TaxTMI Updates e-Newsletter
Feb 07,2026

Reassessment proceedings against a deceased assessee - jurisdictional defect for continuation of proceedings after notice of death - failure to take corrective procedural measures upon notice of death - setting aside of assessment and consequential notices where proceedings continue against dead person - re-initiation of reassessment in accordance with statutory formalities -treatment of heir or petitioner as legal representative for tax proceedings - HELD THAT:- It is not in dispute that at the time when the notice under Section 148 of the said Act of 1961 had been issued for initiating reassessment proceeding against the original assessee - Pijush Kanti Deb (since deceased), the original assessee was no more. In such view of the matter, the proceeding itself was initiated against a dead person.

It is also not in dispute that at the time when the notice under Section 148 of the said Act was issued, the Revenue Authorities had no information as regards the death of the said person and that, the Revenue Authorities got notice of the death of the original assessee only on December 28, 2023 upon the National Airport Authority intimating the same to the respondent Income Tax Authorities while responding to the query of the respondent Income Tax Authorities under Section 133(6) of the said Act of 1961.

It is clarified that if the petitioner does not respondent to the request of the respondent authorities for furnishing names of the legal representatives of the deceased assessee within a period of seven days from receipt of a written request seeking information about the legal representatives and heirs of the deceased assessee/original assessee, the Revenue Authorities shall be free to proceed against the petitioner alone treating the petitioner as the legal representative of the assessee and in such case, the proceeding shall not be liable to be challenged on the ground of non-implement of all heirs and/or legal representatives of the deceased assessee.

WPA stands disposed of with the above observations.

Rectification u/s 161 of the GST Act- reconciliation of Input Tax Credit (ITC) - principles of natural justice and opportunity of hearing - assessment u/s 73 of the GST Act - verification of records on the GST portal - HELD THAT:- On perusal of record, it is manifest that to the notice seeking additional information by the concerned authority, a reply dated 7th August, 2025 was filed enumerating exhaustively with respect to the requirement of reversal of ITC as suggested by the authority concerned. The petitioner during the course of hearing drew attention to such reply where it is categorically stated that “ITC reconciliation statement along with input tax credit and corresponding credit note reversal statement incorporated in consolidated GSTR-3B”. Such reply also depicts that point-wise enumeration with respect to each alleged transaction was submitted. It is revealed from Assessment Order that such reply was discarded as there was absence of original credit notes along with purchase invoices and issuance of credit notes by the suppliers.

It is emphatically submitted that the application filed under Section 161 of the GST Act could not have been rejected without affording opportunity of hearing. This aspect remained uncontroverted by the opposite parties. The order dated 1st September, 2025 rejecting application for rectification could not have been passed merely quoting the provisions under Section 161 of the OGST Act. Without assigning reasons for not accepting the documents stated to have been submitted and declining to verify the evidence available on the portal the rejection of application suffers from infirmity in law. It does not emanate from said order dated 01.09.2025 rejecting the application for rectification that the aforesaid documents as produced by the petitioner have been given due consideration by the Assistant Commissioner of CT & GST, Bhubaneswar-1 Circle, Bhubaneswar nor does it reveal before rejection any opportunity of personal hearing was given.

Thus, this Court perceives that the Order dated 1st September, 2025 (Annexure-9) passed by the Assistant Commissioner of CT & GST, Bhubaneswar-1 Circle, Bhubaneswar rejecting the application for rectification dated 29th March, 2025 is bereft of reason and hence, the same is liable to be set aside.

Having set aside the Order, the case is remanded to the aforesaid authority with the direction that the application for rectification dated 29th March, 2025 be disposed of having regard to the ground taken therein along with supporting documents/records available on the portal as stated to have been uploaded and/or to be produced, as it had not been afforded adequate opportunity to present its case during the course of the proceeding under Section 73 of the GST Act. To avail such opportunity of hearing and proffering explanation before the said Authority by producing records and documents to support fact and figures which have already been uploaded, the petitioner is directed to appear before the Assistant Commissioner of CT & GST, Bhuabneswar-1 Circle, Bhubaneswar within fifteen working days from date.

With the observations and directions, the writ petition stands disposed of.

Regular bail in GST criminal proceedings - import of services and IGST liability under reverse charge mechanism - cognizability and non-bailability of offences u/s 132(1)(i) - further investigation and filing of supplementary complaint not a bar to bail absent specific justification - absence of allegation of fraud in memo of arrest - offences triable by Magistrate with limited sentence - protection of personal liberty against prolonged custody pending investigation and trial - requirement to conclude assessment proceedings before criminal prosecution-exceptions and their limitation - HELD THAT:- In Vineet Jain’s case [2025 (5) TMI 925 - SC ORDER], Hon’ble Apex Court took it seriously that once offense is triable by the Court of Magistrate and awardable sentence is also limited and the allegations are based upon the documentary evidences, it becomes a matter of right to question that despite the accused being inside jail for 07 months, why the bail could not be granted to the accused, until the allegations are proved Similarly, in Manish Kumar’s case [2025 (8) TMI 239 - PUNJAB AND HARYANA HIGH COURT], wherein, there was an allegation of creating of 27 fake firms by the accused, yet by considering the submissions of the GST Department that investigation is still pending, concession of bail was extended to the accused. Brother Judge of this Court (Harpreet Singh Brar, J.), noticed that, ‘Much to the concern of this Court, the empirical data makes it abundantly clear that securing a conviction and concluding the trial is not a matter of priority for the respondent as all its energy is devoted towards curtailing liberty of the prospective accused.’

Even the view taken by the Hon’ble Apex Court in Radhika Aggarwal v. Union of India and others [2025 (2) TMI 1162 - SUPREME COURT (LB)], was also followed by noticing that, ‘normally it would be mandatory to conclude assessment proceedings under Section 73, 74 of the CGST Act before initiating criminal prosecution under Section 132 of the CGST Act. However, in exceptional circumstances, the same can be circumscribed after providing detailed reasons for the same.’

In Sarthak Jain’s case [2025 (7) TMI 1249 - PUNJAB AND HARYANA HIGH COURT] also, though allegation of evading of tax was there, but accused in the said case had remained inside jail for the considerable period and the offences being triable by the Court of Magistrate, was extended the concession of bail.

Judgments relied upon by learned Senior counsel for the respondent/complainant on the contention of the further investigation under Section 173(8) Cr.P.C. [S. 193(9) of BNSS, 2023], is premature at this stage. There is no such prayer or even application before the concerned Court in regard to the submission of the supplementary complaint/report. In view of all the aforementioned circumstances, and more particularly, the offences in the case(s) in hand being triable by the Court of learned Magistrate, and already petitioner(s) herein are there inside jail for about six months, this Court deems it appropriate to extend the concession of regular bail(s) to the petitioner(s).

Consequently, prayer made in the present petitions are allowed. Petitioners are ordered to be released on bail, subject to their furnishing bail/surety bonds to the satisfaction of the learned trial Court/ Chief Judicial Magistrate/ Illaqa Magistrate/ Duty Magistrate concerned, if not required in any other case.

Petitions stand disposed of.

Quashing of cancellation of GST registration - restoration of GST registration subject to discharge of tax liability - condition precedent for restoration pursuant to Tvl.Suguna principle - interim protection against recovery proceedings - suppression of material before Court - Suppression of material fact - HELD THAT:- The petitioner is required to discharge the pending tax arrears / tax liability as a condition for restoration of GST registration in terms of the decision of this Court in Tvl. Suguna Cut Piece Center, Authorized Signatory Vs. The Appellate Deputy Commissioner (ST) (GST), Salem and another [2022 (2) TMI 933 - MADRAS HIGH COURT]

Considering, the impugned order dated 03.02.2024 in Form GST REG-13 is quashed and the petitioner’s GST registration is directed to be restored, subject to the petitioner complying with the conditions stipulated in Tvl.Suguna Cut Piece Center, Represented by its Authorized Signatory Vs. The Appellate Deputy Commissioner (ST) (GST).

Thus, petitioner is directed to comply with the above direction and discharge the tax liability and report the same as required, in accordance with the directions of this Court in the aforesaid case for restoration of the petitioner’s GST registration.

Supply in course or furtherance of business - consideration for supply - taxability of statutory contributions - governmental authority exemption from GST - maintainability of issues not raised before lower authority

Maintainability of issues not raised before lower authority - Questions other than the one decided by the lower authority (i.e., questions at Sl. nos. 4(i), (ii), (iv) and (v)) are not admissible in the present appeal as they were not raised before the lower authority. - HELD THAT: - The Appellate Authority noted that only question No. 4(iii) had been raised before the lower authority and that other questions framed in the appeal were not part of the earlier proceedings. In view of that procedural history, those additional questions do not merit consideration in the appeal proceedings and are accordingly excluded from adjudication. [Paras 8]

Questions 4(i), 4(ii), 4(iv) and 4(v) are not considered in this appeal as they were not raised before the lower authority.

Supply in course or furtherance of business - consideration for supply - taxability of statutory contributions - Whether contributions mandated by the MMDR Act to District Mineral Foundation (DMF) constitute consideration for the mining activity and are taxable under GST. - HELD THAT: - The Authority examined the nature of the payments required under sections 9B and 9C of the MMDR Act, noting that the applicant's mining activities fall within the definition of 'business' and that the mandated payments (30% to DMF and 2% to NMET) are fixed percentages of royalty and not voluntary donations. Because these payments are mandated and arise from the mining operations, they qualify as activities 'in the course or furtherance of business' and thus fall within the ambit of supply. However, the CBEC clarification dated 31.10.2023 characterises District Mineral Foundation Trusts (DMFTs) set up by State Governments as 'Governmental Authorities' eligible for the same GST exemptions as other governmental authorities, observing that DMFTs provide services free of charge for public benefit similar to functions in the Eleventh and Twelfth Schedules and do not realise consideration from beneficiaries. Applying that clarification, the Authority ruled that contributions to DMF are not liable to GST. [Paras 12, 14, 15]

Contribution to DMF is not liable to GST; the appeal is allowed to this extent.

Supply in course or furtherance of business - consideration for supply - taxability of statutory contributions - governmental authority exemption from GST - Whether contributions to National Mineral Exploration Trust (NMET) are taxable under GST. - HELD THAT: - The Authority held that, unlike DMF, the CBEC clarification does not extend governmental authority exemption to NMET. Given that the NMET contribution is a mandated payment tied to mining operations and constitutes a component of the activity carried out in furtherance of business, it falls within the scope of supply for GST purposes. Absent an express exemption or classification as a governmental authority for NMET, the lower authority's ruling applying the tariff entry to NMET contributions was upheld. [Paras 13, 14, 15]

Contribution to NMET is liable to GST; the ruling of the lower authority is upheld.

Final Conclusion: The appeal is allowed insofar as contributions to District Mineral Foundation (DMF) are ruled not liable to GST in view of CBEC's clarification that DMFTs are governmental authorities; the appeal is dismissed insofar as contributions to National Mineral Exploration Trust (NMET) are concerned and the lower authority's ruling upholding taxability is affirmed. Other questions raised in the appeal were not entertained as they were not raised before the lower authority.

Addition u/s 68 - unexplained share capital and share premium - perennial conflict between the Revenue’s reliance on the “Test of Human Probability” and the Assessee’s reliance on “Cast Iron Documentary Evidence” - ITAT deleted addition -

HELD THAT:- We arrive at a definite conclusion that in a corporate assessment, documented traceability (comprising ITR acknowledgments, PAN details, and Bank Statements) through legitimate banking channels carries greater evidentiary weight than the subjective suspicion of an AO.

“Test of Human Probability” cannot be invoked as a tool to disregard a verified and audited paper trail. We also conclude that the ratio in NRA Iron & Steel is applicable only to “phantom” or “non-existent” entities found to be non-traceable upon field inquiry.

