TaxTMI Updates e-Newsletter
Feb 10,2026

Remand for fresh hearing - consideration of documentary evidence - right to personal hearing - quash and set aside appellate order - costs for non-appearance - HELD THAT:- The petitioner herein did not appear before the appellate authority. However, simultaneously it is also noticed by us that the appellate authority has not considered the documentary evidence provided by the petitioner before the adjudicating authority, who had passed the order in favour of the petitioner sanctioning refund.

It is also noticed by us that the petitioner, even though he was served hearing notices on 31.01.2025 and 11.02.2025 by the appellate authority, did not appear before the appellate authority. It is the case of the petitioner that under a bona fide impression that a link to join virtual hearing would be provided along with or within the notices themselves, however, in the absence of any such link, the petitioner was unable to access or attend the scheduled personal hearing.

Thus, though we cannot find any fault in the approach of the appellate authority in passing the impugned order without hearing the petitioner, as the petitioner did not appear, though the notices were served upon him, however the appellate authority was required to consider all the documentary evidences, which were produced by the petitioner before the adjudicating authority while passing the final order.

Under the circumstances, we set-aside the impugned order of appeal and remand the matter to the appellate authority.

Retrospective cancellation of registration - absence of reasons in the Show Cause Notice - failure to place party on prior notice - review petition - error apparent on the face of the record - review not maintainable as reopening overruled arguments - review jurisdiction is not an original hearing - HELD THAT:- It is apparent that the Court while passing the order under review has specifically recorded a finding that the impugned order sans the reasons in the original Show Cause Notice in support of proposed retrospective cancellation as well as failure to place the petitioner on prior notice of such intent, has resulted in the order impugned being rendering invalid.

The contention of the review applicant, in our opinion, amounts to the overruled arguments being sought to be reopened when there is already a concluded adjudication. In any case, the review jurisdiction cannot be equated with original hearing of the case.

We see no material or manifest error on the face of record to infer that there is a miscarriage of justice to the review applicant. There is no scope for inference on the ground that an erroneous decision has been taken by this Court in the facts and circumstances of the case, particularly, having regard to the reasons recorded.

In that view of the matter, there is no substance in the review petition and the same stands rejected.

Reopening of assessment - period of limitation - time limit for notice u/s 149 - search action u/s 153A of the Act was undertaken on 23.11.2021, which indubitably falls in the Financial Year 2021-22 - computation for six years and ten years

HELD THAT:- Taking the date of the search as 23.11.2021 during the Financial Year 2021-22, the Assessment Year 2022-23 will become the first assessment year and, in the same manner, the Assessment Year 2013-14 will become the tenth assessment year. Thus, the year under consideration, namely, Assessment Year 2012-13, for which the impugned notice has been issued under Section 148 of the Act, would fall beyond the period of ten years prescribed under the statute as it stood immediately before the commencement of the Finance Act, 2021, and hence, on this count, the impugned notice can be said to be barred by limitation.

However, since an additional submission has been advanced by learned Senior Standing Counsel Mr. Patel to the extent that the expression used in the proviso to Section 149(1) of the Act, to the extent that “if a notice under Section 148 or Section 153A or Section 153C could not have been issued at that time on account of being beyond the time limit specified”, would mean that the Assessing Officer is competent to issue notice under Section 148 of the Act, since he would only gain knowledge of incriminating material against the third person after the search, and the limitation prescribed under the provisions of Sections 153A or 153C of the Act cannot restrict his power, and such limitation will start running from the day of search. We fail to grasp the said submission and the impact of such submission on the limitation prescribed in the first proviso, which relates to Sections 153A or 153C of the Act. Hence, it is not dealt.

Notice u/s 148 set aside - Decided in favour of assessee.

Allowable expenditure u/s 37 - business loss as an allowable expenditure or not? - compensation amount paid by the assessee -interpretation of contract clauses for tax deductibility - commercial expediency test for allowance of expenditure - ITAT held that the deduction/ expenditure claimed by the assessee to SMTPL towards the loss suffered due to fluctuation in exchange rates is absent in the agreement, and in the absence of any written covenant with regard to the same, it cannot be construed that, either parties is liable to compensate for the loss on account of fluctuation in the exchange rates. Thus, concluded that the said amount cannot be held to be an allowable expenses in the hands of the Assessee.

HELD THAT:- As in the absence of any dispute on the actual payment of the said amount by the assessee to the SMTPL, the disallowance of the said amount by the Assessing Officer cannot be said to be in accordance with law, unless the Assessing Officer comes to the conclusion that the same is an expenditure of the nature prescribed in Sections 30 to 36 of the Act, 1961 and does not fall within the scope and ambit of Section 37 of the Act, 1961.

As seen from the assessment order as well as the order passed by the learned Appellate Tribunal, there is nothing to indicate that the said expenditure incurred by the appellant would fall either under Sections 30 to 36 or to say that the same does not fall under Section 37 of the Income Tax Act, 1961, except saying that the same is not covered by agreement. When the CIT(A) had considered the matter elaborately and furnished detailed reasons for his conclusion, the learned Tribunal with not even finding fault with the order of CIT(A) passed a cryptic order simply referring to Clauses (g) and (j) of the Agreement.

In the order of assessment, there is a finding that the expenditure has been incurred in the financial year ending 31.03.2006. This finding is arrived at on the basis of the fact that FMTPL had not accounted for the said expenditure either in years ending 31.03.2004 or 31.03.2005. It was only in year ending 31.03.2006, relevant to AY 2006-07, that a ledger of SMTPL was produced, accounting for compensation received from the assessee. This payment was pursuant to a Board Resolution, that was communicated to SMTPL by the assessee on 14.09.2005.

Based on the above, the Assessing Authority concludes that the expenditure would be relevant only to AY 2006-07 and disallows the same for AY 2004-05, being the subject assessment year. It is relevant to note that he has not questioned the genuinity of the expenditure incurred.

The Commissioner of Income Tax (Appeals) has accepted the assessee’s challenge to the disallowance on the ground of commercial expediency, being of the view that the disallowance of the expenditure must be tested from the view point of a business man. He does not go into the year of claim. The Tribunal reverses the order of the Commissioner of Income Tax (Appeals) on the ground that the agreement did not contain a clause for compensation. The Tribunal too, does not refer to the year of claim.

We have, in the paragraphs supra, found that the contract contained a categoric clause providing for the payment of compensation. As we have noted earlier, genuinity of the expenses is not in question, as the Assessing Authority has not doubted either the need or the incurrence of the same.

Thus, Appellate Tribunal is not right in interfering with the well-considered order passed by the Commissioner of Income Tax (Appeals) insofar as the disallowance is concerned. Decided in favour of assessee.

Application u/s 197 - lower tax withholding certificate prayer - revenue attributable to its India PE - as conditioned accepting application that payer(s) making payment to the petitioner are required to deduct tax at the rate of 1.6% - petitioner is a company incorporated in the United Kingdom - petitioner is engaged in providing electronic global distribution services (GDS) to the travel industry globally, through an automated Computer Reservation System (CRS) and services are provided to various airlines, and for each completed booking, the petitioner receives booking fees from the airlines

Exigibility of the income tax on the transactions from non-India POS - Respondents has talked about revenue from India Point of Sales (POS) only, whereas the income in the hands of the petitioner from non-India POS is also taxable as the persons have travelled to India on the basis of sale of the tickets booked from the petitioner’s portals or by availing abroad the online services provided by it - HELD THAT:- There is no gain saying the fact that the second issue, the non-India POS on which the AO has created demand, is yet to be decided by the Appellate Authority and/or the Tribunal in accordance with law. Resultantly, for the last four years, the Assessing Officer’s view is against the petitioner. We therefore, refrain from recording any finding or making observation so far as the exigibility of the income tax on the transactions from non-India POS are concerned.

