and Services Tax Act, 2017 has expired - HELD THAT:- The delay arose due to the negligence or omission of the petitioner’s accountant/local advocate. Established legal principle is that a litigant should not be penalized for the mistake of counsel, and denial of statutory rights on this basis results in injustice.

Cancellation of GST registration or missed appellate deadlines should not permanently debar a taxpayer from the GST framework, especially where the taxpayer intends to comply by filing returns, paying taxes, interest, and penalties, and rectifying defaults. In such cases, denial of opportunity to an assessee undermines the inclusive and facilitative objective of the GST regime. Non-restoration of GST registration in such cases also directly impairs the assessee’s ability to conduct business, earn a livelihood and leads economic paralysis, thus, violating Articles 14 and 21 of the Constitution by imposing disproportionate and unreasonable hardship.

Reverting to the case in hand, as far as explanation qua the sufficient cause leading to the delay in filing the statutory appeal in the present case, we are of the opinion that the petitioner had filed his duly sworn affidavit stating therein that it was due to the fault of the counsel/consultant accountant, who was interested with the responsibility of handling these matters, since, the same requires the expertise of a professional and therefore, they were under the bona fide belief that the needful is being carried out in the consultant counsel.

It is stated in the affidavit that it was due to the lack of communication and proper advisory on the part of the counsel/consultant accountant that the petitioner was deprived of taking timely steps to file the appeal within the prescribed period of limitation. Merely, because an objection was taken by the respondents that the affidavit of the petitioner is not accompanied by supporting affidavit of his consultant accountant/counsel, an act beyond the control of the petitioner, due to change of his counsel by him, the stand taken by petitioner cannot be given a short shrift.

Taking a wholesome view, the writ petition is allowed.

Criminal prosecution initiated u/s 276B(ii) and 278B - alleged non-payment of Tax Deducted at Source (TDS) for the Assessment Year 1983-1984 - Revenue Department quantified the compounding fee which was promptly paid by the Petitioner.

A warrant was issued against Accused No. 3, Mr. P.N.K. Sharma, despite the fact that he was long deceased AND Court ordered property attachment even after the Petitioner paid an additional interest amount of Rs. 2,07,935/- on July 5, 2017, to exhaust all possible claims

HELD THAT:- In fiscal offenses where the exchequer has been satisfied through the recovery of tax, interest, and compounding fees, the public interest in continuing a criminal prosecution evaporates. Any attempt to revive such a trial—especially against deceased parties—constitutes a gross abuse of the process of law.

The issuance of a warrant against a dead person is a nullity in the eye of the law. It reflects a reckless lack of application of mind by the Trial Court.

Trial Court’s insistence on invoking Sections 82 and 83 of the Cr.P.C. for proclamation and attachment, particularly after the company’s appearance through an authorized representative and the full settlement of dues, indicates a malfunction of the judicial machinery as the process was being utilized as a tool of harassment. In fiscal offenses, where the exchequer has been satisfied through the recovery of the tax, interest, and compounding fees, the public interest in continuing a criminal prosecution evaporates. Any attempt to revive such a trial—especially against deceased parties—constitutes a gross abuse of the process of law.

This Court is of view that in the event, a statutory compounding fee is accepted by the Revenue during the pendency of a stayed criminal proceeding, the offence is settled. Any subsequent attempt by a subordinate court to revive the trial on the grounds especially against deceased parties or after full financial restitution, constitutes an abuse of the process of law and a violation of the right to a speedy trial under Article 21 of the Constitution.

ORDER - a) The entire proceedings are hereby quashed and set aside.

b) All orders of attachment and warrants of arrest issued by the Learned Metropolitan Magistrate, 4th Court, Calcutta, are recalled and vacated with immediate effect.

c) The Opposite Party is directed to treat the compounding of the offence as finalized in light of the payments made.

d) The Officer-in-Charge of the concerned Police Station is directed to immediately cease all execution proceedings related to the attachment of the Petitioner’s property.

Inspection of seized assets - non-furnishing of information at the stage of search and seizure - whether the information or the reason that have prompted the inspection of seized assets should be supplied to the petitioner and secondly whether the impugned notices informing the petitioner about the inspection intended to be conducted have been issued for “any of the purposes of the Act”

HELD THAT:- A search u/s 132 must be based on "information" that gives rise to “reason to believe” that either all or any of the conditions mentioned in clauses (a), (b) and (c) of Section 132 (1) of the said Act of 1961 exist. Such aspect would be clear from a bare perusal of Section 132 (1) of the said Act of 1961 itself. Constitutional Courts consistently held that search and seizure operations are invasive acts. The Courts have therefore ruled that such act(s) must be based on some material or information in possession of the revenue that justifies the operation.

If any jewellery, bullion or other valuable article is seized during the search operation, the same is required to be inventoried/inventorised and secured in sealed packages in the manner prescribed in Rule 112(10) of the said Rules.

Inspection of a seized article is not an invasive act like search since it does not constitute any intrusion into someone’s private and untainted space. Inspection is usually verificatory in nature and the power to inspect a seized article can therefore be exercised even without “information” and “reason to believe” which are the sine qua non for a search operation. Accordingly unlike in a search operation, in cases of inspection of a seized asset “information” and “reason to believe” cannot be said to be jurisdictional facts for undertaking the exercise of inspection.

If an inspection is done for “any of the purposes of the Act”, the statutory criterion is met; once the statutory criterion gets fulfilled there can be no warrant for interference. Likewise if a notice is issued in terms of the statutory provisions, the same cannot be termed arbitrary. In such view of the matter there is nothing that may persuade the Court to direct the revenue to part with the information and reason that might have induced the inspection.

It is true that none of the notices has stated, with the desired specificity, that the inspection of the seized assets is required for the purpose of the pending proceeding under Section 263 of the said Act of 1961 but on a careful reading of the notice dated November 07, 2025 issued by the revenue in the light of the pleadings in the writ petition (i.e. paragraphs 26 and 30 thereof) and the submissions made on behalf of the respective parties it is almost clear that the impugned inspection is sought to be conducted for the purpose of pending Section 263 proceeding only. This Court is cognizant of the fact that the petitioner has questioned the nexus of the proposed inspection with the pending 263 proceeding in the writ petition especially in the pleadings in paragraphs 26 and 30 thereof but the very assertion that the proposed inspection has no nexus of with the said proceeding indicates that the petitioner has understood the notice have been issued in respect of or for the purpose of the said proceeding itself.

Thus in a proceeding under Section 263 of the said Act of 1961, the PCIT is empowered to make such inquiry as he deems necessary and inspection of seized assets may very well form part of such inquiry.

Whether a notice issued to the person concerned indicating that the same has been issued in connection with a pending 263 proceeding would satisfy the requirement of the notice contemplated under Rule 112(13) of the said Rules? - Inspection or inquiry conducted by statutory authorities can seldom be interfered with in situations where the person against whom such inspection or inquiry is directed or to whom the same is relevant, has opportunity to state his case before the appropriate authority prior to the final decision being taken. A notice calling upon a person to attend an inspection of a seized article cannot be treated as a decision and made justiciable.

What is required to be issued in terms of Rule 112(13) of the said Rules is a “reasonable notice to the person from whose custody the contents were seized to be present” and not a reasoned notice. Of course if a statutory authority acts arbitrarily or in contravention of the law, the same would certainly be liable to be dealt with by the Courts but not otherwise.

In the case at hand there is a pending proceeding under Section 263 of the said Act of 1961 and a notice of inspection issued for such purpose has to be seen as one for “any of the purposes of the Act”. If there had been no proceeding pending or the revenue could not connect the notice to “any of the purposes of the Act” even otherwise, the notice could certainly be interfered with on the ground of arbitrariness.

This Court does not find any reason to hold that the notices impugned have been issued dehors the law. The writ petition therefore stands dismissed.

Later:- After delivery of the judgment and order today, Mr. Mazumdar, learned Advocate appearing for the petitioner seeks stay of operation of this order. The same is opposed by Mr. Dutt, learned Advocate appearing for the respondent revenue authorities. Considering the facts of the case, operation of this order is stayed for a period of seven days from date.

Reopening of assessment u/s 147 - bogus invoices was claimed as expenditure - HELD THAT:- The amounts reflected in the ledger, we do not find that any income escaped assessment. On the contrary, the AO attempted to exhume the amount of Rs. 3,67,43,973/- as bogus purchase from the amount of Rs.14,07,06,100/-. The amount of Rs. 3,67,43,973/- was claimed as deduction not as part of bogus purchases, but on account of payment of Rs. 5,13,02,342/- made subsequent to the survey by DGGI. Even otherwise, the petitioner was never called upon by the AO to explain the alleged bogus claim of expenditure of Rs. 3,67,43,973/- as GST on bogus purchases. Hence, the impugned order and notice are required to be quashed and set aside. WP allowed.

Reopening of assessment - escapement of income of the deceased assessee - reliance on statement of Shri Ram Lal Nath - HELD THAT:- On careful perusal of the said statement, it is evident that there is no reference whatsoever to the deceased assessee, or to his investment in debentures of Kalpataru Fincap Ltd.

Though the statement may refer to the present petitioner holding a different PAN, the proceedings in question specifically pertain to the alleged escapement of income of the deceased assessee. The statement of Shri Ram Lal Nath, therefore, does not constitute tangible material against the deceased assessee.

It is not in dispute that the petitioner furnished complete documentary evidence explaining the source of investment, including bank statements, ledger accounts, debenture certificates, and financial statements. However, the impugned order under Section 148A(3) of the Act, does not reflect any consideration of these materials and is solely premised upon the statement of Shri Ram Lal Nath.

Significantly, the source of investment has not been doubted by the respondent. The reopening is sought only by doubting the nature of investment, without establishing how such investment constitutes income that has escaped assessment.

An investment made out of explained funds cannot, by itself, be treated as income. In absence of any finding of income chargeable to tax having escaped assessment, the jurisdictional precondition under Section 147 of the Act is not satisfied.

We find that in the Assessment Order and also in the show cause notice there is no whisper about any doubt on the source of fund which the petitioner has explained and also recorded in the impugned Assessment Order that the funds have been borrowed from family and friends for payment on interest basis and it is not in dispute that the said funds are invested in debentures of the Kalptaru Fincap Ltd.

Thus, we are of the considered opinion that the impugned notice issued under Section 148 of the Act and the order passed under Section 148A(3) of the Act are unsustainable in law.

Exemption u/s 11 - Charitable activity u/s 2(15) - HELD THAT:- We decide the present set of appeals on the aforesaid question(s) of law as decided by this Court inJaipur Development Authority [2024 (8) TMI 558 - RAJASTHAN HIGH COURT] and hold that the Income Tax Appellate Tribunal has rightly granted exemption u/s 11 of the Act by holding that the activities of the assessee are charitable in nature and therefore, consequential exemption was required to be granted on the benefits. The law as laid down in the case of Ahmedabad Urban Development Authority [2022 (10) TMI 948 - SUPREME COURT] would apply mutatis mutandis in the present cases. Decided in favour of the assessee.

Time limit for reopening assessment - Computation of six-year and ten-year periods under Section 153A - Proviso to Section 149(1) relating to assessments prior to 01.04.2021 - Reopening pursuant to search and seizure - Writ jurisdiction under Article 226 for pure question of law

Time limit for reopening assessment - Computation of six-year and ten-year periods under Section 153A - Reopening pursuant to search and seizure - Writ jurisdiction under Article 226 for pure question of law - Validity of notice under Section 148 and assessment order under Section 147 for Assessment Year 2012-13 where reopening emanated from a search conducted on 11.11.2022 - HELD THAT: - The Court applied the statutory scheme in Section 153A read with Explanation 1 and the earlier decision of this Court to determine the mode of computation for the six-year block and the ten-year outer limit. The date of search (11.11.2022) falls in the financial year 2023-24; the search-assessment year is therefore the first year of the block and the ten-year period is to be reckoned backwards from the end of that search-assessment year. Applying that computation, the tenth assessment year ends at 2014-15, making Assessment Year 2012-13 fall outside the ten-year outer limit. Since the reassessment for AY 2012-13 was initiated on the basis of the search but pertains to a year beyond the ten-year ceiling prescribed by Section 153A (read with Sections 148 and 149), the Assessing Officer acted without jurisdiction in issuing the notice and in completing reassessment. The Court further held that a pure question of statutory limitation and jurisdiction can be raised before the High Court under Article 226 even if not taken earlier before the revenue, because the limitation affects the very competence to reopen assessments. [Paras 7, 8, 9, 10]

The notice under Section 148 and the consequent assessment order under Section 147 for Assessment Year 2012-13 are quashed and set aside as beyond the ten-year period computed under Section 153A read with the applicable provisions.

Final Conclusion: Writ petition allowed: impugned notice under Section 148 and the consequent assessment order for Assessment Year 2012-13 quashed for being beyond the ten-year limitation prescribed by Section 153A read with Sections 148 and 149; no costs.

Penalty u/s 271AAC - assessee failed to substantiate the nature and source of the investment thereby resulting in an addition u/s 69 as unexplained investment - assessee was also non-compliant during the penalty proceeding and has failed to offer any explanation as to the unexplained credit/money in the form of cash deposits appearing in the bank accounts neither during the assessment proceedings nor during the penalty proceedings

HELD THAT:- On perusal of the acknowledgment of notice of hearing, it is evident that notice has been served upon the assessee. We, therefore, infer that the assessee has no explanation to offer nor has he any cogent evidences in support of his contention. Even on the merits of the case, penalty u/s 271AAC of the Act may be levied by the Ld. AO in a case where income determined u/s 68, 69, 69A, 69B, 69C or 69D in addition to the tax payable u/s 115BBE of the Act @ 10% of the tax payable u/s 115BBE(1) of the Act has not been paid on or before the end of the relevant previous year.

Assessee has also not corroborated the nature and source of the unexplained credit/money assessed during the course of the assessment proceeding before the lower authorities.

As observed that the assessee has been recalcitrant and unwilling to comply with the notices during the assessment proceeding, penalty proceeding and even during appellate proceeding. In the absence of any contrary contentions raised by the assessee, we deem it fit to hold that there is no infirmity in the finding of the CIT(A) which warrants no interference.

Appeal filed by the assessee is dismissed.

Addition made u/s 56(2)(vii)(b) - differential consideration of immovable property - Application of tolerance limit prescribed in the Proviso to Section 56(2)(x) and retrospective effect of amendment - HELD THAT:- We find that the differential consideration of Rs. 3,32,960 is within the 10 percent tolerance limit prescribed in the Proviso to Section 56(2)(x) of the Act. It is pertinent to note that the provisions of Section 56(2)(x) of the Act was introduced only from 1-4-2017. We are conscious of the fact that provisions of section 56(2)(x) was introduced from 1.4.2017 and that the fourth proviso thereon providing the tolerance limit of 10 percent had been introduced from 1.4.2021.

We also find that the third proviso to section 50C(1) of the Act providing the tolerance limit of 10 percent was introduced from 1.4.2019. It is well settled that the provisions of section 50C and 56(2)(vii)(b) and 56(2)(x) of the Act are pari materia with each other.

As decided Maria Fernandes Cheryl [2021 (1) TMI 620 - ITAT MUMBAI] had held that amendment made in scheme of section 50C(1) of the Act by inserting third proviso thereto and by enhancing tolerance band for variations between stated sale consideration vis-à-vis stamp duty valuation from 5 per cent to 10 per cent are effective from date on which section 50C of the Act itself was introduced, i.e 01-04- 2003. Though this decision was rendered in the context of section 50C which is applicable to seller of property, the same analogy would be applicable for the buyer of the property in terms of section 56(2)(vii)(b).

