TaxTMI Updates e-Newsletter
Feb 11,2026

Power to summon u/s 70 - summons for inquiry does not amount to arrest or detention - no requirement of seven day's notice for summons u/s 70 - illegal detention and claim for compensation -fraudulent utilization of Input Tax Credit -limited judicial review of arrests under special statutes - Whether the petitioner was under illegal detention for the aforesaid period when he was summoned for recording statement under Section 70 of the CGST Act - HELD THAT:- Admittedly, from the record it is disclosed that when Anti-evasion Wing of CGST, Aurangabad generated a system generated intelligence indicating fraudulent utilization of ITC (Input Tax Credit) by Kabsan and passing on of GST without any supply of goods or services or both, an inquiry was commenced.

On going through the copies of the summonses, it is clearly evident that they are received by the petitioner as well as these two persons without raising any objection by acknowledging them under their respective signatures. Further, after attending GST Bhavan at Aurangabad, the petitioner and Bhavik Mehta were again issued with similar summonses for attending GST Bhavan on 19.06.2025 for further inquiry. Thereafter on 19.06.2025 also the petitioner was called for inquiry on 20.06.2025. It is to be noted that the petitioner did not raise any objection for such attendance during period from 17.06.2025 to 20.06.2025. Thereafter on ascertaining the involvement of the petitioner he was arrested on 21.06.2025 and without any delay, produced concerned Magistrate, who granted him custody.

Admittedly, on going through Section 70, it has been provided that the summons must be issued as provided in the case of Civil Court under the provisions of the Code of Civil Procedure, 1908 (5 of 1908). However, nowhere in this Section there is reference of 7 days prior notice. Learned counsel for the petitioner, for that purpose, relied on Order XVI of the C.P.C. which relates to summoning and attendance of witnesses.

Though in the case of FSM Education Pvt. Ltd vs Union of India [2022 (1) TMI 551 - BOMBAY HIGH COURT] this Court had held that if any summons is required to be issued by the respondent, then it shall indicate the purpose of issuance of summoned with clear 7 days notice, however, this observation had come in the peculiar circumstances of that case only and this cannot be made directly applicable in the instant matter, considering the mandate of Section 70 of CGST Act.

In the instant case, it appears that the petitioner had readily accepted the summons issued to him from 17.06.2025 to 19.06.2025. He readily acknowledged the summons by putting his signatures thereon and also attending on the dates. Further, during that period he did not make any complaint about his alleged illegal detention. Further, the record shows that he was kept in GST Bhavan at Aurangabad as per his own wish and he was also allowed to use his four mobile handsets from which he could have easily made contact with his family members. Under such circumstances, by no stretch of imagination, it can be held that the petitioner was under illegal detention at the hands of respondent Nos. 1 to 4 during the said period. Therefore, no question arises of awarding compensation to the petitioner, as claimed by him. With these observation, we find no substance in the present petition and accordingly it stands dismissed.

Admissibility of complaint averments by complainant as witness - Investigation officer testifying and access to investigation papers - Private complaint treated as FIR u/s 154 CrPC - Reference to documents supplied to the accused during evidence - Inherent jurisdiction under Bharatiya Nagarik Suraksha Sanhita, 2023 - HELD THAT:- The complainant, being the Investigation Officer, is not entitled to look into the investigation papers and should depose based on the investigation that he has been conducted.

However, the documents that have been placed on record being supplied to the accused can be accessed by him. Likewise, the private complaint, once it takes cognizance, partakes the nature of a FIR under Section 154 of Code of Criminal Procedure and therefore, the contents of the complaint can also be looked into by the complainant, who is examined as PW-1.

No witness is expected to memorize the TIN number etc., and for that limited purpose, he is allowed to refer to the papers which have been furnished to the accused.

Therefore, the overruling of the objection by the learned trial magistrate is just and proper in the attendant facts and circumstances of the case and requires no interference by this Court in exercise of its inherent powers under Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023.

The petition stands dismissed.

Condonation of delay - service by uploading on GST portal - limitation does not commence where order not properly served - application for condonation to be considered in light of precedent - remand for reconsideration by Appellate Authority - HELD THAT:- It is noticed that none of these grounds which have been canvassed before this Court were presented before the Appellate Authority in the application for condonation of delay that was filed before the Appellate Authority.

However, since it has been submitted on behalf of the petitioner that the petitioner has reasonable explanations to offer wherefrom it will appear that limitation for the purpose filing appeal might not have crippled the petitioner’s appeal, keeping in view the date when the petitioner first had notice of the adjudication order impugned before the Appellate Authority by reason of the same not having been properly served upon him as alleged, this court of view that the petitioner should be afforded one more opportunity to approach the Appellate Authority with all the relevant explanations and documents in support of his contention that the order was not served upon the petitioner by any other mode excepting uploading thereof on the “additional notices and orders” tab.

If such application is made, within three weeks from date, the Appellate Authority shall consider the same in the light of the judgment of the Hon’ble Division Bench of this court in the case of M/s Ram Kumar Sinhal [2025 (7) TMI 1866 - CALCUTTA HIGH COURT] and the various other judgments following the said judgement and if the Appellate Authority is satisfied that the petitioner has given cogent reasons to condone the delay or that the petitioner did not have knowledge of the order impugned in terms of the ratio laid down by the Hon’ble Division Bench in the case of M/s Ram Kumar Sinhal (supra) and the various other judgments of this court following the ratio laid down therein, the Appellate Authority shall proceed to hear the petitioners appeal on merits. In such situation, the appellate order impugned dated February 20, 2025 shall be of no effect and shall be deemed to have been set aside.

It is clarified that this court had not gone into the merits of the petitioners’ case in this writ petition and all points are left open to be urged by the petitioner before the Appellate Authority and to be decided by the Appellate Authority in accordance with law.

WPA stand disposed of.

Condonation of delay in filing statutory appeals - limitation under the CGST appellate regime and its condonable period - justice-oriented approach to condonation of delay - bona fide belief arising from supplier non-uploading and ITC mismatch - application of GST Council Circulars for consideration of appeals on merits - HELD THAT:- The petitioner had acted under bona fide believe that the mismatch in the Input Tax Credit would be rectified by the supplier, that a legal notice was issued to the supplier, and that the delay was occasioned due to lack of professional assistance and limited awareness of procedural requirements. The explanation, in the present facts, cannot be said to be lacking bona fides.

No doubt Section 107(1) of the CGST Act, 2017 prescribes the period within an appeal to be filed. However, adopting a justice oriented approach, particularly when the justification offered is reasonable and when the matter deserves consideration on merits, in the peculiar facts and circumstance of this case the delay in preferring the appeal deserves to be condoned and the matter requires consideration on merits by the appellate authority having regard to the circler issued by the GST council, namely No. 183/15/2022-GST dated 27.12.2022 and Circular bearing No. No. 193/05/2023-GST dated 17.07.2023.

Writ petition is allowed.

Composite supply - principal supply - mixed supply - natural bundling - Section 2(30) composite supply - Classification of Masala Paan for GST tariff purposes -rules of interpretation of the First Schedule to the Customs Tariff Act - Whether Supply of ‘Masala Pan’ is a Composite Supply with Principal Supply as Betel Leaf and other components as ancillary supply? -HELD THAT:- In the present case, all the ingredients are equally necessary and it is not that particular one of them is a Principal supply. Therefore, we cannot say that this is a composite supply where the supply of betel leaf is a principal supply. Each of these items can be supplied separately and is not dependent on any other item. Hence Masala paan is not a naturally bundled product. Also, as mentioned by the proponent, he wishes to supply the Masala Paan to various states of India & even outside India. Considering the perishable nature of the product (best before 24 hours) the proponent may have to supply each item separately and not in a bundled form. Which further confirms that masala paan is a mixed supply where no supply is principal supply.

It can be seen that the Masala paan is mixture of about 9 ingredients which are essential ingredients of the final produce i.e. masala Paan. All the ingredients have specific importance for the specific taste of Masala paan. Hence masala paan is a mixed supply and not a composite supply. As seen from above table, 8 out of 9 ingredients have GST tax rates of 5%, 12% and 18%. Also, the customer pays more price for Masala paan than betel leaf or sadha paan. The additional cost is for the additional ingredients added to betel leaf. Thus, it has an impact on the final price of Masala paan. Thus, Considering the proportion of taxable items in the final product, the Masala paan should be taxed as per the definition of the Mixed Supply.

On careful examination of different entries under Chapter 21, a quest for appropriate classification rests finally at 2106 9099, the residual entry, as the product itself does not find specific place anywhere else in the Chapter 21. We thus conclude that the impugned product viz, ‘Masala Pan’ or ‘Meetha Pan’ would merit classification as ‘Miscellaneous Edible Preparation’ under Chapter Heading 2106 9099.

Thus, we hold that the product ‘Masala Paan’ is a classifiable under HSN 2106 9099 and chargeable to tax at the rate of 18% under entry No. 23 of schedule III of Notification 1/2017-CT(R).

Whether Supply of ‘Masala Pan’ is a Composite Supply with Principal Supply as Betel Leaf and other components as ancillary supply. - Answered in the Negative.

Composite supply - principal supply - hospital categorized as “in-patients” and “out-patients” -health care services - clinical establishment - eligibility for exemption under entry 74 of notification 12/2017-CT (Rate) - proviso concerning room charges exceeding Rs. 5000 per day - Whether charges recovered towards pathological test, radiological test and other medical test, bed charges and charges for medicines & other consumables during course rendering medical treatment to in-patients is single supply of healthcare service? -HELD THAT:- The applicant provides health care services with the help of professional doctors 0 and is equipped to treat the patients admitted to the hospital. Also, the hospital has its in-house pharmacy/ chemist operating under trade name “LAXMI CHEMIST” for supply of medicines and allied items. For the purpose of administration and identification, the patients visiting the hospital are categorized as “in-patients” and “out-patients”.

The “out-patients” or commonly referred as walk-in customers and are those who visit the hospital for consultation, diagnosis and check-up from the professional doctors. The doctors based on their diagnosis prescribe medicines to such patients. Thereafter, it is the choice of the patient whether to follow the medical advice given by the doctor or not. These patients are not admitted to hospital for treatment. These patients at their choice may purchase the medicines prescribed from the pharmacy shop run by the hospital on making payment of charges.

The inpatient services means services provided by hospitals to inpatients under the direction of medical doctors aimed at curing, restoring and/ or maintaining the health of a patient and the service comprises of medical, pharmaceutical and paramedical services, rehabilitation services, nursing services and laboratory and technical services till the patient gets discharged. A complete gamut of activities required for well-being of a patient from admission till discharge, provided by a hospital under the direction of medical doctors is a composite supply of service and is covered under ‘Inpatient services’ classifiable under SAC 999311.

Section 2(30) of CGST Act 2017, defines “Composite Supply” as supply consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.

In the instant case, taxable supplies such as medicines and consumables, room or bed charges, food charges provided to in-patients are naturally bundled and supplied in conjunction with ‘health care services’ which is the principal supply. Therefore, these supplies to in-patients in the course of the treatment till the patient is discharged is a composite supply of goods and services.

The applicant provides ‘health care services’ as defined in para 2(zg) of the Notification No. 12/2017-CT(R) dated 28.06.2017. Alongwith ‘health care services’, the applicant also provides incidental services of room for inpatients on rent and medical supplies from its chemist shop to the in-patients which are admitted to the hospital. The invoice presented to the in-patient shows bifurcation of total bill among various heads as mentioned above.

Here, ‘healthcare service’ is the principal supply and other supplies of services and goods are ancillary or incidental to the principal supply. Hence, it can be said that the all the services provided to ‘in-patient’ are naturally bundled and supplied in conjunction with each other.