Income attributable to India PE - it is a trite position that the revenue attributable to its India PE is to be taken as 15% in light of the judgement of Hon’ble the Supreme Court in petitioner’s own case - DIT v. Travelport Inc. 2023 (5) TMI 227 - SUPREME COURT]

The expression “was the income accruing or arising in India” in the 13th and 14th line of the above quoted paragraph, raised a doubt in our mind as to whether 15% of its receipts should be reckoned as revenue or income? But on perusal of the judgement particularly paragraph no. 9 and the order of the Tribunal, we are of the firm opinion that 15% of the commission is the revenue attributable to India PE. That is precisely what has been understood and taken by the competent authority in the order under challenge.

Hon’ble the Supreme Court has categorically observed and affirmed the position that 15% represents the quantum of revenue attributable to the Permanent Establishment in India, determined on the basis of the FAR analysis, and not a limit on the allowability of expenditure. As explained by way paragraph 9 of the said judgment, once 15% of the total revenue was attributed to India, the entire commission paid to the distribution agents was liable to be deducted therefrom; and since such commission exceeded the attributed revenue, the Tribunal held that no further income was taxable in India.

The competent authority was therefore, required to deduct expenditure being the commission of 68% from the total revenue being 15% of the commission. If the commission being expenditure is subsumed from the revenue of the PE, then, the income shall obviously be negative, at least in the present scenario.

Such being the position, we set aside the impugned order dated 24.04.2025 passed by the competent authority and corresponding certificate dated 17.04.2025. The competent authority is directed to issue a fresh certificate providing deduction of tax at the rate of .5% (1/5 of 1.6% = .32 or rounded off .5%). We therefore direct that a fresh tax withholding certificate at 0.5% be issued within fifteen days from today.

Capital gain - conversion of capital asset being land into stock in trade at the time of its sale u/s. 45(2) - FMV determination - mistake apparent on record - exercise of appellate powers under Section 251(1) - AO has not taken the same fair market value of land was adopted for computing capital gains at the time of conversion of the said capital asset into stock in trade as cost of purchase. But taken the value was shown by the assessee in its books of accounts - CIT(A) deleted addition

HELD THAT:- AO has adopted a fair market value at the time of conversion of land as stock in trade and he proceeded to complete the assessment without giving the effect of adopting fair market value at the time of conversion while determining the profit under the head ‘income from business’ when the AO recalculated the fair market value at the time of conversion, the same market value had to be adopted while computing the profit under the head ‘income from business’ while determining the cost of acquisition by adopting the fair market value as determined at the time of conversion. Therefore, there is mistake apparent on record the method adopted by the Assessing Officer.CIT(A) has appreciated the above facts and law on record, gave the relief to the assessee.

As at the time of hearing Ld. DR prayed that this issue may be remitted back to the Assessing Officer. However, we observed that the mistake was apparent on record and Ld. CIT(A) has applied the proper law, he has applied his power as per Section 251(1) of the Act. Therefore, we do not see any reason to disturb the well reasoned order of the Ld. CIT(A). Decided against revenue.

Validity of proceedings u/s 153C - date of satisfaction recorded by the AO - order was passed u/s 143(3) making addition u/s 69A of unexplained money of the assessee company, being the amount of loan to BCC Cement Pvt. Ltd. as accommodation entries - HELD THAT:- In the present case, admittedly, the satisfaction was recorded by the AO of the assessee on 24.05.2022 which is falling in the Financial Year 2022-23 relevant to AY 2023- 24. As per First proviso to section 153C(1), the date of search should be construed from the date when satisfaction is recorded by the AO of the assessee upon receiving the books of accounts or other documents or assets seized or re-questioned from the AO of the person searched. This view is supported by the judgement of Jasjit Singh [2023 (10) TMI 572 - SUPREME COURT] and followed by the Tribunal in the cases relied upon by the assessee as stated herein above.

In the present case, as per the date of satisfaction recorded by the AO, the year under which search is conducted will be AY 2023- 24 and 06 Assessment Years immediately preceding AY relevant for the previous year in which search was conducted for initiating proceedings u/s 153C of the Act will be AY 2017-18 to AY 2022-23.

Therefore, we hold that the assessment for AY 2021-22 should have been completed by issuance of notice u/s 153C of the Act and not by issuing notice u/s 143(2) of the Act. Assessee appeal allowed.

Income taxable in India or not - source of the income which is to be seen OR not the receipt of income - fees for technical services (FTS) under Section 9(1)(vii) - fees received by a UAE-resident assessee from an Indian resident - HELD THAT:- There is dispute between the rival parties in appreciation of facts itself. Merely because purchase order was issued by Comviva, India in favour of the assessee will not make the said income taxable in India. The source of the income is to be seen whether it is the Branch office in UAE of Comviva, India who got the contract from Etisalat, UAE and whether the said contract was executed by Branch office in UAE of Comviva, India, which is relevant i.e. the source of income being located outside India to fall in exception crafted u/s 9(1)(vii). The assessee on its part has not placed on record clinching and sufficient evidences to that effect to arrive at conclusive findings., although pleadings are there on record.

Contentions raised by the assessee goes to the root of the matter and needs thorough examination by the authorities, as chargeability to tax will depend upon the findings based upon the proper appreciation of the evidences/explanations produced/provided or to be produced/provided by the assessee.

The assessee is claiming exemption and hence primary onus is on the assessee to prove that it fulfils the conditions as are stipulated for claiming exemption, and the onus is on the assessee to bring on record cogent evidences.

The judgment and order of Hon’ble Supreme Court in the case of Commissioner of Customes(Imports) v. Dileep Kumar & Co. [2018 (7) TMI 1826 - SUPREME COURT (LB)] is relevant. Thus, keeping in view the entire facts and circumstances of the case, it will be in the interest of justice and fair play to restore the matter back to the file of the AO for denovo reassessment after re-examination the entire matter afresh. The assessee is directed to produce necessary and cogent explanation/evidence in context thereto before the AO during the remand proceedings. The matter is, thus, remanded back to the file of the AO for denovo framing of the re-assessment. We order accordingly.

Proportionate interest paid by the firm disallowed for non utilization of loan funds for business purposes - As argued since there is surplus funds available with the Firm, therefore there is no question charging proportionate interest -

A.O. and held that the advance amounts received for flat booking cannot be accepted as interest free advance and the sundry creditors referred to are for materials purchased and labour employed which had also been reflected in the Work-In-Progress (WIP) meaning thereby that the amount had been utilized in the construction activity - HELD THAT:- Assessee has not filed these bank statements before the A.O. Lower authorities clearly held that the assessee has not proved that the direct nexus of so called interest free unsecured loan in advancing the loan to Praveenbhai R. Khatri HUF. Thus the arguments of the assessee without supporting evidence is not acceptable. Therefore the advance of Rs. 1.12 crores is not related to the business activity of the appellant firm and the interest bearing funds has been diverted for other than the business activities. Therefore the interest expenses made by the A.O. does not require any interference. Thus Ground No. 1 raised by the assessee is hereby dismissed.

Addition of unsecured loan u/s. 68 - Assessee submitted before us confirmation of accounts, PAN card and State Bank of India bank account in the name of Dharmeshkumar Ashokbhai Barot and stated that Rs. 2.14 lakhs was issued by Dharmeshkumar Ashokbhai Barot son of Ranjanaben A. Barot. Since the source is being explained the addition is liable to be deleted - HELD THAT:- This argument of the assessee is not acceptable since the assessee failed to establish the identity, creditworthiness of the transaction, therefore the addition made in the hands of the assessee is liable to be sustained. Thus Ground No. 2 raised by the assessee is hereby dismissed.

Addition on account of remuneration paid to all partners disbelieving the Supplementary Partnership Deed filed by the assessee - HELD THAT:- The original Partnership Deed clearly states that the remuneration to the extent of 10% of the profit as defined u/s. 40(b) of the I.T. Act be paid to the managing partners. In the so called Supplementary Deed it refers to Clause 14 of the original Partnership Deed which clause has no relevance regarding the remuneration payable to the partners. Further the payment of Rs. 35,00,000/- to all Partners is against the provisions of Section 40(b) of the Act, therefore the addition made by the Lower Authorities does not require any interference. Thus the submissions made by the counsel has no relevance and the case laws relied by him is also clearly distinguishable with the facts of the present case. In the result, ground no. 3 raised by the assessee is devoid of merits and liable to be dismissed.