As differential consideration is less than 10% tolerance band, we hold that the addition made by the learned AO is to be deleted. Accordingly, the grounds raised by the assessee are allowed.

Exemption u/s 11 and 12 - Delay filing Form No. 10B -Denial of exemption on technical ground - HELD THAT:- HELD THAT:- We find that in the present case Form No. 10B was admittedly filed on 30-03- 2021, whereas the CPC processed the return only on 30-11-2021. Therefore, on the date of processing under section 143(1) of the Act, the audit report was already very much on record.

Denial of exemption under sections 11 and 12 on the ground of belated filing of Form No. 10B was thus, in our view contrary to the law laid down by the Hon’ble Gujarat High Court in SARVODAYA CHARITABLE TRUST [2021 (1) TMI 214 - GUJARAT HIGH COURT] and the consistent view taken by the coordinate benches of this Tribunal.

CIT(Appeals) erred in declining to condone the delay and in dismissing the appeal in limine without appreciating that the underlying adjustment itself ran contrary to binding judicial precedents and that Form No. 10B had been filed and was available at the time of processing of the return.

As we hold that the denial of exemption under sections 11 and 12 merely on account of alleged belated filing of Form No. 10B, when such form was already on record at the time of issuance of intimation under section 143(1), was not justified in law.

Appeal of the assessee is allowed

Reopening of assessment u/s 147 - approval of competent authorities according to Section 151 of the new regime before passing an order u/s 148A(d) - HELD THAT:- As prior approval of Principal Chief Commissioner or Principal Director General and where these two authorities are not there, then, the Chief Commissioner or Director General are competent authorities to grant the approval. However, in the case in hand, such approval of these competent authorities have not been taken and the copy of notice on record shows that the approval has been accorded by the Principal Commissioner of Income-tax-1 which seems to have been as per the old regime.

In the present case Approval was sought from Principle Commissioner of Income Tax-04, Delhi on 07.07.2022 while the law stands settled that as approval sought to have been taken of Principle Chief Commissioner of Income Tax and that vitiates the approval. Reliance is correctly placed of the decision of Rajiv Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] - Assessee appeal allowed.

Jurisdiction of Assessing Officer - Validity of assessment completed by a non-jurisdictional AO - Transfer of proceedings under Section 127 - Non-issuance of notice by the jurisdictional AO - HELD THAT:- In this case on perusal of the notice issued u/s.143(2) of the Act it is noticed that the same was issued by ITO, Ward-1, Karnal and the assessment was completed by ACIT (OSD), Ward- 5, Karnal. Nothing is placed on record to suggest any order of transferring jurisdiction from ITO, Ward- 1, Karnal to ITO, Ward-5, Karnal. Therefore, in the absence of any valid order for transfer of jurisdiction from one ITO to another ITO the assessment framed by the officer to whom the case was transferred is bad in law.

Thus, impugned assessment and appellate order in pursuance of notice by an authority, non-jurisdictional AO, deserves to be quashed. Decided in favour of assessee.

Validity of reopening of assessment - As alleged assessee did not file return of income - eligibility of Reasons to believe

HELD THAT:- Perusal of the assessment order shows that the assessee, as a matter of fact, filed her return of income on 31.07.2011 u/s.139 of the Act declaring income which was also acknowledged by the Assessing Officer. Therefore, the premise on which the assessment was reopened i.e. the assessee did not file return of income is false and factually incorrect.

Thus, reasons recorded for reopening of assessment u/s.148 of the Act are bad in law and consequently the assessment made u/s.143(3) r.w.s. 147 of the Act dated 27.12.2018 pursuant to such invalid notice is also bad in law, void-ab-initio. Decided in favour of assessee.

Exparte Assessment order u/s 201(1)/201(1A) - Impugned Default Order - HELD THAT:- We observe & notice that “Impugned Order” is Ex-parte with no participation of assessee. The assessee being Government itself now desires that they would make effective representation before Ld. AO after retrieving the old records. Revenue to expects the State Govt. Department to be responsible while dealing with tax matters particularly TDS payments. Under these facts & circumstances, we deem fit to set aside the “Impugned Order” and remand the matter back to Ld. AO on de novo basis, who shall now pass a fresh order with reasons.

Re-opening of assessment - reassessment under section 147/section 148 - reopening not permissible where original assessment was completed after due verification and without any new tangible material - escape of income - deduction under section 80IB(10) for housing projects - change of opinion

Re-opening of assessment - reassessment under section 147/section 148 - reopening not permissible where original assessment was completed after due verification and without any new tangible material - change of opinion - Validity of notice under section 148 and reassessment under section 147 for AY 2011-12 - HELD THAT: - The Tribunal examined whether the Assessing Officer was justified in reopening the completed assessment for AY 2011-12 by issuing notice under section 148. The records showed that the original assessment under section 143(3) had been framed after detailed enquiries and verification of submissions and documents, and deduction under section 80IB(10) had been allowed. The reasons recorded for reopening merely asserted non-compliance (presence of commercial area, built-up area limits, distance from municipal limits) but were not supported by any new tangible material which was not earlier placed before the AO. Applying the principle that reopening is impermissible where it amounts to a mere change of opinion and there is no fresh material to form a reasonable belief of escapement, and following the precedents cited, the Tribunal held that the notice under section 148 was bad in law. Accordingly the reassessment order passed pursuant thereto was quashed and the addition made in reassessment was deleted. [Paras 10]

Notice under section 148 and the reassessment under section 147 for AY 2011-12 quashed; addition deleted.

Reopening not permissible where original assessment was completed after due verification and without any new tangible material - application of decision mutatis mutandis - Applicability of the finding in AY 2011-12 to AY 2012-13 - HELD THAT: - The Tribunal applied the reasoning and findings recorded in respect of AY 2011-12 to AY 2012-13, observing that the factual and legal issues were the same and therefore the conclusions reached in the lead case operate mutatis mutandis for the subsequent year. [Paras 11, 12]

Findings in favour of the assessee for AY 2011-12 are applied mutatis mutandis to AY 2012-13; appeals allowed.

Final Conclusion: The reassessment proceedings initiated by issue of notice under section 148 and the consequent assessment orders for AY 2011-12 and AY 2012-13 are quashed; the addition disallowing deduction under section 80IB(10) is deleted and both appeals are allowed.

Addition u/s 56(2)(vii)(b) based on stamp duty value - statutory reference to the District Valuation Officer u/s 142A - HELD THAT:- Once the AO had made a statutory reference to the District Valuation Officer, the matter ought to have been decided on the basis of the valuation so determined by the competent authority. The absence of such valuation report goes to the root of the matter and the issue cannot be adjudicated finally without considering the valuation report.

We also note that, in terms of Explanation 1(iv) to section 153 of the Act ( as applicable to the relevant assessment year), the period commencing from the date on which the AO makes a reference to the Valuation Officer u/s 142A and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer is required to be excluded while computing the period of limitation for completion of assessment.

Section 142A(6) of the Act provides that the Valuation Officer shall send a copy of his report to the Assessing Officer and the assessee within the prescribed period.

Thus, the statutory scheme itself contemplates that the time taken for obtaining the valuation report from the District Valuation Officer is to be excluded for the purpose of limitation. Therefore, the assessment ought not to have been hurriedly completed merely on the ground of limitation without waiting for the valuation report, especially when the statute provides for exclusion of such period.

We consider it appropriate to set aside the order of the learned Commissioner of Income-tax (Appeals) as well as the assessment order passed by the Assessing Officer on this issue and restore the matter to the file of the Assessing Officer for fresh adjudication.

Attachment and confiscation of benami property - Beneficial ownership and evidentiary weight of statements - Re-investigation and remand for further inquiry - Adjudicating Authority and Initiating Officer procedures - Application under Section 26(6) - HELD THAT:-Since it is admitted fact that the appellant received the amount of Rs. 1 Crore, which he invested further, hence, the same is rightly liable to be attached and can be confiscated being the benami property (amount) under Section 27 of the PBPT, being in custody of the appellant by way of investment. However, at this stage, there is no definite evidence that the appellant is a beneficial owner and he himself gave the demonetised currency to any agent of M/s Altimax. Thus, due to the lack of evidence, the appellant cannot be prosecuted under Section 53 & 54 of the PBPT, however, liberty need to be granted to the IO to conduct the further investigation on the material aspects, before proceeding for prosecution in this regard. The further investigation be concluded preferably within 6 months.

The present case is remanded for re-investigation on the material aspects, before launching any prosecution under Section 53 & 54 of the PBPT Act. However, the admitted amount of Rs. 1 Crore lying with the appellant proprietorship concern in the form of investment is rightly attached and can be confiscated under Section 27 of the PBPT Act. Copy of this order be sent to all the concerned parties including benamidars.

Remanded with Direction.

Benami transaction - Provisional Attachment Order confirmation - Fiduciary capacity - Money trail and proof of consideration - Reconstitution of partnership and benamidar allegation - Section 165(6) of Madhya Pradesh Land Revenue Code, 1959 - Section 2(9)(A) of the Prohibition of Benami Property Transactions Act, 1988 - HELD THAT:- The case involves property at Khasra No. 63/2 admeasuring 1.35 Hec. situated at Village- Avargani Raiyat, Tehsil Kurai, Distt. Seoni. The land was registered in the name of the appellant vide Registered Deed dated 14.01.2022 for consideration value of Rs. 80 Lakhs and with the inclusion of stamp duty and other charges, an amount of Rs. 95,33,110/-. The impugned order contains the payment details and the money trail to show that consideration was directly made by the beneficial owner to the seller of the land. The consideration was not paid by the benamidar appellant.

The detailed facts of the transaction have been given in the impugned order which shows that the consideration for purchase of property was made by the beneficial owner. It cannot be considered to be in fiduciary capacity because ultimately the land was registered in the name of the benamidar appellant, thus, it was not a time being arrangement. It was found that the consideration towards purchase of land was paid by Mohd Afzal Abubaker Ahmed Mitha through his partnership firm, M/s Hotel Orient Star and now the property is enjoyed by the beneficial owner because other than 1% share in the partnership firm, 99% share remains with the beneficial owner and others.

The appellant, further, stated that he is not a partner in partnership firm and he, in fact, never signed the documents related to the Partnership Deed. The fact aforesaid became relevant to find out involvement of benami transaction and otherwise we find that deed of partnership does not contain signature of the appellant at the place where party no. 12 has been mentioned, rather, it is lying blank. It could not have been clarified by the Ld. Counsel for the appellant as to on what basis a challenge to the order has been made alleging that the reconstitution of partnership deed was containing the signature of the appellant. The perusal of the deed further revealed that the appellant was not having authority of working for the resort, rather, it is to be monitored and looked after by the parties other than the appellant. Thus, the name of the appellant shown in the partnership deed was only to justify purchase of the land in the name of the benamidar due to the bar in the Madhya Pradesh Revenue Code for transfer of land belonging to the tribal to other community.

The Adjudicating Authority, further, found that even as per the statement of the appellant, he had denied his partnership and otherwise denied his signature on the documents related to the Partnership Deed. It is coupled with the fact that he had no knowledge about the firm and the interest in that firm and accordingly no capital was introduced by the appellant. Thus, he was made partner for the namesake and accordingly entire transaction was taken to be benami transaction.

The financial profile of the appellant was also analyzed to find out whether he was having source and capacity to purchase the land. It was found that the appellant was not filer of the income-tax returns and was not having substantial income and even on the date of recording of his statement he stated about his income to be between Rs. 10,000 to Rs. 12,000 per month and was spending around Rs. 7000 per month on himself. The saving was hardly of few thousand.

Thus, we find that ingredients of Section 2(9)(A) of the Prohibition of Benami Property Transactions Act, 1988 have been satisfied and thereby no reason to cause interference in the impugned order.

Appeal fails and is dismissed.

Condonation of delay - Interference with impugned High Court order - Dismissal of Special Leave Petition - HELD THAT:- Delay condoned.

Having heard the Revenue and having gone through the materials on record, we find no good ground to interfere with the impugned order [2025 (6) TMI 376 - DELHI HIGH COURT] passed by the High Court.

Accordingly, dismissed.

Seeking refund at market value of money in lieu of gold jewellery - Disposal of seized goods without intimation and breach of natural justice - The subject gold jewellery items in effect have been completely confiscated, seized and destroyed by the Customs Department without complying with even the basic principles of natural justice. -

HC held that- This Court directs that the Petitioner shall now be paid the market rate of the gold prevalent today for 1110 grams. The value of the gold at today’s market rate shall be paid within a period of one month. If the amount is not paid within the period of one month, further costs of Rs.1 lakh would be liable to be paid by the Customs Department to the Petitioner.

HELD THAT:- We are not inclined to interfere with the impugned order in exercise of our jurisdiction under Article 136 of the Constitution of India.

The Special Leave Petition is, accordingly, dismissed.

Confiscation without issuance of show-cause notice - Failure to follow procedure for seizure, inventory and disposal of seized goods - Temporary detention of baggage and re-export - Duty to preserve seized property pending final adjudication and appellate/revisional remedies - Violation of constitutional guarantees of reasonableness, non-arbitrariness and protection of property - HELD THAT:- It is a settled principle of law that when the order of a customs officer is not final and is subject to an appeal, and if the appellate authority finds later that there was no good ground for the exercise of that power, the property could no longer be retained and under the Act and has to be returned to the owner. In such a situation there is a legal obligation on the part of the department to preserve the property intact and also return it in the same condition in which it was seized, inasmuch as in such a situation the State Government would be a bailee of the seized property until the order became final.

Neither a notice was issued under Section 124 nor the provisions of Section 110 and Section 111 were followed and the Petitioner was subjected to the fine as contemplated under Section 125 of the Act and further under Sections 112 and 114AA of the Act. The fact that the gold jewellery had been sent in the year 2019 to the mint and thereafter the Revision Order was passed in 2021, allowing for the re-export of the gold reeks of further abuse of the process of law, inasmuch as, now there is no gold available with the customs authorities to allow re-export as stipulated by such order.

In the present case, the Petitioner had sought to redeem the gold pursuant to the order of the Revisional Authority giving them an option to redeem the confiscated goods on paying a redemption fine and penalty. However, in facts of the present case the very basis of confiscation and seizure of the gold jewellery itself is bad in law and made without following the due process of law. Hence the Petitioner is entitled to the value of the gold jewellery as per the present market value. Further, in the facts of the present case, the Revisional Authority has ordered the re-export of the gold jewellery when the same is itself not available for re-export. For such reason, we are not persuaded to accept the Revenue’s contention that the petitioner be granted the value of the gold as on the date of seizure. This would be contrary to the decision of the Division Bench in Leyla Mahmoodi and Anr. Vs. Additional Commissioner of Customs and Ors. [2023 (12) TMI 967 - BOMBAY HIGH COURT], which is accepted by the Respondents. It is for such reason, we do not accept the Revenue’s contention relying on the decision in the case of Division Bench in Ramesh Shamji Patel Vs. Union of India [2025 (9) TMI 1420 - BOMBAY HIGH COURT], the fact of the said case being totally different wherein the Petitioner had written to the authorities to redeem the gold and therefore there was no challenge to the confiscation or seizure of the gold.

When the gold jewellery was confiscated from the Petitioner the detention memo was issued under Section 80 of the Act, is the case of the Petitioner. Hence, the confiscation of the said gold jewellery without following the provisions of law is itself bad in law.