Thus, these supplies of services & goods which are offered to the inpatients in a hospital are naturally bundled supplies and liable to be taxed at the rate of provided for ‘health care services’ as it is the principal supply.

We find that the exemption under S.No.74 of Notification No. 12/2017-CT (R) is not a blanket exemption. It is qualified by a proviso which says that the benefit of the said notification would not be applicable to the services provided by a clinical establishment by way of room (excluding ICCU/CCU etc) having room charges exceeding Rs. 5000/- per day to a person receiving healthcare services. Therefore, even though the services provided by the applicant is a composite service of healthcare, food, room charges, medicines etc., and the principle supply in such cases is the healthcare service which is exempt, they will still have to pay the tax on the room rent charges (other than ICU/CCCU etc as mentioned in the notification), if the same is more than Rs. 5000/ -.

The Advance Ruling Authority of Kerala in M/s. Kinder Womens Hospital and Fertility Centre private Limited [2019 (5) TMI 905 - AUTHORITY FOR ADVANCE RULINGS, KERALA], answered as, “The supply of medicines, consumables, surgical items, items such as needles, reagents etc used in laboratory, room ten used in the course of providing health care services to in-patients for diagnosis or treatments which are naturally bundled and are provided in conjunction with each other, would be considered as “Composite Supply”. The in-patient is under continuous monitoring of the doctors and nursing staff and administration and dosage of medication is all under the control of the doctor and the nursing staff. The entire treatment protocol is documented and recorded. Thus, it is clear that in case of an inpatient, the hospital provides a bundle of supplies which is classifiable under health care services eligible for exemption under SI. No. 74 of Notification No. 12/2017-CT(R) dated 28th June, 2017.

Whether charges recovered towards pathological test, radiological test and other medical test, bed charges and charges for medicines & other consumables during course rendering medical treatment to in-patients is single supply of healthcare service? - HELD THAT:- This supply is a composite supply of goods and services with ‘healthcare services’ as the principal supply and the rate provided for ‘health care services’ as per SI. No.74 of Notification no. 12/2017-CT(R) read with section 8(a) of CGST Act would be applicable.

Whether applicant is eligible for exemption under SI. No. 74 of notification 12/2017-CT (Rate) dated 28th June 2017 for above charges recovered from in patients under 1 common contract/invoice? - HELD THAT:- The services provided by the applicant is a composite service of healthcare, food, room, charges, medicines etc., and the principle supply in such cases is the healthcare services which is exempt, they will still have to pay the tax on the room rent charges (other than ICU/CCU etc. as mentioned in the notification), if the same is more than Rs. 5000/ -. This is as per Sl. No. 74 of Notification No. 12/2017-CT (Rate) dated 28.6.2017.

Supply of services -expression ‘in the course or furtherance of business’ - business (inclusive definition - incidental or ancillary) - Scope ofterm ‘perquisite’ (as corollary to Schedule III) - consideration - related persons - supply without consideration (Schedule I) - value of taxable supply - recoveries from employees - Applicant contended that providing canteen facility to its employees is not in the course or furtherance of business. Providing canteen facility to its employees does not amount to supply of services as per the applicable provisions of Central Goods and Services Tax Act, 2017 (CGST Act’) and Maharashtra Goods and Services Act, 2017 (‘MGST Act’). According to him, the canteen services to employees do not fall under ‘supply’ as per section 7 of CGST Act, as supply of these services are not in the course or furtherance of business.

HELD THAT:- The expression ‘in the course or furtherance of business’ has not been defined in the GST law. However, in the common parlance, “in the course of business” would mean “while conducting the business or the business activity”.

The terms incidental or ancillary have not been defined in the CGST Act. In the absence of a definition, recourse may be taken to general understanding of the terms. Incidental and ancillary refers to something that is connected to the main but is little lesser in importance but none the less is an important part that cannon be severed from the main part.

Taxation of canteen services provided to employees - HELD THAT:- It is seen from the copy of invoice submitted, the applicant has engaged third party service provider M/s. FF Services Private Limited, who are providing the said canteen facilities to the Applicant. Since, the said service is provided by the third-party service provider to the Applicant, the service provider is raising their invoices with applicable GST to the Applicant. The Applicant pays the consideration to the third-party service providers for the said canteen facilities.

In terms of Section 2(17) (c), the volume of transaction is immaterial for the purpose of coverage under ‘business’, therefore, even if supply of food is quite insignificant activity in terms of volume of transaction, still in terms of clause (c) of the aforesaid section, the activity of supply of canteen services, falls within the definition of ‘business’.

As per Income Tax Act, 1961, perquisite is defined to be the value of free benefit or facility given by the employer to his employees. The collection from the employees of whatever value, is not covered under ‘perquisite’. It could be inferred from the above, that any service rendered free of charge, or any service rendered on a concessional basis shall qualify as a perquisite. But it is to be noted that only the value/ portion to the extent of concession offered by the employer is to be treated as a perquisite and not the remaining portion/value that has been charged by the employer. Applying the said analogy to the instant case, in respect of the canteen services provided by the applicant to its employees, it becomes clear that the exemption provided in Entry 1 of Schedule III to the CGST Act, 2017 applies only to the concession part extended to the employees and not on the value charged to the employees.

If incidental or ancillary supply of goods or services such as canteen services by the employer to employee were to not fall under ‘business’, it would not be necessary to provide respite to ‘supplies by employer to employees given as perquisite’ from falling under ‘supply’ by taking recourse to schedule III. That is, if a transaction or activity is not a supply u/s 7(1) of CGST Act, then there would not be necessity to place such a transaction u/s 7(2)(a) for deeming it to be neither supply of goods nor supply of services. Hence, as discussed, Applicant’s activity of supply of canteen services falls u/s 7(1) of CGST Act, 2017.

As discussed, only the perquisites i.e., free supplies, in terms of a contractual agreement between the employer and employee are not to be subjected to GST as these are in lieu of the services provided by employee to the employer in relation to his employment. Hence, the recoveries made from the employees are liable to levy of tax as it is consideration against canteen services provided by the Applicant to the employees.

Value in respect of which canteen services are taxable. - The activity of provision of canteen services to the employees are in the course of business. Consideration is absent or nominal. As per Section 7(1)(c), ‘the activities specified in Schedule I, made or agreed to be made without consideration’ have been defined to be included in ‘Supply’.

As the supply of perquisite by the employer to the employee would not have respite from above two aspects mentioned at Sr. No. 1 and 2 above as the said supply is neither exempted nor a Non-GST supply, it would be appropriate to interpret that the perquisite given to the employees in view of the contractual agreement are in lieu of services given by the employee to the employer and would not be subjected to GST by deeming it to be part of Schedule III as a corollary to entry at Sr. No. 1 of Schedule III for cohesive interpretation.

If the applicant does not recover any amount from the employees, then, the entire value of the services for which no amount is charged is the perquisite provided by the employer to the employees. As this perquisite is in lieu of services of the employees to the employer which fall under schedule 3, the perquisite part is not taxable, as a corollary, deeming it to be falling in the said entry of schedule 3. As the entire value is the perquisite provided by the employer, it is not liable to tax as discussed above.

If the applicant recovers any amount from the employees, then the perquisite in this case is only to the extent of concession given to the employees and any amount recovered would be liable for GST.

Conclusion -

Whether GST would be applicable on canteen facility provided by M/s. KSB Limited to its employees using a third-party canteen services provider?

Answer:- The supply of canteen services by the applicant to its employees amount to supply of services under the MGST Act, 2017. GST would be payable on the said services.

In case GST is applicable on Canteen services provided by KSB to its employees, whether GST would be applicable if KSB Limited does not recover any amount from employee for providing canteen facility?

Answer:- GST is not applicable, if no amount is recovered from the employees for the canteen services as the cost of said service would be considered as a perquisite.

In case GST is applicable on Canteen services provided by KSB to its employees, whether GST would be applicable if KSB Limited recovers from employee’s part or whole of the cost charged by the canteen service provider to KSB?

Answer:- Yes, GST would be applicable on the amount recovered from the employees for the canteen services. The portion of the cost, not recovered, would be considered as a perquisite.

Revision u/s 263 - validity of assessment order u/s 143(3) - deduction of amount in assessment order u/s 143(3) which was claimed by the assessee-company on account of foreign exchange fluctuation loss on O/S ECB loan in the computation of income made as per provision of Income Tax Act - HC [2022 (7) TMI 1463 - CALCUTTA HIGH COURT] allowed the assessee’s claim of foreign exchange fluctuation loss on mark to market basis - delay of 1157 days in fling the special leave petition

HELD THAT:- We are not inclined to interfere in the matter in view of an inordinate delay of 1157 days in fling the special leave petition(s). The special leave petition(s) is dismissed on the ground of delay.

TDS u/s 195 - service charges paid to Solvay Singapore are in the nature of “fees for technical services” as per Article 12(4) of the India–Singapore DTAA - powers of the AO u/s 142 and 143 of the Act and those of the AO (TDS) under Section 201

Whether the AO(TDS) can exercise his jurisdiction u/s 201 of the Act of holding the petitioner to be an “assessee in default” after the assessment order passed u/s 143(3) of the Act ?

HELD THAT:- For attracting the provision of Section 201 of the Act, the assessee must be a person who has failed to deduct or pay TDS and is, therefore, deemed to be an “assessee in default”. The consequences of such failure include mandatory interest under Section 201(1A) of the Act and penalty u/s 221 of the Act. The limitation prescribed for these proceedings also differs. Thus, while a scrutiny assessment may trigger action u/s 201, it is not essential that merely because the AO failed to notice any incongruity relating to TDS, the TDS Officer would be precluded from invoking proceedings u/s 201 of the Act. Both proceedings are independent in nature.

AO (TDS) can always exercise his jurisdiction relating to tax deducted at source and arrive at his own conclusion, independent of the view taken by the Assessing Officer who has passed the scrutiny assessment order under Section 143(3) of the Act. We, therefore, do not find substance in the argument advanced by the learned counsel for the petitioner that the Assessing Officer (TDS) cannot take a view different from that of the Assessing Officer who passed the order u/s 143(3) of the Act while exercising powers under Section 201 of the Act. Decided in favour of revenue.

Effect of order passed by DRP u/s 144C on the order passed u/s 201 - AO(TDS) has precisely exercised his jurisdiction and powers for scrutinizing the aspect of compliance with the provisions of Section 40(a)(i) read with Section 195 and the subsequent order passed by the DRP will have no bearing on the order of the Assessing Officer (TDS).

In the present case, it appears that there was a lack of coordination between the AO who conducted the scrutiny assessment and the AO (TDS), and both proceedings were conducted simultaneously. On an overall appreciation of the statutory scheme u/s 143(3), 195, and 201 of the Act, we are of the opinion that the Ao operated in different spheres of their respective jurisdictions.

Merely because the assessment order passed by the Assessing Officer under Section 143(3) of the Act travelled to the DRP and culminated in an order, the same cannot, in any manner, impact the exclusive jurisdiction of the Assessing Officer (TDS) under Section 201 of the Act, unless the issue of TDS was assertively dealt and answered by DRP.

Validity of order passed u/s 201 - impugned order by declaring the petitioner as an assessee in default, relies primarily on the alleged inadequacy of the invoice descriptions - Section 90(2) of the Income Tax Act mandates that DTAA provisions prevail if they are more beneficial to the assessee. The Supreme Court in the case of Union of India vs. Azadi Bachao Andolan [2003 (10) TMI 5 - SUPREME COURT] has confirmed that DTAA provisions take precedence over the Income Tax Act. Accordingly, the Assessing Officer (TDS) erred in holding the petitioner as an assessee in default.