Bogus purchases - Estimation of income - CIT(A) directed the AO to make addition for only the gross profit element embedded in the bogus purchases

HELD THAT:- Since the construction activity carried on by the assessee has not been disputed, it would be reasonable to conclude that the purchases were not made from these four parties but from certain other parties and the profit derived in such transactions will be certainly higher than the normal GP rate as disclosed by the assessee. Therefore, the direction of the ld. CIT(A) to restrict the addition in respect of bogus purchase of four parties only to the extent of gross profit element embedded in such purchase cannot be held as correct.

Considering the consistent view of the Hon’ble Jurisdictional High Court that only profit margin embedded in the bogus purchases are required to be taxed, it will be reasonable to restrict the addition in respect of purchases made from the four non-existent parties @ 5% higher than the GP rate disclosed by the assessee in the current year. Appeal of the Revenue is partly allowed.

Addition of Long Term Capital Gain by invoking Section 50C - addition based on value adopted for stamp duty purposes (assessee’s 1/6th share) - whether the value of said land determined by the Collector of Stamps, Raipur in pursuance of the order of Hon’ble Chhattisgarh High Court (supra) instead of the value determined by the Stamp Valuation Authority/Sub-Registrar has to be taken for working out capital gains under section 50C of the Act - HELD THAT:- Only if a capital asset being land or building or both is transferred and the consideration received or accruing as a result of such transfer is less than the value adopted or assessed or assessable by the stamp valuation authority, the deeming fiction under sub-sec. (1) of Section 50C of the Act shall be activated to substitute such adopted or assessed or assessable value as full value of consideration received or accruing as a result of such transfer in the given situation. Explanation 2 of section 50C of the Act clearly provides that the value so determined on reference to any Authority under the law has to be taken as sale value for stamp purposes.

In the case in hand, the Sub-registrar/Stamp Valuation Authority, at the time of registration of the said property, referred the stamp valuation matter to the Collector of Stamps, Raipur under section 47-A(2) of the Indian Stamp Act, 1899. The said valuation, after prolonged litigation as detailed above in para 4 of this order, attained finality at Rs.1,60,31,000/-, which was determined by the Collector of Stamps, Raipur in pursuance of the order of Hon’ble Chhattisgarh High Court.

For applicability of Explanation 2 of section 50C of the Act, there is no need to invoke section 50C(2) of the Act. The use of word ‘assessable’ in section 50C of the Act takes care of all situation where purchaser/seller and or the Sub-registrar/Stamp Valuation Authority has challenged/referred the valuation of the property for stamp purposes to the Hon’ble Court/any authority. Here, the value of said land for stamp purposes has attained finality at Rs.1,60,31,000/- instead of Rs.5,75,11,000/-. Thus, value of said property at Rs.1,60,31,000/- has to be taken for computing capital gains under section 50C of the Act.

Exemption u/s 54F allowed on deeming capital gains - impossible for the assessee to fulfil the conditions for availing the full exemption in spite of investing the entire net consideration in the eligible asset/residential house - HELD THAT:- We are of the considered view that deeming sale consideration as per the provisions of Section 50C of the Act is not applicable for exemption under section 50F of the Act. The rationale is that one cannot expect a person to perform impossible things. When the person receives a particular sum, he cannot be expected to invest any amount over and above the amount of consideration received for transfer of property.

The legal maxim "lex non cogitadimpossibilia", which means that the law cannot possibly compel a person to do something which is impossible to perform.

The Hon'ble Supreme Court in the case of Krishnasamy S. Pd v. Union of India [2006 (2) TMI 75 - SUPREME COURT] has upheld this maxim. Thus, if provisions of section 50C of the Act is applied in section 54F of the Act, then it is impossible for the assessee to fulfil the conditions for availing the full exemption in spite of investing the entire net consideration in a new residential house.

Accordingly, we hold that where the assessee claims exemption under section 54F of the Act, the net consideration when deployed in acquisition or construction of residential house, it should be eligible for exemption and the provisions of section 50C should not be imported for such computation. Value adopted for computing capital gains under section 50C of the Act can not be treated as net consideration in respect of the original asset which was transferred. We, therefore, direct the Ld. AO to allow the complete exemption u/s 54F of the Act as the cost of new asset is not less than the net consideration in respect of the original asset.

Assessee appeal allowed.

Validity of reopening of assessment as barred by limitation - scope of new regime - TOLA - time-bar / limitation by six-year period - proviso to Section 149(1)(b) and retrospective application of extended limitation - Time limit for notice u/s 149 -

HC [2024 (12) TMI 1699 - DELHI HIGH COURT] set aside the reopening notice as barred by limitation - HELD THAT:- Delay has not been satisfactorily explained by the petitioner(s).

Even otherwise, we find no good reason to interfere with the impugned order passed by the High Court. Special Leave Petition is, therefore, dismissed on the ground of delay as well as merits.

Scope of revisional powers u/s 264 - mistakes/errors were committed by the Petitioner itself in the Return of the Income - HELD THAT:- This Court has time and again held that revisional powers u/s 264 are not only wider in their scope but are also intended for preventing miscarriage of justice and providing relief to an Assessee, which it is otherwise entitled to.

This Court has also taken into consideration the decision of Goetze (India) Ltd.[2006 (3) TMI 75 - SUPREME COURT] and held that the said decision would be wholly inapplicable since the Hon’ble Supreme Court was not considering the revisional powers as conferred under the provisions of Section 264 of the IT Act, but was in the context of a deduction claimed by the Assessee by a letter, after the Return was filed, without filing of a Revised Return.

We are clearly of the view that Respondent No. 1 ought to have considered the Revision Application of the Petitioner (filed under Section 264) even though mistakes/errors were committed by the Petitioner itself in the Return of the Income. Once we are of this view, the impugned order passed under Section 264 cannot be sustained and would have to be set aside.

Reopening of assessment u/s 147 - period of limitation - scope of new regime - jurisdictional requirement was the issuance of notice under Section 148 within the period of limitation - HELD THAT:- The instant case is governed by the pre-amendment regime i.e. prior to 01.04.2021 as the notice under section 148 of the Act of 1961 was issued on 31.03.2019. Under the un-amended provisions, the jurisdictional requirement was the issuance of notice under Section 148 within the period of limitation, and not its service within such period and service, even if effected after the expiry of limitation, cannot vitiate the assumption of jurisdiction, so long as the notice stood issued within the prescribed period of limitation.

In the facts of the present case, once it is found that the notice under Section 148 was issued on 31.03.2019, i.e., within the prescribed period of limitation, it was sent to and received by the petitioner on 31.03.2019 itself. Hence, even if it is taken that service was effected thereafter cannot, by itself, render the proceedings a nullify.

A similar view has been taken in the judgment rendered in R.K. Upadhyaya v. Shanabhai P. Patel, [1987 (4) TMI 5 - SUPREME COURT] wherein it was made clear that for the purposes of Section 149 of the Act of 1961, what is material is the issuance of the notice and not its service within the period of limitation. The date of despatch of the notice is the relevant date for determining whether the notice has been validly issued. Applying the said principle to the facts of the present case, since the notice under Section 148 was issued on 31.03.2019, i.e., within the prescribed period of limitation, it cannot be said that there is inherent lack of jurisdiction. The Assessing Officer cannot be faulted merely on the ground that attachment sent therewith contained some other assessee’s notice - WP dismissed.