Therefore, the contention of the Respondent that the Petitioner cannot approbate and reprobate deserves to be rejected, as also the decisions relied upon by the Respondents in such context will not assist the Respondents.

Thus, it is eminently in interest of justice that the Petition be allowed in terms.

Penalty for improper importation of goods - mis-declaration - overvaluation and failure to advise/importer - Obligations of Customs Broker / due diligence - Mens rea requirement for penalties - Judicial review under Article 226 - Customs House Agents Licensing Regulations, 2018 Regulation 10(d),(n),(o),(q) - HELD THAT:- It is the case of the respondent authority that the petitioner, being a CHA, has tried to abet and aid the goods which were mis-declared and, hence, the provisions of Section 112(a) of the Customs Act would get attracted, which would have consequences leading to the imposition of penalty. From the tenor of the order which is being passed by the respondents, we find that there is no whisper of any finding relating to any mis-declaration, fraud or overvaluation, or any mens rea on the part of the petitioner, which would even remotely connect the petitioner with such acts that would satisfy the ingredients of Section 112(a) of the Customs Act.

The intention of the advisory Circular dated 23.10.2024 is clear and falls in line with the settled legal principle for imposition of penalties against CHA in those cases where there is no evidence of complicity in the illegal importation of goods or wrong intent or prior knowledge about the violation, penalty cannot be imposed on the Customs Brokers. Before imposing the penalty on the petitioner, the respondent-authority had the option to suspend, revoke the license under the Regulation 14, and 16 of CBLR, 2018, in case the act of the petitioner deserved such action looking to his conduct. However, such steps are not resorted.

Thus, we find that the respondent authority by invoking the provisions of 112(a), 112(b) and 114AA of the Customs Act, 1962 has committed a jurisdictional error by misapplying the statutory provisions. Thus, instead of relegating the petitioner for availing the remedy of filing of appeal which invites pre-deposit of 7.5% of Rs. 7,00,00,000/- the amount of penalty, we find that this is a fit case to invoke the inherent powers under Article 226 of the Constitution of India for setting aside such action.

Thus, the present writ petition stands allowed.

Proportionality of punishment - penalty u/s 114 - confiscation u/s 113 - entry for exportation and mis-declaration u/s 50 - violation of principles of natural justice -Special Economic Zone Act, 2005 - alternative remedy under the Customs Appeal Rules, 1962 - HELD THAT:- M/s. Universal Gems violated the provisions of Section 50 of the Customs Act, 1962 read with Rule 46 of the Special Economic Zone Rules, 2006 which prescribes procedure for exports, by mis-declaring the make of the diamonds, and the petitioner facilitated the same. We do not find any infirmity or illegality in the impugned order which has been passed. The judgments, on which reliance is placed, will not come to the rescue of the petitioner as it is found that in the case of H.B. Cargo Services [2011 (3) TMI 816 - ANDHRA PRADESH HIGH COURT], the High Court had examined the issue after the order was passed by the Appellate Authority in the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore, with regard to the revocation of suspension of the export license on the ground of illicit export. Whereas, in the case of Shangrila Latex [2016 (10) TMI 817 - GUJARAT HIGH COURT] the Court had examined the issue relating to the Foreign Trade (Development & Regulation) Act, 1992, and in light of the fact that there was no mens rea and the huge penalty of Rs.2.27 crores was not justified. The judgement in the case of Mukul Kumar Choudhuri [2009 (8) TMI 1130 - SUPREME COURT] deals with service jurisprudence and the penalty imposed in disciplinary proceedings.

On an overall analysis of the facts and the impugned order, we neither find any jurisdictional error nor any violation of principles of natural justice or violation of statutory provisions, hence we are not inclined to entertain the writ petition. The petitioner, though has an alternative remedy of filing the appeal, however chose to contest the writ petition on merits despite our suggestion, and since we were called upon to address on merits, we have passed the present order. At this stage, petitioner has submitted that since the petitioner has no money, he is not in a position to file the appeal. It is trite that the monetary incapacity of litigant cannot dilute the statutory provision of appeal.

Hence, in wake of the facts, the present writ petition is hereby rejected.

Rectification of mistakes in customs documents - recall and re-assessment of bill of entry - bona fide / inadvertent error - administrative discretion in amendment of customs records - reliance on precedent in departmental decisions - Article 226 of the Constitution of India - JNCH Standing Order No.27/2019 - HELD THAT:- It was the petitioner’s clear case in the letter dated 18 June 2020 (supra) that due to an inadvertent / human typographical error, incorrect unit price was mentioned in the purchase order and the supplier had also raised invoices with incorrect unit prices. Thus, it is submitted that under the provisions of Section 149 read with Section 154 of the Customs Act, rectification / correction of such bills of entry ought to have been considered as it was a bona fide mistake.

We may observe that certain issues in regard to inadvertent / bona fide errors/mistakes having taken place, were placed on record of the Deputy Commissioner of Customs by the petitioners in their application.

In our opinion, the case of the petitioners as set out in the application as also on the documents, which, according to the petitioner, existed at the relevant time ought to have been considered in the proper perspective. There was no reason as set out in the order passed by the said authority, considering the impugned communication (supra), as to why such case of the petitioners on the said documents needs to be rejected.

In our opinion, it is in the interest of justice that the impugned communication be set aside and the proceedings are remanded to the Deputy Commissioner of Customs, Gr. III/JNCH, who shall examine the petitioners’ case on cancellation of out of charges and recall of Bills of entry for amendment of unit price and on the issues as urged on behalf of the petitioners, and after considering all such documents and the petitioners’ pleas and after an opportunity of hearing being granted to the petitioners, a decision be taken as expeditiously as possible and within a period of six weeks from the date this order is presented before the said authority.

Petition is accordingly disposed of in terms of our aforesaid observations.

Classification of goods based on condition at the time of import - impugned goods viz. Tendofit, Mobilee &GG Orosoluble - essential character of a composite or mixture - General Rules for the Interpretation (GIR) including GRI 1 and GIR 3(b) - burden of proof on revenue to establish alternative classification - persuasive value of foreign customs rulings and expert scientific opinion - exclusion/inclusion between Chapters 21, 39 and 30 - HELD THAT:- What is apparent from the above is that under the Customs Act, 1962 [the Act] the taxable event for customs duty occurs on import of the goods into India or export of goods. It is settled law that the fundamental principle while determining the classification under the Customs Tariff Act, 1975 is the condition of goods at the time of import, which is the taxable event.

Classification under the Customs Tariff Act, 1975, relies on the Harmonized System of Nomenclature (HSN) to assign 8-digit codes for imported and exported goods, to determine the applicable duty rates. The Customs Tariff Act is organized into 21 sections, 98 chapters, headings, sub-headings, and 8-digit tariff items. This HSN-aligned system, maintained by the World Customs Organization, standardizes classification globally while allowing India-specific extensions.

It is very clear that the raw material, Tendofit, which at the time of import is not edible, would not be classifiable under the said residuary heading 21069099. This is further strengthened by the examples of ‘Namkeen, Mithai, Misthans’ etc given for the said heading. It is also important to note that there is no chemical examination report which supports the Department’s contention that the imported goods are edible at the time of import.

We find that the product Mobilee being a mixture, the classification would have to be as per GIR 3 (b). Such a commodity/mixture would have to be classified by the component which gives it its essential character. In the instant case, the essential character of Mobilee is given by Sodium Hyaluronate which is liable to be classified under CTH 3913. The learned authorized representative has submitted that as collagen is also present along with sodium hyaluronate, hence the resultant product viz., Mobilee does not remain a natural polymer, and changes its nature to a food preparation. We are unable to appreciate this contention. It has been submitted before us that Mobilee, when imported is not in edible form and is in bulk packaging of 5 kgs. It needs to be formulated to the prescribed dosage strength of 80mg/day before the same becomes edible. Consequently, applying the principle of customs classification which is at the time of import, the same cannot be termed as preparation of food falling under CTH 2106. Consequently, we uphold the appellant’s contention in classifying Mobilee in CTH 3913.

The imported powder represents a probiotic powder which is used for suitable formulation production as per required dosage. The addition of Xylitol and sorbitol is for better stability during storage, transportation as well during the industrial processes. It has been categorically stated that the goods are raw material grade, which has to undergo processes for making it edible. The use of the excipient carriers is not used as a flavouring agent or sweetener for food preparation. We find that the Department has not led any evidence to controvert these submissions.

It is settled law that the Department has to discharge the burden of proving the classification alleged by them. In the instant case, the appellant has submitted the expert opinion of the Professor of a reputed institute to substantiate their claim. We observe that the Supreme Court in its judgment in Hindustan Ferodo Ltd [1996 (12) TMI 49 - SUPREME COURT] held that it was for the Revenue to lead and evidence in and demonstrate that the classification is incorrect.

In the instant case, apart from the expert opinion of Dr Pradhan, there is no contrary chemical examination report which would establish the Department’s contentions. In view of the same, we are of the opinion that the classification adopted by the appellant for GG Orosoluble is correct.

Thus, we set-aside the impugned order. Consequently, the appeal is allowed.

Confiscation of imported goods - Exemption for temporary import under carnet - Interpretation of 'paid employment' and 'gainful occupation' - Notification No. 296/76-Cus dated 2nd August 1976 - HELD THAT:- There is no bar on the applicability of carnet to an Indian citizen subject to being resident outside the country. The appellant, undoubtedly, is one such. There is neither allegation of the appellant having taken up ‘paid employment’ nor any evidence that the appellant had undertaken ‘gainful occupation’ on this particular visit to India. The company established by the appellant continued to operate even when he was outside the country and may not have involved any additional preoccupation of his time and effort in its pursuit of normal activities.

There is no evidence that during his stay in India he had been specifically addressed to resolve any business matter for which he was compensated. Moreover, ineligibility attributed by the adjudicating authority would not be a threshold condition but intended to prohibit such activity while availing the benefit of the notification. The car was never cleared from customs control. Any allegation of ‘paid employment’ or ‘gainful occupation’ prior to the import of the car or after the export of the car is of no relevance to administration of the impugned notification.

Thus, we find that the confiscation of the car under section 111 of Customs Act, 1962 does not have authority of law. Accordingly, the consequential fine, along with the penalties imposed on the appellant under section 112 of Customs Act, 1962, are set aside to allow the appeal.

Contravention of handling and storage obligations for hazardous cargo - Findings of breach of regulation 5 and regulation 6(1)(i) and 6(1)(q) of HCCAR, 2009 - Invocation of penal provision u/s 117 - Principles of natural justice - duty to place party on notice before disagreeing with enquiry findings - Enquiry authority findings versus adjudicating authority's independent conclusion - HELD THAT:-

The facts on record and the evidence available do not point to the appellant having breached any of their obligations to be responsible for the safety and security of the imported and export goods. In any case, as a ‘cargo service provider’, any loss attributable to the storage facility, insofar as goods is concerned would have to be borne by the appellant. Nor can we conclude that the appellant had not abided by the provisions of Customs Act, 1962 and rules framed thereto.

The findings, based on speculation and unattributable conclusions, do not stand the test of law. The facts on record do not substantiate breach of regulation 6(1)(i) and6(1)(q) of the said Regulations. Invoking of section 117 of Customs Act, 1962, intended for penalization in the absence of express provisions, cannot be allowed in the light of penalties prescribed in the Regulations. Invoking of section 117 of Customs Act, 1962 is without foundation or any basis.

Accordingly, the appeal is allowed.

Determinative effect of Export Obligation Discharge Certificate (EODC) on fulfilment of export obligation - jurisdiction of Customs authorities to question certificates issued by DGFT - validity of demand, confiscation and redemption fine where DGFT has issued EODC - recognition of export earnings from hotel, travel and tourism services for EPCG obligations - Export Promotion Capital Goods (EPCG) Scheme - HELD THAT:- In view of the aforesaid two decisions of the Tribunal in Interglobe [2025 (11) TMI 1460 - CESTAT NEW DELHI] and Bestech Hospitalities [2025 (8) TMI 509 - CESTAT NEW DELHI], it has to be held that the Customs Authorities could not have confirmed the demand in the absence of any adjudication by the DGFT cancelling the EODC certificate earlier issued by it certifying that the export obligation had been fulfilled by the appellant.

The confirmation of demand and imposition of penalties upon the appellant, cannot, therefore, be sustained and is set aside.

Invalidation of certificate of origin under AIFTA - Cumulative rule of origin - Revocation versus verification under Operational Certification Procedures (Article 16) - Denial of preferential tariff benefit - Procedural notice and enquiry u/s 28DA - Recovery of duty u/s 28(4) - Penalties and confiscation regime under sections 114A, 114AA, 111(o), 111(q) and 125 - HELD THAT:- There is no doubt that one certificate of origin had been revoked, but, from the correspondence, there are no appearances of either lack of authenticity or non-conformity with leeway afforded by rule 2(b) of the Rules of Origin for the ASEAN-India Free Trade Agreement (AIFTA). It appears that, upon inquiry being instituted, a request was made for revocation. Indeed, the said Rules of Origin as well as the Operational Certification Procedures have no provision for revocation by any government authority. To read such revocation as tantamount to a report of verification contemplated in Article 16 of the Operational Certification Procedures is contrary to Agreement that has force of law and is egregious exercise of extra-legal authority.

By venturing upon the extraordinary sweep of rule 7 of Customs (Administration of Rules of Origin under Trade Agreement) Rules, 2020 but, instead of following due process enshrined therein, proceeded to recover duty foregone, the saddling of consequences is tainted by breach of proper notice prescribed in section 28DA of Customs Act, 1962 even if the report on the single other ‘certificate of origin’, i.e. certificate of origin no. AI2019-0037008 dated 13th August 2019 corresponding to bill of entry no. 4567038 dated 20th August 2019, was considered as unfavourable.

This is particularly so as the movement of ‘antimony oxide’ from Myanmar was against D Form and in accordance with the bilateral agreement between Thailand and that country. That such transfer did not occur against A Form does not alter the principle of cumulative origin.

Nevertheless, we see that, other than the impugned certificate of origin, the imports have been effected against certificate of origin that had been issued by the competent authorities that were not subjected to the scrutiny prescribed in the respective rules. It would be inappropriate to deprive the benefit of exemption notification to imports where the connected certificate of origin had not been scrutinised and without following the process of placing the importer on notice, not for recovery of duty, for invalidation of eligibility.

Thus, we find that the detriment fastened on the appellant cannot sustain. Accordingly, the impugned order is set aside and appeal is allowed.

Validity of conditions for provisional release of seized goods - Application of the "most akin" test for classification of petroleum fractions - Relevance of cloud point as a non-determinative parameter for classification and seizure - Provisional release u/s 110A - Seizure u/s - Confiscation provisions u/s 111 - HELD THAT:- It is pertinent to mention here that Ld. Commissioner vide impugned order has not agreed with the allegations of investigating agencies and he has observed that the finding of CRCL Visakhapatnam that samples failed to meet IS 16731 requirements on cloud point and water content for DMX grade are not sustainable. He further held that for the tested parameters, both samples match fully with DMX-type Distillate Marine Fuel (IS 16731) under Customs TI 2710 19 61, and only partially with HFHSD (IS 16861) under Customs TI 2710 19 49 and therefore, the balance of convenience lies in favour of the importer. Ld. Commissioner of customs also held that the sample of the subject goods is “most akin” to the DMX-type Distillate Marine Fuel (IS 16731) on the parameters tested by CRCL, Visakhapatnam.