The respondents have also questioned the maintainability of the instant writ petition, on the ground of alternative remedy of appeal. We are not inclined to reject the writ petition, and relegate the writ petitioner to avail the remedy of appeal, since the petitioner has raised legal issues relating to interpretation of the statutory provisions governing the jurisdiction and powers of Assessing Officers under different Chapters. Moreover, we have also held that the impugned order dated 31.03.2024 also suffers from non-application of mind to vital aspects raised by the writ petitioner.

The impugned order issued by the AO(TDS) u/s 201 and 201(1A) of the Income Tax Act is hereby quashed and set aside. Decided in favour of assessee.

Exemption u/s 11 - Simply because the assessee had disclosed the income arising from the trust property under the head ‘income from other sources’, can the exemption be denied? - appellant is a trust registered as a Non-Governmental Organisation (NGO) with the Ministry of Culture, Government of India and also registered under the provisions of Section 12A and Section 80G

HELD THAT:- Case in hands is a classic example of callousness. AO while making the scrutiny assessment has taken advantage of the assessee’s fault.

According to us, while passing an order u/s 143(3) the AO is required to apply a judicious approach and confer due benefits, including exemption or deduction, for which the assessee is otherwise entitled to.

In the instant case, rather a strange situation has come to fore – while processing the appellant’s return of income, it has been assessed in accordance with law with a justice-oriented approach whereas during scrutiny assessment the AO has proceeded akin to a machine which does not have the ability to think for itself. The machine has processed the return as if it has a pulsating heart and a human mind with the ability to analyse, while the man (the Assessing Officer) has proceeded as a machine. Such approach mocks at the adjudicatory mechanism.

We are surprised to see that both the appellate authorities too have applied a telescopic view of the matter and have rejected the appellant's appeal by simply observing that the said amount had not been added by the AO Even if that was so, at least they were expected to consider the material & petitioner’s contentions.

Appellate proceedings are a continuation of regular proceedings and if any error has been committed by the AO, it is the duty of the appellate authority to correct such error.

AO might have been swayed by the revenue considerations, (ideally, which he should not) but at least the CIT(A) ought to have taken into account, the correct factual and legal position instead of non-suiting the appellant on technical count. Similar has been the approach of the learned Tribunal, which should have been avoided. It is because of such approach that the appellant has to come to this Court. A lis, which could have been given a quietus, has to be brought to this Court.

It is the duty of the appellate authorities to assist taxpayers in securing legitimate reliefs and not be fettered by mere technicalities.

This view stands affirmed in the judgment rendered by this Court in CIT v. Jai Parabolic Springs Ltd. [2008 (4) TMI 3 - DELHI HIGH COURT] wherein it was held that there is no bar on the appellate authorities to entertain a claim for deduction not made in the return. A reference was also made to the judgment of National Thermal Power Co. Ltd. [1996 (12) TMI 7 - SUPREME COURT (LB)] wherein it was held that appellate authorities including the Tribunal remain fully empowered to grant relief or allow claims to which the assessee is entitled, even if unclaimed in the return.

The view is further reinforced vide the CBDT Circular No. 14-XL (35) dated 11.04.1955 which enjoins a duty upon the officers of the department to aid taxpayers in every reasonable way to correctly determine their tax liability, particularly when some refund or relief is due to them and to refrain from taking advantage of an assessee’s ignorance of his rights.

We allow the appeal and impose a cost of Rs. 25,000/- upon the Income Tax Department.

Refund Claim along with applicable statutory interest - petitioner mentioned application to contend the AO has passed an order u/s 154 r/w Section 143(1) thereby directing the refund and though the credit of TDS has been granted still the amount directed to be refunded - On the last date of hearing, Respondents had sought time to take instructions. He states that despite his best efforts, the instructions are not forthcoming.

HELD THAT:- We accordingly dispose of the application directing the refund of the undisputed amount to the petitioner within a period of two weeks from today. If the amount is not refunded within two weeks, we grant liberty to the petitioner/applicant to revive the present application and we shall be constrained to call the presence of the Assessing Officer in the court.

Rectification of mistake in Tribunal order - dismissing the petitioner's cross-objection as delayed - Misc. Application to restore the cross-objection for consideration of the correct fact as the Tribunal has incorrectly observed that cross-objection was out of time by 8 to 9 months and since the delay was considerable and no valid reasons were given by the petitioner, the cross-objections were dismissed.

HELD THAT:- It is painful to record that the Tribunal instead of considering the facts and appreciating the submissions made by the learned advocate for the petitioner, has gone tangent by referring to the provision of Section 255(5) of the Act ignoring the provision of Section 253(5).

Such a approach of the Tribunal is highly deprecated as the Tribunal did not bother to apply the mind when there is sufficient cause explained by the petitioner by filing an affidavit in support of the cross-objections, the Tribunal had an audacity to mention without any basis that “Petitioner has stated a cooked story for condonation of delay, which is not supported by any evidence. Hence, even delay of 31 days cannot be condoned.”

Such observations made by the Tribunal are not emanating from the Misc. Application for rectification filed by the petitioner, but the same are made out of context as on the date of passing of the order dated 16.10.2024, there was mention of delay of 8 to 9 months in the order dated 23.1.2009, which was not corrected by issuing corrigendum by the Tribunal, till 18.12.2024.

The impugned order passed by the Tribunal in Misc Application is hereby quashed and set-aside and the order dated 23.1.2009 passed by the Tribunal is ordered to be recalled. The delay in filing the cross-objections by the petitioner is ordered to be condoned considering the averments made in the affidavit filed by the petitioner and the Tribunal is directed to hear the cross-objection along with the pending Appeal filed by the respondent-revenue.

As the Appeal and the cross-objections are pending since 2003-2004, the Tribunal is directed to hear the same and dispose of within a period of 12 weeks from the date of receipt of copy of this Order. Rule is made absolute to the aforesaid extent.

Refund claim along with up-to-date statutory interest u/s 244A - Revenue fairly states that there is no impediment in processing the petitioner’s claim for refund in accordance with law.

HELD THAT:- The concerned authorities are directed to process the petitioner’s claim for refund along with the interest in accordance with law as expeditiously as possible and preferably within a period of eight weeks from today.

Taxability of business profits of the Netherlands resident - DRP held Appellant constitutes a PE - "business connection" in India or not? - Fixed Place PE and Dependent Agent PE - Appellant, a Netherlands-based company eligible for benefits under the India-Netherlands DTAA ('the DTAA'), operates a Digital Platform for online Accommodations' reservations.

HELD THAT:- Recognizing the need to tax the digital/ new age economy for which the existing tax framework was considered inadequate, the Government of India introduced the provisions of Significant Economic Presence ('SEP') from the subject AY. As per the provisions of Explanation 2A to section 9(1)(i) of Income-tax Act, 1961 ('the Act'), the significant economic presence of a non-resident in India is deemed to constitute "business connection" in India.

Since SEP was enshrined under the Act with no corresponding amendment in the tax treaties, the enterprises governed by the tax treaties continued to remain outside its ambit since no consequential amendment was made in the tax treaties. Therefore, the Appellant also remained outside the purview of SEP.

Existence of fixed place PE in India of the Appellant has not been established and any business thereof, no part of the commission income could be brought to tax in India.

Assumption of jurisdiction under sections 147 / 148 - AO held assessee having fixed place PE in India in the form of dependant agents and accommodations - AO had no evidence on the record to establish constitution of fixed place PE. The assessee conducts its business of online reservations of accommodations through a digital platform hosted on servers located outside India, the assessee has no place of business, agent, personnel or equipment of India during the relevant previous year, no place/accommodation was made available to the assessee by any of the hotel or guest houses. Assessee does not have any dependant agent in India. The assessee transacts with the accommodation of principal to principal basis, there is no element of agency involved even if principal agent relationship is assumed between accommodation and the assessee considering the flow of funds by the accommodations to the assessee in the form of commission does constitute any agency.

AO failed to discharge the onus of establishing assessee having fixed place PE in India and to attribute the earning of commission income to such alleged fixed placed PE in India.

Hon’ble Supreme Court of India in the case of Formula One World Championship Limited [2017 (4) TMI 1109 - SUPREME COURT] has held for constituting fixed place PE (in India) the foreign enterprise must have (i) identified fixed place in India and ii) such fixed place must be at the disposal of the foreign enterprise and (iii) core business activities of the foreign enterprise must be carried out through such fixed place

AO and DRP erred in holding that assessee constitute a fixed place PE and Agency PE without any basis and holding that third party accommodation in India from whom the assessee earns commission on booking of rooms by end user constitute PE in India under Article 5 of India Netherland Tax Treaty.

Assessee appeal allowed.

Addition u/s 69A - non-genuine accommodation entries - AO had relied on statements recorded u/s 131(1A) and on investigative inputs - HELD THAT:- In the present case the assessee was not found the owner of any money or other valuable articles but the AO acted upon the statement taken u/s 131(1A) of the Act. The assessee has already been assessed under section 143(3) by rejecting books of accounts after making the addition and estimated his profit @8% of the gross receipts. We find that Ld. NFAC has examined the issues in the correct perspective and rightly deleted the addition towards the addition on the non-genuine transaction and treated the same as unexplained money u/s 69A of the Act made by the AO. The reasoning and findings of the Ld. NFAC, while granting relief is on the proper appreciation of law expounded by the judicial dicta.

Reopening of assessment - reasons to believe - link between the tangible material and the formation of the reason to believe that income has escaped assessment - ‘borrowed satisfaction’ - AR submitted that the reasons recorded by the AO are bad in law because the reasons was recorded without application of independent of mind - HELD THAT:- A perusal of the reasons for reopening of the case for the impugned assessment year shows that the re-opening was made on the basis of the report of the Investigation Wing and there is no independent application of mind by the AO for re-opening.

In the cited cases, like Meenakashi Overseas Pvt. Ltd. [2017 (5) TMI 1428 - DELHI HIGH COURT], Insecticide (India) Ltd. [2013 (5) TMI 691 - DELHI HIGH COURT] and Signature Hotels (P) Ltd [2011 (7) TMI 361 - DELHI HIGH COURT] it was held that re-opening on the basis of the report of the Investigation Wing without independent application of mind by the AO is not valid. Accordingly, the reassessment proceedings which were based on the report of Investigation Wing and without independent application of mind by the AO have been held to be illegal. In this case the AO has reopened the assessment on the basis of report of the Investigation Wing and there appears to be no independent application of mind by the AO, hence, the reassessment is not proper. Accordingly, we hold that the reassessment proceedings initiated by Assessing Officer is illegal and thus quashed.

Jurisdiction assumed by Ld. Assessing Officer beyond the limitation of 4 years - The power under section 147 of the Act have to be exercised after a period of four years only if there is a failure to disclose fully and truly all material facts and information, by the assessee. In the present case the case of assessee was re-opened beyond period four years where the original assessment has been completed u/s 143 (3) of the Act. The assessee had disclosed the fully and truly materials facts at the time of the original assessment. The Assessing officer has failed to show that escapement of income is due to failure on part of the assessee. Since the assessment had earlier been concluded under section 143(3) by order dated 30-03-2015 and assessee had fully and truly disclosed all material facts necessary for assessment, the pre-condonation for invoking the proviso to section 147 of the Act had not been satisfied. Decided in favour of assessee.