Certificate u/s 197 of the Income Tax Act, 1961 - respondent has required its counterpart in India to deduct tax at the rate of 15% on the payments made and credited to the petitioner - HELD THAT:- Firstly, because the competent authority has not considered the application and judgments which the petitioner had cited and has simply picked up the findings of the AO recorded in the assessment orders for AYs 2021-22 and 2022-23 and secondly, because it has placed strong reliance upon the judgment rendered by the AAR in the case of Shell India Markets Private Limited [2012 (2) TMI 98 - AUTHORITY FOR ADVANCE RULINGS] completely ignoring the fact that the same stands overruled by the Bombay High Court in the appeal filed by said assessee reported in [2024 (3) TMI 216 - BOMBAY HIGH COURT]

These two reasons are sufficient to set aside the impugned order which we hereby do. We are inclined to accept the petitioner’s alternative plea that a certificate be directed to be issued at 2% rate (equal to the equalization levy), which a levy or amount the petitioner has been paying up to 31.03.2025.

Appeal of the petitioner against the order of DRP is pending before the Tribunal and pronouncement of the order of the Tribunal may take some more time. In the meanwhile, if at the end of financial year (i.e. on 31.03.2026), the petitioner’s application for issuance of certificate under Section 197 of the Act of 1961 shall be rendered redundant. Hence, as a temporary measure, we direct the competent authority to issue a certificate under Section 197 of the Act of 1961 at 2% rate. Same shall be issued within a period of 15 days from today.

The impugned order, purportedly dated as 02.05.2025 and the certificate dated 18.06.2025 are hereby set aside The petition is accordingly partly allowed.

We hereby make it clear that our order shall apply only for the certificate to be issued pursuant to the petitioner’s application for AY 2026- 27 (i.e. FY 2025-26).

For subsequent year(s), the competent authority shall consider the application in accordance with law subject of course to the order of the Tribunal. Any of the parties aggrieved with the order of the Tribunal shall obviously be free to assail the same in accordance with law.

Revision u/s 263 - AO did not make any addition u/s 56(2)(x)(b) of the Act in the reassessment order - difference of value adopted by the Stamp Valuation Authority/Sub- Registrar and the actual purchase consideration taxable u/s 56(2)(x)(b) - Scope of Legal maxim ‘Law Prospicit Non Respicit’ presumes law to be prospective and not retrospective - safe harbour tolerance band for difference between stamp duty value and consideration (5% / 10%) and its retrospective application - deeming fiction under section 56(2)(x)(b) and valuation reference to Departmental Valuation Officer

HELD THAT:- The Stamp Duty Value of the property may not accurately reflect the market rate as even for the properties in the same locality the rates may vary due to various factors such as size, location, shape of property, nearby public amenities, distressed sale, transportation facilities. etc. etc. Earlier, sections 43CA/50C/56(2) of the Act did not provide for any safe harbour limit w.r.t difference in the Stamp Duty Value of the property and actual sale consideration, which resulted in additions in income even in case of marginal difference in the valuation. Finance Act 2018, came up with a remedial measure by providing a tolerance band of 5% in respect of the difference in Stamp Duty Value and the actual consideration which was further increased to 10% by Finance Act 2020.

Legal maxim ‘Law Prospicit Non Respicit’ presumes law to be prospective and not retrospective. However, where the legislation is enacted with a purpose of mitigating undue hardship the provision in such a case has to be given a reasonable & equitable construction and has to be considered to be retrospective in nature so as to make the provisions workable. The rule of beneficial construction should apply in such a case. The Hon’ble Supreme Court has followed the principle of reasonable construction instead of strict interpretation in the cases R.B. Jodha Mal Kuthiala [1971 (9) TMI 2 - SUPREME COURT]

The phrase "erroneous and prejudicial to the interests of revenue" has been subject to extensive judicial interpretation. In Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] the Hon’ble Supreme Court held that an order is erroneous if it involves an incorrect assumption of facts or an incorrect application of law. However, if the AO has taken a possible and legally permissible view, the order cannot be deemed erroneous simply because the Commissioner has a different opinion. This principle was further reinforced in many decisions later on.

In view of the judicial pronouncements cited supra, we are of the considered view that the Ld. AO’s decision taken with the approval of his immediate supervisory officer for not taxing the sum of Rs,.94339/- as the difference was only 5.24%, being one of the possible and legally permissible view, cannot be revisited again under section 263 of the Act because the PCIT (C) has a different opinion. We are also of the considered view that it is a case of change of opinion; hence, the section 263 of the Act cannot be invoked in the present case.

As we hold that the safe harbour rules of 10%, in view of the judicial pronouncements cited in para 7 above, are held retrospectively applicable here. Hence, the difference between Stamp Duty Valuation and actual consideration of the property being less than 10% should have been ignored by the Ld. PCIT(C) once the Ld. AO had already taken a conscience decision on the same in reassessment order. Accordingly, we quash the impugned order passed under section 263 of the Act by the Ld. PCIT(C). Decided in favour of assessee.

Regular bail - commercial quantity under the NDPS Act - release on bail in lengthy pre-trial custody - parity with co-accused - stringent bail conditions - surrender of passport as bail condition - right to legal representation and legal aid - trial court obligation to record offer of legal aid - limited observations for purpose of bail only

Regular bail - commercial quantity under the NDPS Act - release on bail in lengthy pre-trial custody - parity with co-accused - stringent bail conditions - surrender of passport as bail condition - limited observations for purpose of bail only - Grant of regular bail to the appellant despite seizure allegedly exceeding commercial quantity and setting aside the High Court order denying bail. - HELD THAT: - The Court noted that the appellant had been in custody for over four years and that an identically situated accused who travelled with the appellant on the same flight had already been granted bail by this Court. In view of the prolonged incarceration and parity with the co-accused, the Court allowed the appeal and set aside the High Court order dated 24.07.2025 refusing regular bail. Bail was granted subject to stringent terms to be fixed by the trial Court; the appellant was directed to surrender her passport and to cooperate during trial without seeking unnecessary adjournments. The Court expressly confined its observations to the limited purpose of granting bail and refrained from commenting on the merits of the case. The trial Court was directed to endeavour to conclude the trial at the earliest.

Appeal allowed; appellant released on bail on stringent terms, including surrender of passport and cooperation in trial; impugned High Court order set aside.

Right to legal representation and legal aid - trial court obligation to record offer of legal aid - procedural direction to High Courts - Obligation of trial Courts to inform accused of right to legal representation and to record the offer and response regarding legal aid before commencing witness examination. - HELD THAT: - The Court observed that the appellant had not crossexamined witnesses at the initial stage until she engaged counsel and obtained permission to reexamine. The Court held that trial Courts must inform accused persons of their right to legal representation and their entitlement to legal aid if they cannot afford counsel, and must record in their orders the offer made, the accused's response and the action taken before commencing examination of witnesses. The Court directed communication of this procedure to the Chief Justices of all High Courts so that suitable instructions may be issued to trial Courts for scrupulous implementation.

Trial Courts must inform and record offers of legal representation and legal aid before witness examination; Chief Justices of High Courts to be notified to issue necessary instructions.

Final Conclusion: The appeal was allowed and the appellant granted bail on stringent conditions (including surrender of passport and cooperation in trial), the High Court order denying bail was set aside, the Court limited its observations to the bail exercise without adjudicating merits, and issued binding procedural directions requiring trial Courts to inform and record offers of legal representation/legal aid and to communicate the procedure to High Courts for implementation.

Provisional release of seized goods - imported ‘in-shell walnuts’ from the United States of America (USA) -Discretion u/s 110A of the Customs Act - Bond versus bank guarantee as condition for provisional release - Arbitrary detention and want of tangible material - Writ jurisdiction under Article 226 - Article 14 and Article 300-A - equality and property rights - HELD THAT:- In the present case no search was conducted at the petitioner’s premises. A sweeping/general statement is foisted in the seizure order and the provisional release order, in regard to some actions taken within the jurisdiction of the DRI Delhi Zone unit on consignments of other importers of similar goods, who/which has nothing to do with the petitioner, and in no manner concerning the petitioner.