Unless the Revenue proves a “live link” showing that the funds originated from the assessee’s own coffers, the AO cannot substitute his judgment for that of the marketplace.

Tribunal has conducted a meticulous factual inquiry. The Tribunal has recorded a specific finding that the assessee had provided “Cast Iron” documentary evidence to establish the identity and creditworthiness of the subscribers. The audited balance sheets of these companies reflected a substantial net worth, which was far in excess of the amounts invested in the assessee company.

We are convinced that the findings of the learned Tribunal are based on a meticulous factual inquiry.

Revenue has failed to produce any contrary material to disprove the documents filed. It is a settled position that suspicion, however strong, cannot take the place of evidence. We find no perversity in the findings of the learned Tribunal.

No substantial question of law arises for consideration in this appeal.

Addition u/s 68 - unexplained share capital and share premium - assessee failed to prove the identity of the alleged shareholders, their creditworthiness and also the genuineness of the whole transaction - Doctrine of "source of source" and Doctrine of "origin of origin"- ITAT deleted addition - Revenue’s grievance is that the learned Tribunal failed to appreciate the "Test of Human Probability." -

HELD THAT:- In the present case, the investors are traceable taxpayers who confirmed the transactions through Section 133(6) responses. To equate "traceable investors" with "phantom entities" is a leap in logic that this Court cannot countenance.

Assessment Year 2009-10, the "Source of Source" doctrine remains inapplicable as the proviso to Section 68, introduced by the Finance Act, 2012, is prospective. The Tribunal noted that the subscribers possessed substantial Net Worth (Reserves and Surplus) far exceeding the investment amounts, thereby satisfying the creditworthiness test.

In a corporate assessment, documented traceability through legitimate banking channels carries greater evidentiary weight than the subjective suspicion of an officer. Terms like "money laundering" or "round-tripping" should not be used casually without specific, corroborative evidence showing a "live link" that the funds originated from the assessee’s own coffers. No such evidence has been brought on record by the Revenue.

In the result, we find no perversity in the findings of the learned Tribunal. Decided in favour of assessee.

Validity of assessment on non comply with the provisions of Section 143(1)(a) - HELD THAT:- Admittedly, no intimation was given to the assessee as contemplated in the first proviso to Section 143 (1) (a). The first proviso, in our opinion, is clearly mandatory in nature, as it clearly stipulates that no adjustment ‘shall be made’ unless an intimation is given to the assessee of such adjustment either in writing or in electronic mode.

Once this is a mandatory provision, no intimation order under Section 143(1)(a) can be passed, making any adjustment in the Return of Income filed by the assessee, unless such proposed adjustment is first intimated to the assessee and he has been given a chance to respond thereto.

In the facts of the present case, no intimation as contemplated under the first proviso to Section 143(1)(a) was ever issued to the Petitioner. This is an undisputed fact. On this ground alone, the intimation order dated 1st December, 2025, issued under Section 143(1)(a), is liable to be quashed and set aside.

We are unable to agree with the submission of Revenue that this exercise would be an exercise in futility because in the facts of the present case, admittedly, Form 10-IC was not filed by the due date. There could very well be a case where, after belatedly filing a return and belatedly filing Form 10-IC, and before the intimation order is passed u/s143 (1)(a), the Petitioner could have obtained an order seeking condonation of delay in filing form 10-IC under Section 119(2)(b) of the IT Act.

This could possibly be the response that the assessee may give to the CPC in respect of the notice issued under the first proviso to Section 143(1)(a) and contend that the proposed adjustment ought not to be made. It is therefore incorrect to suggest that the intimation proposing an adjustment, as contemplated under the first proviso to Section 143(1)(a), would be an exercise in futility. Once we find that the said provision is mandatory in nature, the same has to be complied with by the Revenue. The Revenue cannot decide in which case it would be futile and in which case it would not.

Notional carry forward of losses already set off against other income for deduction u/s 80IA - whether notional loss of depreciation which was set off against other income of earlier years prior to initial assessment year could not be carried forward to set off in the initial assessment year for the purpose of working out the deduction u/s 80IA of the Act, when the same is permitted u/s 80IA(5) of the Act? - HELD THAT:- The first question of law is covered by a decision of this Court in Velayudhaswamy Spinning Mills (P.) Ltd [2010 (3) TMI 860 - MADRAS HIGH COURT] held that loss in the year earlier to the initial assessment year already absorbed against the profit of other business cannot be notionally brought forward and set off against the profits of the eligible business as no such mandate is provided in section 80-IA(5).

Whether computing the deduction u/s 80IB, deduction u/s 80HHC need not be excluded when the intention behind Sec. 80IA(9) is that deduction should not be allowed twice in respect of the same profits? - The issue is covered by a judgment of Shital Fibers Ltd. [2025 (5) TMI 1599 - SUPREME COURT (LB)] in favour of the assessee following the ratio of the decision of Associated Capsules (P) Ltd. [2011 (1) TMI 787 - BOMBAY HIGH COURT] to hold that section 80-IA(9) does not affect the computability of deduction under various provisions under heading C of Chapter VI-A, but it affects the allowability of deductions computed under various provisions under heading C of Chapter VIA, so that the aggregate deduction under section 80-IA and other provisions under heading C of Chapter VI-A do not exceed 100 per cent. of the profits of the business of the assessee. Our above view is also supported by the Central Board of Direct Taxes Circular No. 772 dated December 23, 1998 ((1999) wherein it is stated that section 80-IA(9) has been introduced with a view to prevent the taxpayers from claiming repeated deductions in respect of the same amount of eligible income and that too in excess of the eligible profits.

Rectification u/s 154 - Addition made on re-computation of allowable deduction u/s 36(1)(viia)(c) and 36(1)(viii) - Whether deduction available to assessee u/s 36(1)(viia)(c) has to be reduced from profits derived from business providing long-term finance computed under head "profit and gains or business or profession" for the purpose of computing deduction available u/s 36(1)(viii) - whether issue is debatable and beyond the scope of section 154?

HELD THAT:- We find that on the issue of deduction u/s 36(1) (viia)(c) and 36(1)(viii) of the Act, the Revenue has placed reliance on the decision of Rural Electrification Corpn. Ltd. [2009 (7) TMI 912 - ITAT DELHI] whereas the CIT(A) has followed Delhi ITAT in the case of Tourism Finance Corpn. Of India Ltd [2010 (1) TMI 1186 - ITAT DELHI]

We are therefore of the considered view that the calculation of deduction u/s 36(1)(viia)(c) and 36(1)(viii) of the Act is an issue which is highly debatable and therefore the same cannot be categorized as a mistake apparent from record.

We, therefore, hold that the calculation for disallowance of the deduction u/s 36(1)(viia)(c) and 36(1)(viii) of the Act, can not be resorted under the provision of section 154 of the Act.

We accordingly direct the AO to delete the addition made on re-computation of allowable deduction u/s 36(1)(viia)(c) and 36(1)(viii) - Appeal of the Revenue is dismissed.

Assessee in default u/s 201 - Nature of payments made to Consultants - TDS u/s 194C OR 194J OR 192 - contractual arrangement with Salaried doctors and Consultants -Characterisation of payments as salary versus professional fees - Employer-employee relationship and contract for service versus contract of service - whether Respondent's practice of deducting TDS on payments made to Consultants u/s 194J of the IT Act was correct as per law.

HELD THAT:- AO had fallen in error to distinguish between contract "for service" and "not of service", which CIT(A) has duly considered. CIT(A) has rightly relied the consultancy agreements, which made it evident that the Consultants act in their independent professional capacity while providing the concerned medical consultancy and advisory services since the parties operate on a 'principal to principal' basis.

Consultants possess complete discretion for determining the manner of providing their services to the Respondent or its patients and are further governed solely by the terms and conditions stipulated in their respective consultancy agreements.

Supervision of a service provider, such as reporting to any authority specified in their agreements, fixed hours and days of work, restriction on engaging with any other hospital /clinic or undertaking private practice during hours scheduled with Respondent, approval of leaves etc are merely for ensuring enforcement of terms and condition or to invoke penalty provision and same do by metamorphosis transform contract "for service" to one "of service".

Our conclusion are duly supported by decision of Apollo Hospitals International Ltd.[2012 (8) TMI 459 - GUJARAT HIGH COURT] and Fortis Hospital Ltd. [2023 (11) TMI 395 - ITAT DELHI]

In any case when Consultants have already offered the professional income to income-tax while filing their income tax return(s) Accordingly, the Respondent cannot be considered as an 'assessee in default' on the basis the Proviso attached to Section 201 - Appeal of revenue dismissed.

Addition made u/s 56(2)(iia) - difference in fair market value of shares of companies against purchase cost shown by the assessee - CIT(A) has deleted the addition admitting additional evidences - as per AO no opportunity to rebut additional evidence given to examine the fair market value of shares -

HELD THAT:- We appreciate the impugned order of Ld. CIT(A) we find that though not specifically mentioned that additional evidences have been admitted the CIT(A) has benefitted the assessee primarily relying a decision in the case of Minda S. M. Technocast (P) Ltd. [2018 (3) TMI 882 - ITAT DELHI] for the proposition that while valuing the shares, the book value of the assets and liabilities should be taken into consideration holding that only 100% value can be considered, there by negating the AO’s erroneous conclusion that enhanced value of the immovable properties held by such companies by estimating an adhoc increase of 150% of such immovable property stating that the mark up is being done considering that the immovable properties are appreciating asset, should be considered.

As with regard to this crucial legal aspect nothing comes forth from the department as to how that finding of ld. CIT(A) is not sustainable - The appeal of the revenue is dismissed.

Taxability of property received under Family settlement - addition u/s 56(2)(vii)(b) - transfer under Section 2(47) - definition of specified relatives in Section 56(2) - transaction was carried out between the assessee and her brother in law - allegation by way of registered gift deed was not ‘transfer’ as defined u/s 2(47)

HELD THAT:- If the property received by the assessee under the family settlement would still it considered to be deemed income u/s 56(2)(vii)(b) as the donor Ravi Aggarwal s/o late Shri A.D. Aggarwal does not fall in the definition of relatives.

We are of the considered view that proviso to sub-clause (b) of clause (vii) of Subsection (2) of section 56 of the Act provide that clause (vii) will not apply in the case of property is received from any relative and the definition of relative in Explanation (e)(ii) mentions that in case of Hindu Undivided Family any member thereof. Meaning there by that if the property is received without consideration from member of HUF, same shall not be considered deemed income.

Now, in the case of assessee the manner in which the facts giving rise to gift are narrated vary apparently, the family settlement was between members of the family, who constituted HUF, by due to reason of manner of acquisition of property and respective antecedent rights and interest in the subject property.

The execution of gift was only a formality to transfer a valid title consequent to family settlement. These factual aspects of family settlement have been duly pleaded before AO but as rightly observed by the CIT(A), AO has not disputed same on any factual or legal aspect so as to now challenge in appeal. Thus have to be admitted as settled as held by ld. CIT(A).

Thus, at one end the conclusion of ld. CIT(A) that the transaction of gift only culminated the family settlement which does not fall in the definition of ‘transfer’ for the purpose of Section 2(47) needs no interference. On the other hand, the provisions of Section 56(2) of the Act, also do not apply as the gift deed was merely execution of a formal document amongst the family members constituting HUF.

Partial allowance of exemption u/s 54 - Claim denied as construction was not completed within three years

HELD THAT:- AO & ld. CIT(A) had not doubted the figures in the revised computation. Assessee had filed copy of collaboration agreement and details of transactions to purchase and construction which was corroborated with Bank statement and details etc. A final sale deed was submitted assessee was not confronted with inspectors report to suggest that construction was not completed within 3 years. Sale consideration was kept in bank saving account in HDFC.