The only case of Investigating Agency for seizure of goods is that test reports dated 07.10.2025 and 09.10.2025, indicate that the cloud point of the samples is -6°C and -10°C, and does not meet the parameter of IS 16731- Distillate Marine Fuel, which is above -16 °C.I agree with submissions of the appellant that the purported basis for seizure is an alleged deviation under a single parameter, i.e., Cloud Point (Maximum) which, as per IS 16731:2019, is not a determinative or mandatory specification for the classification of goods as "Distillate Marine Fuel." The reliance on one non-essential specification while ignoring compliance with all other mandatory parameters appears improper.

The conditions imposed for provisional release of goods vide impugned order are not sustainable. Two bank guarantees, furnished by appellant are liable to be discharged. Other conditions of provisional release are liable to be modified as per above decision of Hon’ble Gujarat High Court passed in Noya Infrastructure case [2025 (12) TMI 1026 - GUJARAT HIGH COURT].

EODC determinative of fulfilment of export obligation - Counting of hotel, food, beverage and travel earnings towards discharge of EPCG export obligation - Customs authority's jurisdiction to sit in judgment over DGFT-issued certificate - HELD THAT:-In view of the two decisions of the Tribunal in Interglobe [2025 (11) TMI 1460 - CESTAT NEW DELHI] and Bestech Hospitalities [2025 (8) TMI 509 - CESTAT NEW DELHI] it has to be held that the Customs Authorities could not have confirmed the demand in the absence of any adjudication by the DGFT cancelling the EODC certificate earlier issued by it certifying that the export obligation had been fulfilled by the appellant.

The confirmation of demand and imposition of penalties upon the other appellants, cannot, therefore, be sustained and are set aside.

Amendment of export documents u/s 149 - conversion of "free" shipping bills to scheme shipping bills - retrospective inclusion in Foreign Trade Policy norms - remand direction of the Tribunal and duty to consider documents - role of customs certification (ARE-1) in establishing export entitlement - quasi-judicial obligation of the Commissioner to examine documentary evidence - HELD THAT:- Notwithstanding the lack of mandated examination of goods exported against ‘free-shipping bills’, documents exist for verification that ‘cast body valves’ were, indeed, permitted to leave the factory without payment of duties of excise and the packages containing these had been enumerated before ‘let export order’ was granted with appropriate endorsements on the ARE-1 resubmitted to central excise authorities to relieve the burden of duties of excise.

Commissioners of Customs are not unaware of this procedure and of the role of customs authorities in the prescribed process. Discard of this evidence is merited only on peril of proceeding against customs officials concerned for dereliction of responsibility. There is no record of such in the impugned order or submission on behalf of respondent herein. Furthermore, section 149 of Customs Act, 1962 does not purport to grant benefits of any incentive scheme but merely enabling amendment of bills of entry and shipping bills, as well as other documents furnished in support, without consideration of any consequential benefits and to be dealt with on available facts.

The foregoing of duties of central excise on manufactured goods, validated in duly certified ARE-1s by not having been controverted in the impugned order, leave no room for doubt that the requests for amendment of the shipping bills was bonafide. In these circumstances, rejection of the requests for amendment under section 149 of Customs Act, 1962 was improper.

Accordingly, we set aside the impugned order to allow the appeal with direction to the competent authority to effect the necessary amendment in the impugned shipping bills.

Claim to alternate exemption Notification No.94/1996-Cus. - Entitlement to exemption notwithstanding initial claim under Notification No.158/1995-Cus. - reassessment u/s 149 - remand for de novo adjudication - principles of natural justice - HELD THAT:- Undisputed facts of the case are that the appellant initially had reimported the defective BCMs from their overseas associated company M/s. Bosch Corporation, Japan vide Bill of Entry No.9188259 dated 05.04.2017 claiming benefit of Notification No.158/95-Cus. dated 14.11.1995. The goods could not be re-exported after necessary reworking on the same within the period stipulated under the said Notification but was imported on 22.06.2015. Later, they claimed benefit of alternate Notification No.94/1996-Cus. dated 16.12.1996 as they fulfilled the conditions of the said notification.

We find that the learned Commissioner (Appeals) had remanded the case to the adjudicating authority observing that the appellant has a very strong case on merit; however in the impugned order, he has held otherwise.

We find that the issue has been considered by this Tribunal involving more or less similar circumstances in the case of SSK Export Ltd. Vs. CC, Cochin [2024 (11) TMI 745 - CESTAT BANGALORE]. This Tribunal observed that benefit of alternate Notification No.94/1996-Cus can be claimed even though at the initial stage it was not claimed but they have claimed benefit of Notification No.158/1995-Cus., while reimporting the goods earlier exported.

Thus, we are of the opinion that the appellant are entitled to claim the benefit of the alternate Notification No.94/1996-Cus dated 16.12.1996 even though not claimed at the time of reimport. On the admissibility of the benefit of said Notification No.94/1996-Cus. dated 16.12.1996, it is subject to fulfilment of the condition mentioned in the said Notification. In the absence of any finding whether the appellant has fulfilled the condition of the said Notification, it is prudent to remand the case to the adjudicating authority.

Needless to mention, principles of natural justice be followed and as far as practicable, the de novo proceeding be completed within a period of three months from the date of receipt of this order.

Appeal is allowed by way of remand.

Director's disqualification u/s 167(1)(b) - interim restraint on creation of third-party interests in company assets - Validity of interim directions restraining payments to directors and preventing creation of third-party interests in company assets - status quo on payments/remuneration/repayments to directors - HELD THAT:- Once the appeal was e-filed on 08.01.2026 the incident of dated 09.01.2026 ought not to have been added in the hard copy of the appeal filed on 13.01.2026 and we take strong objection to this practice.

We find nothing wrong in passing such order since prayers have already been sought in the company petition. Now though the Appellant objects to the status quo on assets on the ground the assets are required for collateral securities but had failed to disclose of such collateral securities or if are required to be furnished during the period from 09.01.2026 till the order is pronounced. There is no pleadings to this effect as of now. Thus, in case such collateral securities are required to be renewed, the Appellants shall be at liberty to approach the Ld. NCLT by filing an application in this regard.

Thus, the fact that final hearing has since been concluded in the company petition and the matter was reserved on 09.01.2026 for judgment, we see no reason why to set aside or even modify the interim orders passed by the Ld. NCLT and we dispose of these appeals with a request to the Ld. NCLT to pronounce the judgment reserved by it on 09.01.2026, as expeditiously as possible.

Dismissal of section 9 application for initiation of CIRP of the Corporate Debtor - operational debt had emanated in pursuance of the terms of the six agreements between the two parties which required payments to be made to the Operational Creditor by the Corporate Debtor - HELD THAT:- Having heard the learned counsel for the appellant, we find no grounds made out to interfere with the impugned judgment/order passed by the National Company Law Appellate Tribunal, Principal Bench, New Delhi.

The appeal is, accordingly, dismissed.

Applicability of time limitation for application filed u/s 9 of IBC - existence of pre-existing dispute or not - absence of other supporting corresponding document on record to establish the settlement - HELD THAT:- After having heard the appellant, we do not find a good reason to take a different view than what has been taken by the National Company Law Appellate Tribunal (NCLAT). Accordingly, the appeal is dismissed.

Debt and default for purposes of admission of insolvency proceedings - admission of a Section 7 application under Insolvency and Bankruptcy Code, 2016 - MSME restructuring under the Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises - obligation to cooperate with stock and book audit for restructuring - Section 7 of the Insolvency and Bankruptcy Code, 2016 - Whether the Adjudicating Authority has rightly returned the finding that debt and default on the part of the Appellant-Corporate Debtor in the repayment of dues of the Respondent No.1-Financial Creditor is fully established and basis this finding to have admitted the Section 7 application. - HELD THAT:- It is a well settled legal proposition that the Adjudicating Authority while adjudicating a Section 7 application is empowered only to verify whether a default has occurred or not and basis the findings thereon can admit or reject a Section 7 application.

Having noted the guiding precepts for admission or rejection of Section 7 application, we now proceed to look at the Section 7 petition which was filed by the Respondent No.1 before the Adjudicating Authority. The foundation of any application under Section 7 is default committed by the Corporate Debtor in the repayment of its loan/facilities as depicted in Part-IV of the said application.

In the present case, in Part-IV of the application under which the particulars of financial debt have been enumerated and explained by the Respondent No.1, it shows that the total amount of debt claimed was Rs. 39,19,52,518.04/- only which included the amount claimed to be in default arising out of the Cash Credit Facility and the Term Loan Agreement including charges, interest and penal interest. The date on which default occurred has been shown as 30.06.2023.

There is no material on record to show that the Appellant had responded to the above e-mail of 11.03.2025. It is pertinent to notice that the above e-mail also states that even the Auditor of the Respondent No.1 had purportedly issued ten emails calling upon the Appellant to permit inspection and audit of stocks. The persistent lack of response from the Appellant clearly shows deliberate non- cooperation on their part.

It is only after take-over of the Corporate Debtor by the IRP that the Appellant has now requested that stock audit can be conducted to enable restructuring by the Respondent No.1-Financial Creditor. It is therefore clearly borne out from material on record that the Corporate Debtor has yielded to the request for stock audit only after the management control has gone into the hands of the IRP. In such circumstances, we are inclined to agree with the Respondent No.1 that it is not open for the MSME’s to agitate their request for restructuring belatedly without having cooperated in the conduct of restructuring exercise when it was undertaken by the Financial Creditor in the first place.

From the pattern of conduct of the Appellant it is amply borne out that far from being proactive in their effort at taking their restructuring proposal to its logical culmination, the Appellant was unwilling to budge inspite of repeated nudges of the Respondent No.1 and their auditors to facilitate stock audit and are now raising this bogey again as an opportunistic ploy which does not meet our countenance. Hence, this inordinate belated request for carrying out stock audit being made now cannot be a ground not to admit the Section 7 application.

In sum, we hold that the Adjudicating Authority has considered all relevant factors which needed to have been considered in coming to the conclusion that the Section 7 application deserved to be admitted. We are satisfied that impugned order of Adjudicating Authority initiating CIRP against the Corporate Debtor cannot be faulted. The Appeal being devoid of merit is dismissed.

Deemed approval under Green Channel - approval of Resolution Plan under Section 31 sub-section (4) of the Insolvency and Bankruptcy Code, 2016 - forum for examination of combinations is the Competition Commission of India - HELD THAT:- The relevant facts have been placed before the CCI, where it has been submitted that application, which was submitted by Independent Sugar Corporation was not in accordance with the CCI Act and the CCI Regulations 2011 and there was suppression of relevant facts in the application. After filing of the complaint, when the CCI did not take any action, a Writ Petition has been filed in the Delhi High Court with the prayers as quoted above in this judgment. Learned Counsel for the parties submitted that the Writ Petition filed by the Appellant before the Dehi High Court is pending consideration.

When we look into the Regulation 5A of the CCI Regulations 2011 as relied by the Appellant, the provision itself contemplate that upon filing of a notice under sub-regulation (1) and acknowledgement thereof, the proposed combination shall be deemed to have been approved by the CCI. Where the CCI finds that the combination does not fall under Schedule III and/or the declaration filed pursuant to sub-regulation (1) is incorrect, the notice given and the approval granted under this regulation shall be void ab initio and the Commission shall deal with the combination in accordance with the provisions contained in the Act. The Forum for examining the combination, which has been deemed to be approved is the CCI. The issue which is sought to be raised in this application, cannot be gone into and decided in this Appeal, which has been filed challenging the order approving the Resolution Plan of the Successful Resolution Applicant.

The Appellant having already filed a complaint before the CCI and also pursuing the Writ Petition in the Delhi High Court praying for quashing the deemed approval granted by the CCI, we are of the view that neither the said issue can be gone into in this application, nor the additional documents, which are sought to be brought on record by this application can be accepted.

We, thus, are of the view that prayers made in the application cannot be accepted. IA is rejected.

Treatment of claims of homebuyers in CIRP - duty of the Insolvency Professional / Resolution Professional to identify and admit claimants - status of deferred allottees under an approved resolution plan - responsibility of the Successful Resolution Applicant who was the CIRP petitioner - approval of resolution plan by the Adjudicating Authority - HELD THAT:- Subsequently, on 28.10.2025, the Counsel for SRA informed that the matter has been amicably resolved with the appellant vis – a- vis the allotment of the apartment. In this regard, the SRA has on 31.10.2025 filed an affidavit which is taken on record. SRA vide affidavit dated 31.10.2025 has stated that the flat has been allotted to the appellant and the appellant has no grievance now. The appellant present in the Court agrees to the same.

The appeal is disposed of in terms of the aforesaid affidavit.

Characterisation of debt as operational debt vis-à-vis financial debt - Assignment of trade receivables / factoring arrangements - Form of claim under CIRP Regulations (Form B / Form C) and directory/mandatory nature - Finality of Committee of Creditors' approval of resolution plan and inadmissibility of belated/reclassified claims - Time-bound corporate insolvency resolution process and preservation of resolution timelines - HELD THAT:- The present is a case of transaction, wherein, seller, buyer and financers are registered and transaction takes place for sale and purchase of goods and discounting of invoices, payments and recoveries of payment by Financers. In the present case, no disbursement was made to the Corporate Debtor, hence, the transactions cannot be held to be a 'financial debt". The debt in question is an operational debt coming within the meaning of Section 5(21) of the Code, having arisen from the Corporate Debtor's procurement of goods from its suppliers during the ordinary course of business operations. The mere subsequent assignment of these trade receivables to the Appellant does not change the fundamental nature of the debt from operational to financial.

Thus, we find that the Adjudicating Authority has rightly dismissed the Appellant's claim under Form C and correctly held that the nature of the debt in question is operational. There exists no legal or factual basis for treating the Appellant as a Financial Creditor in the present case. The Impugned Order, therefore suffers from no infirmity and is in conformity with the statutory scheme under the Code.

We accordingly dismiss the Appeal and confirm the order of the Adjudicating Authority and all the related IAs are disposed of.

Insolvency resolution process costs - related party transaction - approval of the committee of creditors - extinguishment of claims on approval of resolution plan - adjudicating authority's jurisdiction u/s 60(5)(c) - Regulation 31 of the CIRP Regulations, 2016 - HELD THAT:- In the present case, appellant has filed pre-CIRP claim of ₹ 23.12 crore with regard to which NIL payment was proposed in the resolution plan, which had become final.

A resolution plan may include details of all CIRP cost incurred and in a case where resolution plan contains details of CIRP cost also which is payable by resolution applicant that shall also become final and cannot be questioned. In the present case, there are nothing on record to indicate as to whether resolution plan dealt with all CIRP cost or not. Adjudicating authority, although have not proceeded to examine contention on the merits, but in these appeals, both the parties having made elaborate submissions of the respective claims, we proceed to examine the claims on merits to give finality to the issues raised.

The RP has categorically submitted before us that the CIRP cost as is being claimed by the appellant was never placed before the CoC nor ever approved by the CoC. The issue which need consideration before us is as to whether the CIRP cost, which is claimed by the appellant in I.A. No.170/2021 was approved by the CoC or not.

The Minutes of the CoC itself makes it clear that when any cost is to be approved, it has been separately dealt by the CoC like approval of the CIRP cost and the cost of the legal counsel. The approval which is referred and relied by the counsel for the appellant is approval of related party transaction as mandatory required by Section 28(1)(f) and is not approval of CIRP cost as contemplated by Regulations 31 (d) & (e) and Regulation 34 of the CIRP Regulations, 2016.