There is no material to show that, similar to what had happened in the case of other importers before the Delhi Authorities, namely that in the petitioner’s case, during any search, sales contracts or parallel invoices belonging to various importers being at all recovered from the petitioner or any other similar material was elicited. In the absence of such material, either being pointed out to the petitioner in the manner known to law or placed before us, we are unable to accept a presumptive/general action being taken against the petitioner’s goods. This more particularly when in the facts of the present case, the entire statutory procedure in respect of assessment of the Bills of Entry was undertaken, statutory declarations were made, and as far back as December 2025, the Bills of Entry were duly assessed by the Customs Officer, pursuant to which full customs duty was paid. As on date, there is no incriminating material whatsoever available, which would justify the impugned action of seizure/detention, more particularly after full payment of duty. Thus, the entire action of detention of the goods appeared to be arbitrary and without basis, which has eminently resulted into an order of provisional release, being already passed.

It would have been a completely different case, if there was substantial material to show any illegality in regard to the import in question. It is not unknown that several importers deal in similar products which may be imported from different origins. However, it cannot be a general rule that merely because some importers having alleged to have committed irregularities, every importer dealing in similar goods would be required to be painted with the same brush and their goods subjected to detention and seizure. Such approach is not only counterproductive to trade and commerce, but also adversely affects the valuable rights of Indian importers and their legitimate business interests, resulting in losses to the importers, such as the petitioner.

Therefore, any such actions of the Customs officers are required to be on the basis of tangible material and for the reasons which are legitimate and lawful. There is no rule of law that there can be any blanket imposition of coercive conditions in the absence of any tangible materials. Such actions would be in the realm of arbitrariness and an unwarranted clog on undertaking smooth business activities. In the present case, there is not an iota of any material whatsoever, so as to label the goods to be in any manner tainted as in the case before the Delhi Authorities as referred in the seizure memo which are the only reasons as set out in the seizure memo.

There is no dispute with the proposition that an alternate remedy would be available to the petitioner to assail the order of provisional release of the goods insofar as the conditions imposed by the said order. However, when the facts on record concern not only statutory rights under the Customs Act but also of constitutional rights, particularly under Article 14 read with Article 300-A of the Constitution, the Court is certainly empowered to exercise jurisdiction under Article 226.

As a result of the aforesaid discussion, the petition deserves to be disposed of in terms.

Right to cross-examination under the Customs Brokers Licensing Regulations - breach of principles of natural justice vitiating disciplinary proceedings - procedural mandatory nature of Regulation 17(4) of CBLR, 2018 - relevance of non-adherence to prescribed timelines in CBLR where natural justice is breached - HELD THAT:- After going through the impugned Order, we find that no substantial question of law arises in the present case. We say this because admittedly, as recorded in the impugned Order, despite the Respondent seeking an opportunity to cross-examine persons examined by the Revenue, in support of the grounds forming the basis of the proceeding, the aforesaid opportunity was denied. The denial was on the basis that there is no retraction filed by any of the persons whose statement were recorded under Section 108 of the Customs Act, 1962, and therefore, there is no need to cross-examine all the persons, as demanded by the Respondent.

In the facts of the present case, admittedly, the inquiry relies upon the oral evidence/statements recorded of certain persons. Admittedly also, these persons were not cross-examined by the Respondent Assessee because the right to cross-examine these persons was denied by the Inquiry Officer. We find that, in the facts of the present case, once there is a breach of Regulation 17(4), then we do not find any infirmity in the Order passed by the Tribunal in setting aside the Order of the Commissioner revoking the license of the Respondent Assessee.

No hesitation in holding that the CESTAT was fully justified in setting aside the Order of the Commissioner on the ground of non-compliance of Regulation 17(4) of the CBLR, 2018. As far as the finding given by the Tribunal on the time line is concerned, the same becomes irrelevant when one takes into account the fact that the Order of the Commissioner cannot be sustained on the ground that it is passed in violation of Regulation 17(4) and in breach of the principles of natural justice.

We, accordingly, find that the above Appeal does not give rise to any substantial question of law requiring any answer by the Court. It is accordingly dismissed.

Smuggling gold - Knowledge of owner as precondition for confiscation and penalty - Confiscation of conveyance for removal of prohibited goods u/s 115 - Penalty for abetment of smuggling u/s 117 - Effect of successful challenge to confiscation on consequent penalty - Whether the appellant had knowledge of the fact that his vehicle will used for carrying smuggled gold. - HELD THAT:-In the first instance, Customs Appeal filed by Gourav Jain has been allowed by order of date and confiscation and imposition of penalty upon Gourav Jain has been set aside. This apart, there is no evidence on record which may substantiate the case of the department that the appellant had knowledge of the fact that his car will be being used for the alleged purpose of smuggling of gold bars.

Section 115 of the Customs Act that deals with confiscation of conveyance would, therefore, not apply in the present case. In that event, penalty under section 117 of the Customs Act could not have been imposed upon the appellant.

The impugned order dated 11.10.2023 passed by the Commissioner (Appeals) in so far as it concerns the appellant is, accordingly, set aside and the appeal is allowed.

Relevancy of statements recorded before gazetted customs officers - Mandatory procedure u/s 138B for admissibility of statements recorded during inquiry - Burden of proof where goods are seized and Section 123 - Admissibility of documents produced after seizure - Liability for penalty u/s 112(b)(i) and 114AA - HELD THAT:- A bare perusal of sub-section (1) of section 138B makes it evident that the statement recorded before the concerned Officer during the course of any inquiry or proceeding shall be relevant for the purpose of proving the truth of the facts which it contains only when the person who made the statement is examined as a witness before the Court and such Court is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence, in the interests of justice, except where the person who tendered the statement is dead or cannot be found.

In view of the provisions of sub-section (2) of section 138B of the Customs Act, the provisions of sub-section (1) of the Customs Act shall apply to any proceedings under the Customs Act as they apply in relation to proceedings before a Court. What, therefore, follows is that a person who makes a statement during the course of an inquiry has to be first examined as a witness before the adjudicating authority and thereafter the adjudicating authority has to form an opinion whether having regard to the circumstances of the case the statement should be admitted in evidence, in the interests of justice. Once this determination regarding admissibility of the statement of a witness is made by the adjudicating authority, the statement will be admitted as an evidence and an opportunity of cross-examination of the witness is then required to be given to the person against whom such statement has been made. It is only when this procedure is followed that the statements of the persons making them would be of relevance for the purpose of proving the facts which they contain.

Section 123 of the Customs Act, on which reliance has been placed by the Commissioner (Appeals), provides that where any goods to which the section applies are seized under the Customs Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be in a case where such seizure is made from possession of any person be on the person from whose possession the goods were seized and if any person, other than the person from whose possession the goods were seized, claims to be the owner, also on such other person.

In Om Prakash Shah, Director of M/s. Quilon Trade Commerce Pvt. Ltd. vs. Commissioner of Customs (Preventive), Kolkata [2025 (5) TMI 1623 - CESTAT KOLKATA] the Tribunal held that as it was a case of town seizure and there was no foreign marking on the gold and the purity was less than 99.9%, the burden under section 123 of the Customs Act would not be on the appellant but on the Revenue to show that they had a reasonable belief why the gold was of foreign origin.

The Commissioner (Appeals) should have appreciated that the provisions of section 123 of the Customs Act could not have been applied in the present case considering the fact that the gold bars did not contain foreign marking and did not have the requisite purity of gold.

In this view of the matter and more particularly when the gold bars were neither seized from the possession of the appellant nor the appellant claimed to be the owner of the gold bars, penalties under section 112(b)(i) of the Customs Act or section 114AA of the Customs Act could not have imposed upon the appellant.

The impugned order dated 11.10.2023 passed by the Commissioner (Appeals) in so far as it imposes penalties upon the appellant, therefore, deserves to be set aside and is set aside. The appeal is, accordingly, allowed.