Validity of reopening of assessment - application of TOLA - Period of limitation -surviving limitation for reassessment - scope of notice beyond surviving period in view of section 149(1) r.w. relaxation granted under TOLA

HELD THAT:- We find force in the contention of the Ld. AR that TOLA does not apply to the assessment year and the regular limit for issuing notice u/s. 148 of the Act was available until 31.3.2022, the notices issued of the assessment year 2015-16 under the old law between 1st April, 2021 and 30th June, 2021 would not receive an extended period of validity.

These notices would be considered invalid as they were issued under the old law which was impermissible since the new laws had kicked in from 1st April, 2021 and they did not receive a fresh lease of life under TOLA since the time limit available for reopening the said year was till 31.3.2022. It is noted that in the case of IBIBO Group Pvt Lgd. [2024 (12) TMI 1269 - DELHI HIGH COURT] and quashed the reassessment proceedings for AY 2015-16 on identical facts relying on the decision of the UOI vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)]

We also note that in view of the Hon’ble Supreme Court decision in the case of Rajeev Bansal(Supra) the extended due date for issuance of notice u/s 148 of the Act expired on 18.6.2022 and since, the notice is u/s 148 of the Act is issued on 21-07-2022, thus the said notice was time barred by limitation. Respectfully following the aforesaid decision of the Hon’ble Supreme Court, we hold that the notice issued u/s 148 of the Act on 21.7.2022 is time barred by limitation, hence, the same is quashed and consequently, the reassessment also quashed. Accordingly the legal issues raised by the assessee is allowed.

Revision u/s 263 - as per PCIT AO failed to consider the necessity of revisiting the method of disallowance under Rule 8D read with Section 14A - AO accepting the suo motu disallowance offered by the assessee - HELD THAT:- CIT has rightly pointed out the disallowance offered by the assessee, without taking into account its claim for excluding Strategic Investment, needed proper verification by the AO. His observations are in sync with the landmark decision of Maxopp Investment Ltd. [2018 (3) TMI 805 - SUPREME COURT] in which similar issue of strategic investment was decided in favour of the Revenue for the purposes of computation of disallowance under section 14A r.w. Rule 8D.We are of the considered opinion that it was incumbent on the AO to examine a third party report especially in the light of the Apex Court ruling and the provisions of the Act in this regard and more so, in the light of suo motu disallowance of mere Rs. 1.82 cr. on exempt income exceeding Rs. 274 cr., against investments of Rs. 11,813 cr., without testing the computation method under Rule 8D, which demonstrates clear case of lack of any inquiry worth the name. Therefore, on the facts and the circumstances of the case, the deeming provisions of Explanation 2,clause(a) are clearly applicable.

Accommodation entries as AO did not examine the issue at all -Information was already available to the AO on Insight Portal which he completely overlooked although the information revealed that the assessee was recipient of accommodation of accommodation entries as a consequence of search action on Sankalp Group. This fact has not been controverted by the ld.AR who kept on stressing that the ld.PCIT did not make available the said information to it during revision proceedings without taking due cognizance of the fact that the assessment order has been set aside for necessary verification and enquiry allowing adequate opportunity of hearing to the assessee. This contention of the assessee cannot take away the fact on record that the AO failed to take any note of such vital piece of information which was very much available with him at the time of assessment proceedings. It is also clearly a case of no inquiry, hit by the deeming provisions of Explanation 2.

In so far as the requirement of due enquiry to be conducted by the Assessing Officer while scrutinising any case in the course of assessment order is concerned, it would be relevant to quote certain landmark decisions of Ram Pyari Devi Saraogi [1967 (5) TMI 10 - SUPREME COURT] and Tara Devi Aggarwal [1972 (11) TMI 2 - SUPREME COURT] holding that in a stereo-typed order which simply accepts what the assessee has stated and fails to make enquiries which are called for in the circumstances, is erroneous.

Thus, the issuance of notice u/s 263 of the Act and impugned order passed by the PCIT u/s 263 of the Act is validly assumed jurisdiction of Revisionary powers which cannot be alleged as invalid assumption of jurisdiction or bad in law and we confirm the same. Decided against assessee.

Cancellation of registration granted to the assessee-trust u/s 12A - definition of “Specified Violation” as per section 12AB(4) -genuineness of activities vis-a-vis charitable education - Charitable activity u/s 2(15) - as allegedcertain activities undertaken by the assessee are not genuine as per the provisions of sections 11, 12 and 12A AND trust was spending the major portion of funds on activities, which are more beneficial towards the business prospect of the assessee-trust and therefore, it was alleged that the activities of the trust fall under the definition of “Specified Violation” as per section 12AB(4)

HELD THAT:- From the plain reading of the provisions of the Explanation to section 12AB(4) of the Act, it is evident that insofar as the non-maintenance of books of account by the trust or institute in respect of the business which is incidental to the attainment of its objects, same is dealt in clause (b), while the activity being not genuine has been provided in clause (e) of the Explanation which defines the term “Specified Violation”. Therefore, we find merit in the submissions of the learned Senior Counsel that the registration under section 12A of the Act was cancelled by the learned CIT(E) for violation of clause (b) of Explanation to section 12AB(4) of the Act without granting an opportunity of hearing to the assessee.

In the present case, the assessee has filed an application seeking admission of additional evidences to support its contention that even this case does not fall under clause (b) of Explanation to section 12AB(4) of the Act. As noted above, it is the case of the assessee that since no show cause notice was issued on this aspect, these evidences could not be furnished before the learned CIT(E). Accordingly, having considered the submissions made in the application filed by the assessee seeking admission of additional evidences, we admit these additional evidences,

We deem it appropriate to set aside the impugned order and restore the matter to file of the learned CIT(E) for de novo adjudication, after consideration of the evidences as placed on record by the assessee before us. Appeal by the assessee is partly allowed for statistical purposes.

Confiscation of gold bars and the bag and the vehicle used for concealment of gold bars - Admissibility of statements recorded u/s 108 read with section 138B - Relevance of documentary evidence produced after seizure - Application of burden of proof under section 123 in town seizures with no foreign marking and purity below 99.9% - Requirement of reasonable belief for seizure u/s 110 - Validity of confiscation u/s 111(d) and 111(h) - Imposability of penalties u/s 112(b)(i) and 114AA where confiscation is unsustainable - HELD THAT:- Section 108 of the Customs Act deals with power to summon persons to give evidence and produce documents. It provides that any Gazetted Officer of customs shall have the power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making under the Customs Act.

In Drolia Electrosteel [2023 (11) TMI 10 - CESTAT NEW DELHI] a Division Bench of the Tribunal examined the provisions of section 9D of the Central Excise Act and after placing reliance upon the decision of the Punjab and Haryana High Court in Jindal Drugs Pvt. Ltd. vs. Union Of India [2016 (6) TMI 956 - PUNJAB & HARYANA HIGH COURT] observed that if the mandatory provisions of section 9D(1)(b) of the Central Excise Act are not followed, the statements cannot be used as evidence in proceedings under Central Excise Act.

Thus, the statements made by various persons under section 108 of the Customs Act could not have been relied upon by the Commissioner (Appeals) to record a finding that the appellant had smuggled 69 gold bars of foreign origin.

In Om Prakash Shah, Director of M/s. Quilon Trade Commerce Pvt. Ltd. vs. Commissioner of Customs (Preventive) [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.

As noticed, there is no evidence to substantiate that the gold bars in question were smuggled. The gold bars could not have been confiscated and, therefore, could not have been seized.

Goods can be confiscated under section 111(d) of the Customs Act where any goods which are imported or attempted to be imported or are brought into India contrary to any prohibition imposed by or under the Customs Act. In the present case, the appellant had purchased the gold bars under invoice dated 20.03.2021. Goods can be confiscated under section 111(h) of the Customs Act where any dutiable or prohibited goods are unloaded or attempted to be unloaded in contravention of the provisions of section 33 or section 34 of the Customs Act. It is not the case of the department that the appellant had smuggled gold bars into India or such gold bars were attempted to brought into India. The appellant had, in fact, purchased the seized gold bars from domestic market, in which case, the burden shifted to the Revenue to show that the appellant had not purchased the seized gold bars.

Thus, as the goods could not have been confiscated, penalties under section 112(b)(i) and section 114AA of the Customs Act could not have been imposed upon the appellant.

The appellant had also not signed or used any document for alleged smuggling of gold bars into India. Penalty under section 114AA of the Customs Act could not have been imposed upon the appellant on the premises that M/s. S.R. & Co. provided backdated and fabricated invoice in the name of M/s. Pulak Ornament LLP to legitimate the gold bars under the directions of the appellant. Thus, penalty under section 114AA of the Customs Act could not have been imposed upon the appellant.

Thus, the impugned order dated 11.10.2023 passed by the Commissioner (Appeals) so far as it rejects the appeal filed by the appellant against the order dated 09.09.2022 passed by the Additional Commissioner deserves to be set aside and is set aside. The appeal is, accordingly, allowed.

Relevancy of statements recorded u/s 108 - mandatory procedure u/s 138B for admissibility of recorded statements - requirement of examination by adjudicating authority and opportunity for cross examination - admissibility of computer printouts and electronic records u/s 138C - inadmissibility of evidence without statutory compliance - Whether the statements recorded u/s 108 of the Customs Act can be considered as relevant if the procedure contemplated u/s 138B of the Customs Act has not been followed - HELD THAT:- Section 108 of the Customs Act deals with power to summon persons to give evidence and produce documents. It provides that any Gazetted Officer of customs shall have the power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making under the Customs Act.

In view of the provisions of subsection (2) of section 138B of the Customs Act, the provisions of subsection (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.

Learned authorized representative appearing for the department has, however, placed reliance upon the decision of this Tribunal in Shri T.N. Malhotra, Managing Director vs Pr. Commissioner of Customs, New Delhi [2024 (6) TMI 202 - CESTAT NEW DELHI]. In this decision, the Bench examined the provisions of section 108 of the Customs Act, but it appears that the provisions of section 138B of the Customs Act were not brought to the notice of the Division Bench. As a result, the Bench examined whether the statements made were voluntary or under pressure. It is for this reason that the Bench relied upon the statements.

In view of the aforesaid discussions, it has to be held that the statements of persons recorded under section 108 of the Customs Act could not have been relied upon by the Commissioner (Appeals) for rejecting the transaction value and re-determining the same.

A perusal of the order passed by the Commissioner (Appeals) shows that though a specific ground was taken by the appellant that the provisions of section 138C of the Customs Act had not been complied with, but no finding was recorded by the Commissioner (Appeals) regarding compliance of section 138C of the Customs Act. In the absence of any certificate under section 138C of the Customs Act, no reliance can be placed on the printouts of the email.

In the present case, there is nothing on the record to show that Panchnama was drawn regarding the printouts of the email. The statements made under section 108 of the Customs Act were also retracted by the appellant. Thus, the compliance of section 138C of the Customs Act had not been satisfied.

In this view of the matter, it is not possible to sustain the order dated December 03, 2020 passed by the Commissioner (Appeals) that rejects the declared value of the goods under rule 12 of the 2007 Valuation Rules and re-determines it under rule 3. Nor is it possible to sustain the imposition of penalty upon the appellant.

The impugned order dated December 03, 2020 is, accordingly, set aside and the appeal is allowed.