Related party transaction was done between the AAL and other group companies as per business model which was being run prior to the initiation of CIRP, which business continued even after commencement of the CIRP. Learned counsel for the RP has contended that RP never placed the said cost to be approved as a CIRP cost before the CoC, since it was never contemplated as CIRP cost.

We thus are satisfied that the cost which is claimed by the appellant in I.A. to be paid as CIRP cost having never been placed and approved by the CoC, the relief claimed by the appellant could not have been allowed by the adjudicating authority. We thus are of the view that order of the adjudicating authority rejecting the I.A., need to be upheld, but for the reasons as indicated above.

Thus, we do not find any merit in any of the appeals. Both the appeals are dismissed.

Continuing default - time-bar u/s 10A - financial creditor's entitlement to file a Section 7 application- Whether a Section 7 application is barred by Section 10A when the application relies on defaults occurring after the Section 10A period - HELD THAT:- The financial creditor has relied on date of default 15.04.2021 which is subsequent to Section 10A period and default by the corporate debtor has been claimed from 15.04.2021 thereafter and the amount which is in default after 15.04.2021 is much beyond the threshold period. We find substance in the submission of the appellant that the adjudicating authority committed an error in rejecting application as barred by Section 10A.

Thus, we are of the view that order of the adjudicating authority rejecting the application as barred by Section 10A cannot be sustained. The impugned order dated 02.11.2023 is set aside. It is held that application is not barred by Section 10A.

In result, the appeal is allowed and the impugned order is set aside. C.P. is revived before the adjudicating authority for afresh consideration in accordance with law. We make it clear that we have not entered into any other contentions, except the submissions on Section 10A.

Effect of One Time Settlement (OTS) on existence of default - Adjudicating Authority's power to admit Section 7 application - Admission of the Section 7 application despite an OTS entered between the parties - Suspension of legal/enforcement actions during OTS and right to revive on default - HELD THAT:- Admittedly, under the OTS the payment schedule was provided apart from Rs. 2.90 crores which was upfront payment no other payment has been made by the appellant. Under the payment schedule the balance amount was payable in three equal monthly instalments within 90 days i.e; 29.12.2025, when no monthly instalment for October and November was paid the breach of OTS was very much committed by the CD, which fact, that October and November instalment was not paid was also noticed in the argument of the bank in our order dated 18.12.2025.

It is not the CD’s case that they have complied the OTS. Reliance has been placed on para-11(ii) that it was agreed between the parties that both bank borrower and guarantor shall keep on hold the legal actions and enforcement actions during compliance of OTS.

The present is not a case where borrower has taken any legal action or enforcement action during compliance of the OTS.

Present was a case where Section 7 application was initiated much before, in the year 2024 and it was not the bank which was taking any legal actions against the borrower. Moreso, when the second line of the clause 10, 11.2 itself provide that in event of default/delay, the parties are entitled to revive or continue the legal proceedings/ enforcement action. Thus there was no prohibition on the bank in proceeding with Section 7 application. The said clause does not come to the aid of the appellant and cannot be said that in view to that Clause Section 7 proceeding could not have been proceeded. The reliance of Clause of 17 by the appellant also does not help the appellant since present is a case where CD was itself in default of the OTS. We thus do not find any error in the order, admitting Section 7 application. Appellant having not complied with the OTS, the resolution of the CD is necessitated under the IBC and its Regulations.

The appeal is dismissed.

Crystallisation of statutory liabilities- Admission and collation of claims in Corporate Insolvency Resolution Process - Effect of moratorium on initiation or continuation of assessment proceedings - Finality and binding effect of an approved Resolution Plan - Scope of appellate interference with approval of Resolution Plan - Resolution Plan approval u/s 31 - Moratorium u/s 14 - Provident fund contribution and allied liabilities under Sections 7A, 7Q and 14B of the Employee's Provident Funds and Miscellaneous Provisions Act, 1952 - HELD THAT:- It is the admitted position from the documents that the claims of appellant under Section 7Q and Section 14B had not been adjudicated prior to the date of initiation of CIRP and therefore the claims were not crystalized.

While the Appellant filed its claim in Form-B on 18.05.2023, filing of a claim during CIRP cannot substitute the requirement of a statutory adjudication under the EPF Act. Admission of a claim by the Resolution Professional is for the purpose of collation and does not amount to final determination of liability, particularly where the statute itself contemplates an adjudicatory process.

We note that the exclusion of claims towards Sections 7Q and 14B flows from the factual position that such claims had not been finally determined as on the insolvency commencement date. We also note that this position has been affirmed through various judgments of this Tribunal.

In the present case, directing payment of unadjudicated claims under Sections 7Q and 14B would have resulted in imposing uncertain and indeterminate liabilities upon the Successful Resolution Applicant. Such a course would be inconsistent with the object of the IBC, which seeks to freeze claims as on the insolvency commencement date and provide certainty to the resolution process.

We find no material on record to suggest that there was any irregularity in approval of resolution plan. The approval of the Resolution Plan was preceded by CoC approval, statutory scrutiny, and compliance with procedural requirements. The decision to exclude uncrystallised claims of the EPFO by the Adjudicating Authority was in accordance with the provisions of the Code and legal precedence, accordingly we are of the view that the impugned order does not warrant interference.

Thus, the appeal is dismissed.

Pre-existing dispute - notice of dispute u/s 8 - maintainability of Section 9 application - Adjudicating Authority - HELD THAT:- Under Section 9(5)(ii)(a) when a notice of dispute has been given, the Adjudicating Authority has not to admit Section 9 application. The notice of dispute gives in detail reasons as to why the claim is refuted. The work has to be completed by June, 2022 as per the contract between the parties, however, as per the Corporate Debtor, the work could be completed in January, 2023, which was also incomplete. Corporate Debtor claimed to have given payment under protest in December, 2022 and has come up with the case that there was settlement between the parties on 11.08.2023., which settlement has been pleaded in Para 2(q) of the reply to the demand notice.

The settlement is not being accepted by the Appellant and it is submitted that the terms are not clear as to who has to pay what amount and according to the Appellant this document is a forged document. When the notice of dispute dated 16.02.2024 was given giving details with regard to contract and subsequent execution of settlement between the parties, few of the paras we have already noticed, we are of the view that pre-existing dispute is reflected and the Adjudicating Authority has rightly come to the conclusion that there is a pre-existing dispute.

We fully concur with the view of the Adjudicating Authority. We dismiss the appeal, however, it shall be open for the Appellant to claim such amount, if any, recoverable from the Corporate Debtor, before appropriate forum in accordance with law.

Invitation for Expression of Interest - Final list of Prospective Resolution Applicants - Extension of timelines by the Committee of Creditors - Compliance with provisional list and objection mechanism under Regulation 36A(10)-(12) - Committee of Creditors' commercial wisdom - Adjudicating Authority's power to approve a resolution plan - Section 30(2) of the Insolvency and Bankruptcy Code, 2016- Whether the process adopted by the CoC and the RP to include Consortium of Dharmesh Jain as one of the Resolution Applicant, after approval of the CoC, is in accordance with Regulation 36A and Regulation 39 of the CIRP Regulations. - HELD THAT:-Regulation 36A sub-regulation 10 provides for issuance of provisional list of eligible PRAs within 10 days from the last date for submission of EoI to the Committee and to all prospective Resolution Applicants, who submitted the EoI. Sub-regulation 11 of Regulation 36A provides for objections for inclusion or exclusion of a PRA within five days and under sub-regulation 12, the RP is to issue final list of PRAs.

Coming to the facts of the present case, as noted, as per Form-G published on 05.04.2023, the 26.04.2023 was the last date for receiving of EoI, 28.04.2023 was the date for issuance of provisional list of eligible PRAs and 03.05.2023 was last date for receiving the objections to provisional list. Provisional list was issued on 28.04.2023, in which name of Consortium of Dharmesh Jain obviously was not there.

When Form-G, Note-2 contemplate extension of timelines, extension of timeline has to be considered to be extension of all timelines as mentioned in Form-G, including last date of receipt of EoI, issue of provisional list of PRAs and submission of objections to provisional list of PRAs and issuance of final list of PRAs. The requirement of issue of provisional list of all PRAs and inviting objection, is a statutory requirement as per Regulation 36A, sub-regulations 10 and 11. Even if the submission of Shri Datta is accepted that CoC could have extended the timelines for receipt of the EoIs and Resolution Plans, any EoI could have been accepted and included in the final list of PRAs only after due compliance of requirement under sub-regulations 10 and 11.

We, thus, are of the view that after extension of timeline for receiving EoIs, as per Form-G, even though it was not necessary to issue a fresh Form- G and CoC was competent to extend the timeline for receipt of EoIs and Resolution Plans, the statutory requirement in sub-regulations 10, 11 and 12 of Regulation 36A of CIRP Regulations has to be complied with.

In the present case, we have looked into all relevant Minutes of the CoC and letters and other correspondence and it is clear that after a request was made to the RP by Consortium of Dharmesh Jain on 30.01.2024, in the Minutes of the Meeting of the CoC held on 02.02.2024, it was decided by the CoC to accept the EoI and to extend the last date for submission of Resolution Plan for the CD. The Resolution Plan given by Consortium of Dharmesh Jain was considered and voted, but it is not shown that after receipt of the EoI from Consortium of Dharmesh Jain on 30.01.2024, any amended list of PRAs for the purpose of inviting objections was published and the compliance was made of sub- regulations 10, 11 and 12 of Regulation 36A.

When no provisional list of eligible PRAs, including the name of Consortium of Dharmesh Jain inviting any objections was published, inclusion the name of Consortium of Dharmesh Jain, cannot be said to be in accordance with the statutory requirements. Hence, we are of the view that Resolution Plan of Consortium of Dharmesh Jain could not have been considered by the CoC.

We are in full agreement with the reasons given by Adjudicating Authority in Paragraph 9.2 (ii), (iii) and (iv). When the Resolution Plan submitted by Consortium of Dharmesh Jain could not have been considered without complying the statutory requirements of Regulation 36A as noted above, the Adjudicating Authority did not commit any error in not approving the Resolution Plan of Consortium of Dharmesh Jain. We, thus, upheld the decision of Adjudicating Authority in not approving the Resolution Plan of Consortium of Dharmesh Jain for the reasons indicated above.

Eligibility of Consortium of Dharmesh Jain to submit EoI - HELD THAT:- In the findings although the Adjudicating Authority has noticed the breach of Regulation 36A and other observations, but there is no finding or conclusion recorded that Consortium of Dharmesh Jain is not eligible to submit the Resolution Plan. Rather, the observation is that Nirmal Consortium has not offered any performance security, which can be forfeited in the event of non-implementation of the Resolution Plan. We, thus, are of the view that Adjudicating Authority has not held the Consortium of Dharmesh Jain as ineligible to submit the Resolution Plan. Question is decided accordingly.

Expiry of CIRP -extension of CIRP period - HELD THAT:- The CoC has submitted that the plan approval application was filed on 30.09.2024, whereas the Adjudicating Authority in the above paragraph has observed that the Plan approval application was filed only on 24.10.2024. Be that as it may, when the Resolution Plan was approved within the CIRP period, no fault can be found with the process on the ground that application for approval of Resolution Plan was filed on 24.10.2024, whereas as noted above, the case of the CoC is that the application was filed on 30.09.2024. We, thus, do not find any breach of CIRP period in the resolution process. Question is decided accordingly.

We have noted that CIRP period was extended by the Adjudicating Authority till 30.09.2024 and thereafter, Plan approval application was pending before the Adjudicating Authority, giving rise to these Appeal(s). In the facts of the present case, we are of the view that ends of justice will be served in modifying the judgment of the Adjudicating Authority by deleting the direction issued by Adjudicating Authority for filing of liquidation application. We are conscious that CIRP period is over long ago, but in view of interest of 2200 homebuyers, who are homebuyers in different projects of the CD, one last effort needs to be made for resolution of the CD by a Resolution Applicant.

The Tribunal upheld the Adjudicating Authoritys refusal to approve the resolution plan because the belated EOI and ensuing plan were considered without complying with the provisional-list/objection requirements of Regulation 36A. The Tribunal declined to decide the plan-specific compliance questions as unnecessary on that finding, but in the interest of stakeholdersparticularly homebuyersset aside the liquidation direction and directed the RP and CoC to re-commence the CIRP by issuing a fresh Form-G, publish provisional and final lists and invite resolution plans, to be concluded within 90 days, failing which the RP may apply for liquidation.

Extortionate interest - admissibility of interest as component of financial debt - related-party transactions and bona fides of advances - corporate insolvency resolution process and liquidation - absence of board resolutions -judicial precedent on disallowance of exorbitant interest - Adjudicating Authority's review jurisdiction in insolvency matters - HELD THAT:- We note that an application under Section 7 was filed by Shree Bharkha Synthetics Limited i.e., Respondent No. 3 herein against the Corporate Debtor which was admitted and CIRP was initiated on 21.08.2019 and Respondent No. 1 was appointed as Resolution Professional.

It is the case of the Appellant that these transactions were purely commercial transactions and the Adjudicating Authority should not have interfered. The Appellants submitted before us that they have filed the appeal to the limited extent of challenging the Impugned Order where the interest in entirety as claimed by the Appellants, being Financial Creditors’, has been disallowed on the pretext of extortionate in nature.

The Appellants also pleaded that on paper the interest rate could have been mentioned as 24% however, in effect the annual intent over and above principals debt work out to be only 6% p.a.

Since, the present appeal is limited only regarding disallowing the interest by the Adjudicating Authority and asking the Appellants to return the same to the Liquidator, we shall examine this limited issue.

We do not find any logic for Appellant/ Financial Creditor (who allegedly related to each other/ to give loan to an entity which has shut doors more than one decade ago. Any prudent corporate bodies like the Appellants will always like to secure its money before considering any financial facilities to others. Here is the case when the Appellants have chosen to advance money to the Corporate Debtor without even getting it registered with RoC as charge. We do not buy argument of the Appellant that the Corporate Debtor was contemplating to register the charge with RoC but could not do so. We will not go into further details as fact remains that the Appellant gave money to the Corporate Debtor, with whatsoever interest, it might have been.

We note that the Impugned Order also discussed about loan not being stamped or registered with RoC. We also note that there was no documentation to establish that any board resolution was passed by the Corporate debtor to obtain such financial facilities from the Appellants. Nor it has been brought out as to what was the need for Corporate Debtor to take loan at that stage.

Loan of the Appellant i.e., M/s Bhilwara Spinners Limited was not treated as Secured as charge could not be registered. Note C also stipulates that no interest has been provided in the books of the Corporate Debtor. Interestingly, Corporate Debtor candidly acknowledged the fact that the terms of repayment is NIL. It means that repayment terms neither finalized nor repayment seems contemplated. Thus, the interest of loan especially interest rate which stood enhanced to 24% p.a. compounded monthly seems not appropriate in given circumstances. In this background, we tend to agree with the finding of the Adjudicating Authority as contained in the Impugned Order. We do not find any rational for Corporate Debtor for acknowledging interest liability but not account for same in its own financial statements, which is against the established accounting norms and standards.

Incidentally, we take into account the term-sheet annexed as Annexure 4 in the appeal paper book and find that not even the place has been mentioned, where the term sheet was signed and kept as blank. This is also does not augur well for the cause of the Appellants.