As relying on Philip Ghani [2024 (3) TMI 1118 - ITAT DELHI] as held it is axiomatic that Section 54(1) of the said Act does not contemplate that the same money received from the sale of a residential house should be used in the acquisition of new residential house. Had it been the intention of the Legislature that the very same money that had been received as consideration for transfer of a residential house should be used for acquisition of the new asset, Section 54(1) would not have allowed adjustment and/or exemption in respect of property purchased one year prior to the transfer, which gave rise to the capital gain or may be in the alternative have expressly made the exemption in case of prior purchase, subject to purchase from any advance that might have been received for the transfer of the residential house which resulted in the capital gain.

Hon’ble Allahabad High Court in the case of CIT Vs. H.K. Kapoor [1997 (8) TMI 44 - ALLAHABAD HIGH COURT] held that exemption on capital gains u/s 54 of the Act could be allowed notwithstanding the fact that the construction of new house had begun before the sale of the old house.

It was immaterial that the construction of the new building was started before the sale of the old building. We fully agree with the view taken by the Karnataka High Court in the case of CIT vs. J.R. Subramanya Bhat [1986 (6) TMI 7 - KARNATAKA HIGH COURT] Assessee appeal allowed.

Revision u/s 263 - Disallowance of deduction u/s. 80P(2)(a)(i) - Interest income earned by the assessee on investment - meaning of the word 'attributable' - assessee is aggrieved with the above revisionary order passed by the PCIT raising the fact and grounds that the assessee is entitled to deduction u/s. 80P(2)(a)(i) of the Act and also u/s. 80P(2)(d)

PCIT issued a show cause notice on examination of the record holding that the assessing officer should held that that interest income earned by the assessee from cooperative society and cooperative banks and other banks is required to be taxed u/s. 56 of the Act and assessee is not eligible for any deduction u/s. 80P(2)

HELD THAT:- In Tumkur Merchants Souharda Credit Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] held that the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to the members, as there were no takers. Therefore they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P(1) of the Act.

Even otherwise, the decision of Tumkur Merchants Co-op. Society [2015 (2) TMI 995 - KARNATAKA HIGH COURT] are in favour of the assessee and the decision of Totagars Cooperative Sale Society [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] is against the assessee. Therefore ld.AO has followed the one of the two possible views and allowed the claim of the assessee. When the ld.AO has followed one of the views, it cannot be said that the order of the AO is erroneous and prejudicial to the interests of the Revenue.

Deciding the issue based on the decision of the Honourable Jurisdictional high court could not have been said that assessment order passed is unsustainable in law. In view of the above facts, we hold that the order passed by the ld. PCIT holding that the assessment order passed by the ld.AO is erroneous and prejudicial to the interests of the Revenue is not sustainable - Assessee appeal allowed.

TDS u/s 195 - Disallowance u/s 40(a)(i) - commission payment which includes provision for commission to foreign agents - contention of the assessee is that no tax was deductible u/s 195 of the Act on the payments made by it to the foreign agents for the reason that the services being rendered outside India, the payments were not chargeable under the Act

HELD THAT:- As decided in Vedanta Limited. [2023 (1) TMI 72 - SC ORDER] since the non-resident agents were carrying on business of selling Indian goods outside India, commission so earned by them could not be said to be income which had accrued and/or arisen in India and, thus, the assessee was not liable to deduct TDS on payment of commission and demurrage

The contention of the assessee that the commission paid by the assessee to the foreign agents was not chargeable to tax in India was not controverted by the Revenue.

No finding was given that the foreign agents had rendered any service in India or that the payments made to then was chargeable to tax in India for any other reason.

Once the income is not chargeable to tax in India, the question of deducting TDS thereon under the provision of section 195 of the Act and disallowance of the entire payment under the provisions of section 40(a)(i) of the Act does not arise. Decided in favour of assessee.

Rejection of books of account u/s 145(3) - estimation of income on account of rejected books - AO concluded that the Assessee had inflated the sales in its records to reduce the profit of the firm

HELD THAT:- Assessee had not satisfactorily explained the source of cash deposits made in Union Bank of India to prove that the deposits were made from explainable sources. It is the statement of the Assessee that the business receipts in the form of sale proceeds were received from the parties through account payee cheques. Hence, there was no mechanism for the Assessee to receive sale proceeds in cash so as to make it as an explainable source for the cash deposits made in the bank account.

It is a fact that Assessee is engaged only in the wholesale business of dealing in beer and not liquor. Obviously, the profit margin for wholesale dealer dealing in beer would be less than the wholesale dealer dealing in liquor.

Assessee had disclosed 0.15 percent net profit after interest on capital and partners remuneration. This net profit is increased to 0.50% for the year under consideration to take care of all the deficiencies pointed out. In my considered opinion, this would meet the ends of justice. Accordingly, AO is directed to re-compute the net profit of the Assessee at the rate of 0.50% of turnover and re-compute the total income accordingly. Appeal of the Assessee is partly allowed.

Penalty order passed u/s. 271(1)(c) - Estimation of income on bogus purchases - HELD THAT:- As relying on Trustar Diamond [2025 (5) TMI 2234 - ITAT MUMBAI] and Nakodiam Diamonds Private Limited [2024 (7) TMI 1741 - ITAT MUMBAI] we hold that no penalty u/s 271(1)(c) of the Act could be justified on an estimated addition upheld by the authorities. Accordingly, the grounds of appeal of the assessee are allowed.

Revision u/s 263 - distinction between lack of inquiry and inadequate inquiry - addition made u/s 68 - debatable issue

HED THAT:- It is noticed from the records, replies submitted that he AO in the instant case has made a detailed investigation and enquiry in the matter before arriving at the conclusion. The addition made by him are stated to be still pending before the first appellate authority in the quantum appeal. We also find that the ld.PCIT has also acknowledged the above facts in the body of the revision order itself. In such a situation, the observations and his findings constitute a mere change of opinion.

With taking due note of the fact that quantum appeal was already pending on the impugned issue, he was wrong in assuming jurisdiction on the same issue which is not permitted by the provisions of section 263 of the Act. There being adequate enquiry by the AO, it cannot be said that the assessment order was passed without making any enquiry and therefore Explanation 2 to the section was clearly not applicable to the facts of the case.

As rightly pointed out by AR that the coordinate bench in another case involving the same scrip had deleted similar addition in the case of Kishore Jethalal Morabiain [2025 (7) TMI 1971 - ITAT MUMBAI] - Therefore, even on this count, it could well be concluded that the issue in hand is a debatable one on which different views could be taken and on which section 263 provisions cannot be invoked otherwise also.

Assessee appeal allowed.

TP adjustment - international transaction of corporate guarantee commission earned - HELD THAT:- We do not find any merit in the adjustment made to the international transaction of commission paid on corporate guarantees since admittedly the issue stands covered in favour of the assessee by the order of the ITAT in the case of the assessee for A.Y 2014-15.

Adjustment made to the international transaction of interest earned on convertible loans given by the assessee to its associate enterprise - DR was unable to controvert the factual contention of the assessee, more particularly, that the impugned disallowance had been made by the TPO and upheld by the DRP following order in the preceding years in the case of the assessee, which adjustments in the preceding years stood deleted by the ITAT in all the years. No distinguishing facts were brought to our notice. In view of the same, we find no reason to confirm the adjustment made to the international transaction of interest earned on convertible loans issued by the assessee, finding the same to be admittedly covered in favour of the assessee.

Adjustment made to the international transaction of reimbursement of expenses - ITAT took note of the facts of the case, and found that the assessee had reasonably demonstrated through documents that the expenses were incurred in respect of the assessee’s business interest in the overseas jurisdiction and further noting that similar expenses reimbursed by AEs in AY 2012-13 and 2013-14 had been held to be at arm’s length by the ITAT in its order passed for the said year. Since no distinguishing facts have been pointed out by the ld.DR from the facts of the preceding years, the decision rendered by the ITAT in AY 2014-15 [2022 (9) TMI 1560 - ITAT AHMEDABAD] will apply to the impugned year also.

TP adjustment made to the international transaction of sale of goods by the assessee - assessee while benchmarking its transaction of sale of goods to its AE, Zydus USA, had treated its AE as the tested party and benchmarked the transaction by conducting an independent search on Compustat North America, database of North American companies - HELD THAT:- AR was unable to controvert the said fact. He conceded that the operating margins of the comparables was correctly taken by the TPO at 1.60% and taking the same there was no scope of the adjustment made to the international transaction falling within the 3% margin as specified in Rule 10CA. He fairly conceded that there was no merit left in the ground so raised by the assessee.

Accordingly, Ground raised by the assessee is dismissed finding the contention raised of the adjustment made to the international transaction of sale to ZYDUS USA being within the safe harbour 3% range as per rule 10CA, to be admittedly factually incorrect.

Rejection by the TPO of three comparables selected by the assessee company, i.e SCHEIN (HENRY) INC, ACETO CORP, and PATTERSON COMPANIES INC - Authorities below had erred in rejecting these three entities as comparables, since, the basis for rejecting the same by the TPO does not survive i.e. the entities not being functionally comparable and operating in a wider jurisdiction, since, the assessee has furnished segmental data of the pharmaceutical division with respect to the three entities and has also demonstrated the three entities to be operating majorly in the jurisdiction of USA.

The fact that the tested party, that is the AE, has consistently been returning profits in the past of 4.5%, which have not been visited with any adjustment in the hands of the assessee in the past, add strength to the argument of the assessee in support of the arm's length price of the transaction entered into by the assessee with its AE.

We hold that the AO / TPO was not justified in rejecting the three comparables selected by the assessee for determining the arm's length price of its international transaction of sales to Zydus USA. All the three entities are held to be comparable by us.

Adjustment made in the International Transaction pertaining to sale of finished goods to Zydus France - Comparable selection -Assessee, before us, was unable to controvert the factual findings of the DRP that the search on the DIANE data base for comparable companies related to calendar year 2012 to 2014 only. The impugned year before us is AY 201718, therefore no comparables for the impugned year or the immediately preceding year was done on the DIANE data base which is the requirement for 10CA of the Rules. Therefore, we do not find any infirmity in the order of the DRP rejecting the assessee’s search of comparables on the DIANE data base. This argument of assessee is also rejected.

Weighted deduction claimed by the assessee of Research & Development expenditure incurred by it in terms of the provisions of Section 35(2AB) - As submitted assessee’s claim of deduction u/s.35(2AB) of the Act has been restricted to the extent approved by the competent authority i.e. DSIR in Form No. 3CL - case of the assessee is that the competent authority was not empowered to approve the quantum of deduction - HELD THAT:- The intent of the legislation is to give incentive to research and development activities by granting weighted deduction to expenditure incurred on account of the same. To make it workable and feasible, Rules have been framed by CBDT stating the approving authority to be DSIR who approves the facility and by virtue of an amendment to the rules even the quantum of expenditure is required to be approved by the competent authority.

This amendment to the rules in our view does not in principle defeat the policy objective of the section i.e. the grant of weighted deduction to R&D expenditure. In fact, the amendment to the Rules has made the section workable, granting the power to scrutinize the eligible expenditure to the authority which is technically competent to do so and thus ensuring that only eligible R&D expenses are allowed the benefit of weighted deduction. The arguments of the assessee that the rules has effected substantively the parent provision is therefore incorrect. Ld.Counsel for the assessee cited decisions in support of its contention that any provision made in Rules could not circumvent or transgress the legislative intent, but since this principle laid down by the courts is not disputed, and on the contrary however it is found that in the present case the rules have not transgressed the legislative intent, the said decisions do not help the case of the assessee.