Validity of licence/scrip at the time of import - Duty Free Replenishment Scheme (DRFC) and Duty Free Imports Authorisation Scheme (DFIAS) misused by over-invoicing of export goods - fraud vitiates everything - honour of licences not cancelled by the licensing authority - confiscation where import made on forged licence - invocation of extended period of limitation in cases of forged scrips - HELD THAT:- We find that this is a case where a scrip validly issued by DGFT authorities were found to have been obtained by misstatement or misrepresentation etc by the original exporter M/s. Shree Kuberappa & Sons. We find that a similar legal issue was examined by a Coordinate Bench of this Tribunal in its order pertaining to The India Cements Ltd. Vs Commissioner of Customs, Chennai [2025 (8) TMI 1158 - CESTAT CHENNAI]

Hence the action that lies when a scrip/licence has been issued by DGFT but was obtained by misrepresentation is not the same as in the case of a fraudulent scrip/licence. Since the import in this case was made under a licence which was valid at the time of import and was cancelled by DGFT much later, the said licence are required to be honoured by the Custom authorities and no demand can be raised. In the circumstances interest, penalties etc do not survive.

Thus, we set aside the impugned order and allow the appeal. The appellant is eligible for consequential relief as per law. The appeal is disposed of accordingly.

Names which resemble too nearly - fraudulent incorporation - name similarity test - Section 4(2)(a) prohibition on similar names - cancellation of registration - remittance of funds to liquidation account - Corporate Insolvency Resolution Process (CIRP) -SPICe+ automated name-checking - writ remedy for wrongful incorporation -No Objection Certificate (NOC) misuse - HELD THAT:- We find substance in the contention of the petitioner that on a proper application of Rule 8 of the aforesaid Rules, respondent No. 3 could not have been registered as a company bearing the name ‘Sangeeta Aviation Service Private Limited’ as it was clearly and strikingly similar to the name of the petitioner corporate debtor i.e. ‘Sangeeta Aviation Services Private Limited’. The only difference being deletion of alphabet ‘s’ from the word ‘services’ clearly demonstrated that the respondent No. 1 could not have registered and incorporated respondent No. 3 with the name ‘Sangeeta Aviation Service Private Limited’. Apart from this, we find that the registered address of both the companies was shown as ‘Akshay Mittal Estate, Andheri (East), Mumbai’. We also find that common domain name viz. supremeaviation.com was used in the registered e-mail ID of respondent No. 3, when the said domain name was already being used by the suspended director of the petitioner corporate debtor. Even the company letterhead was replicated by the respondent No. 3 when compared with the letterhead of the petitioner corporate debtor.

It is simply stated that the said system approved the name ‘Sangeeta Aviation Service Private Limited’, and therefore, registration and incorporation of respondent No. 3 was undertaken.

We find that the stand taken in the reply affidavit of respondent No. 1 makes matters worse for the said respondent. An impression is sought to be given that due to lack of human interface and in the light of the functioning of the ‘SPICe+ system', such registration of the respondent No. 3 was undertaken. This is another reason why we are of the opinion that the respondent No. 1 is seeking to justify the fraudulent manner in which the respondent No. 3 was registered and incorporated as ‘Sangeeta Aviation Service Private Limited’. If the aforesaid ‘SPICe+ system' is so inadequate and incompetent, there is no reason why the officers of respondent No. 1 - Registrar of Companies should have used such a system in the first place and in any case, we find that a detailed enquiry into the matter is justified.

We have come to the considered conclusion that in this case, respondent No. 3 company was fraudulently incorporated in the name of ‘Sangeeta Aviation Service Private Limited’ although its name was strikingly and too nearly similar to the name of the already registered company ‘M/s. Sangeeta Aviation Services Private Limited’, which is the corporate debtor petitioner. It is of no consequence that when the fraud was discovered, the name of respondent No. 3 was subsequently changed to ‘M/s. S4 Aviation Service Limited’. We also find that the petitioner has suffered considerable financial loss due to significant amounts being diverted because of the fraud committed by respondent No. 3, for which separate proceedings have already been initiated. The record also shows that the respondent No.4 Bank had taken steps to debit-freeze the account of respondent No. 3. Considering the conclusions that we have reached hereinabove, we find that an appropriate direction ought to be issued to respondent No.4 to remit the balance amount lying in the account of the fraudulently registered and incorporated respondent No. 3 to the liquidation account of the petitioner corporate debtor (under liquidation).

Accordingly, we grant reliefs to the petitioner in terms of prayer clauses (A), (B) and (D). - Consequently, the registration and incorporation of respondent No. 3 stands cancelled.

As regards prayer clauses (C), (E) and (F) pertaining to directions for instituting inquiry and investigation against the officers of the respondent No. 1 and considering directions for imposing penalty on respondent No. 1 and also directing the said respondent to pay compensation / damages to the petitioner, the respondent No. 1 is granted time of four weeks to file an additional affidavit. Rejoinder, if any, shall be filed within two weeks thereafter.

Initiation of Corporate Insolvency Resolution Process (CIRP) - Section 65 IBC recall of admission - collusive and malicious initiation of CIRP - debt and default u/s 7 IBC - settlement agreement and withdrawal of Section 7 petition - board resolution and authority to represent the corporate debtor - standard of proof u/s 65 - HELD THAT:- It is the case of the Appellant itself that Board Resolution was passed on 05.10.2021 by the CD, where Mr. Atish Kumar Shaw was authorized to sign, verify and represent the CD before the NCLT and NCLAT. The copy of the Board Resolution, which is at Page-579 of the Appeal paperbook, shows that the said Board Resolution was also signed by one of the Appellant. The CD having by Board Resolution authorized Mr. Atish Kumar Shaw to appear before the NCLT, no objection can be taken on behalf of the Ex-Directors of the CD that Mr. Atish Kumar Shaw could not have filed reply in Section 7 application. It has been submitted on behalf of the Respondent that Mr. Atish Kumar Shaw is a practicing Chartered Accountant, who was associated with both FC and the CD. Giving loan recall notice on behalf of the FC, cannot be a reason to hold that initiation of Section 7 application by FC was fraudulent and malicious. The Board Resolution authorizing Mr. Atish Kumar Shaw on behalf of the CD is subsequent to issuance of loan recall notice, hence, had there any objection with regard to Mr. Atish Kumar Shaw to represent the CD, the Board of the CD would not have passed the resolution. We, thus, do not find any substance in the above submission of the Appellant that initiation of CIRP has to be held malafide and fraudulent.

The issue having considered and answered holding that Applicant has not produced any material that satisfies the strict standard of proof required under Section 65. We, thus, are of the view that Adjudicating Authority did not commit any error in rejecting application Section 65 application filed by the Appellant praying for rejection of Section 7 proceedings and recall of admission order dated 15.12.2023.

There is no merit in the Appeal. The Appeal is dismissed.

Approval of resolution plan in accordance with Section 30(2) of the IBC - binding effect of Committee of Creditors' commercial wisdom - duty of the Resolution Professional to protect assets and share information with the Successful Resolution Applicant - effect of setting aside termination of lease and revival of lease - challenge to resolution plan approval on alleged irregularities by the Resolution Professional - petition for post approval directions against the Resolution Professional and third parties supporting implementation of the plan - HELD THAT:-The termination notice issued by GIDC terminating the lease deed has been set aside and the lease is revived and the corporate debtor still continues to hold the lease. I.A. 159/2020 was revived by order dated 21.03.2025 for fresh consideration and accountment to the order dated 21.03.2025 parties were heard on I.A. No. 159/2020 and by the impugned order I.A. No. 159/2020 has been allowed and resolution plan approved.

The observations made by the adjudicating authority as noticed indicate that all facts and circumstances of the present case has been noticed by the adjudicating authority reasons due to which the delay was caused due to repeated litigation has also been noticed. SRA who has submitted the plan whose plan has been approved is also fully bound by the plan and cannot be allowed to resile from the plan on any reason. The objections and submissions made by the SRA with respect to termination notice issued by GIDC having already taken care by the RP, and this Tribunal having already set aside the termination notice, the lease in favour of the corporate debtor survives and continues. The prayers made by the appellant in I.A. 717/2025 that GIDC should give undertaking that they shall not terminate the lease could not be allowed by the adjudicating authority. Alleged irregularity by the RP in conduct of CIRP also does not give any reason to interfere with the order approving the resolution plan. The submission of appellant that approved resolution plan has been altered is not substantiated.

We do not find any ground at the instance of the appellant to interfere with the order allowing the I.A. 159/2020. No ground has been made out to interfere with the impugned order.

The appeal is dismissed.

Preferential transactions u/s 43 - Ordinary course of business exemption - Related party within two-year look-back period - Look-back period and effect on distribution u/s 53 - Directory nature of Regulation 35A of the CIRP Regulations - Principles of natural justice and recall of ex-parte orders - violation of mandatory timelines for determining a preferential transaction - Power of the Resolution Professional/Liquidator to avoid preferential transactions -

Whether the transactions amounting to Rs. 19,66,698.77 made in favour of the Appellant during the look-back period constitute preferential transactions under Section 43 of the Insolvency and Bankruptcy Code, 2016. - HELD THAT:- We note that at the time of initiation of CIRP there was substantial secured financial debt in the books of the Corporate Debtor. The claim of secured Financial Creditor Canara Bank was for an amount of Rs. 11.96 Cr. It is also on record that the appellant, who was a Director of the Corporate Debtor had also extended unsecured loan to the Corporate Debtor and the balance amount of said loan as on 21.09.2020 was Rs. 1.55 Cr. It is also undisputed that the insolvency commencement date is 20.09.2022 and that the payments of Rs. 19.66 lakhs, which are treated as preferential transaction, were made to the appellant within two years prior to this date i.e. in the period between 21.09.2020 and 20.09.2022. It is also an admitted fact the appellant is a related party.

Once the amounts are credited to and routed through the accounts of the Corporate Debtor and used to discharge its liability towards a related party, the transaction cannot be taken outside the scope of Section 43(4) merely by pointing to the alleged source of those funds. What is relevant is the effect of the transaction, namely that the Corporate Debtor’s liability towards the Appellant stood reduced by that amount which is contrary to the provisions of Section 43(2) which has been extracted above.

Thus, we are of the view that the Adjudicating Authority was correct in holding that the payments amounting to Rs. 19,66,698.77 satisfy the requirements of a preferential transaction under Section 43 of the Insolvency and Bankruptcy Code, 2016. Issue is accordingly decided against the Appellant and in favour of the Respondent.

Whether the impugned order dated 28.08.2024 suffers from any procedural illegality, violation of principles of natural justice, or jurisdictional error so as to warrant interference by this Appellate Tribunal u/s 61 of the Insolvency and Bankruptcy Code, 2016. - The fact that appellant was set ex-parte on 04.06.2024 and this was in the knowledge of counsel for the appellant as his proxy counsel was present in the court. The right course of action should have been to file an application for setting aside the said ex-parte order.

It is an admitted position that the Appellant had filed a reply to the application under Section 43, setting out all his factual and legal objections. The impugned order shows that the Adjudicating Authority has taken note of these submissions and has decided the matter on merits. Therefore, this is not a case where the Appellant was condemned unheard or denied a reasonable opportunity of being heard.

The objection of the appellant regarding the violation of mandatory timelines for determining a preferential transaction and for filing an application before the Adjudicating Authority in accordance with Regulation 35A of the CIRP Regulations is equally untenable. It is settled law that the timelines prescribed under Regulation 35A are directory and not mandatory. We further note that under Section 35(1)(l) of the Code, the Liquidator is expressly empowered to investigate the financial affairs of the Corporate Debtor to determine undervalued or preferential transactions during liquidation, which was initiated by the Adjudicating Authority on 06.06.2023. The Adjudicating Authority, therefore, acted well within its jurisdiction in entertaining and deciding the application under Section 43.

Thus, the Appellant’s objection that the application under Section 43 was time-barred cannot be accepted, and the Adjudicating Authority was justified in entertaining and deciding the application, which clearly supports the case of the Respondent.

Both the appeals are dismissed.