Transaction value- Section 14 valuation principles - sequential application of the Customs Valuation Rules - burden on Revenue to displace declared invoice value - market survey as basis for export valuation - confiscation for valuation dispute - redemption fine and penalty - HELD THAT:- In respect of valuation of goods as per Section 14(1) of the Customs Act, 1962, in the normal course, the value of exported goods shall be the ‘transaction value’. In case this value is not found to be correct, the procedure specified under Customs Valuation (Determination of value of Export goods, 2007) (CVR, 2007 in short) Rules, is required to be followed, sequentially.

Admittedly, there is no dispute that the goods were to be exported and the overseas importer was required to pay the amount to the appellants banker and then get hold of the documents like export invoice, Bill of lading etc to release the goods. Therefore, the goods were being cleared through proper banking channels only. In case, the transaction value is not acceptable to the Revenue, the Rule 4 to 8 of CVR, 2007 are to be applied in a sequential manner. In the present proceedings, we do not see that this method was adopted by the Revenue. There is no data brought in as evidence towards export of such goods about the same time in respect of the other exporters to the same destination country. The department has directly adopted the market survey method. Even in this survey, they have compared the value of the goods of the manufacturers whereas the appellant was buying from the traders, wherein the cost of procurement would be higher. Therefore, even this comparison is erroneous.

Further, we find that the Adjudicating Authority has gone on a different tangent altogether by partly holding that there was error in computing the value under the market survey and has re-determined the per unit value of the goods and added notional profit margin of 10%. We do not find that any provision of this kind is available in the Customs Act, 1962 or CVR, 2007.

In the course of hearing, the Learned Counsel has submitted that the goods were not released for export in February 2023 and they are still under custody of the Customs Department. Therefore, the export order got cancelled. Hence, he prays for immediate release of the goods if the Revenue’s appeals are dismissed. He further submits that these goods would not be exported.

Thus, we find that Revenue has not made out any case in support of their appeal. We do not find any reason to interfere with the considered decision arrived by the Commissioner (Appeals). Therefore, we dismiss the appeals filed by the Revenue.

Considering the request of the appellant, which we find to be reasonable since about 3 years have elapsed from the date of seizure, we direct the concerned authorities to release the goods as soon as the present order is uploaded at the official website of the Tribunal.

Acceptability of permission addressed to canalising agency as a valid license for import - high seas sale as import through a State Trading Enterprise / canalising agency - confiscation u/s 111(d) and imposition of penalty u/s 112 - remand for consideration of licence/permission conditions -HELD THAT:- The appellants in this case rely on the matter of Sunita Commercials P Ltd. & Ors vs CC Mundra [2023 (1) TMI 814 - CESTAT AHMEDABAD]. He draws attention of this court to para 5.4, which is reproduced below to indicate as to how the licenses or permission are granted whenever the item is canalized.

It finds that the decision quoted by the learned Advocate covers the matter and the permission which has been granted by addressing to MMTC for allowing the appellants to import can be taken to be the proper license. However since the permission by the Ministry of Chemicals & Fertilizers is subject to various conditions which department has not considered as far as record of this case are concerned. Therefore, for the limited purposes the matter is remanded to the adjudicating authority with expectation that the matter being of small quantity and already delayed, the same shall be decided expeditiously. Appeal allowed by way of remand.

Suit for specific performance and damages -Bar u/s 31 of the Foreign Exchange Regulation Act, 1973 - res judicata - enforceability of agreement in the context of the Income Tax Act, 1961 - limits of interlocutory determination - HELD THAT:- The additional issue framed on January 4, 2023 was taken up for consideration and decided by the impugned judgment and order. The additional issue was decided as against the appellant herein and in favour of the plaintiff.

There is some substance in the contention of the appellant before us that, the second portion of the second issue and the additional issue framed on January 4, 2023 may overlap to some extent. Therefore, the appellant may face difficulty on the issue of res judicata.

In such circumstances, it would be appropriate to clarify that, the decision rendered on the additional issue framed on January 4, 2023, by the impugned judgment and order, is limited to such issue. It is clarified that, the decision rendered on the additional issue framed on January 4, 2023 will not prejudice any of the parties, in relation to the other four issues framed on December 14, 1992. The issue of legality, validity, sufficiency, enforceability and the effect of the agreement dated January 2, 1989 is kept open to be decided at the trial without being impeded in any manner and form by the impugned judgment and order.

The High Court negatived the contention that the suit is barred by Section 31 of the Foreign Exchange Regulation Act, 1973, but confined that finding strictly to the additional issue; all original issues framed on December 14, 1992, including questions of enforceability under the Income Tax Act, 1961 and other aspects of FERA, remain open for full adjudication at trial.

Place of provision of services - import of service - taxable territory - overseas commission agent had rendered the services of promotion of sales to customers located in North America - intermediary - liability on recipient under reverse charge - whether the demand of tax on the provision made in the book of accounts on commission payable to overseas agents but not paid is correct. - HELD THAT:-Section 66B clearly provides that the taxable event i.e. the ‘service’ must happen in the ‘taxable territory’. The term ‘taxable territory’ has been defined in section 65B(52) as ‘the territory to which the provisions of this Chapter apply’. By section 64(1) Chapter V of the Finance Act, 1994 (i.e. the law governing service tax) extends to the whole of ‘India’ except the State of Jammu & Kashmir. In this context, we note that it is a settled legal position that taxable event for service tax is the provision or rendering of taxable services.

Overseas commission agent - We note that the Board's Circular F. No. B1/4/2006-TRU dated 19.4.2006 categorically clarifies that the services have to be received in India for the same to be taxable under Section 66A read with Taxation of Services Rules, 2006. In this context, we note that in Genom Biotech Pvt. Ltd. [2016 (3) TMI 139 - CESTAT MUMBAI]

In the instant case, we note that the services were clearly received in North America, and hence is not liable to service tax.

Intermediary - place of provision of services - We note that the definition of the term of ‘intermediary’ was amended w.e.f. 01.10.2014. Consequently, the service of arranging or facilitating supply of goods between two or more persons, such as a commission agent would be covered within the definition of ‘intermediary’. Consequently, the place of provision of services as per Rule 9 (c) of POPS Rules would be the location of service provider. In the instant case, it is a fact that the Commissioner Agent was abroad. Consequently, the liability of service tax would not arise.

As regards the liability on the two invoices, it has been submitted that no payment was made even though the invoices had been raised. This fact would also have to be verified. As discussed earlier, it is settled legal provision that the liability to pay service tax arises only when the service is provided. In the instant case, it has been categorically submitted that the service was not provided by the overseas Commissioner Agent. Consequently, the liability of service tax does not arise.

Thus, we are of the opinion that this matter requires to be reconsidered by the original adjudicating authority. Accordingly, we remand the matter to the original authority to hear the appellant giving them opportunity to submit all relevant documents to substantiate their contentions.

The impugned order is set aside and the appeal is allowed by way of remand.

Non-taxability of forfeited Security Deposit and Earnest Money Deposit - tender fee as consideration for service versus sale of tender documents - declared service under clause (e) of Section 66E of the Finance Act, 1994 - extended period of limitation and requirement of positive/intentional evasion -HELD THAT:- Both the demands have been confirmed invoking Section 66E(e) of Finance Act, 1994. The demand of forfeited amount (the first issue is acknowledged to have been no longer res integra) this Tribunal has time and again held that the amount of security deposits or earnest money deposits cannot be called as consideration as for an amount to qualify as consideration there has to be “quid pro quo” or “activity for such consideration”, nor even, while forfeiting such amount on account of violation of agreed terms and conditions; no activity being undertaken against the forfeited amount. Hence, the amount cannot be called as the consideration towards the activity which can be called as service defined as 65B (44) of the Act.

The circular No. 214/1/2023-ST dated 28.02.2023 has clarified that the amount collected as liquidated damages are not susceptible to tax. It reflects that the nontaxability of the forfeited EMD and SD amounts on account breach of the contract is well settled and stands accepted by the Department. The Commissioner (Appeals) is held to have committed an error while ignoring the settled position of the decided case law and department’s own circular. The demand on first issue is therefore liable to be set aside for the said reasons.