We reject the argument of ld. counsel of the assessee. The order of the authorities below restricting assessee’s claim of weighted deduction u/s 35(2AB) of the Act to the extent approved by the DSIR in Form 3CL is therefore upheld.

Explanation to Order 47 Rule 1 of the Code of Civil Procedure, 1908 - Review jurisdiction and condonation of delay - Binding effect of earlier coordinate and larger Bench decisions - Prospective application of substantive amendments to penal/confiscatory provisions - Whether the Appellate Tribunal lawfully allowed the review petition and condoned delay solely on the basis of the liberty granted by the Supreme Court without determining whether the bar contained in the Explanation to Order 47 Rule 1 CPC applied. - HELD THAT:- As can be seen from the order dated 19.10.2024 passed in the review petition in Union of India & Another vs. Ganpati Dealcom Private Limited, [2024 (10) TMI 1120 - SC ORDER (LB)], the Union of India (respondent) have been granted the liberty to seek a review of the order dated 07.12.2022 passed by the learned Appellate Tribunal. However, in the case of K.L. Rathi Steels Limited [2024 (7) TMI 811 - SUPREME COURT] the Supreme Court while considering it’s other judgments, such as Subramanian Swamy vs. State of T.N [2014 (1) TMI 1710 - SUPREME COURT] and Beghar Foundation vs. K.S. Puttaswami [2021 (2) TMI 504 - SUPREME COURT] – has held that in terms of the Explanation to Order 47 Rule 1 CPC, if the decision on a question of law on which the judgment of the Court is based, is subsequently reversed or modified by a subsequent decision of a Superior Court in any other case, it shall not be a ground for review of such judgment. Even an erroneous decision cannot be a ground for a Court to undertake a review and that change in the law or subsequent decision/judgment of a coordinate Bench or a larger Bench by itself, cannot be a ground for review.

As can be seen from the facts, the Hon’ble Supreme Court in the case of Kokilaben Chhaganbhai Patel [2025 (5) TMI 1634 - SC ORDER] has already taken a decision with regard to which of the three Judges Benches decision of the Hon’ble Supreme Court should be followed. It has already decided that the earlier three Judges Bench in the case of K.L. Rathi Steels Limited [2024 (7) TMI 811 - SUPREME COURT] would have to be followed and the observation/direction passed in paragraph-7 of the review petition in Union of India & Another vs. Ganpati Dealcom Private Limited cannot be followed, as the same was apparently per incuriam. When the Hon’ble Supreme Court in the case of Kokilaben Chhaganbhai Patel has already decided as to which decision of the conflicting 3 Judges Bench is to be followed, we are bound to follow the above interpretation given by the Hon’ble Supreme Court. Further, in the case of National Insurance Company Limited vs. Pranay Sethi & Others, [2017 (10) TMI 1276 - SUPREME COURT], the Hon’ble Supreme Court has held that when there are conflicting decisions of equal Benches of the Supreme Court, the earlier decision would have to be followed by the High Court.

The common order dated 13.10.2025 of the Appellate Tribunal allowing the review petitions and restoring the appeals is set aside; the appeal is allowed.

Violation of Provisions of Section 110 - Compliance with the mandatory return of goods - SCN within six months - Waiver of Show Cause Notice and its effect on the six month limitation - Adjudication post expiry of statutory seizure period is void/without jurisdiction - goods description, ‘Cold Rolled Stainless Steel Coils Grade J2’ imported from China on the basis of House bill of lading -Release of goods (in rem relief) distinct from in personam proceedings against persons - circumvention of circular of Ministry of Steel - Restriction by departmental circular without statutory authority -

Waiver of Show Cause Notice and its effect on the six month limitation - HELD THAT:-We find that the decision in respect of goods cannot be faulted with in the instant case and the seizure gets vacated if show cause notice is not issued within the statutory limits of six months provided in Section 110. The view is fortified by the decision in the matter of Deepak Natwarlal Soni [2018 (9) TMI 1912 - GUJARAT HIGH COURT]. It is thus clear that even when show cause notice is waived in view of the decision of Hon’ble Delhi High Court in M/s. Shiv Shakti [2016 (4) TMI 408 - DELHI HIGH COURT] the proceedings are required to be more expeditiously concluded and adjudication cannot be delayed beyond six months and the waiver given will no more be binding after expiry of the time limit under Section 110 of the Act. We, therefore on this point find no infirmity in the order of the Commissioner (Appeals) in giving relief to the party.

Release of goods (in rem relief) distinct from in personam proceedings against persons - HELD THAT:- There is nothing on record to show that BIS standards have been applied for the above goods which can only be prescribed under laid down procedure under World Trade Organization (W.T.O.) in relation to technical standards to be prescribed on the principles of equal treatment to all the countries at the import point as well as National Treatment. The same needs to be notified by following due process by making them available on a designated website to various countries. Firstly, the Advocate submitted that the control order does not cover ‘Cold Rolled Coils of Stainless Steel Grade J2’. Secondly, even if, the above circulars placed additional restriction of getting NOC from the Ministry of Steel for the kind of grade which has been imported and whether the same was covered with the requirement of BIS standards. Same it, therefore meant that the restrictions placed by the law i.e. Steel & Steel products (Control) Order were being extended by way of aforesaid circulars by the mandate of executive, without there being such restrictions in law. In fact, customs is itself calling such unwarranted procedures as restrictions/prohibitions.

It is thus clear that the goods are not prohibited and are liable to be released in India as the Learned Commissioner (Appeals) has ordered. We therefore, find no infirmity in the order but are refraining from pronouncing on whether the Circular by the Ministry of Steel was issued under due authority of law or extended the scope of the restrictions without the statutory authority. While department emphasized that action in personam will still survive, after release of goods.

We find that it can only be pressed by the department, if it finds tangible violations of some law prescribing and making such imports restricted and prohibited only on the basis of BIS standards or a statutory Control Order and not without such conclusion. Appeal by the department is therefore dismissed. Miscellaneous application also disposed of. Goods to be released within 10 days of the receipt of order.

Appeal dismissed.

Maintainability of demand u/s 28, when assessment is provisional - imported items viz. Recycled LDPE Granules -Provision of relied upon documents (RUDs) and procedural fairness in adjudication - payments made voluntarily by importers - Consequences for appropriation of deposits, confiscation and penalties where demand is unsustainable - HELD THAT:- In this case, we find that though relied upon documents have been mentioned in the SCN, it is claimed by the Assessee that such relied upon documents have not been given to them along with the SCN, as against which the Adjudicating Authority asserts that the RUDs were given along with the SCN, but the same does not go well with his own findings at paras 3.A & B of the Οrder-in-Original.

Ld. Advocate has placed reliance on a decision/Order of this very Chennai Bench in the case of M/s. Shami Impex and Others Vs Commissioner of Customs [2024 (7) TMI 562 - CESTAT CHENNAI] wherein the Bench has set aside the demands raised under Section 28 ibid.

Thus, we have to hold that the demands, the appropriation of deposits towards duty, the penalties imposed on the Appellants and the confiscation of the goods have to be set aside, which we hereby do. The Appellants are eligible for consequential reliefs as per law. The Appeals are disposed of accordingly.

Penalty for knowingly using false or incorrect material - onus on department to prove prior knowledge of falsification - due diligence of customs broker - bonafide belief arising from clerical/typographical error - revocation of suspension of customs broker licence - Misdeclaration of country of origin - HELD THAT:- It is evident that the department has mechanically imposed the said penalty on the appellant since the law provided for a legal provision to do so. Penalty under section 114AA can only be imposed for use of false or incorrect material only when such person knowingly utilizes the said material. Prior knowledge of such falsification is a must to impose such penalty upon the appellant. Since there is no such piece of evidence we find absolutely no justification for imposition of penalty on the appellant in the matter. However, as regards the appellant’s responsibility to ensure due diligence while discharging import-export business it is incumbent upon the appellant so as to ensure the correctness of the information acted upon. We are however of the view that in view of the stated facts and all material particulars (other than that of the number), indicated in the invoice, tallying with that of the Country of Origin Certificate, the case of holding a bonafide belief of a typographical error cannot be absolutely ruled out.

Moreover, as all import documents were received by them directly from the importer themselves, the presumption of the mis-match in the invoice number with there being no apparent duty benefit accruing to the importers, the appellant may have justifiable reasons to harbor a bonafide belief and benefit of doubt about the clerical errors in the two numbers would ordinarily come to mind; more so as date, weight, quality and quantity of the goods, description thereof etc. were all found to be tallying completely and as per other import documentation. Furthermore, it is also on record that part consignment of the goods was already offloaded at Sagar Port, even prior to offloading the rest of the cargo at the port of Haldia, with the same set of invoice and other import documentation, including the erroneous/ fraudulent Country of Origin Certificate.

Considering the totality of the matter and the fact of the suspension of the CBLR having been revoked even prior to the personal hearing of the matter fixed, we obviously do not find any sound reason for sustaining the penalty imposed on the appellant. However, Customs Broker being an important link in the chain of overseas trade and commerce, it is rightly expected of them to exercise all possible care and due diligence to avoid the perpetuation of fraud. He is required to exercise proper vigil and be alert and abreast of the legal nuances at all times, so as to ensure that the sinister designs of fraudsters do not succeed. Thus, at best we would like to issue a note of caution to the appellant in the matter for exercise of due diligence and being more careful in such transactions in future. The appeal filed is thus allowed in the aforesaid terms and the order of the lower authority is set aside. There will be no penalty imposed on the appellant in the matter.

Threshold monetary limit for filing appeal before the Tribunal - litigation policy of the Government - applicability of CBIC instructions issued under the powers conferred by Section 131BA of the Customs Act, 1962 - dismissal of appeal for non-compliance with prescribed monetary threshold - Maintainability of Revenue's appeals in view of the CBIC instruction prescribing a monetary threshold and the Government's litigation policy - HELD THAT:- By deriving the powers conferred in Section 131BA of the Customs Act, 1962, the Central Board of Indirect Taxes and Customs (CBIC) has issued the instructions, from time to time, with the objective in reduction of the Government litigation in the area of Customs.

In the latest instruction issued by the CBIC from file F. No. 390/Misc/30/2023-JC dated 02.11.2023, the threshold monetary limit of Rs. 50 lakhs has been prescribed, below which the appeal shall not be filed before the CESTAT. Though at paragraph 2 in the said instructions dated 02.11.2023, there is specific mention of agitating the matter before the Appellate Forum, irrespective of the involvement of the amount on certain issues, but the issue categorized therein are not confirming to the present appeals filed by the Revenue. Hence, the appeals can be disposed of in terms of the litigation policy formulated by the Government.

Since the Customs duty demand of Rs.20,85,698/- was dropped by the learned adjudicating authority, which is below the threshold limit of Rs.50,00,000/- prescribed under the said Instruction dated 02.11.2023, Revenue is not permitted to file appeal before the Tribunal. Both sides have confirmed that the disputed amount of customs duty involved in the present appeal preferred by the Revenue is less than the monetary limit prescribed under the Instruction dated 02.11.2023 issued by the CBIC.

Considering the disputed amount of customs duty involved in the present appeals filed by Revenue, which is below the prescribed threshold limit, as per the Instruction dated 02.11.2023, the appeals filed by Revenue in our considered view, are liable to be dismissed. Accordingly, the appeals filed by Revenue are dismissed under the Litigation Policy of the Government.