Statutory trust u/s 29 of the NABARD Act - third-party assets held in trust - Administrator's duty to segregate and deal with third-party assets under Rule 10 of the FSP Rules and Notification dated 30.01.2020 - effect of filing claim in Form-C / status as a financial creditor in CIRP of a financial service provider - binding effect of an approved resolution plan vis-a -vis pending statutory entitlement and distribution mechanism - HELD THAT:- As noted, even prior to submission of its claim in Form-C, the Appellant has written to the Administrator claiming its statutory entitlement of receivables from the CD, which were to be handed over to the NABARD. By submitting claim in Form-C, the Appellant has not given up any of its rights, which flow from statutory provisions. In any view of the matter, along with Form-C, the Appellant has given all details of transactions. Along with rejoinder affidavit, the Appellant has brought on record entire Form-C, including the relevant documents, statement of facts, which were part of Form-C. It is useful to notice some of the averments made in the statement of facts.

When along with claim Form, all relevant transactions, including the claim of the Appellant to get the receivables from the accounts of the CD, which it refinanced, the claim of the Appellant, cannot be said to be in any manner diminished by filing its claim in Form-C.

The Adjudicating Authority committed error in holding that since the Appellant is Member of the CoC, it is bound by Resolution Plan and the amount proposed by the SRA is for full and final payment. There can be no dispute to the proposition that Plan binds all, but present is a case where distribution mechanism, which is approved by the CoC, itself takes care of claim of the Appellant, which has been set apart as noted above. Thus, the fact that Appellant was treated as part of the CoC as secured Financial Creditor, does not negate the claim of the Appellant in any manner and Adjudicating Authority although noticed the relevant provisions of Section 29 of the NABARD Act and Rule 10 of FSP Rules, has not adverted to the said statutory provisions, which obliged the Administrator to keep apart third-party assets, which was its statutory obligation. We, thus, are satisfied that Adjudicating Authority committed error in rejecting IA (IB) No.896/KB/2022 and the Appellant has made out a case for granting the reliefs as prayed in the application.

In the present Appeal, we had passed an interim order on 04.04.2024 “Implementation of the Plan is in pursuance of the Impugned Order shall abide by the result of the Appeal”. Moreso, the distribution mechanism as approved by the CoC has noted that if the NABARD application (IA (IB) No.896/KB/2022) is decided in NABARD favour by NCLT or NCLAT or the Hon’ble Supreme Court, the NABARD set aside amount will be paid to NABARD as noticed above. Thus, the CoC has already approved the distribution mechanism in event the application is allowed, the NABARD shall be paid the amount set apart.

In result, we allow the Appeal, set aside the impugned order dated 01.02.2024 rejecting IA (IB) No.896/KB/2022. IA (IB) No.896/KB/2022 is allowed. The Appellant shall be entitled for the amount set apart for NABARD as per distribution mechanism noted and approved in 37th CoC Meeting, as noted above. The amount already paid to the Appellant as dissenting Financial Creditor is also liable to be adjusted in the amount set apart and to be paid to the Appellant under the distribution mechanism.

Pre-existing dispute - operational debt - Section 9 IBC - plain reading of the contract - construction of contract - Mobilox test - HELD THAT:- There is no dispute that the contract required the appellant to set aside 2 days within two years ending 07.03.2023 for rendering services, which in terms of Clause 3.2 of the contract, must be at the date, time and place and schedules to be mutually agreed to by the parties in writing. The appellant was paid 50% of the sum agreed to be paid as consideration for two days as signing amount as provided in Clause 5.1.1, and his services too have been procured for a day. Admittedly, the second day services were not procured, but the appellant has made his claim for the second instalment in terms of Clause 5.2. The point is whether non-payment of the amount stipulated to be paid under clause 5.1.2 gives rise to an operational debt, or does it merely give rise to a cause of action for claiming damages for breach of contract.

Since the parties are at variance on this issue, and inasmuch as the respondent has raised a dispute over it, it now becomes imperative to ascertain what the plain reading of the contract supports. It is underscored that our effort is to identify if a plausible dispute exists in understanding the terms of the contract and not how we harmonise internal inconsistences, if any.

It made clear that that if the issue eventually boils down to one involving breach of contract on the part of the respondent entitling the appellant to a claim for damages, then in terms of Sec. 3(6) of the Code, the appellant would be entitled to make a claim, but a mere right to claim damages will not still constitute any debt within the meaning of an operational debt as defined under Sec. 5(21). While a claim may include a debt, not every claim will constitute a debt for commencing a CIRP. As outlined earlier, there will be a need to travel thus far to enter a finding on it only if we find that the plain reading of the contract leads to a conclusion that the defence resting on a pre-existing dispute is fanciful and sham.

While Clause 7.2(c) provides that the appellant has a right to make a claim for the entire consideration where the respondent wholly defaults in performing its part of the contract, clause 7.2(d) provides for forfeiture of the signing amount which is the first instalment of the consideration paid under Clause 5.1.1 in the eventuality of the respondent defaults in fulfilling its contractual obligations. Cautioning ourselves not to embark on an enquiry on the effect of these contractual terms in terms of the principles of Contract Act, we still believe that consideration payable cannot be separated from the purpose for which it was agreed to be paid.

To sum up while the appellant’s understanding of the contract seems to suggest that he has to provide one service – of endorsing the respondent’s Website. The consideration payable is one consolidated sum receiving which the appellant has undertaken to perform one service, which in terms of the contract is required to be made for not more than two days. The second day in that sense, may have to be understood as a cushion to meet the contingency when the contracted services could not be fully performed on the first day. However, nowhere in the contract we find any indication that the consideration as agreed upon represents a consolidated sum for one service to be rendered for not more than two days. On the other hand, the terms of the contract make the understanding of the contract as projected by the respondent a possibility. This would mean that the pre-existing dispute which the respondent has raised appears reasonably plausible. Eventually this has to be sorted out by a civil court and not by us.

To conclude, we affirm the judgement of the Adjudicating Authority in C.P. (IB) and consequently dismiss the present appeal.

Continuing guarantee - Invocation of corporate guarantee - Debt and default for initiation of CIRPu/s 7 - Acknowledgement of liability for limitation - Discharge/novation by variation of contract and Section 133, Indian Contract Act - Effect of pending civil suit on Section 7 proceedings - Sanction letter as proposal and not a novation - validity, subsistence, invocation, and enforceability of the corporate guarantee - HELD THAT:- To the first aspect, and it relates to the discharge of the appellant’s obligation under the first deed of guarantee and reliance here was to the 3rd recital in the second deed of guarantee. See: Paragraph 7(d) above for the text of this recital. Firstly, it is a recital merely and not an operative term of the contract. Secondly, a recital provides only those introductory facts that sets the circumstances for the execution of a deed. Thirdly, and more specifically, while the recital speaks of discharge of the outgoing guarantor, what is significant here is that the outgoing guarantor in terms of the first deed of guarantee and the incoming guarantor under the second deed of guarantee is the same.

Then arrives the issue of enforceability of second deed of guarantee in view of the alleged blank spaces in it. The fallacy which the appellant apparently has overlooked is that if the second deed of guarantee is void and unenforceable, then even the recital 3 thereof cannot be given any credence to, and this would imply that the first deed of guarantee and the obligations created thereunder would continue to haunt the appellant.

Now, turning to the alleged blank spaces per se, the terms of the contract of guarantee is in a standard form where there are couple of blank spaces, but they are in the recital portion of the document, and not in the operative portion, and they relate to the date of sanction of the loan in 2012. They do not relate to the material terms of the contract, and hence the appellant cannot take shelter behind it. In other words, it should have established a prima facie case that there involved an issue inviting construction of the second guarantee deed. That was not even attempted. This contention, with all its ingenuity or desperation does not help the appellant’s cause.

A careful reading of the deed of guarantee discloses that under Clause 8 thereof, the guarantee is described as a continuing guarantee. Contrary to the contention of the appellant, nowhere it could be found that the guarantee in question is limited by time. On the other hand, it indicates that its liability under the deed of guarantee will be co-existent with the liability of the principal debtor. Needless to state that this argument of the appellant fails.

The next aspect relates to the letter dated 30.06.2016. According to the appellant, under this letter, the bank had relinquished the guarantee which the CD had executed and hence the latter stands discharged of its liability. This communication dated 30.06.2016 was addressed by the first respondent-bank to the principal debtor. The communication itself states that it concerns with ‘Review proposal’. It describes the purpose of the term loan to include the takeover of the existing term loan of Rs. 8.07 crores. It does indicate an intention to relieve the third-party guarantee and also giving up security interest over 22 apartments etc., but stipulated as many as six conditions which includes perfection of security for property located in Durgapur, West Bengal.

Mere proposal of the bank to relieve the third- party guarantor of its original contractual obligation in the eventuality of the principal borrower complying with the conditions listed in the communication dated 30.06.2016 will not be adequate enough to provide a sustainable line of defence to the appellant.

Turning to the issue on pendency of C.S. is concerned, pendency of the suit by itself may not be a ground to reject a petition under Sec.7, though it may be relevant for the one instituted under Sec.9 IBC. The pendency of the suit may become relevant if only the foundation for the same rests in any allegation of fraud played by the lender, but then facts constituting such allegation of fraud have to be independently pleaded and established in a proceeding under Sec.7 IBC. The appellant fails again.

Bar of limitation - Merely because the appellant has chosen to describe its co-extensive liability arising under the deed of guarantee as contingent liability in its balance sheets may not have any legal consequence of a co- extensive liability into contingent liability. It is an unilateral and a self- serving statement which the appellant has made in its books merely. What is contextually relevant is, whether the appellant has acknowledged its liability, and not how he has chosen to describe it in the books of accounts of the corporate guarantor. Viewed thus, this tribunal holds that the appellant indeed has acknowledged its liability within the period of limitation, and necessarily it has to be held that the petition filed under Sec. 7 IBC is not barred by time.

To conclude, we do not find any infirmity in the Order of the Adjudicating Authority, dated 17.12.2024 in C.P. 89 of 2024 and hence dismiss this appeal.

Interpretation of Section 8(7) of the PMLA - interpretation of Section 8(8) of the PMLA - definition of "proceeds of crime" under Section 2(1)(u) of the PMLA - finality of confirmation order u/s 8(3) - doctrine of merger - limitation on Special Court where appeal under Section 26 is pending - scope of expression "material before it" in Section 8(7) - requirements of Rule 2(b) and Rule 3A of the Prevention of Money-laundering (Restoration of Confiscated Property) Rules, 2016 - powers and role of the Appellate Tribunal under Sections 25, 26 and 35 - HELD THAT:- The definition of “proceeds of crime” under Section 2(1)(u) of the PMLA is wide enough to include a property which is equivalent in value to the property that is directly or indirectly obtained from a criminal activity relating to the scheduled offence. Thus, such a property can also be attached if the proceeds of crime, as such, are not otherwise available. Section 2(1)(u) of the PMLA, despite being a definition clause, indicates the very objective of the enactment to secure proceeds of crime in any form.

When an appeal or a further challenge is pending before the Appellate Tribunal or the concerned higher forum against an order passed under Section 8(3) of the PMLA, the Special Court is expected to refrain from dealing with an application filed under Section 8(7) of the PMLA, without awaiting the disposal of such appeal or further challenge. We also say so in view of the doctrine of merger.

Once an order of confiscation has been made either under Section 8(5), or Section 8(7), or Section 58B, or Section 60(2A) of the PMLA, the confiscated properties vest in favour of the Central Government, as provided under Section 9 of the PMLA. Resultantly, any right or title over the property, qua a third party, gets extinguished, since such a vesting becomes absolute. By the operation of law, the Central Government gets ownership of the property, free from any encumbrances. Hence, this provision clearly delineates the final consequence of a confiscation order.