Thus, we do not find any error in the Impugned Order. The Appeal devoid of any merits stands rejected

Pre-existing dispute - operational debt and its crystallisation - disputed invoices and reconciliation of accounts - adjudicating authority's role u/s 9 - notice of dispute u/s 8(2)(a) - admissibility of claimed interest in absence of contractual agreement - claim for value of unreturned goods - Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. [2017 (9) TMI 1270 - SUPREME COURT] principles -HELD THAT:- It is the case of the Corporate Debtor that the shuttering and scaffolding material supplied by the Operational Creditor was of poor quality which had been rendered degraded and unusable by rainy weather conditions. The Operational Creditor had been reminded orally and in the course of physical meetings to take back the damaged material and replace it which never took place resulting in delays in the execution of the project resulting in financial losses. It was also pointed out that besides requesting the Operational Creditor to collect the remaining material, the Operational Creditor was also requested to conduct a valuation of the damaged goods as it was necessary to determine the adjusted value to enable release of payments. However, when reconciliation was pending, no amount could have been claimed for payment.

Hence the Corporate Debtor has disputed the addition of Rs. 1.65 Cr. towards value of unreturned shuttering and scaffolding material in computing the outstanding liability of the Corporate Debtor. Since no replacements were provided despite requests and the Operational Creditor also failed to carry out a valuation of the damaged goods, this constituted sufficient grounds to establish that the invoices stood disputed and had never been admitted by them to be payable.

It is clear that the defence which was raised by the Corporate Debtor in its reply to Section 8 Demand Notice cannot be said to be moonshine. The correspondence exchanged between the Corporate Debtor and the Operational Creditor on 01.01.2024, 10.04.2024 and 10.06.2024 prior to Section 8 Demand Notice also clearly establishes that there was real pre-existing dispute. Hence the reliance placed on the judgment of this Tribunal in B.V. Gautam judgment supra by the Appellant is misplaced because in that case the dispute was raised after a prolonged delay post the Section 8 Demand Notice. However, in the present case, the dispute was raised on 10.06.2024 which clearly pre-dated the Section 8 Demand Notice and hence we are of the view that this judgment does not come to the relief of the Appellant.

Where Operational Creditor seeks to initiate insolvency process against a Corporate Debtor, it can only be done in clear cases where no real dispute exists between the Operational Creditor and Corporate Debtor. In case the Corporate Debtor raises a dispute which dispute is pre-existing in nature, the Adjudicating Authority is not required to be satisfied as to whether the defence raised is likely to succeed or not as long as it finds the defence raised to be plausible. In the present facts of the case, the Corporate Debtor having successfully raised pre- existing disputes within the meaning of IBC and which has been substantiated from material placed on record, we are of the considered opinion that the Adjudicating Authority did not commit any error in rejecting the Section 9 application.

Thus, we find no merit in the Appeal. The Appeal is dismissed. We are of the considered view that the Adjudicating Authority has rightly rejected the application under Section 9 of the IBC and find no reasons to interfere with the impugned order.

Valuation of security shares - ascertainment of "debt" and default - operation of moratorium - interplay between parallel fora - jurisdiction of Debt Recovery Tribunal - maintainability of Company Petition u/s 7 of the I&B Code, 2016 - Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - Sections 25 and 22 of the Recovery of Debts and Bankruptcy Act, 1993 - HELD THAT:- A perusal of the impugned order, which is under challenge will reveal that the Company Petition has not at all been touched or decided on merits and that, it has been rejected simpliciter with the right reserved for the Appellant to re-open the issue, upon the determination of valuation of shares, which was an issue artificially culled out by the Ld. Tribunal, which was not even prevailing either in the issue before the Hon’ble High Court of Telangana or even in the Judgment rendered by the Hon’ble High Court of Telangana on 10.03.2021.

In that eventuality, the Appellant cannot be deprived of his right to proceed with the proceedings under Section 7 of the Code which has to be independently decided on its own merit. Closing of the proceedings under Section 7 of the Code, on the premise that, the valuation of shares has to be decided first by the DRT as directed by the Hon’ble High Court is not at all an issue that involved consideration in the Judgment of the Hon’ble High Court dated 10.03.2021.

In that eventuality, the proceedings of the Company Petition cannot be rejected, only on the said premise as above and it has to be decided on its own merit as per law.

Since the Judgment of the Hon’ble High Court had got nothing to do with the issue of valuation of shares as it was not even an issue involved in the Writ Petition, the Company Appeal would stand allowed and the impugned order would stand quashed. The proceedings of the Company Petition revived back to its number, to be decided on its own merits.

Regular bail - Grant of bail where trial not likely to be completed within a reasonable time - Proceeds of crime - HELD THAT:- The sum and substance of the case of the respondent, as against the appellants is, that pursuant to the offence committed as the predicated offence, and the proceeds of crime have been utilized by the appellant(s) to the tune of Rs.73 lakhs.

Respondents submits that except the accused – appellant Devender Singh, the other two accused appellants -Rahul Parashar and David Mario Denis have serious charges against them.

In the present case, it is, therefore, submitted that in view of the rigors of Section 45 of the PMLA, there is no need to interfere with the impugned orders which have been passed by the High Court.

The fact which still remains, is that the appellants have been under incarceration for more than two years and six months, and the trial has just commenced.

Thus, we are inclined to grant bail to the appellants, since the trial is not likely to be completed within a reasonable time.

Appeals stand allowed, accordingly.

Enlargement on regular bail - Relaxation of twin conditions of Section 45 of PMLA in respect of a woman accused - Conditions of bail including cooperation with trial, attendance, non-tampering with evidence and deposit of passport - HELD THAT:- The petitioner is in custody for almost one year. In the predicate offence, the petitioner has been enlarged on bail. As the petitioner is a woman, it seems to us that the twin conditions of Section 45 of PMLA can, to some extent, be relaxed.

Consequently, but without expressing any opinion on merits, the instant petition is allowed. The petitioner is directed to be enlarged on bail subject to her furnishing bail bonds to the satisfaction of the Trial Court. In addition to the conditions that may be imposed by the Trial Court, it is directed that: (i) the petitioner shall fully cooperate with the ongoing trial; (ii) the petitioner shall remain present in Court on each and every date of hearing unless granted prior exemption; (iii) the petitioner will not try to influence the witnesses or tamper with the evidence in any manner; and (iv) the passport of the petitioner shall remain deposited with the Trial Court until further orders.

The special leave petition is, accordingly, disposed of.

Maintainability of writ petiiton - availability of alternate statutory remedy of appeal - Exemption from service tax - Works of construction of roads executed for government departments - rejection of application for rectification of mistake u/s 74 of the Act - HELD THAT:- We find no good ground and reason to interfere with the impugned judgment/order passed by the High Court [2025 (11) TMI 1099 - BOMBAY HIGH COURT]. - special leave petition is, accordingly, dismissed.

Invocation of extended period of limitation - Suppression of facts - exemption under Mega Exemption Notification No. 25/2012 (Entry 14(a)) - determination of service tax liability on the basis of Form 26AS - assumption of jurisdiction by revenue authorities - violation of principles of natural justice - writ jurisdiction under Article 226 - supervisory jurisdiction to correct jurisdictional error- Petitioner received work orders in the nature of works contracts for execution of construction, erection, commissioning or installation of original works pertaining to Railways and AMC services - deduction of TDS is on payment basis with or without accrual as and when payments arise in terms of the contracts. - HELD THAT:- This Court is of the considered view that the determination made by the respondent authorities by issuing the demand cum show cause notice and the confirmation in the impugned order-in-original is contrary to the provisions of the Act and the law declared by the Apex Court as well as by the High Court. The impugned order-in-original is therefore is bad and the same is liable to set aside.

It is seen that the ST-3 returns filed for the period mentioned, the petitioner declared only Rs. 1,09,71,749/- as the gross value of services and thus suppressed the actual value of taxable services provided during the said period and consequently evaded payment of service tax to the tune of Rs. 9,37,91,059/- including Krishi Kalyan Cess and Swachh Bharat Cess on the differential taxable value of Rs. 62,52,73,726/-. Therefore, assessing authority found that the petitioner did not declare the correct value of taxable service in the ST-3 returns as per their book of accounts.

It is a trite law that greater the power prescribed under the statute greater will be the responsibility on the authorities on whom it has been bestowed to ensure that no infraction of the provisions of the Act and the Rules are made and no injustice is caused to the assessee during the process of demand and recovery.

It is not a case that the documents which were called for required to be submitted were not furnished. The ST-3 Returns filed by the petitioner assessee were available in the records of the revenue authorities and which would have given a complete picture of the services rendered by petitioner assessee and/or whether such services come within the ambit of service taxes or are excluded by any circular or notification issue. However, there is no finding by the revenue authorities as to why this aspect was not examined. There is no conclusion of the revenue authorities in this aspect of the matter as is evident from the impugned order in original.

It is a clear case of assumption of jurisdiction by the Revenue authorities where the statutes did not confer them such jurisdiction by default. A Writ Court while exercising its powers under Article 226 can certainly examine whether the Tribunal or the quasi-judicial authority by exercising its jurisdiction mandated under the statute has fulfilled the necessary pre-conditions prescribed by the statute itself.

It is the conclusion arrived at by this Court that such preconditions mandated by law under section 73(1) having not been fulfilled by the Revenue authorities, their assumption of jurisdiction under section 73(1) of the GST Act was completely unwarranted and revenue authorities could not have assumed the jurisdiction under section 73(1) unless these pre-conditions mandated and a conclusion thereto has been arrived at by the Revenue authorities before assumption of such jurisdiction. It is under these circumstances that notwithstanding the availability of statutory alternative remedy, this Court considers it an appropriate case to invoke its jurisdiction under Article 226 to interfere with the impugned order in original and to set aside and quash the order-in-original. Under these circumstances, the case laws referred to by the respondents will have no bearing in the facts and circumstances of the present proceedings.

There is also no quarrel with the general proposition of law that in the face of statutory alternative remedy being available, a Writ Court would ordinarily not invoke its power of issuance of prerogative Writs. Since this Court has held that the levy of service tax on the petitioner by extending the limitation is contrary to the provisions of law, the natural corollary that would follow is that the levy of all penalty, surcharge and interest are also not leviable on the petitioner, this Court therefore issues a writ of certiorari setting aside the impugned order in original and it is ordered accordingly.

Therefore the writ petition stands accordingly allowed. However no order as to cost. Pending I.A.s are also dismissed and the interim order if any stands merged.

Condonation of delay - "sufficient cause" and liberal construction to advance substantial justice - Negligence, inaction or lack of bonafides of party or counsel - Limitation and time-bar for filing appeals - HELD THAT:- It is admitted fact that applicant has office of Authorized Representative / Chartered Accountant for taking appropriate legal steps regarding impugned order. Therefore, he had legal expert and they were capable of providing him legal advice about the filing of appeal within stipulated period or within reasonable period.

Merely on the ground of delay such benefit cannot be denied to the appellants. Therefore, in that case some agriculturist received higher rate of compensation in same acquisition of land and these appellant’s where denied on the grounds of limitation.

Hon’ble Supreme Court in the latest judgment Shivamma (Dead) by LRS Vs Karnataka Housing Board & ORS [2025 (9) TMI 1721 - SUPREME COURT] wherein, held that “No litigant should be permitted to be so lethargic and apathetic, much less be permitted by the courts to misuse the process of law”. Hon’ble Supreme Court also held that ‘There is, it is true, no general principle saving the party from all mistakes of its counsel. If there is negligence, deliberate or gross inaction or lack of bonafides on the part of the party or its counsel there is no reason why the opposite side should be exposed to a time barred appeal’.

Therefore, the ground taken by the applicant in approaching this Tribunal after such a long delay is not justified. Therefore, application for Condonation of Delay is liable to be dismissed for want of any sufficient cause. The application for Condonation of Delay is dismissed and consequently the appeal stands dismissed.

Leviability of service tax on ocean freight under reverse charge - Place of provision of services and destination based consumption tax - Extra-territorial legislative competence and nexus with India - HELD THAT:- We find that CESTAT Delhi, in the case of Gravita India Ltd. Vs. Commissioner of Central Excise & Central GST [2024 (3) TMI 1107 - CESTAT NEW DELHI] held that assessee being neither service provider nor service recipient could not be made liable to pay service tax on ocean freight paid by foreign seller to a foreign shipping line.

Accordingly, we dismiss the appeal filed by the department and uphold the impugned order of the Commissioner (Appeal). Cross Objection filed by the respondent also stands disposed of.

Limitation - condonation of delay - statutory limit of thirty days for condonation - statutory bar on condoning delay beyond prescribed period - HELD THAT:- None present for the party, the matter however, has been heard on merits it turns out that the appeal has been filed against the order of the Commissioner (Appeals) which has disallowed the appeal being barred by limitation and being beyond the scope of his condoning powers, as it involved delay beyond 30 days which is maximum statutory limit permitted for condonation.

Learned AR seeks to rely on the decision in the case of Singh Enterprises Vs. CCE, Jamshedpur- [2007 (12) TMI 11 - SUPREME COURT]. In which it is mentioned that no Court has the of condoning power beyond what has been statutorily provided by the Act. - issue being no more res Integra - we are compelled to disallow the appeal on the ground of limitation.

Appeal dismissed.

Levy of Service tax on water charges paid to the Government of Odisha for supply of water against charges / consideration at a specified rate stipulated in the Renewal Agreement - agreement by providing license to draw the water. - HELD THAT:- As appellant is drawing water on its own use from the water resources of the Government to the plant in that circumstances the facts in the case of Sasan Power Ltd. [2024 (5) TMI 326 - CESTAT NEW DELHI] and the case in hand are identical.

A perusal of Sasan Power clearly shows that even in that case, 'the appellant had applied to the government for permission to draw water from the Rihand Reservoir' and 'the government had agreed to grant the said permission on certain terms and conditions.' The Tribunal specifically noted that 'The appellant was required to make its own arrangement at its own cost for drawl of water from the water resource of the government to the plant' - which is identical to the present case.

As it has already been held that no Service Tax is payable on the basis of agreement executed between the assessee and the Government of Odisha for supplying water for which was paid by the assessee on the basis of volume of water. In that circumstances we hold that no Service Tax is payable by the appellant. Consequently, no penalty can be imposed on the appellant.

Thus, we set aside the impugned order and allow the appeal with consequential relief, if any.

Limitation and extended period of limitation - Reverse Charge Mechanism - Revenue neutrality - Advance received versus refundable loan - CENVAT credit admissibility and temporal application of proviso to Rule 4(1) - Penalty under Section 78 of the Finance Act, 1994 and Rule 15(3) of the CENVAT Credit Rules, 2004 -

Demand of Service Tax confirmed in the impugned order on ‘import of service’ under Reverse Charge Mechanism for the period 2011-12 - HELD THAT:- The said demand confirmed, by invoking the extended period of limitation, is not sustainable. Further, we also find that this demand has been made under Reverse Charge Mechanism. Therefore, we agree with the submission of the appellant that they would be entitled to take CENVAT Credit on the very same amount on the very same day. In this context, we also note that it has been laid down in a catena of decisions that the allegation of suppression and demand beyond the normal period cannot be sustained in cases of demands under Reverse Charge Mechanism. We rely upon the decision of the Hon’ble Supreme Court in the case of M/s. Jet Airways (India) Ltd. Versus Commissioner [2018 (1) TMI 210 - SC ORDER]. Furthermore, it is also pertinent to refer to the decision rendered by this Bench in appellant’s own group company case on the very same issue, which allowed the appeal on limitation, ref. Forum Projects (P) Ltd. v. Commissioner of Service Tax-I, Kolkata [2024 (4) TMI 1334 - CESTAT KOLKATA].