Import of ‘dried cranberry’ - entitlement to import without payment of duty -Transferable post-export Duty Free Import Authorization (DFIA) not subject to an actual user condition - inapplicability of actual use requirement to transferees of post-export authorisations - invalidity/inapplicability of a public notice imposing a value cap without gazette notification - failure to issue a speaking order in terms of section 17(5) - obligation on licensing authority to restore/revalidate lapsed DFIA where denial of entitlement was without factual basis - HELD THAT:- The appellant had sought the benefit of the authorizations for ‘dried cranberry’ and the argument on behalf of respondent is that ‘fruit’ therein, being generic, is no ground for requiring ‘specific’ description in the corresponding shipping bills. There is no finding on the actual details entered in those shipping bills. Denial of exemption without such ascertainment is irresponsible adjudication; placing the onus on an importer, who is not the exporter, by unfounded presumption is not approved by any legally established procedure.

As ‘dried cranberry’ is, doubtlessly, ‘fruit’, the entitlement to exemption is undeniable. Before we part with the matter, there is one submission that, necessarily, must be dealt with. The authorizations have since lapsed and the appellant put to severe financial detriment in consequence. The fault is not that of the appellant but overreach, without an iota of factual foundation to dispute entitlement to exemption, or any measure of legal authority to cast doubts on the eligibility, on the part of the assessing authority who was also derelict in adhering to his obligation under law. The first appellate authority, too, did not consider it necessary to insist on placing a reasoned order of the original authority to the test of being legal and proper; he, too, chose to decide against eligibility for exemption without any basis as we have set out above. Certainly, restitution is called for and we may forbear from doing so only on peril of encouraging extra-legal impediments to foreign trade and instigating defiance of settled law.

We do not intend that; the jurisdictional Commissioner is, hereby, directed to request the licencing authorities for restoration of validity of the licence for the unexpired period commencing with presentation of bill of entry. In doing so, we are guided by the decision of the Hon’ble High Court of Punjab & Haryana in Pushpanjali Floriculture Pvt Ltd v. Union of India [2016 (7) TMI 628 - PUNJAB & HARYANA HIGH COURT] held that - " It is seen that the DFIA is issued with a limited validity of 24 months. Due to the actions of the respondents the DFIAs could not be utilised by the petitioner. The Hon’ble Supreme Court in the matter of Sandeep Exports Ltd., 2004 (9) SCC 128, had directed the respondents to issue certificate for the purpose of revalidation of expired licences due to disputes raised by the department. We are satisfied that due to the impugned invalid notifications/Public Notice/Circular, licences could not be utilised by the petitioner. The petitioner cannot be expected to present licences for debit in such circumstances. Therefore, a case for directing revalidation of the licence is made out.’

We set aside the impugned order to allow the appeals along with the direction supra.

Closure of EPCG authorization by DGFT - failed to fulfill the export obligation -regularization of export obligation - bar on coercive action pending DGFT decision - consequential reliefs flowing from DGFT closure - HELD THAT:-We find that DGFT has clearly held that the case pertaining to the EPCG license under consideration stands fully closed. Considering the same, we set aside the impugned Order and allow the Appeal filed by the Appellant. The Appellant would be eligible for consequential relief, if any, as per law.

Classification Ofgoods - described as PS Moulding, PS Wall Panel, PS L Profile, PS Wall Panel Sheet, PVC Panel Foam, PVC Sheet UV, PVC Panel, PVC Vinyl Sheet, PVC Panel WPC Mould, PVC Wall Panel and PU Wall Panel - Chapter Note 10 to Chapter 39 - classifiable under Tariff Heading 3921 (plates, sheets, film, foil and strip, of plastics) Or 3925 (builders' ware of plastics) - meaning of "plates, sheets, film, foil and strip" and the exclusion for goods "not further worked" - scope of Heading 3925 including "structural elements" and "ornamental architectural features" - General Rules for Interpretation (GRI) - primacy of heading and application of GRI 1 and GRI 3(a) - Essential character test - Meaning of "further worked" for classification purposes - HELD THAT:- Based on the information on record, I observe that there are in fact two categories of products listed in this application. The first category comprises plain PVC sheets, supplied in large rectangular form with or without surface printing undoubtedly having character as plastic sheets in terms of Chapter Note 10. The another category, which comprises mouldings, wall panels and goods with interlocking tongue-and-groove edges, designed to be fitted continuously to create a wall or ceiling surface. These products in view of the department exhibit characteristics of builders' ware/structural elements/architectural features and their classification requires to be examined in further detail.

The mere fact that a product is used on walls does not make it a "structural element used in walls." The category contemplates products that are integral to the wall structure itself, not decorative overlays applied to finished walls. These PVC panels remain essentially decorative sheets designed for aesthetic wall covering as a substitute of paint & wall papers, temporarily in nature and easily removable, lacking structural function, architectural complexity, or permanent integration into building frameworks. The correct classification under CTH 3921 reflects both the goods' essential character as plastic sheets and their commercial understanding as decorative wall coverings. In view of above, do not find force in the department's argument.

As per the applicant's submission, flutings are vertical grooves carved into columns or pilasters, serving both structural purposes to strengthen columns and ornamental purposes in classical architecture. Cupolas are small, dome-like structures on roofs, often used for ventilation, light, or as bell towers. Dovecotes are specialized structures for housing pigeons or doves. In this regard, flutings, cupolas, dovecotes are complex, three-dimensional architectural elements with specific functions and design requirements. They are not simple flat panels but are intricate structures that form distinctive architectural features of buildings. The products under consideration are simple rectangular decorative panels with surface patterns such as stone textures, wood grain effects, or 3D designs. Moreover, these products are used for "interior decoration purposes" and to "enhance the aesthetic appeal of domestic or commercial spaces," which is precisely the function of decorative wall coverings, not architectural features. In view of above, do not find force in the department's argument.

Thus, the products retain the essential form of plates/sheets of plastics within the meaning of Note 10 to Chapter 39. The longitudinal interlocking/tongue-and-groove at the edges is an in-line extrusion profile and, on these facts, does not amount to "further working" of the type exemplified in the Chapter and explanatory notes (e.g., drilling, milling, framing, twisting, cutting into non-rectangular shapes). The HSN EN to 3921 explicitly embraces cellular and reinforced/laminated/supported sheet products that remain plates/sheets and are not covered by 3918/3919/3920 or Chapter 54. The subject panels fit that description.

Thus, the following goods mentioned in application are classifiable under heading 3921 of the Customs Tariff; goods of polymers of styrene in sheet/panel form fall under 39211100; goods of polymers of vinyl chloride in the sheet/panel form fall under 39211200 and goods of polyurethanes in the sheet/panel form fall under 39211390; subject to verification of the actual composition, structure (cellular/non-cellular; reinforced/laminated/supported) by the field formation in this regard.

Rule accordingly.

Classification Of goods - import and trade of "goods described as PS moulding/PS wall panel/PS L profile/PS wall panel sheet/PVC panel foam/PVC sheet UV/PVC panel/PVC vinyl sheet/PVC panel WPC mould/PVC wall panel/PU wall panel" (the Products) -classifiable under Heading 3921 Or under Heading 3925 - builder's ware vs sheets - General Rules for the Interpretation (GRI) 1 - General Rule for Interpretation 3(a) - essential character - not elsewhere specified or included - HELD THAT:- There are in fact two categories of products listed in this application. The first category comprises plain PVC sheets, supplied in large rectangular form with or without surface printing undoubtedly having character as plastic sheets in terms of Chapter Note 10. The another category, which comprises mouldings, wall panels and goods with interlocking tongue-and-groove edges, designed to be fitted continuously to create a wall or ceiling surface. These products in view of the department exhibit characteristics of builders' ware/structural elements/architectural features and their classification requires to be examined in further detail.

The mere fact that a product is used on walls does not make it a "structural element used in walls." The category contemplates products that are integral to the wall structure itself, not decorative overlays applied to finished walls. I find these PVC panels remain essentially decorative sheets designed for aesthetic wall covering as a substitute of paint & wall papers, temporarily in nature and easily removable, lacking structural function, architectural complexity, or permanent integration into building frameworks. The correct classification under CTH 3921 reflects both the goods' essential character as plastic sheets and their commercial understanding as decorative wall coverings. Thus, do not find force in the department's argument.

As per the applicant's submission, flutings are vertical grooves carved into columns or pilasters, serving both structural purposes to strengthen columns and ornamental purposes in classical architecture. Cupolas are small, dome-like structures on roofs, often used for ventilation, light, or as bell towers. Dovecotes are specialized structures for housing pigeons or doves. In this regard, find that cupolas, dovecotes are complex, three-dimensional architectural elements with specific functions and design requirements. They are not simple flat panels but are intricate structures that form distinctive architectural features of buildings. The products under consideration are simple rectangular decorative panels with surface patterns such as stone textures, wood grain effects, or 3D designs. Moreover, these products are used for "interior decoration purposes" and to "enhance the aesthetic appeal of domestic or commercial spaces," which is precisely the function of decorative wall coverings, not architectural features. Thus, do not find force in the department's argument.

Thus, the products retain the essential form of plates/sheets of plastics within the meaning of Note 10 to Chapter 39. The longitudinal interlocking/tongue-and-groove at the edges is an in-line extrusion profile and, on these facts, does not amount to "further working" of the type exemplified in the Chapter and explanatory notes (e.g., drilling, milling, framing, twisting, cutting into non-rectangular shapes). The HSN EN to 3921 explicitly embraces cellular and reinforced/laminated/supported sheet products that remain plates/sheets and are not covered by 3918/3919/3920 or Chapter 54. The subject panels fit that description.

The following goods mentioned in application are classifiable under heading 3921 of the Customs Tariff; goods of polymers of styrene in sheet/panel form fall under 39211100; goods of polymers of vinyl chloride in the sheet/panel form fall under 39211200 and goods of polyurethanes in the sheet/panel form fall under 39211390; subject to verification of the actual composition, structure (cellular/non-cellular; reinforced/laminated/supported) by the field formation in this regard.

Advance ruling under Section 28H/28I of the Customs Act, 1962 - Classification under General Rules of Interpretation (GRI) - Separate chemically defined organic compounds (Chapter 29 Note 1) - Heading 2923 - lecithins and other phosphoaminolipids - Chapter Note 1(f) - addition of stabiliser/anticaking agent

Advance ruling under Section 28H/28I of the Customs Act, 1962 - Validity and maintainability of the applicant's advance ruling application - HELD THAT: - The Authority examined whether the applicant satisfied statutory conditions for seeking an advance ruling prior to importation. The applicant held a valid IEC, the question related to classification under the Tariff and was not pending in the applicant's case before any customs officer, the Appellate Tribunal or any Court, nor previously decided by those fora. On that basis the application was held to be valid and allowed to be proceeded with and the Authority exercised its jurisdiction to decide the matter on merits. [Paras 1, 5]

The application for an advance ruling is valid and maintainable and was admitted for determination on merits.

Classification under General Rules of Interpretation (GRI) - Separate chemically defined organic compounds (Chapter 29 Note 1) - Heading 2923 - lecithins and other phosphoaminolipids - Chapter Note 1(f) - addition of stabiliser/anticaking agent - Classification of 'Sharp PS' (phosphatidylserine enriched soy lecithin) under the Customs Tariff - HELD THAT: - Applying Rule 1 of the GRI and relevant Chapter/HSN Explanatory Notes, the Authority found Sharp PS to be a separate chemically defined organic compound (composition defined by constant ratio and representable by a structural diagram) falling within Chapter 29. The chemical composition and structure show a glycerophosphate skeleton conjugated with two fatty acids and Lserine and a phosphatidylcholine base, placing it within the phospholipids/phosphoaminolipids family. Heading 2923 expressly covers lecithins and other phosphoaminolipids; the product therefore meets the essential characterisation for Heading 2923. Addition of Silicon Dioxide as an anticaking/stabiliser does not alter classification since Chapter Note 1(f) permits such additions where necessary for preservation or transport. The Authority also noted persuasive value of an earlier cross ruling classifying phosphatidylserine under the corresponding tariff entry. On these determinative grounds the product was classified under Tariff Item 2923 2090. [Paras 1, 5, 6]

Sharp PS is classifiable under Chapter 29, Heading 2923, Subheading 2923 20 and Tariff Item 2923 2090 of the First Schedule to the Customs Tariff Act, 1975.