To sum up, Chapter – III of the PMLA provides a comprehensive picture of how properties involved in the offence of money-laundering are to be dealt with.

Admittedly, the appellant company, having suffered an order under Section 8(3) of the PMLA, had preferred an appeal under Section 26 of the PMLA which was pending on the file of the Appellate Tribunal even at the time of filing of the applications under Sections 8(7) and 8(8) of the PMLA. The fact that the said appeal was pending before the Appellate Tribunal, for want of coram, is not in dispute. The decision of the Adjudicating Authority under Section 8(3) of the PMLA is subject to the outcome of any further challenge to the same.

The powers of the Appellate Tribunal are rather wide and exhaustive. What is referred to under Section 8(7) of the PMLA is a confirmation order which has attained finality. At the cost of repetition, once an order under Section 8(3) of the PMLA is challenged before a higher forum, a deemed embargo operates on the conclusion of the proceedings under Section 8(7) of the PMLA. Hence, the Special Court cannot go into the issues which the higher forums have been entrusted with. When an appeal is provided for under the statute, it gives a vested right to any aggrieved person to exhaust the same.

In the present case, we are concerned with the decision-making process adopted by the Special Court, as confirmed by the High Court. Instead of deferring the application filed under Section 8(7) of the PMLA, and awaiting the adjudication by the Appellate Tribunal under Section 26 of the PMLA, the Special Court has allowed the said application, for which exhaustive reasons have been given independently on merits. The Special Court has, in effect, rendered the appeal under Section 26 of the PMLA infructuous. The said action at the instance of the Special Court is totally impermissible in law.

Insofar as the application filed by the appellant under Section 8(8) of the PMLA is concerned, we find that it has been correctly dismissed by the Special Court. Having preferred an appeal under Section 26 of the PMLA against the order suffered under Section 8(3) of the PMLA, and not having demonstrated that it suffered a quantifiable loss as a result of the offence of money-laundering, the necessary conditions under Section 8(8) of the PMLA have not been satisfied by the appellant company.

In such view of the matter, we set aside the order passed by the Special Court allowing the application under Section 8(7) of the PMLA, as confirmed by the High Court in the impugned order. We are also conscious of the fact that after filing the present appeal, the Appellate Tribunal has dismissed the appeal under Section 26 of the PMLA, as having become infructuous.

Hence, the interest of justice would require that the order passed by the Appellate Tribunal under Section 26 of the PMLA also be set aside, as merits have not been gone into by the Appellate Tribunal for no fault of the appellant. It would only be fair and just to restore the said appeal for a decision on merits.

Thus, we set aside the order dated 15.09.2022 passed by the Special Court allowing the application filed by the respondent under Section 8(7) of the PMLA, as confirmed by the High Court vide the impugned order dated 27.02.2023. The application filed by the appellant under Section 8(8) of the PMLA was not maintainable.

Input service - CENVAT credit - nexus with taxable output service - deposit insurance as mandatory statutory requirement for banking - banking as a single and integrated activity - Whether the service tax paid by the respondent–banks on the deposit insurance premium remitted to the Deposit Insurance and Credit Guarantee Corporation qualifies as an “input service” under Rule 2(l) of the CENVAT Credit Rules, 2004. - HELD THAT:- The very same question was examined in detail by the Larger Bench of the CESTAT in South Indian Bank Ltd. v. Commissioner of Customs, Central Excise and Service Tax[2020 (6) TMI 278 - CESTAT BANGALORE - LB], wherein, after an exhaustive analysis of the provisions of the DICGC Act, the nature of banking business, and the scope of the definition of “input service”, it was held that deposit insurance is a statutory and mandatory requirement for banks and that the service tax paid on such insurance premium is eligible for CENVAT credit. The Larger Bench categorically held that without such insurance, a bank cannot lawfully carry on banking operations and render taxable banking and financial services.

The said Larger Bench decision has been affirmed by the Kerala High Court in Principal Commissioner of Central Tax & Central Excise, Cochin v. South Indian Bank Ltd. and Catholic Syrian Bank Ltd. [2022 (12) TMI 1479 - KERALA HIGH COURT]. The High Court agreed in full with the findings of the Larger Bench and rejected the Revenue’s attempt to isolate the activity of acceptance of deposits from other allied banking services. It was held that while acceptance of deposits is a money transaction, the statutory obligation to insure such deposits forms part of the banking business and does not fall within the negative list. The Court further held that the insurance service provided for insuring deposits is an “input service” and that CENVAT credit of service tax paid thereon is admissible.

In view of the settled legal position, we hold that the Tribunal applied the law and followed authoritative precedents in allowing CENVAT credit on the service tax paid on the DICGC insurance premium. The substantial questions of law framed by the Revenue are answered against it. Consequently, the impugned common Final Order of the Tribunal requires no interference, and all appeals filed by the Revenue are dismissed. No costs.

Invocation of extended period of limitation - liability of sub-contractor where principal contractor discharged service tax - suppression of material facts with intent to evade - bona fide belief arising from conflicting decisions of the Tribunal - effect of Master Circular No.96/7/2007-S.T. - HELD THAT:- We find that it is a fact on record that after issuance of the Master Circular No. 96/7/2007-S.T. dated 23.08.2007, the appellant has not paid Service Tax, being the sub-contractor, on the ground that the main contractor was paying Service Tax on the activity undertaken by the appellant.

Further, the issue was referred to the Larger Bench of the Tribunal in the case of Commissioner of S.T., New Delhi v. Melange Developers Pvt. Ltd. [2019 (6) TMI 518 - CESTAT NEW DELHI-LB] wherein this issue came up before this Tribunal to decide as to whether in such a situation, after issue of the Master Circular dated 23.08.2007, a sub-contractor is liable to pay Service Tax if the main contractor is paying Service Tax. The Larger Bench decided the issue on 23rd May, 2019 holding that in such a situation, the sub-contractor would be liable to pay Service Tax. However, till then, there was a dispute as to whether a sub-contractor was liable to pay Service Tax in such cases or not.

Admittedly, in this case, the period of dispute is from December, 2008 to March, 2012 whereas the Show Cause Notice came to be issued only on 07.01.2014 by invoking the extended period of limitation. Therefore, in these circumstances, we hold that the extended period of limitation is not invocable.

In view of this, we set aside the impugned order and allow the appeal, with consequential relief, if any.

Rectification of mistake - mistake apparent on the record - limited scope of Section 35C(2) - re-appreciation of evidence not permissible in rectification - penalty u/s 78 limited to confirmed demand - contractual inclusion of service tax in work-order price - distinction between factual findings and rectifiable patent error - HELD THAT:- We find that it is now well settled law that the application for rectification of mistake is maintainable only in cases where it can be pointed out that there is an error apparent on record. An error which has crept in while passing the order could have been subject matter for rectification. It is finding recorded even if erroneous could not be rectified by resorting to these provisions for which a provision of appeal has been made in the statute.

We find that in respect of Section 78, we find that the applicant has sought to state para 4.9 (7) is upholding the penalty in respect of the demands set aside by the impugned order. We do not find any merits in the said submission, para 4.9 (7) is summarization of the findings recorded earlier and is to be read along with the para 4.8 of the order. We have clearly stated that the penalty under section 78 will be re-determined and will be equal to the demand upheld in the remand proceedings. Thus there is no error apparent in the this regrds. Even otherwise, as per provisions of Section 78, penalty under Section 78 could not be in excess of the total demand confirmed. We find that applicant has made an attempt to find out as looking through a magnifying glass to search for certain mistakes in the order to justify his application. We are very clear in our view that in respect of the amount dropped or remanded there cannot be any penalty under Section 78 more than the amounts confirmed in the remand proceedings. We do not find any justification in this ground.

The demand confirmed in respect of RCC Bridge over the Baishaha Nala in the mining area of SECL, we do not find any merit in the submission by which I cannot be said that an error crept in our findings. Our findings are based on the available documents on record including work order signed between applicant and service recipient. Para 9 of the work order provides that value of work order is inclusive calculated @4.944% of quoted value then we do not find anything further to be considered while considering this application.

As per the stipulations made in the work order issued by M/s South Eastern Coalfields Ltd. dated 19.11.2014, the total value of the work order has been determined after taking into exercise the service tax payable on the work value and this is as per the norms of the company i.e. SECL. Reliance which appellant sought to be placed would not held the case of the applicant either at the time of argument or now. We do not find any merits in this ground also.

Thus, we do not find any merits in this application for rectification of mistake.

Application is dismissed.

Negative List of Services - job work - exemption under Notification No. 25/2012-S.T., Sl. No. 30(c) - manpower supply services - service tax liability - extended period of limitation - interest and penalty u/s 78 - HELD THAT:- We find that during the impugned period, the appellant was engaged in providing different services to the service recipient viz., M/s. Exide Industries Ltd., against different work orders were awarded to them.

As far as the first type of work orders are concerned, for which services were rendered by way of supply of labour / manpower, against which bills were raised on per-day / per-hour basis, in the form of daily paid canteen workers, dispatch of company documents as courier boy, fixing stickers in bottles, etc., the appellant has admitted their liability to Service Tax under the category of manpower supply services and claims to have discharged their Service Tax liability in this regard.

We find that the labourers were engaged directly in the process of manufacture of battery by M/s. Exide Industries Ltd and the consideration was fixed on the basis of work accomplished by counting in ‘piece’. Hence, we agree with the submission of the appellant that such services were provided by way of carrying out job work / fabrication for manufacture of excisable goods in the premises of M/s. Exide Industries Limited. As the activity undertaken by the appellant resulted in ‘manufacture’ of excisable goods, on which M/s. Exide Industries Limited has discharged Service Tax, we are of the view that such services are exempted from payment of Service Tax. We find that the above activity undertaken by the appellant is squarely covered within the ambit of Sl. No. 30(c) of Notification No. 25/2012-S.T. dated 20.06.2012.

Accordingly, we find that the demand of Service Tax confirmed in the impugned order, on the above services rendered by the appellant, is not sustainable, on merits.

Limitation - We find that the appellant were regular in filing their ST-3 Returns and that the impugned demand has been raised solely on the basis of the difference found between the Income Tax Return (ITR) and Service Tax Return (ST-3) filed by them for the Financial Year 2014-15. As the appellant have not suppressed any material fact from the Department, we observe that the intent to evade payment of Service Tax has not been established in this case. In the absence of any evidence to the contrary, we are of the view that the ingredients for invoking the extended period of limitation are not satisfied in this case. Accordingly, we hold that the confirmation of the said demand by invoking the extended period of limitation is not sustainable.

Thus, we hold that the demand confirmed in the impugned order is not sustainable, on merits as well as on limitation and hence, the same is set aside.

Since the impugned demand against the appellant cannot be sustained, the question of demanding interest or imposing penalty thereon under Section 78 of the Act does not arise. Accordingly, the said demands are also set aside.

In the result, the appeal filed by the appellant is allowed, with consequential relief, if any, as per law.