It is observed that the entire demand of Rs.9,08,617/- has been confirmed by invoking the extended period of limitation. Thus, by relying on the ratio of the decisions cited supra, we hold that the demand confirmed on this count is not sustainable and hence, we set aside the same.

Demand of Service Tax on the advances received - HELD THAT:- The evidences submitted by the appellant clearly indicate that the advances received by the appellant from their Group companies and others were refunded along with interest. As it is clear that the advances received were not with respect provision of any taxable service, we hold that no Service Tax is payable on the same. In this context, we also observe that the said issue has already been settled in favour of the appellant by this Bench in appellants own group companies’ case in Forum Projects Pvt. Ltd. v. Commissioner of Service Tax, Audit, Kolkata [2025 (11) TMI 1339 - CESTAT KOLKATA]

Thus, in view of the above discussion and by applying the ratio of the decision cited supra, we hold that the demand of Service Tax amounting to Rs.73,63,722/- confirmed on the advances received is not sustainable. Accordingly, the said demand stands set aside.

Demand on account of alleged inadmissible CENVAT Credit on the ground of violation of Rule 4 of Cenvat Credit Rules, 2004 read with Notification No.21/2014- CE(NT) - HELD THAT:- We hold that the CENVAT Credit taken by the appellant during the period 201112 to 2013-14 was not covered under this proviso. Moreover, it is observed that there is no dispute regarding eligibility of the said CENVAT Credit, receipt of the input service or use of the same towards provision of taxable services. We also find that the CENVAT Credit amounting to Rs.23,62,960/- out of total Cenvat Credit Rs.23,75,756/- has been allowed by the ld. adjudicating authority.

We find force in the appellant’s stand that since the remaining credit has also been taken before coming into existence of the third proviso to Rule 4(1) of the CENVAT Credit rules, the denial of the said amount of CENVAT Credit is not justified. In view of the above discussions, we hold that the appellant is eligible for the above CENVAT Credit and accordingly, we set aside the disallowance of CENVAT Credit and recovery thereof as ordered vide in the impugned order.

Imposition of penalties - HELD THAT:- There is no allegation in the Show Cause Notice regarding suppression, fraud, willful misstatement, etc. Furthermore, even in the impugned order under challenge, there are no specific findings regarding suppression, fraud, etc., nor has any evidence been brought on record to prove that the appellant is guilty of suppression, to justify the invocation of the said penal provisions against them. In these set of facts, we find that the provisions of Section 78 of the Finance Act, 1994 read with Rule 15(3) of the CENVAT Credit Rules, 2004 are not applicable at all. Consequently, we hold that no penalty is imposable in this case and hence, we set aside the penalties imposed 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.

Works contract service - turnkey projects - value of materials supplied - taxable value of services - composite contract - VAT on goods supplied

Works contract service - turnkey projects - value of materials supplied - taxable value of services - VAT on goods supplied - composite contract - Whether the value of materials supplied under bifurcated turnkey contracts was required to be included in the taxable value of services rendered under "works contract service" for the period in question - HELD THAT: - The adjudicating authority found, and this Tribunal records, that the work orders in question expressly specified the value of goods supplied separately from the value of erection, testing and commissioning services. Having regard to those contractual allocations and the fact that the respondent was liable to pay VAT on the value of goods supplied, the Tribunal held that the value of materials need not be added to the taxable value of the services. The Revenue's contention that the bifurcated supply and erection contracts constituted a single composite contract requiring aggregation of the supply value into service value was negatived on the ground that the orders themselves quantified the separate components and the respondent had specified the value of materials involved in execution of the works. [Paras 6, 7, 8, 9]

Demand in respect of the value of goods supplied for execution of the turnkey contracts is not maintainable and the impugned order dropping that portion of the demand is upheld

Final Conclusion: The appeal by the Revenue is dismissed; the Tribunal upholds the adjudicating authority's decision to exclude the separately stated value of materials from the taxable value of works contract services for the period 2007-08 to 2011-12.

Invocation of extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 - bona fide belief as defence to allegation of suppression, fraud or wilful misstatement - penalty and interest consequences for short payment, delayed return and late fee - appellate adjudication before CESTAT Allahabad and review of orders of Commissioner (Appeals) and Original Adjudicating Authority - HELD THAT:- From the reading of the findings recorded in the impugned order, there is no discussion in respect of invocation of extended period of limitation to show that ingredients have prescribed by proviso to Section 73(1) are present in this case. Further, it is nowhere coming from the impugned order to show that whether the default payment of tax was on account of ignorance or deliberate with intent to evade. Thus, in absence of any such findings, impugned order has been made on the presumption that extended period of limitation will be invokable for making this demand.

There is sufficient ground to hold that appellant entertained a bonafide belief that he was not required to pay service tax in respect of these receipts and accordingly he had not paid the tax even if they were actually due.

Demand made by invoking extended period of limitation cannot be upheld. The impugned order which have made a presumption about the fact that the extended period of limitation will be invokable is bad in law.

Appeal is allowed.

Extended period of limitation - proviso to Section 73(1) of the Finance Act, 1994 (extended limitation for fraud, collusion, wilful misstatement or suppression) - bona fide belief - burden of proof for invoking extended limitation - timebarred show cause notice

Extended period of limitation - proviso to Section 73(1) of the Finance Act, 1994 (extended limitation for fraud, collusion, wilful misstatement or suppression) - burden of proof for invoking extended limitation - timebarred show cause notice - Whether the demand was sustainable by invoking the extended period of limitation under the proviso to Section 73(1) for the Financial Year 2016-17. - HELD THAT: - The Appellate Tribunal examined whether the department had established any active or deliberate act of fraud, collusion, wilful misstatement or suppression of facts with intent to evade payment of service tax so as to justify invocation of the extended limitation. The Tribunal noted that neither the OrderinOriginal nor the impugned appellate order records findings to sustain the extended period, and that the appellant had entertained a bona fide belief that the services (supply of farm labour) were not leviable. Reliance was placed on settled precedents emphasising that the proviso to Section 73(1) is attracted only where positive material establishes deliberate suppression or mala fide conduct and that the burden to prove such mala fide lies on the Revenue. In the absence of specific averments in the showcause notice and any material establishing suppression or intent, the showcause notice was held to be timebarred and the extended period could not be invoked. [Paras 4]

Invocation of the extended period of limitation under the proviso to Section 73(1) for AY/FY 2016-17 is not justified; the showcause notice is timebarred.

Timebarred show cause notice - consequential setting aside of demand and penalties - bona fide belief - Consequences of the finding that the extended limitation could not be invoked - whether the impugned order confirming demand, interest and penalties must be set aside. - HELD THAT: - Because the Tribunal held that the extended limitation was wrongly invoked and the showcause notice was timebarred, the demand confirmed by the Commissioner (Appeals), including interest and penalties founded upon that demand, could not stand. The Tribunal observed that the record did not sustain findings of suppression or deliberate evasion and that there were materials (profit & loss account, cash memos) indicating the appellant's claim concerning the nature of receipts, supporting a bona fide belief. On this ground alone the impugned appellate order was set aside and the appeal allowed. [Paras 4, 5]

Impugned order confirming demand, interest and penalties set aside; appeal allowed.

Final Conclusion: The Appellate Tribunal held that the department failed to establish the necessary positive material to invoke the extended period of limitation under the proviso to Section 73(1) for FY 2016-17; the show-cause notice was timebarred, and consequently the impugned order sustaining demand, interest and penalties was set aside and the appeal allowed.

Extended period of limitation - Bonafide belief / bona fide conduct - Burden of proof - Suppression, fraud, collusion, wilful misstatement - Claim of exemption from service tax - Proviso to Section 73 of the Finance Act, 1994 - HELD THAT:- As per which appellant claimed that the services in respect of which the tax was being demanded was exempt from payment of service tax. Impugned order rejects the same in subsequent paragraphs. However, appellant on the basis of above entertained a belief that he was not required to pay service tax in respect of these services. Even if Notification No.25/2006-ST dated 13.07.2006 was rescinded by Notification No.32/2011-ST dated 25.04.2011 the fact that appellant even otherwise the another facts has been recorded in para 6.5 of that order with records to surrender of ST-2 Certificate dated 28.09.2011 along with ACES status of Surrender request pending with the Department.

Even when appellant had made a request for surrender and the department failed to act on the same either by accepting or by rejecting the said surrender. There is enough evidence to show that all the facts in respect of services being provided by the appellant was well within the knowledge of the Department and they failed to act upon the same. In such a situation, where appellant entertained a bonafide belief and all the facts were well within the knowledge of the department invocation of extended period of limitation for making this demand cannot be justified.

Thus, demand made by invoking extended period of cannot be upheld. The impugned order is set aside.

Appeal is allowed.

Taxability of refundable deposits / sinking fund as consideration for service - treatment of charges forming part of composite construction contract / sale consideration - reimbursement / miscellaneous receipts not constituting consideration for service - voluntary compliance encouragement scheme / VCES declarations and payments - maintainability of revenue appeal against dropping of demand on calculation error and classification of advances -

Demand of service tax on such refundable deposit - HELD THAT:- Since the maintenance account has not been settled, the sinking fund has not been handed over to the association at that time and it remained with the appellant. The Ld. Counsel submitted that at present this amount has already been handed over to the Residential Welfare Association, which was formed later. Thus, we observe that this fund is a pure deposit without any service element. We also find that the said amount was shown as current liability in the balance sheet (Rs. 93,10,650/- in 2011–12 and Rs. 96,63,330/- in 2012–13) and not income. Thus, we observe that demand of service tax on such refundable deposit is not justified.

Demand of Service Tax on Miscellaneous Receipts - HELD THAT:- Appellant submitted some sample copies of tax invoice for purchase of electric meter on which VAT has been charged by the respective vendors in this regard in the F.Y. 2009-2010 & 20102011. Thus, we observe that the appellant-assessee has not provided any service to the flat owners in this regard. Accordingly, we hold that the demand of service tax confirmed on this ground is not sustainable.

Demand of Service Tax on Advance Maintenance Deposits - HELD THAT:- We hold that the entire demand of service tax of Rs. 21,18,991/- confirmed in the impugned order is not sustainable and hence we set aside the same. As the demand of service tax is not sustainable, the question of demanding interest or imposing penalty does not arise and hence we set aside the same.

Demand of service tax on the amount received as ‘advances from customers’ - HELD THAT:-The appellant submits that these advances were wrongly classified and should have been grouped under “Advance against agreement” as they were payments toward the sale of flats. During the disputed period, we find that the appellant-assessee was engaged in residential property development and sale. Since both Club Town Residency and Koyla Vihar projects received completion certificates before 1st July 2010, we hold that the advances received towards these flats are not taxable under the service tax regime, as per prevailing legal provisions.

We find that the Ld. Adjudicating Authority has acknowledged the Order-in-Original that the advances were received for the sale of flats and not for any taxable service. He has clearly held that the activities, if taxable, would fall under “Construction of Residential Complex Service” and not “Management, Maintenance or Repair Services.” Moreover, since the projects were completed before 01.07.2010, these transactions are outside the scope of taxable service. We do not find any infirmity in the findings of the Ld. adjudicating authority while dropping this demand. Accordingly, we uphold the dropping of the demand on this count by the adjudicating authority.

Thus, we find that the appeal filed by the Revenue against dropping of the demand of service tax, does not merit consideration and accordingly, we reject the same.

Withdrawal of writ petition with liberty to respond - time granted to respond to show cause notice - leave to challenge validity of Rule 26(2) of the Central Excise Rules, 2002 - prohibition on raising constitutional challenge before adjudicating authority but preservation of rights on adverse order - principles of natural justice / opportunity to be heard

Withdrawal of writ petition with liberty to respond - Disposition of the writ petition by withdrawal with liberty to respond to the impugned show cause notice. - HELD THAT: - The petitioner's counsel sought leave to withdraw the writ petition while reserving the right to respond to the impugned show cause notice and to raise all contentions in future. The respondents did not oppose this request and the Court accepted that such a course is reasonable. The writ petition is accordingly disposed of as withdrawn while expressly granting the petitioner the stated liberty. [Paras 2, 6]

Writ petition disposed of as withdrawn with the petitioner granted liberty to respond to the show cause notice.

Time granted to respond to show cause notice - Grant of time to the petitioner to file a response to the impugned show cause notice and the consequence of non-filing. - HELD THAT: - The Court granted the petitioner four weeks' time to respond to the impugned show cause notice. The Court clarified that if no response is filed within this period, the Adjudicating Authority is free to pass fresh orders without awaiting such a response. The direction balances the petitioner's right to respond with the Authority's power to proceed where no response is filed. [Paras 4, 5]

Petitioner given four weeks to respond; if no response is filed, the Adjudicating Authority may proceed to pass fresh orders.

Leave to challenge validity of Rule 26(2) of the Central Excise Rules, 2002 - prohibition on raising constitutional challenge before adjudicating authority but preservation of rights on adverse order - Whether the petitioner may raise a challenge to the validity of Rule 26(2) and the extent to which such a challenge may be entertained before the Adjudicating Authority. - HELD THAT: - The Court left all contentions of the parties open, including the petitioner's contention that Rule 26(2) of the Central Excise Rules, 2002 is ultra vires the Central Excise Act, 1944. The Court observed that questions of ultra vires and constitutional validity are not to be decided unnecessarily. It further indicated that although such a constitutional challenge cannot be raised before the Adjudicating Authority at the stage of adjudication, the petitioner's right to question the validity of Rule 26(2) is preserved in the event of an adverse order arising from disposal of the show cause notice. [Paras 3, 4]

All contentions, including a challenge to Rule 26(2), are left open; constitutional challenge not to be raised before the Adjudicating Authority but preserved for challenge if an adverse order is passed.

Principles of natural justice / opportunity to be heard - Obligation of the Adjudicating Authority to observe principles of natural justice in disposing of the show cause notice. - HELD THAT: - The Court directed that the Adjudicating Authority must comply with the principles of natural justice and fair play and hear the petitioner before disposing of the show cause notice. This requirement applies regardless of whether the petitioner files a response within the granted four-week period, insofar as any hearing prior to passing orders is mandated by law. [Paras 5]

Adjudicating Authority must observe principles of natural justice and hear the petitioner before disposing of the show cause notice.

Final Conclusion: The writ petition is disposed of as withdrawn; petitioner granted four weeks to respond to the show cause notice, all contentions (including a challenge to Rule 26(2)) are left open with the limited direction that constitutional objections are not to be pressed before the Adjudicating Authority but remain available if an adverse order is made, and the Adjudicating Authority must observe the principles of natural justice when disposing of the matter.

CENVAT credit admissibility - Manufacture by mixing/blending - Bill of Entry as duty-paying document -Suppression of facts - Bonafide payment and revenue neutrality -extended period of limitation - penalty - HELD THAT:- As regards confirming the demand by invoking extended period of limitation, we find that there was neither suppression of facts nor any willful misstatement by appellant to warrant invocation of the extended period of limitation. All activities were undertaken in full transparency and were within the knowledge of the Department. All three departments, Customs, Central Excise and Service Tax Authorities were well aware of the activities of the appellant from the year 2002.