Final Conclusion: The Authority allowed the advance ruling application and ruled that the product 'Sharp PS' (phosphatidylserine enriched soy lecithin), including when presented with Silicon Dioxide as an anticaking agent, is classifiable under Customs Tariff Item 2923 2090.

Principle of proportionality in disciplinary proceedings - Wednesbury/irrationality standard in judicial review of administrative action - requirement of transparent invoicing and direct payment to appointed support service providers - prohibitions on acceptance/sharing of fees with appointed professionals or support service providers - directory character of timelines in disciplinary proceedings and relevance of unexplained delay as a mitigating factor - automatic suspension of Authorisation for Assignment (AFA) upon issuance of show cause notice vis-a -vis suspension of registration under disciplinary order

Principle of proportionality in disciplinary proceedings - Wednesbury/irrationality standard in judicial review of administrative action - Whether the suspension of the petitioner for one year was disproportionate and therefore liable to be judicially reduced - HELD THAT: - The Court applied established standards of judicial review in disciplinary matters, reiterating that interference is permissible where there is an infraction of statute or rule, a vitiated decision-making process, or where the penalty is grossly disproportionate. While the Court declined to reappraise purely factual findings of misconduct, it found that the Disciplinary Committee failed to take into account relevant mitigating material and the prejudice already suffered by the petitioner. Having regard to the proportionality principles articulated in the cited precedents, and the peculiar factual matrix of the case, the Court held that interference on the question of penalty was warranted and that the one year suspension should be reduced. [Paras 19, 20, 30]

Penalty of one year suspension reduced to the period already undergone; suspension deemed to end from the date of this order.

Requirement of transparent invoicing and direct payment to appointed support service providers - prohibitions on acceptance/sharing of fees with appointed professionals or support service providers - Whether the petitioner's conduct in receiving consolidated fees and subsequently paying support personnel contravened the Board Circular and Code of Conduct clauses - HELD THAT: - The Court accepted the Disciplinary Committee's core conclusion that the Committee of Creditors had approved separate fees for the RP and for the support service agency (Quantuum), and that the Circular and subsequently incorporated clauses require that appointed professionals raise invoices in their own name and receive payment directly. However, the Court noted that the DC did not make any specific finding that the petitioner retained funds for unlawful personal gain. The petitioner produced evidence of disbursements (invoices, Forms 16A and a detailed statement), and asserted that Quantuum was majority-owned by him and that payments were ultimately made to the team. The Court observed that these mitigating facts and the absence of a finding of unlawful gain were not adequately considered by the DC when determining penalty, and refrained from re-opening the factual finding of contravention while taking those omissions into account for mitigation. [Paras 21, 22, 24, 25]

The Court did not overturn the DC's finding of contravention of the Circular and Code of Conduct clauses, but held that the DC failed to consider material mitigating circumstances and absence of a finding of unlawful gain when imposing penalty.

Directory character of timelines in disciplinary proceedings and relevance of unexplained delay as a mitigating factor - automatic suspension of Authorisation for Assignment (AFA) upon issuance of show cause notice vis-a -vis suspension of registration under disciplinary order - Whether the Disciplinary Committee's delay in disposing of the show cause notice, contrary to the sixty-day endeavour in Regulation 13(2), justified relief or mitigation - HELD THAT: - The Court acknowledged that Regulation 13(2) is expressed as an endeavour and is hence directory, but held that a directory timeline does not license unreasonable or prolonged delay. Administrative authorities must act within a reasonable period and must justify any prolonged pendency. In the present case, the SCN was issued on 05.04.2024, reply filed on 19.04.2024, and the impugned order was passed on 25.04.2025 - nearly one year later. The Court found that the petitioner thereby suffered suspension of AFA for almost one year prior to final adjudication; when combined with the subsequent one year suspension, the cumulative professional bar was effectively excessive. The delay was therefore a relevant mitigating circumstance which the DC ought to have considered in fixing penalty. [Paras 26, 27, 28, 29]

Regulation 13(2) is directory but unexplained inordinate delay in disciplinary proceedings is a relevant mitigating factor; the delay in this case warranted reduction of the penalty.

Final Conclusion: Writ petition allowed in part: disciplinary order suspending the petitioner for one year is reduced by the Court and shall be deemed to have ended as of the date of this order, on account of the DC's omission to consider relevant mitigating facts and the inordinate delay in concluding proceedings; the Court otherwise refrains from reappraising factual findings of contravention by the Disciplinary Committee.

Effect of approved resolution plan u/s 31 - Extinguishment of claims not included in an approved resolution plan - Abatement of statutory proceedings and appeals on approval of resolution plan - Binding nature of resolution plan on creditors and statutory authorities - Reliance on Ghanashyam Mishra and Sons Pvt. Ltd. [2021 (4) TMI 613 - SUPREME COURT] - HELD THAT:- It is clear from the above that once the Resolution Plan is approved by the Adjudicating Authority under Section 31 (1) of Insolvency and Bankruptcy Code, 2016 (IBC) then ‘no person will be entitled to initiate or continue any proceedings in respect to a claim which is not part of the resolution plan’. That means even the present proceedings before us cannot be continued as held in Ghanashyam Mishra and Sons Pvt. Ltd. [2021 (4) TMI 613 - SUPREME COURT].

Resultantly, the appeal stands closed/disposed of accordingly.

Moratorium u/s 14- SARFAESI Act proceedings against personal guarantor - Corporate Insolvency Resolution Process (CIRP) - Maintainability of appeal u/s 19 of the Contempt of Courts Act - Appeal not maintainable against order dismissing contempt application in limine - HELD THAT:- The Contempt Application was filed by the Appellant- Suspended Director alleging violation of Moratorium dated 30.01.2025. From the facts on the record, it does appear that notice under Section 13(2) was issued both to borrower i.e. Corporate Debtor as well as the personal guarantor. Appellant was one of the personal guarantor and mortgagor which is reflected from the materials under Section 13(4) brought on the record. The Appellant was also referred in the notice as mortgagor. Adjudicating Authority in the impugned order held that the Moratorium under Section 14 does not protect the property of the personal guarantor, hence, the declaration of Moratorium under Section 14 does not bar initiation of proceeding under the SARFAESI Act. The above view of the Adjudicating Authority is clearly in accordance with law and fully supported by judgment of the Hon’ble Supreme Court in “State Bank of India vs. V. Ramakrishnan [2018 (8) TMI 837 - SUPREME COURT]”.

The Hon’ble Supreme Court in “Midnapore Peoples’ Co- operative Bank Ltd. & Ors. vs. Chunilal Nanda & Ors. [2006 (5) TMI 537 - SUPREME COURT] framed one of the questions for consideration is as to whether the Appeal was maintainable and in the above context, law was clarified in paragraph 11. The above judgment clearly lays down that the Appeal under Section 19 is maintainable only against an order or decision of the High Court passed in exercise of its jurisdiction to punish for contempt, that is, an order imposing punishment for contempt. When Contempt Application has been rejected in limine, Appeal under Section 19 was held not maintainable.

In the present case, Contempt Application has been dismissed in limine, hence, the said order cannot be said to have been issued in exercise of jurisdiction to punish for contempt and we are of the view that the Appeal filed by the Appellant is not maintainable and objection raised by the Respondent deserves to be accepted. We hold the Appeal not maintainable and consequently, the Appeal is dismissed.

Financial debt - share application money treated as deposit and financial debt - finality of judgment - principle of res judicata - admission of application u/s 7 - limitation extended by written acknowledgement in balance sheet - HELD THAT:- When issue between the parties has become final and has been decided, the parties to reopen the issue is clearly impermissible by principle of res judicata and further permitting agitation of such issues is akin to abuse of process of a court as has been held by the Hon’ble Supreme Court in paragraph 35 of the judgment in ‘Neelima Srivastava’ [2021 (9) TMI 483 - SUPREME COURT] In the earlier proceeding initiated by financial creditor under Section 7 decided on 25.07.2019 application was rejected by adjudicating authority, relying on the case set up by R-2 that R-2 was ready to refund the amount, but the relevant letter 03.07.2015, which is claimed by financial creditor to be sent to the R-2 company has never been delivered. 03.07.2015 was a letter, by which request was sent by financial creditor to refund of the amount and due to only on the said ground the application was rejected with a liberty to revive. Order of the adjudicating authority granted liberty to revive was set aside and substituted by Appellate Court judgment dated 26.07.2019, giving liberty to file a fresh application under Section 7 and the application under Section 7 being C.P. IB 21/2021 was filed as a fresh petition. After the judgment of this Tribunal dated 26.11.2019, the financial creditor claimed to have been send again the request at 06.12.2019 for remitting the amount in favour of the financial creditor, which letter was also filed along with Section 7 application as Annexure P-18.

Thus, request was again sent by financial creditor to the corporate debtor for refund of the amount which was pleaded in Section 7 application C.P. IB 21/2021. Earlier proceedings were concluded on 26.11.2019 by decision of this Appellate Tribunal and thereafter more than after a year amount was not refunded, the financial creditor had to file Section 7 application being C.P. IB 21/2021 on 12.01.2021, which could be decided on 12.12.2023, admitting Section 7 application. The amount which was remitted by financial creditor to corporate debtor having not been refunded, there is clear default on the part of corporate debtor and adjudicating authority has not committed any error in admitting Section 7 application. The statement of the corporate debtor that he was ready to refund the amount as recorded in the earlier Section 7 proceeding is clearly a statement without any intention to refund. The fact is that even after closure of the earlier proceeding in the year 2019 R-1 did not refund the amount leading to filing of Section 7 application 21/2021.

Thus, we are of the view that no grounds have been made out to interfere with the order of the adjudicating authority dated 12.12.2023, admitting Section 7 application against the corporate debtor. There is no merit in the appeal. The appeal is dismissed. The interim order stands discharged. The amount deposited under the interim order dated 21.12.2023 be refunded to the appellant. By dismissing the appeal, we leave it open for the appellant to remit the amount of US $ 1,24,000/- and US $ 1,42,000/- totalling to US $ 2,66,000/- to the financial creditor and financial creditor after having received the amount can take recourse to the proceeding under Section 12-A read with Regulation 30A of the CIRP Regulations, 2016. The period from 23.12.2023, till date is excluded from the CIRP. The RP may proceed with the CIRP in accordance with the law.

The appeal is dismissed subject to the above.

Clearing and Forwarding services - service tax - limitation u/s 73 - penalty under subsection 4A of Section 73 - acknowledgement of debt u/s 18 of the Limitation Act, 1936 - order of remand - Estoppel against law (no estoppel against statute) - HELD THAT:- Sub section 1A and 3 of Section 73 are inapplicable to the appellant firm. Sub-section 1A provides when the past service tax dues has been paid after the issuance of the show cause notice. In the present case, the appellant made the payment towards the past dues before the issuance of the show cause notice. Sub-section 3 is also not applicable since the same is applicable to the payment of past service tax which is to be paid after May, 2004. In the present case the appellant ought to have paid the service tax from September, 1999.

We are conscious of the fact that the services of the appellant came under the radar of the authorities, for the first time on April 19, 2002. On that said date, the revenue authority conducted a search and seizure operation in the office premises of the appellant. Indeed, the revenue authority did not immediately act qua the appellant from the said date of the search and seizure.

Thus, the limitation period of 5 years applies to the claim of service tax against the appellant. In view of the above, the revenue authority had 5 years to raise a claim against the appellant from the date when it made the payment on January 29, 2004 towards the past service tax dues under sub-section 4A to Section 73 of the Finance Act.