Tender fee collected from the bidders - HELD THAT:- It is apparent that since the tender is merely an invitation to the bidder, the fee collected towards providing the said tender document cannot have any element of service. In this case also, there is no ‘quid pro quo’ while receiving the said amount. The appellant is Government local authority. In view of the Department Circular No. 192/02/2016-ST dated 13.04.2016, the services provided in lieu of the being charged by the Government or local authority shall be taxable if an only the payment is made for getting a service in return.

As already observed above against receiving the tender fee no service has been rendered by the appellant except providing the tender documents to the bidders which is as good as sale of documents. Otherwise also the tender is merely an offer and not an agreement (as already observed above). Hence, it is held that the tender cost/fee is wrongly held to be an amount received towards provision of service. The order confirming the demand of service tax on this amount is therefore liable to be set aside, we draw our support from the decision of this Tribunal in the case of M/s Ajmer Vidyut Vitaran Nigam Ltd. Vs. Principal Commissioner of CGST & Central Excise, Jaipur [2024 (11) TMI 1445 - CESTAT NEW DELHI].

Invoking extended period of limitation - HELD THAT:- The Hon’ble Apex Court has time and again settled that for invoking the extended period of limitation, there should be an intent to evade duty as was held in M/s Cosmic bychemial [1994 (9) TMI 86 - SUPREME COURT]. It has also been held that extended period is applicable only when something positive other than mere in-action or failure on part of the assessee is proved. Conscious and deliberate act is necessary for invoking the extended period as was held in M/s Gopal Zarda Udyog [2005 (9) TMI 83 - SUPREME COURT]. Both these elements are absolutely absent in the present proceedings. Hence, it is held that the extended period should not have been invoked. Thus the demand for the period till March 2017 is held barred by limitation. In the absence of any mala fide suppression etc, it is held that extended period is wrongly invoked. For the normal period the demand is held to be wrongly confirmed (as discussed above).

As a result of entire discussion, the order under challenge is hereby set aside. Resultantly, the appeal is allowed.

Waiver of duty, interest and penalty - Inadvertent payment credited to third party - benefit of underlying credit -verification and adjustment of wrongly credited amount - remand for verification of non-utilisation - costs for lack of due diligence - HELD THAT:- The learned advocate is before us pleading for the party. He has sought to place reliance on various case law on the judgment of Welspun Corp Ltd Vs. C.C.E & S.T.-Rajkot [2023 (2) TMI 780 - CESTAT AHMEDABAD] whereby the DB of this Tribunal had allowed the benefit of underlying credit in the face of error in payment of service tax wherein service tax registration number of another unit was wrongly mentioned. The decision is based on various other judgments of coordinate bench of this Tribunal only.

The decision quoted by the appellant is applicable even to the facts of this case, the ratio applies since the substantive transaction is not doubted. No doubt they has been lack of diligence on the part of accountant of the appellants putting everyone concerned to inconvenience.

Considering the factum, while the appeal is being allowed by this Court and waiver of demand of duty, interest and penalty is being granted, department is directed to adjust amount wrongly paid to the credit of M/s. Sonal Engineering after verification of the certificate to allow the credit to the appellant. The interest would not be there in case no credit is deemed to be taken at that time in their account. However, for wrongful credit and lack of due diligence relating to maintains of improper Government Accounts a cost of Rs. 10,000/- as consented shall be imposed by the verifying authority i.e. AC or DE., and same shall be deposited in P M Care Relief Fund within the stipulated time as indicated by the verifying authority.

With above directions, the matter is remanded for verification of the amount paid in the credit of M/s Sonal Engineering and its non-utilisation by either party.

Works contract service - Laying of cables under or alongside roads not taxable - Commercial or industrial construction services - Applicability of Circular No.123/5/2010-TRU - Whether laying down cables by the appellant alongside the road for various telecom service providers, namely, BSNL, Vodafone, Bharti Airtel, Idea etc. would be leviable to service tax.- HELD THAT:- We find that in the Circular No.123/5/2010-TRU dated 24.05.2010 it is clarified that laying cables under or alongside roads would not fall within the scope of taxable service under Section 65 (105) of Finance Act, 1994.

We find that the services rendered by the appellants are classifiable as works contract service and they have produced sufficient evidence that the services are in the nature of composite contract which involves supply of materials and also labour, hence, squarely covered by the judgment of Hon’ble Supreme court in the case of Commissioner of Central Excise & Customs v. M/s. Larsen & Toubro Ltd. and others [2015 (8) TMI 749 - SUPREME COURT].

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

Service tax demand based on ITR/Form 26AS without independent verification - Levy of service tax on IT-enabled services / BPO services - Requirement that a show cause notice specify the precise service and basis of demand - Reliance on bank statements and contemporaneous records to determine receipt of consideration - CBIC instruction to reconcile ITR-TDS data before issuing show cause notices - Imposition of penalty u/s 78 as statutory consequence of confirmed tax liability - Imposition of penalties u/s 77 for record-keeping, furnishing information and return defaults - HELD THAT:- In the present case, show cause notice itself admits that no amount has been received by the appellant during the period of dispute on which TDS has been deducted in terms of Section 194C, 194Ia, 194Ib, 194J, 194H and as per Forms 26AS of the appellant. The amount in respect of which demand has been made is reflected towards sale of service. In the ITR no information with regards to the nature of service or even invoices etc. has been found or relied upon to ascertain whether any services were being provided by the appellant against such receipts.

It is evident that the total receipts of the appellant during the Financial Year 2016-17 as per this statement is Rs 2,27,346.51 and not Rs 69,60,560/- as declared by them in their ITR. The difference in the amounts received as per bank statement and ITR can be a matter of investigation for the income tax authorities or other concerned authorities. However the same cannot be reason for demanding service tax, in respect of services which have never been provided and no consideration has been received.

No merits in the impugned order and the same is set aside.

Appeal is allowed.

Issuance of excise duty invoice without delivery of goods - Penalty under Rule 26(2) of the Central Excise Rules, 2002 - Amount of such benefit as the outer limit of penalty - Invoice without delivery -Liability of issuer irrespective of actual availment of credit by user - Discretion to moderate quantum of penalty having regard to gravity and mitigating factors - Whether the penalties imposed are tenable in law and commensurate with the role of the appellants in the facts and circumstances of the case. - HELD THAT:- It is discernible from the impugned order that JM Trading corporation, a registered dealer, is found to have issued invoices without transportation of scrap. The Adjudicating authority has further found that they have admitted to having received 55% of Cenvat and 100% vat from their customers. The appellant has also conceded to the allegations and have requested leniency in so far as the penalty imposed is concerned.

This Tribunal is of the considered view that viewed cumulatively, from the material placed on record, the finding of the Adjudicating Authority that the appellants have committed the violations attracting the penalty under Rule 26(2) of the Cenvat Credit penalty does not warrant any interference and deserves to be upheld. That said, as regards the penalty imposed, it is the firm opinion of the Tribunal that penalty cannot be imposed across the board at a uniform percentage, without evaluating the facts and circumstances governing the transactions involving the respective appellants and such an imposition has rendered the quantum of penalties determined in the impugned order untenable.

J M Trading Corporation, Saravana Metal Corporation and SSK Iron and Steels Pvt Ltd, have submitted that they are not contesting the findings of the Ld. Adjudicating Authority, but have prayed for leniency stating that the penalties are excessive. Though fraud and justice do not go hand in hand, the test of quantity of penalty is the gravity of the violations. This Tribunal cannot lose sight of the fact that the number of instances the violation has occurred, the quantum of benefit sought to be passed on, whether the appellants are repeat violators etc are also germane to the decision on the quantum of penalty. Thus, this Tribunal is of the view that the penalties imposed on them are excessive and are not in proportion to the gravity of the violations committed by them.