As regards the activity, the finding that the activity of mixing/blending of propane or butane undertaken by appellant amounts to manufacture is upheld. However, with regard to cenvat credit of Rs.14,33,19,851/- which was availed and utilized by the appellant during the course of investigation, we find that as per Rule 9 of CENVAT Credit Rules, 2004, CENVAT credit can be availed on the basis of prescribed documents issued by the supplier of goods or service providers, as well as other specified duty-paying documents. The said Rule, under clause (c), specifically recognizes a Bill of Entry as one of the valid documents for availing CENVAT credit, falling within the ambit of “Documents and Accounts” contemplated therein.

Following the ratio of the judgment in the matter of Union of India Vs. M/s. Marmagoa Steel Ltd. [2008 (7) TMI 95 - SUPREME COURT] and following decision in the matter of M/s. Hindustan Zinc Ltd. [2012 (12) TMI 462 - CESTAT, NEW DELHI] CENVAT credit cannot be denied for imported goods once duty is paid and goods are received, even if technical deficiencies exist in the Bill of Entry. Rule 11(2) of the Central Excise Rules, 2002, governing domestic goods, is inapplicable to imports, and credit is available even to a borrower of goods.

Thus, the period of limitation computed is unsustainable. Bill of Entry is filed by the importer under Section 46 of the Customs Act, 1962 became evidence of duty only upon assessment under Section 47. It is not equivalent to an invoice or duty paying document issued by a manufacturer under Rule 9(1) of CENVAT Credit Rules, 2004. Limitation provisions aim to prevent misuse, not to penalize genuine duty-paid receipts.

Accordingly, Appeal filed by M/s. Hindustan Petroleum Corporation Ltd., is partially allowed by confirming the activity as manufacturing and by confirming the demand for the normal period. The demand alleging ineligible cenvat credit against appellant M/s. Hindustan Petroleum Corporation Ltd., is dropped since the credit is held as eligible. Further, penalties imposed under section 11AC of Central Excise Act. 1944 / Rule 26 of Central Excise Rules, 2002 on Co-appellants in Appeal Nos. E/20160/2019, E/20161/2019 and E/20162/2019 are liable to be set aside and they are set aside.

Liability for special additional duty (SAD)- Effective rate of customs duty - Exemption under section 5A of Central Excise Act, 1944 -Special Additional Duty (SAD) - Entitlement u/s 5A - EOU domestic clearance rule - Value Added Tax (VAT) exemption condition -Net Foreign Exchange Positive (NFEP) - HELD THAT:- The distinguishment of levy on domestic clearance by ‘export oriented unit (EOU)’ from normal clearances of excisable goods is built on the premise that duty foregone should be made good on goods that are not exported; ‘aggregate duties of customs’ is intended precisely to that end. There is no plausible cause for discriminating between standard import and exempted imports standing on identical ground, as far as domestic clearance of goods manufactured from such imports are concerned, on rate of duty; furthermore, ‘additional duty of customs’ equal to excise duties are available for offset as credit in standard import by domestic manufacturers in much the same way as domestic procurement which ‘export oriented units (EOU)’ cannot avail of.

The recovery of duties on domestic clearance should, therefore, not be more than that chargeable on like article when imported into India and to be passed on to buyer as credit of duties. Furthermore, the restriction in section 5A of Central Excise Act, 1944 is not a taxing provision for charge of standard rate of duty on ‘export oriented unit (EOU)’ but an exemption limiting the duty chargeable on domestic manufacturers for such clearances; it is intended to ensure that ‘export oriented units (EOU)’ do not shelter behind it to circumvent the special levy charged on them under section 3 of Central Excise Act, 1944.

There is neither logic nor law to support that proposition that it applies, and to the extent utilised in goods cleared domestically, to raw materials and consumables that were permitted exemption under notifications intended specifically for such units. The decisions cited above affirm the claim for effective rates of duty adopted by the appellant.

There is no dispute of the contention that the goods cleared by the appellant are liable to ‘value added tax (VAT)’ and that it had only been temporarily deferred owing to transaction being stock transfer; on sale, the goods would be subject thereto unlike in central excise levy where clearance is the point of assessment.

Thus, the impugned order does not stand the test of law and is set aside to allow the appeal.

Cenvat credit on capital goods handed to works contractor - Invoice showing recipient as consignee and admissibility of credit - Effect of works contract valuation on availment of credit - Invocation of extended period of limitation for suppression or fraud -Whether the appellant is entitled to take Cenvat Credit on the capital goods purchased by the appellant and handed over to the works contractor for erection commissioning in its factory and same has been used by the appellant post installation and manufacture of dutiable goods or not. - HELD THAT:- In the instant case, the Appellant is inter alia engaged in manufacture of various iron and steel products. Further, the items on which credit has been availed by the Appellant pertained to the Purchase Order/ Work Order placed for supply of goods which were either plant and machinery or their auxiliaries falling under the definition of ‘capital goods’ in as much as the same were used for Design, manufacture and Supply of Indigenous Plant, Machinery and Equipment with Auxiliaries for Coke Oven Battery. Thus, the goods supplied under the Purchase Order/Work Order qualify as ‘capital goods’ under Rule 2(a) of CCR.

In view of the decision in the case of M/s. Larsen & Toubro Limited [2024 (8) TMI 395 - CESTAT KOLKATA], where in under similar factual scenario, the department had denied credit to the Appellant (Tata Steel Ltd.) on the ground that the capital goods on which the Appellant availed Cenvat Credit becomes inputs for L&T, who is restricted from availing Cenvat Credit, therefore, the Appellant was not permitted to avail credit on such goods. This Hon’ble Bench allowed the Appellant to avail credit on those capital goods observing that the capital goods procured by the Appellant were the Appellant’s property and the same were handed over to L&T for installation and commissioning. Thus, the goods remained the property of the Appellant during the impugned period.

Thus, we hold that appellant M/s. Steel Authority of India has correctly taken the Cenvat Credit on the capitals goods required by them which has been handed over to the job workers of M/s Mecon Ltd. for installation, erection and commissioning of plant and have ultimately used in the manufacture of final product. Therefore, Cenvat Credit cannot be denied.

In view of this we hold that Cenvat Credit has taken by the appellant namely M/s Steel Authority of India Ltd. is correct and no penalty is imposable on the appellant. Therefore, penalty imposed on the appellant are set aside.

In view of this the impugned orders are set aside and appeals are allowed with consequential relief, if any.

Cenvat credit on input services used in relation to setting up, modernization, renovation or repairs of a factory - Entitlement to utilize Cenvat credit as a common pool / cross-utilization - Invocation of extended period of limitation - Doctrine of nexus between input services and manufacture of final products - HELD THAT:- On going through the facts of the case the case of the Revenue is that services utilized for not in relation to manufacture of final dutiable goods and the same is used in setting up of a factory which is not eligible to take Cenvat Credit.

Appellant has availed the Cenvat Credit on various input services used for setting up of its factory, its modernisation and ultimately used for manufacture of final product is eligible for Cenvat Credit. Thus, we hold that appellant has correctly taken the Cenvat Credit on input services used for setting up of its factory, its modernisation and services used in relation to manufacture of final product is entitled to take Cenvat Credit. In view of this we do not find any merit in the impugned order. The same is set aside.

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

Recovery of amounts collected as representing excise duty - Inclusion of freight, loading and unloading charges in assessable value - Place of removal / ex-factory versus FOR/site delivery - Small Scale Industry (SSI) value-based exemption under Notification No.8/2003-CE - Appellate Tribunal (CESTAT) adjudication on interpretation of Section 11D - HELD THAT:- In the present case, the invoices which are issued to the customers during the exemption period, nowhere in the invoices any amount is shown and collected from the customers as excise duty calculated on the value of the goods sold even though the appellant has been availing value-based exemption under Notification No.8/2003-CE dated 01.03.2003 up to an aggregate value of clearances of specific goods of Rs.150 lakhs in a financial year. If any amount is not shown in the clearance document as representing duty, Section 11D is not attracted. This principle has been laid down by the Tribunal in a series of cases including Everest Industries Ltd. Vs. CCE, Coimbatore [2019 (6) TMI 735 - CESTAT CHENNAI]

The confirmation of demand u/s 11D cannot sustained.

We find merit in the contention of the learned advocate for the appellant inasmuch as except in the cases of NAPC and BPCL, no other evidence has been placed on record by the Revenue to justify the clearances are on FOR basis. On the other hand, the sample invoices enclosed along with the appeal paper book reveals that the clearances are on ex-factory basis and transportation costs are shown separately which are paid on behalf of the customers and recovered separately. Also, we find merit in the contention of the Learned Advocate on the issue of limitation. Hence, confirmation of demand on this count also cannot be sustained. Further, it is submitted that major portion of the clearances were ex-factory basis and levy of duty on freight charges is a question of interpretation of law, hence invoking extended period is bad in law.

On the appropriation of the amount, we find that the appellant though discharged duty against periodical clearances within the stipulated time; however, there was delay in filing periodical returns with the Department. Attributing the reason, the learned advocate for the appellant has submitted that the delay was caused at the end of the Chartered Accountant who was entrusted with the job of filing the Excise returns; however, they have filed the returns subsequently complete in all aspects. From the records, we find that the amount paid by the appellant for the respective period has been appropriated. Considering the fact that the appellant is an SSI unit, for delay in filing the return deserves to be condoned.

In the result, the impugned order is set aside and the appeals are allowed.

Burden of proof in allegations of clandestine manufacture and removal - fictitious units / sham suppliers as basis for invoking extended period of limitation - requirement of corroborative material - raw material procurement, labour deployment, power consumption, bank transactions - misdescription, suppression and invocation of extended period under proviso to Section 11A(1) of the Central Excise Act, 1944 - penalties under Finance Act, 1994 - HELD THAT:- We find that it is an admitted fact that the Government of Tamil Nadu has placed order for supply of school bags to M/s Silvertone, New Delhi. On completion of manufacturing, payment for the supply were made directly into the bank accounts of the two said firms M/s. Max Trading and M/s. Mahalaxmi Trading Co. Further there is no evidence on record to show that the Appellant had the facility to manufacture such a large number of quantities by way of procuring raw material or manufacturing. Further, as per the impugned order the said two entities who had supplied the goods were held as non-existence since they were not traceable in the given address and due to that reason, it is held that they belonged to Appellant only. We find that there is no evidence that the Appellant had procured the raw material, no evidence to prove that the Appellant had the capacity to manufacture such huge quantity of bags and no evidence that the requisite number of persons were available to manufacture the said quantity of bags. We further find that during the investigation, though the Appellant had furnished the details of the names of job workers, who had conducted the manufacturing activities as directed by the Appellant, no investigation was done with them. Further no attempt was made to find out the beneficiary of the accounts to which the supplier had deposited the amount with banks also.

Law is well settled that when an allegation of clandestine removal, production, clearance is made, onus is on Revenue to prove with evidence to that effect to corroborate the evidence such as procurement of excess raw material, inputs, consumption of excess electricity inculpability statement, enquiry with purchase of the goods, etc. Thus, Appellant cannot be held as manufacturer of the goods and cannot be fastened with duty liability. In view of the above the impugned order is unsustainable and liable to be set aside.

Accordingly, impugned order is set aside, and the appeal is allowed with consequential relief, if any, in accordance with law.

Dishonour of cheque -Locus standi of the complainant - maintainability of complaint in sole proprietorship - rebuttal of statutory presumptions - revisional jurisdiction - concurrent findings of trial and appellate courts - Offence u/s 138 of the Negotiable Instruments Act, 1881 - Sections 118(a) and 139 of the Negotiable Instruments Act, 1881 - HELD THAT:- It is well-settled that the High Court in criminal revision against conviction is not supposed to exercise the jurisdiction akin to the appellate court and the scope of interference is limited. Section 397 of the Cr.P.C. vests jurisdiction for the purpose of satisfying the Court as to the correctness, legality or propriety of any finding, sentence or order, recorded or passed, and as to the regularity of any proceedings of such inferior court. It is also well settled that while considering the same, the Revisional Court does not dwell at length upon the facts and evidence of the case.

It is urged that since the cheque in question was issued in the name of M/s Yashman Diamonds and not in the individual name of the respondent, the respondent lacked the authority to institute the complaint under Section 138 of the NI Act.

The dishonour of the cheque on account of “payment stopped by drawer” is duly proved through bank records, and the statutory demand notice was issued within the prescribed period and admittedly replied to by the accused. These facts, once established, triggered the statutory presumptions under Sections 118(a) and 139 of the NI Act in favour of the complainant. The burden thereafter shifted upon the petitioners to rebut the presumption by raising a probable defence, not by mere assertions, but by material on record.

This Court finds that the objection regarding the complainant’s locus standi was rightly rejected by the learned Trial Court. No perversity or legal infirmity is discernible in the findings returned on this aspect. The contention raised by the petitioners is accordingly rejected.

No attempt was made to clarify what fees were allegedly payable, to whom such fees were due, or on what occasion the cheque was retained for that purpose. The accused also did not explain where the cheque was kept, under what circumstances the complainant allegedly gained access to it, or when the cheque was purportedly taken away. These crucial aspects remained completely unexplained. The learned Appellate Court has also correctly noted that the petitioners never lodged any complaint with the police or any other authority alleging misuse of the cheque, nor was any such complaint proved during trial. In view of the above, this Court finds no infirmity in the concurrent findings of the learned Trial Court and the learned Appellate Court rejecting the defence of misuse of cheque.

In the totality of the circumstances, this Court finds no perversity or illegality in the concurrent findings recorded by the learned Trial Court and the learned Appellate Court.

Accordingly, this Court holds that the conviction of the petitioners u/s 138 of the NI Act calls for no interference in revisional jurisdiction.

Rebuttable presumption u/s 139 of the Negotiable Instruments Act - Existence of legally recoverable debt for offence u/s 138 of the Negotiable Instruments Act - Admissibility of additional evidence by appellate court - Appellate discretion u/s 391 CrPC to secure ends of justice - Appellate powers to decide conviction and sentence - High Court supervisory jurisdiction on criminal revision - HELD THAT:- Admittedly, cheque is issued in a sum of Rs. 3,80,000/-. Cheque was presented at the first instance and it was dishonoured and later on, amount was demanded by the complainant and there was a request to represent the same and as such, cheque was again represented on 08.05.2008. Again the cheque was dishonoured for ‘want of funds’ and there was no reply to the legal notice. Non reply to the callings of the legal notice exposes the hollowness in the claim of the accused.

On perusal of the additional evidence for the sake of appreciating the arguments of learned counsel for the revision petitioner, would make it clear that the contention of the accused that trailer were not delivered is not established.

Therefore, taking note of all these aspects of the matter and especially in the absence of any reply notice and any contra evidence placed on record, this Court is of the considered opinion that the dismissal of the appeal by the First Appellate Court and also rejecting the additional evidence, if not providing proper reasons, would not be a ground to interfere with the order of the First Appellate Court

In the case on hand, no such ambiguity would arise, inasmuch as, accused failed to establish that she did not take delivery of the trailers and cheque issued towards payment of cost of the trailers vide Exs.P.10 and 11 stood dishonoured and thereby, the offence committed by the accused is duly established by the material evidence placed on record.

Therefore, viewed from any angle, both the decisions are not applicable to the case on hand.

However, both the Courts have missed out a fact that lis is between two private parties and no State machinery is involved. Thus, imposition of Rs. 5,000/- towards the defraying expenses of the State needs to be set aside and to that extent, case is made out by the revision petitioner for interference.

Revision Petition is allowed in part.