CONCLUSIONS-

It is ruled that the appellant firm has provided clearing and forwarding services to the companies, TISCO and TRL. To that extent, the decision of the first authority and the appellate tribunal is upheld.

The claim of service tax for bending and bundling services and stock verification services raised by the revenue authority under the head Clearing and Forwarding services is hereby quashed. The revenue authority will be at liberty to tax the said services in accordance with law.

The appellate tribunal has not decided the point of limitation discussed hereinabove. It is evident from the above that the Ld. Tribunal had clear and adequate evidence before it to rule on the point of limitation and the quantum of penalty. This Court notes with anguish, an attitude of “passing the buck” and abdication of responsibility on the part of the Tribunal. The judgment and order dated May 29, 2008 of the Ld. Tribunal to the extent that it that the remanded issue of limitation and imposition of penalty to the first authority is thus set aside.

A remand can only be made when the evidence on record is inadequate for the appellate authority to rule upon the point raised. Consequently, the issue is remanded to the first authority for recording of evidence and decision. An order of remand is also made when the first authority has not decided an issue and the appellate forum to ensure that parties do not lose a forum passes an order of remand.

Since the appellant has voluntarily registered itself under the Central Excise Act after the search and seizure operation conducted by the revenue authority, the court has leaned in favour of a reduction of penalty. The conduct of the revenue authority in not immediately issuing a show cause for the payment of service tax after the search and seizure operation has also persuaded us to lean in favour of the said reduction. The penalty however has to be imposed in view of the deliberate omission of the appellant firm to pay the service tax from the period September 1999.

The appellant and the revenue authority have submitted that the former has deposited security money as a condition precedent for the hearing of the subject appeal with the Registrar, Original Side.

Thus, the revenue authority shall raise a fresh demand within 7 days from the date of pronouncement of this judgment as regards the service tax for the clearing and forwarding services upon the appellant strictly in terms of paragraphs nos.39 and 40of this judgment. The said paragraphs have upheld the amount of service tax levied upon the appellant for clearing and forwarding services. There shall be a simple interest of 10% per annum on the consolidated amount of the service tax to be paid by the appellant under the tax bracket of 'Clearing and Forwarding services'. The said interest shall be computed from the date of filing of this appeal to the date of the actual payment by the appellant.

With the aforesaid discussions and directions, stands disposed off.

Liability to pay service tax under reverse charge on expenses in foreign currency for overseas film shooting and allied activitie- short reversal of cenvat credit on common input services -Place of Provision of Services Rules, 2012 - onus on Revenue to identify specific taxable service and classify under charging provision - treatment of advances - penalty u/s 78 of the Finance Act, 1994 - limitation / extended period of limitation - inadmissibility when based solely on balance sheet and ST3 returns - HELD THAT:- It is pertinent to note that for the purposes of computation of reversal under Rule 6(3A) of the CCR, value of the “services provided during the financial year” has to considered. In this regard, the Appellant submits that in terms of Point of Taxation Rules, 2011, the services are deemed to have been provided at the time the point of taxation it may be noted that 2004 Rule 3 of the Point of Taxation Rules, 2011, point of taxation is the point when the invoice for the service has been issued or when the payment has been received, whichever is earlier. Ld. Adjudicating Authority has rejected the inclusion of such advances in the value of output services on the ground that no taxable service has been provided by the Appellant during the FY 2013-14.

Whether the appellant is liable to pay service tax under reverse chance mechanism on the expenses incurred in foreign currency towards shooting of films and other related expenses or not ? - It is undisputed facts that the appellant is providing taxable as well as exempted services and on taxable services, the appellant is paying service tax. Some services are exempted services, on which, the appellant is not paying service tax. The appellant is not paying service tax on permanent transfer of copyright of cinematographic films and on that transfer of copyright, the appellant has paid VAT, therefore, no service tax is payable.

Whether the appellant is liable to pay service tax under reverse chance mechanism on the expenses incurred in foreign currency towards shooting of films and other related expenses or not ? - The demand has been raised merely on the basis of difference in figures between the Balance Sheet and the ST-3 Returns.

We take note of the fact that the services are in the nature of services relating to immovable property location selection, which are outside India.

Admittedly, all these expenses have been incurred by the appellant outside India for reference of services relating to immovable property location or shooting services, which are performed based on the services relating to immovable property-location and the same shall be place of providing services. Admittedly, all the services have been performed by the appellant outside India. Therefore, the same will be treated as availed outside India. Therefore, no service tax is payable by the appellant. In view of this, the demand of Rs.1,24,73,378/- is set aside.

Whether an amount of Rs.30,58,083/-, is required to be reversed on account of alleged short reversal of cenvat credit on input services used commonly for making both taxable and exempt supply or not ? - We find that the appellant has pro rata reversed the cenvat credit of the input services used in relation to its film division by computing the value of exempted and output services on entity basis as a whole and the Revenue is seeking reversal by considering the revenues of film division, which is not correct proposition. In terms of Rule 6(3A) of the Cenvat Credit Rules, 2004, the value of the services provided during the financial year, is required to be considered and the appellant has reversed the cenvat credit proportionately. If the same is taken up as service during the financial year, then, there is no shortage of reversal of cenvat credit by the appellant. In view of this, the said demand of Rs.30,58,083/- is set aside.

Whether an amount of Rs.26,16,650/- is required to be reversed on cenvat credit used on input services received from RIMT Pvt. Ltd. used for providing both taxable and exempt supply or not ? - From the invoices produced before us, we find that the invoice raised by RIMT Pvt. Limited on the appellant, is for content mastering charges and the appellant has raised invoices for D5 processing and digitisation charges. The digital cinema refers to the technical process of converting a film’s digital intermediate outputs into a DCI/SMPTE Complaint Digital Cinema Package by compressing, encrypting and synchronising image, audia and subtitle files for theatrical exhibition. As the appellant is engaged a sub-contractor by providing services i.e. RIMT Pvt. Ltd. and provided the service to the service recipient . As the appellant paid service tax on the said service, in that circumstances, the appellant is entitled to take the cenvat credit in full for the services received from RIMT Pvt. Ltd..

Whether an amount of Rs.15,53,293/- is required to be reversed to cenvat credit availed on projectors and its maintenance related services purported used exclusively for providing exempt services or not ? - The cenvat credit sought to be denied on projector and the related services to the projector for their maintenance etc. on the ground that the said projector has been used for providing exempted services. In fact, the said capital goods have been used by the appellant for providing exempted as well as taxable services. In that circumstances, the cenvat credit on the capital goods cannot be denied to the appellant as in respect of the said capital goods have been used by the appellant for providing taxable as well as exempted services.

Therefore, the denial of cenvat credit of Rs.15,53,293/-, is not sustainable.

Whether an amount of Rs.21,76,552/- is required to be reversed for excess availment of cenvat credit in ST-3 Returns Vis-à-vis the cenvat credit register or not ? - The cenvat credit of Rs.21,76,552/- sought to be denied to the appellant on account of the appellants have availed excess cenvat credit in their ST-3 Returns as compared to cenvat credit register.

Whether penalty can be imposed under Section 78 of the Finance Act, 1994 on the appellant, or not ? - The penalties have been imposed on the appellant for availment of cenvat credit paid under reverse charge mechanism without any duty paying documents in terms of Rule 8 & 9 of the Cenvat Credit Rules, 2004. As there is no evidence brought on record that the appellant has availed cenvat credit by way of fraud, collusion or willful mis-statement or suppression of facts or contravention of any provisions of law with intent to evade payment of service tax, therefore, no penalties can be imposed on the appellant under Section 78 of the Finance Act, 1994 on account of availment of cenvat credit paid under reverse charge mechanism without any valid documents and excess availment of cenvat credit on the capital goods. Therefore, the penalties imposed on the appellant under Section 78 of the Finance Act, 1994, are set aside.

Taxability of payments to overseas joint venture as Business Support Services / Information Technology Software Services - place of provision of services and location of recipient under the Place of Provision of Services Rules - treatment of overseas establishments/branches/JV as distinct persons for levy of service tax - non-liability to service tax on the import services -reimbursements/sharing of expenses versus consideration for taxable service - temporal scope of expansion of operational or administrative assistance into taxable net (effective date) - HELD THAT:- The words "operational and administrative assistance" have wide connotation and can include certain services already taxed under any other head of more specific description. The correct classification will continue to be governed by Section 65A. During the introduction of change in the Budget for the year 2011-12, the Tax Research Unit of the Ministry of Finance vide D.O.F No.334/3/2011/TRU dated 28.02.2011 has explained the scope of explanation of existing services by amendment or addition of a new aspect of a certain service to the existing oneThe words "operational and administrative assistance" have wide connotation and can include certain services already taxed under any other head of more specific description. The correct classification will continue to be governed by Section 65A. During the introduction of change in the Budget for the year 2011-12, the Tax Research Unit of the Ministry of Finance vide D.O.F No.334/3/2011/TRU dated 28.02.2011 has explained the scope of explanation of existing services by amendment or addition of a new aspect of a certain service to the existing one.

The Government had clearly stated that the scope of taxable services under Section 65 (105) (zzzq) ibid is being expanded and the scope of services to be covered w.e.f. 01.05.2011 are explained as those services which are in the nature of support activities for the ongoing business support functions. These services are distinct from operational assistance for marketing which was covered earlier under the scope of taxable services, for the limited purpose of understanding and for coming to a conclusion about the date of effect of bringing into tax net the scope of comprehensive services of 'operational or administrative assistance', such expansion of services were brought under the tax net only with effect from 01.05.2011 and not earlier, as contended by the Revenue; the Appeal filed by Revenue for charge of service tax on the disputed activity, prior to 01.05.2011 therefore does not have the support of law.

We find that the dispute in respect of similar issue relating to status of overseas office vis-à-vis branches/head office and the limitation thereof, the jurisdiction to classify the services under Section 65 (105) of Finance Act, 1994, the receipt of 'Business Auxiliary Service by the Assessee Appellant from its branches and the inclusion of reimbursable expenses for computation of gross receipts under Section 67 of Finance Act have been dealt in detail by a coordinate Bench in the case of Tech Mahindra Ltd., Milind Kulkarni Vs. Commissioner of Central Excise, Pune [2016 (9) TMI 191 - CESTAT MUMBAI]. In the aforesaid case, the Tribunal has held that transfer of funds is nothing but reimbursements and taxing of such reimbursement would amount to taxing of transfer of funds which is not contemplated by Finance Act, 1994 and therefore set aside the demand of tax as having been made without authority of law. In view of the categorical decision of the Tribunal, the issue under dispute in the present case is no more open to debate, and a different view cannot be taken by this Tribunal.

A more or less similar issue was the subject matter of an Appeal before a coordinate Bench of the Tribunal in the case of Steel Authority of India Limited Vs. Commissioner of Service Tax, New Delhi in Final Order [2020 (4) TMI 346 - CESTAT NEW DELHI] and the Bench has held that charging section is Section 66 of the Finance Act, 1994 and not Section 66A ibid. The provision of Section 66A is only to determine whether the provision of service is in India or out of India. Therefore, it was held unless that charge of service tax is proved under Section 66 ibid, there cannot be levy of service tax only on the basis of Section 66A ibid.

Thus, we are of the considered view that payment of consultancy charges paid by the Respondent-Assessee to JV situated in abroad (Saudi Arabia), in the present set of facts cannot be subjected to levy of Service Tax under the Finance Act, 1994. It would, therefore, not be necessary to examine the contentions of the Respondent/Assessee that the extended period of limitation could not have been invoked in the present case.

We do not see any justifiable reasons to interfere with the well reasoned order of the Commissioner and hence, we dismiss the Appeal filed by the Revenue.