While upholding the finding of the Ld. Adjudicating Authority as far as the role of the appellants in the violations attracting the penalty are concerned, this tribunal modifies the impugned order to the extent of penalties imposed on the aforesaid appellants as stated hereinafter, namely, the penalty imposed on J M Trading Corporation is reduced from Rs.3,16,000/- to Rs.1,00,000/-; the penalty imposed on Saravana Metal Corporation is reduced from Rs.1,76,000/- to Rs.55,000/-; the penalty imposed on SSK Iron and Steels is reduced from Rs.5,07,000/- to Rs.1,80,000/-; the penalty imposed on Magnum Steels is reduced from Rs.1,65,000/- to 40,000/- and the penalty imposed on Sri Ambal Steel Traders is reduced from Rs.2,95,000/- to Rs.70,000/-.

Resultantly, the appeals are partly allowed and stand disposed of in the above terms.

Definition of input service under Rule 2(l) of CENVAT Credit Rules, 2004 - place of removal and FOR destination contracts determining point of clearance - nexus or integral connection with manufacture or clearance up to place of removal - express exclusion of services used primarily for personal use or consumption of employees (post01.04.2011) - exclusion of service portion in execution of works contract and construction services (post01.04.2011) - invocation of extended period of limitation under proviso to Section 11A - interest under Rule 14 CCR / Section 11AA - penalty under Rule 15 CCR -

Entitlement to CENVAT credit of service tax paid on escort/security personnel deputed along with high-value consignments during transit to customer sites - HELD THAT:- In the present case, escort/security services are directly linked with safeguarding consignments during outward movement and may qualify as input services if the place of removal extends beyond the factory gate. However, since the relevant purchase orders, delivery terms, insurance/risk clauses and contractual documents have not been placed before us in sufficient detail, we are unable to conclusively determine admissibility. Accordingly, this issue is remanded to the adjudicating authority for the limited purpose of verifying the contractual place of removal and thereafter deciding eligibility of credit on escort/security services strictly in terms of Roofit Industries Ltd. [2015 (4) TMI 857 - SUPREME COURT], EMCO Ltd. [2015 (8) TMI 200 - SUPREME COURT] and CBIC Circular No. 1065/4/2018-CX dated 08.06.2018, after affording due opportunity to the Appellant.

Admissibility of CENVAT credit on “transport coordination services” - HELD THAT:- The Hon’ble Supreme Court in Solar Industries India Ltd. [2022 (9) TMI 1155 - SC ORDER] has categorically held that transportation of employees through rent-a-cab/employee transport services has no nexus with manufacture and is barred by the exclusion clause post-amendment. The Chennai Bench in Verizon Data Services India Pvt. Ltd. [2022 (8) TMI 1105 - CESTAT CHENNAI] has also reiterated that employee welfare services such as rent-a-cab and similar benefits are not eligible for credit after 01.04.2011. Therefore, credit on transport coordination services relating to employee movement is inadmissible for the period from 01.04.2011 onwards, and the disallowance is upheld for the post-amendment period.

Admissibility of CENVAT credit on service tax paid to agencies engaged for collection of C-Forms and follow-up for realization of payments from customers - HELD THAT:-We find that such services are clearly post-sale and post-removal commercial activities undertaken after clearance of the goods. Collection of statutory declaration forms under the CST regime and recovery of sale proceeds arise only after the transaction of sale is completed and do not contribute either directly or indirectly to the process of manufacture, nor do they fall within the scope of “clearance of final products up to the place of removal” under Rule 2(l) of the CENVAT Credit Rules, 2004.

Even though the definition of “input service” prior to 01.04.2011 included the expression “activities relating to business”, it is well settled by the Hon’ble Supreme Court in Maruti Suzuki Ltd. [2009 (8) TMI 14 - SUPREME COURT] and by the Bombay High Court in Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] that the inclusive portion cannot enlarge the scope to cover remote post-clearance financial or documentation activities having no integral nexus with manufacture. Therefore, credit on services relating to collection of C-Forms/payments is inadmissible even for the pre-01.04.2011 period, and the position is even more explicit against the Appellant after 01.04.2011 when the definition was further narrowed. Accordingly, the disallowance is upheld for the entire period and is answered against the Appellant.

Admissibility of CENVAT credit on civil/works contract related services such as earth pits, manholes, sewage treatment plant works, renovation of canteen facilities, gas bunk renovation and other allied civil activities undertaken in the factory premises - HELD THAT:- In the present case, the disputed services pertain to civil activities such as earth pits, manhole chambers, STP works and renovation of canteen/gas bunk facilities.

Accordingly, this issue is remanded to the adjudicating authority for the limited purpose of verifying whether the impugned activities constitute admissible repairs/renovation/ modernisation or inadmissible construction/works contract services hit by the exclusion clause post-01.04.2011, and thereafter to decide admissibility strictly in accordance with Rule 2(l).

Interest, Penalty and Invocation of Extended Period - HELD THAT:- In the present case, we find that despite the statute being clear, the Appellant continued to avail CENVAT credit even after 01.04.2011 on services which were plainly hit by the exclusion clause, such as Sodexo meal passes, medical services, canteen/outdoor catering and employee transport coordination services. These services are neither directly nor indirectly connected with manufacture or clearance of final products, and are expressly excluded by law. The continued availment of credit on such services, notwithstanding the clear statutory prohibition, cannot be treated as a mere interpretational dispute, but constitutes availment in contravention of the CCR provisions.

The availment of credit on services which are expressly barred indicates suppression of material facts and contravention with intent to avail inadmissible benefit. Therefore, the extended period of limitation is clearly invokable in the facts and circumstances of the case.

Accordingly, we uphold the invocation of the extended period for recovery of inadmissible credit on those services which are conclusively held to be excluded and ineligible. The adjudicating authority, while re-computing the demand upon remand, shall apply the extended period wherever the credit pertains to services clearly hit by the exclusion clause and not forming part of the remanded issues.

As regards interest, it is settled that interest under Rule 14 is attracted when credit is wrongly taken and utilized. The adjudicating authority shall verify the extent of utilization of inadmissible credit and thereafter determine interest liability accordingly.

Insofar as the remaining services are concerned, we uphold the disallowance of credit on collection of C Forms/payments services as being post-removal commercial activities not covered under Rule 2(l).

The appeal is thus partly allowed by way of limited remand only on escort/security services, gardening services, and works contract/civil services, while the remaining disallowances are sustained in the above terms.

The invocation of the extended period is upheld, as the Appellant continued to avail CENVAT credit on services clearly excluded under Rule 2(l) post-01.04.2011 in contravention of the statutory provisions. Interest and penalty, if any, shall be consequential and shall be redetermined after fresh adjudication.

Effect of sanction of scheme of demerger on asset vesting - attachment of property for tax liability of the demerged company - independent tax liability of resulting companies after demerger - competence to attach assets vested by a court-sanctioned scheme for the assessees' own tax liability - protection of assessee when appellate proceedings remain pending - Wealth Tax liability for Assessment Years 2011-12 to 2015-16 - HELD THAT:- A reading of the scheme of amalgamation makes it clear that two resulting companies, namely the petitioner (Resulting Company No.I) and M/s.Binny Mills Limited (Resulting Company No.II) have been vested with certain assets. Therefore, the assets vested with the resulting companies cannot be attached for the tax liability of the demerged company, namely M/s. Binny Limited.

Therefore, the impugned attachment of the property which stood vested with the petitioner cannot be countenanced for the tax liability of M/s.Binny Limited (demerged). The impugned attachment order therefore is not sustainable. However, it is always open for the Income Tax Department to attach the property vested with the petitioner pursuant to the scheme of demerger sanctioned on 22.04.2010 independently for the tax liability of the petitioner for the said tax period under the Wealth Tax Act 1957 in accordance with law.

Having concluded as above it is imperative that the petitioner cannot be penalized in case the statutory appeal filed under the Wealth Tax Act, 1957, has not been disposed by the Appellate Authority as they are not under the control of the petitioner.

Accordingly, this Writ petition is partly allowed with the above liberty.