Demand of duty - demand by serving a show cause notice u/s 11A - limitation-extended period of five years - non-payment or short payment of duty - fraud, collusion, wilful mis-statement or suppression as exception to limitation - pasting notice on notice board not valid service - service after passing order cannot cure lack of prior notice - HELD THAT:- The undisputed position is that the appellant had changed its address and intimated the change to the department but the SCN was sent to the old address and when it was returned by the postal department, it was pasted on the notice board of the office of the department. This cannot be termed service of notice. After the order was passed, the appellant sought the SCN and it was served on 24.7.2012 beyond the period of five years from the relevant period. The Annexures to the SCN and the relied upon documents were served even later. Thus, the SCN was clearly time barred and the impugned order deciding the proposals therein cannot be sustained.

The SCN must be served before issuing the order and not after the order has been issued. The very purpose of issuing an SCN is to give the noticees an opportunity to show cause which cannot be served if the order is passed without serving the SCN.

We find that the impugned order cannot be sustained because the SCN was served beyond the extended period of limitation of five years. It is, therefore, not necessary for us to consider the other submissions made by both sides.

The impugned order is set aside and both appeals are allowed with consequential relief to the appellants.

Extended period of limitation - bar of limitation - suppression, mis-statement, mis-declaration - self-assessment regime and duty of the officer to scrutinise returns - best judgment assessment - routine audit versus officer's responsibility - HELD THAT:- Appellants submit that there is no suppression, mis-statement, mis-declaration, collusion etc. on the part of the appellants. We find that the same has not been alleged with evidence in the show cause notice. We find that the only case of the Department is that but for the audit, the alleged evasion could not have seen the light of the day. We understand that the appellants are regular assessees and are filing Returns regularly from time to time and are paying the applicable central excise duty. We find that Tribunal in a plethora of cases held that extended period cannot be invoked when the appellants have reasons to have an alternate interpretation of statutory provisions and more so, extended period cannot be invoked when the detection is on the basis of a routine audit conducted.

Thus, we are of the considered opinion that Revenue has not made any case for invocation of extended period. Accordingly, we find that the impugned SCN is barred by limitation. Consequentially, the orders passed on the basis of SCN are liable to be set aside. As we find that the appeal merits to be allowed on limitation itself, there is no need to go into the merits of the case.

Appeal is allowed.

Savings clause preserving proceedings under the repealed Central Excise Act - reliability of electricity-consumption-based production estimates - insufficiency of electricity-consumption alone to establish clandestine removal - requirement for additional corroborative factors to determine production and clandestine removal - Validity of initiating and continuing proceedings under the Central Excise Act after commencement of the CGST Act - HELD THAT:- We find that excess stocks of finished production and raw material seized from premises of Marie on 10.11.2017, excess stock of perfume seized on 10.11.2017 from the residence of Agarwal and excess stock of sweet supari seized from C&F agent of Marie are all parts of separate SCNs. The impugned order is only on account of alleged production and clandestine removal of sweet supari by Marie during the period October 2014 to June 2017.

Clearly, the savings clause in section 174(2) of the CGST Act allows institution of any proceedings under the repealed Act (Central Excise Act, 1944) even after the appointed day of CGST Act. The submission of the Revenue deserves to be accepted and the submission of the learned counsel deserves to be rejected.

Clandestine production and removal of sweet supari - The quantity of supari produced in kg per unit electricity consumed, as indicated above, varied widely during the period from 2.522 kg per unit to 8.448 kg per unit. The department’s case is that the highest production of 8.448 kg per unit consumed is the correct figure and Marie actually produced supari at this rate through the entire period and reported less production.

No other parameter was used in the SCN to calculate the alleged clandestine production and removal although 59 documents were relied upon in the SCN included 16 statements of various persons recorded under section 14 of the Act and the Panchnamas. - In our view, all that the figures and calculations show is that if the production of supari in terms of electricity consumption has been as efficient during the entire period of dispute as it had been during the period 1 November 2017 to 9 November 2017, the production of supari would have been as calculated. However, the calculation does not establish that the production has, indeed, been so efficient throughout the period of dispute and part of the supari so produced was clandestinely removed without paying duty. In COMMISSIONER OF C. EX., MEERUT-I Versus R.A. CASTINGS PVT. LTD. [2010 (9) TMI 669 - ALLAHABAD HIGH COURT] the Allahabad High Court set aside a similar demand of duty alleging clandestine removal of ingots merely based on electricity consumption.

Similarly in the case of Balashri Metals Pvt. Ltd. vs Union of India [2016 (10) TMI 872 - JHARKHAND HIGH COURT] the Jharkhand High Court quashed the order of Commissioner confirming demand of duty based on the production calculated based on electricity consumption.

We find nothing in the calculations in Annexures A and B to the SCN to show that any other factor other than electricity consumption was reckoned to determine the alleged production of supari. We, therefore, find that the allegation of excess production and clandestine removal and consequent demand of duty, interest and penalties cannot be sustained.

The impugned order is set aside both appeals are allowed with consequential reliefs to the appellants.

Rejection of belated appeal for delay without sufficient explanation - claimed excess Input Tax Credit - service by registered post and return endorsement "no such person at the address" - personal service by departmental officer and non-service where premises locked - duty to inform assessing authority of cessation or change of business address - Compliance with the procedure laid down in Rule 64 of the AP VAT Rules - diligent prosecution before appellate authority as factor against excusing delay - HELD THAT:-On perusal of the record it is evident that when initial order of assessment was passed on 30.04.2012, the same was assailed before the 2nd respondent and the same was partly remanded and partly dismissed by order dated 20.06.2012. Therefore, an inference can be drawn that the petitioner was diligently pursuing the matter before the appellate authority. Further, having knowledge of the order passed by the 2nd respondent despite issuance of show cause notice, the petitioner did not choose to appear and participate before the 1st respondent in assessment proceedings. Further, after following the procedure contemplated under AP VAT Act, 2005 and the rules made there under, the 1st respondent passed consequential order dated 31.03.2015.

The petitioner failed to mention the mode of service and the address mentioned in the said notice. - Nothing is placed on record to show that the petitioner had informed the same to the 1st respondent.

After following the procedure contemplated under Rule 64 of the AP VAT Rules, the assessing authority passed order dated 31.03.2015. On perusal of the record it is clear that, the appeal was filed after a period of 2 years 4 months and 20 days, and the explanation offered by the petitioner cannot be believed. In the absence of the same, the contention of the counsel for the petitioner is liable to be rejected. Further, the petitioner having slept over the matter approached the appellate authority without explaining the delay. Apart from the same, as already observed supra the petitioner failed to explain as to how it received the demand notice dated 14.09.2017 from the 1st respondent. It is clear that, the petitioner filed the appeal without properly explaining the delay.

Thus, this Court does not find any illegality or infirmity in the impugned order dated 12.12.2017, passed by the 2nd respondent. Viewed from any angle, there are no merits in the writ petition and accordingly the same is dismissed.

Binding effect of DRT sale certificate on revenue records - removal of encumbrances from 7/12 extract - priority of secured creditor's recovery under the RDB Act over unregistered statutory charges - constructive notice insufficient without registration on CERSAI - HELD THAT:- It is not in dispute that the petitioners have purchased the property pursuant to auction sale. The property in question was mortgaged with the Punjab National Bank. The DRT has passed a categorical order directing removal of all charges from the Revenue Records and registration of the petitioner’s name without encumbrances. This order is not challenged. It was, therefore, necessary to give effect to the order of the competent forum in its letter and spirit.

The DRT having confirmed the auction sale and further having addressed the communication to the Talathi–Wada to remove the charge of the Sales Tax and State Tax Department from the 7/12 extract of the land in question, in our opinion, the Talathi was then not justified in recording the charge of the Sales Tax Department in the ‘other rights’ column.

There is no challenge to the order passed by the DRT in O.A.No.407 of 2016 or for that matter, the order passed by the Tahsildar–Wada. As can be seen from the finding of the Tahsildar– Wada in the order dated 1st September 2023, it has clearly been recorded that in terms of the registered sale-deed, the parties have executed the registered sale deed before the Deputy Registrar–Wada and hence, sale certificate is duly registered in accordance with law. The Tahsildar has clearly held that the complaint made by the Deputy Commissioner–Sales Tax Department is rejected by observing that if at all the Sales Tax Department is to seek necessary reliefs, the same has to be by approaching the Civil Court of competent jurisdiction. It is further observed that the decision of the Civil Competent Court will be binding on the parties. In such view of the matter, it is impermissible for the Talathi to continue the charge of the Sales Tax Department in the ‘other rights’ column. The petition must succeed. This is, however, subject to orders that may be passed by the Courts of competent jurisdiction.

Learned Addl. G.P. submitted that the Sales Tax Department intends to challenge the order of the DRT in R.P.No.308 of 2019 in O.A. No.407 of 2016 before the appropriate forum. It is made clear that the revenue entry in favour of the petitioner based on this order is subject to the orders that may be passed by the Court of competent jurisdiction. The Writ Petition is, therefore, allowed in terms of prayer clause (a).

Power of the Court to extend mandate under Section 29A - application u/s 29A(5) maintainable after expiry and after award rendered - mandate termination u/s 29A(4) is conditional and transitory - award rendered after expiry of mandate unenforceable u/s 36 - continuation of arbitral proceedings while extension application is pending - Court's power to substitute arbitrators u/s 29A(6)-(7) - Court's power to reduce arbitrator's fees and impose costs as corrective measures - statutory requirement to dispose applications u/s 29A(9) expeditiously (60 days) - Whether a Court can entertain an application under Section 29A(5) of the Arbitration and Conciliation Act, 1996 to extend the mandate of the arbitrator(s) for making the award even after an ‘award’ is rendered, though after the expiry of the statutory limit of eighteen-month period? -HELD THAT:- Section 29A of the Act does not, in terms, bar an application for extension of the mandate of an arbitrator in the event of the delivery of an award. There is no such prescription anywhere in the section. In the first place, if an award is made after expiry of the mandate, then there is no doubt about the fact that such an award is non est. A better expression would be to hold that such an award would be unenforceable under Section 36. Such an award need not be challenged under Section 34.

Vesting of power and jurisdiction in the Court, in our opinion, is a complete answer to any apprehension that extension of time, even in cases where an ‘award’ is passed, could introduce a culture of indiscipline, as arbitrator(s) and/or counsels could become indifferent to the mandatory timelines. This apprehension is not true. There is no automatic extension of time. The Court will and must exercise its discretion only after evaluating the facts and circumstances after close scrutiny. Section 29A, in terms, enables the court to adopt distinct measures to ensure dynamic and efficient conduct of arbitral proceedings with integrity and expedition.

In conclusion, we hold that an application under Section 29A(5) for extension of the mandate of the arbitrator is maintainable even after the expiry of the time under Sections 29A(1) and (3) and even after rendering of an award during that time. Such an award is ineffective and unenforceable. But the power of the court to consider extension is not impaired by such an indiscretion of the arbitrator. While considering the application, the Court will examine if there is sufficient cause for extending the mandate, and in the process, it may impose such terms and conditions as the situation demands. The Court will also take into account other factors such as reduction of the fee of the arbitrator under proviso to Section 29A(4) and also impose costs on parties if the fact situation so demands. Substitution is an option for the Court as the provision itself says, “it shall be open for the Court to substitute”, and it will be exercised carefully. If the mandate is extended, the arbitral tribunal will pick up the thread from where it was left, and seamlessly continue the proceeding from the stage at which the mandate had expired, and conclude within the time granted.

Appeal against the judgment and order dated 24.01.2025 in Application passed by the High Court of Judicature at Madras is allowed. The Application No. 5993 of 2024 is restored to its original number and the High Court will proceed with the said application and dispose it of as per the principles laid down in our judgment.