Transaction value - exclusion of other taxes from transaction value - royalty not a tax - stowing excise duty as duty of excise - forest transit fee as tax - rural infrastructure and road tax as tax - entry tax - terminal tax - development and environment cess as tax - excise duty on captive consumption - extended period of limitation u/s 11A - penalty u/s 11AC - waiver of interest in light of Mineral Area Development Authority - Whether the amount received by the appellant under ‘b’ to ‘g’ of the chart is also includible in the definition of ‘other taxes’ under section 4(3)(d) of the Central Excise Act. -

Stowing Excise Duty - HELD THAT:-Section 8 of the Act provides that the duty of excise levied under section 6 shall be collected by such agencies and in such manner as may be prescribed. Section 9 of the Act deals with utilization of proceeds of duties levied and collected under section 6 and section 7 of the Act. Chapter III of the Coal Mines (Conservation and Development) Amendment Rules 2011 deals with collection of excise duty. Rule 8 provides for collection and assessment of excise duty while rule 9 provides for the review of assessment of excise duty.

It has, therefore, to be held, that the amount received by the appellant towards the stowing excise duty has to be excluded from the transaction value. The Commissioner, therefore, committed an error in holding that it would be includible in the transaction value.

Forest Transit Fees - HELD THAT:- In the present case, the burden of the regulatory forest transit fee is passed on to the buyers on actual basis. Such regulatory fee charged under the provisions of the Rules and Indian Forest Act, 1927 would, therefore, be in nature of a ‘tax’ and so cannot be included in the assessable value in terms of section 4(3)(1) of the Central Excise Act.

Madhya Pradesh Rural Infrastructure and Road Tax - HELD THAT:- The Madhya Pradesh High Court in Neogy & Sons vs. The State of M.P. and Another., examined the constitutional validity of the Madhya Pradesh Rural Infrastructure and Road Development Act, 2005. The petitioners had challenged the constitutional validity of the Act conferring power on the State Government to levy Rural Infrastructure and Road Development tax upto 20% of the annual value of the annual value of mineral bearing land leased for carrying out mining operation.

It is seen that the High Court has held that the levy imposed under the said act is a tax on land bearing mineral. Thus, the amount collected under this head would not be included in the transaction value in terms of section 4(3)(d) of the Central Excise Act.

Entry Tax - HELD THAT:- As the demand of excise duty on entry tax has been dropped for the subsequent period by order dated 24.05.2016 and this order has attained finality as the order dated 24.05.2016 has not been challenged by the department, the demand of excise duty confirmed in the impugned order is liable to be set aside.

Terminal Tax - HELD THAT:-Terminal Tax is a tax imposed by the Municipality/Municipal Corporation under the Statute on goods or animal exported from the limits of the Corporation/Municipal Council.

Thus, the levy of ‘terminal tax’ is a compulsory levy in the nature of ‘tax’ and, therefore, cannot be included in the assessable value in terms of section 4(3)(d) of the Central Excise Act.

CG Development and Environment Cess - HELD THAT:- It is, evident that the Cess levied is in the nature of compulsory extraction of money by public authority for public purposes enforceable by law. Further, the Rules provide for a complete machinery for collection, assessment and recovery of tax.

The infrastructure development Cess and environment Cess are, therefore, in nature of tax and, therefore, not liable to be included in the assessable value in terms of section 4(3)(d) of the Central Excise Act.

Duty demand on captive consumption - HELD THAT:- This issue has been decided by the Tribunal in favour of the appellant in South Eastern Coalfields Ltd. vs. CCE, [2018 (1) TMI 1579 - CESTAT NEW DELHI]. The entitlement of exemption under the Notification has been held to be justified in respect of coal captively consumed within the mines for use in further production of coal. The said decision has also been followed by the Commissioner (Appeals), Ranchi in Order-in-Appeal No. 286/RAN/2018 dated 03.07.2018 in the appeal filed by the sister company M/s. Bharat Coking Coal Ltd. Thus, the demand of duty of coal captively consumed in the aforesaid three Excise Appeals cannot be sustained.

Extended Period of Limited - HELD THAT:- It would be seen from a perusal of sub-section (4) of section 11A of the Central Excise Act that where any excise duty has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve a notice to the person chargeable with the duty requiring him to show cause why he should not pay the amount specify in the notice. Sub-section (4) of section 11A, however, provides that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, by reason for fraud; or collusion; or any wilful mis-statement; or suppression facts; or contravention of any of the provisions of the Act or Rules made thereunder with intent to evade payment of duty, the Central Excise Officer shall, within five years from the relevant date service notice on such person requiring into show cause why he should not pay the amount specified in notice with interest and penalty.

The contention of the appellant that it bonafide believed that it was not liable to pay excise duty on the amount of royalty and also on the other amount mentioned from ‘b’ to ‘g’ of the chart deserves to be accepted. At the relevant time the judgment of the Supreme Court in India Cement did hold that royalty was in the nature of tax and, therefore, in terms of section 4(3)(d) of the Central Excise Act, the amount of royalty was not required to be included in the transaction value. It is subsequently that the judgment of the Supreme Court in India Cement [1989 (10) TMI 53 - SUPREME COURT] was reversed by the Supreme Court in Mineral Area Development Authority [2024 (8) TMI 956 - SUPREME COURT (LB)] and it was held that royalty is not in the nature of a tax. In respect of the amount collected from Serial No. ‘b’ to ‘g’ of the chart, it has been found that they are in the nature of ‘other taxes’ contemplated under section 4(3)(d) of the Central Excise Act.

It can, therefore, safely be said that the appellant, a Government of India undertaking, could have bonafide believed that it was not liable to pay central excise duty and, therefore, there cannot be any intent to evade payment of duty.

The extended period of limitation, therefore, could not have been invoked in the facts and circumstances of the case.

Penalty under section 11AC is imposed for short payment of duties by reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made there under with an intent to evade payment of duty. This penalty is equal to the duty determined.

Conclusion - Levy of central excise duty on the amount received towards royalty is confirmed for the normal period of limitation, as this amount is includible in the transaction value. It is set aside for the extended period of limitation. However, even for the normal period, the imposition of penalty and demand of interest is set aside; and

The demand of central excise duty on Stowing Excise Duty, Forest Transit Fees, Madhya Pradesh Rural Infrastructure and Road Tax Entry Tax, Terminal Tax and CG Development and Environment Cess and captive consumption is set aside. Accordingly, the imposition of penalty and interest are also set aside.

The matter is, therefore, remitted to the Adjudicating Authority only to determine the duty to be paid by the appellant in terms of this decision.

Eligibility for exemption under Notification No. 33/1999-C.E. - refund of excise duty under Industrial Policy Memorandum - classification of Solvex-GL as light oil (special boiling point spirit) versus gas for exemption - effect of prior tribunal adjudication on subsequent recovery proceedings - prematurity and unsustainability of show cause notice where entitlement has been finally decided - HELD THAT:- Appellant submits that as the issue of sanctioning of the refund claims to the appellant during the impugned period was pending before this Tribunal, Excise Appeal No. 977 of 2011 was filed by the Revenue; that the said issue has been settled by this Tribunal vide Final Order No. 75650 of 2020 dated 14.10.2020 in Excise Appeal No. 977 of 2011 which has dismissed the appeals filed by the Revenue on merits, holding that the said Notification squarely covers the impugned products and the benefit of the same is available to the appellant.

Appellant submits that the impugned Show Cause Notice issued to the appellant is premature and therefore the said Show Cause Notice is not sustainable in the eyes of law.

We find that the issue as to whether the appellant is entitled to benefit of the Notification(s) as claimed by the appellant, claiming refunds, has been settled by this Tribunal holding that the impugned products, for which the benefit of the said Notification(s) has been claimed by the appellant, are covered under the said Notifications. In view of this, we hold that the appellant has correctly availed the benefit of the Notifications in question.

Consequently, the impugned Show Cause Notice issued is not sustainable in the eyes of law.

Accordingly, the impugned proceedings are set aside.

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

Imposition of penalty u/s 11AC - payment of duty and interest before issuance of show cause notice bars issuance of SCN and penalty - availment on input services attributable to an exempted unit - Extended period of limitation - invocation when SCN barred by prior payment u/s 11A(2) - HELD THAT:- We find that in the present case, during the course of audit, it was pointed out by the audit team that the Respondent have wrongly availed the CENVAT Credit on various input services attributable to Haridwar unit which was already enjoying the benefit of exemption from payment of excise duty.

As soon as the audit team pointed out the irregular availment of CENVAT Credit attributable to Haridwar unit, the Respondent deposited the entire amount of allegedly inadmissible CENVAT Credit along with interest vide e-payment challan dated 27.12.2014, which is not disputed here. Once the Respondent have paid the amount along with interest before the issuance of SCN then as per the provisions of Section 11A(2) of the Act, the department is not supposed to issue the SCN as held in the various judgments cited.

Hence, issuance of SCN, invoking the extended period of limitation, is itself legally not sustainable, therefore, we hold that the SCN was not required to be issued in the present case. Consequently, the learned Commissioner has rightly dropped the penalty under Section 11AC of the Act.

Thus, we do not find any infirmity in the impugned order, hence, we uphold the same and dismiss the appeal of the Revenue. Cross-objection is also disposed of accordingly.

Entitlement to interest on delayed refund u/s 39(5) of the Chhattisgarh Value Added Tax Act, 2005 - duty of tax authorities to refund excess amount after reassessment - obligation to act upon a bona fide representation for refund - HELD THAT:- Admittedly, there was some dispute with regard to assessment done by the Assessment Authority, therefore, an application was moved for reassessment and subsequently, the amount arrived at by the assessment authority was reduced to the figure of Rs. 68,799/- (VAT) and Rs.70,464/- (Entry Tax). The order of reassessment was passed on 18.6.2024 and thereafter, the authorities concerned should have refunded the amount into the bank account of the petitioner. The submission made by counsel for the State appears to be proper that no representation was made by the petitioner, therefore, no steps were taken but the documents would show that the representation was made by the petitioner before the authority concerned on 15.3.2025 and reminder was sent on 28.3.2025, therefore, the authorities concerned should have taken a prompt decision after receipt of the representations. The step was taken by the respondent authorities with regard to refund of excess amount after filing of writ petition. The respondent authorities exercised power under Section 39(5) of Act, 2005 and Rule 47 of the Rule 47 of the Chhattisgarh Value Added Tax Rules, 2006 (for short Rules, 2006) suo moto and refunded the amount into the bank account of the petitioner.

According to the provisions of Section 39(5) of the Act, 2005, the petitioner is entitled to be paid interest @0.5% per month if the excess amount is not paid to the assessee within the stipulated time. Thus, the petitioner shall be entitled for interest @0.5% per month on the amount of Rs. 60,62,081/- from 20.3.2025 till the actual date of payment i.e. 31.10.2025.

With the aforesaid direction(s), this petition is disposed of.

Burden of proof in stock transfers u/s 6A - Obligation of dealer to furnish declaration Form F and evidence of despatch - Duty of assessing and revisional authorities to scrutinise documents and make inquiries - Remand for fresh adjudication after defective consideration - HELD THAT:- In the present case, the petitioner submitted all necessary documents before the Assessing Authority but the concerned authority on the basis of difference of value between F-Form and entry tax paid by the petitioner passed two separate orders levying 14% VAT tax and entry tax Rs.85,436/-. In the revision, the petitioner took a plea that there was malfunction of newly employed SAP Software but same was not taken into consideration by the said authority. As the documents were provided by the petitioner to the Assessing Authority as well as the Revisional Authority, therefore, the authorities were under an obligation to examine those documents. According to the provisions contained in Section 6A of the Act of 1956, the Assessing Authority as well as the Revisional Authority are under an obligation to scrutinize all the documents before taking any decision.

As in these petitions, the Assessing Authority as well as the Revisional Authority failed to scrutinize the documents provided by the petitioner and also failed to consider the grounds raised by the petitioner, therefore, orders passed by the Revisional Authority in both the petitions dated 11.01.2016 are hereby set aside.

The matter is remitted back to the Assessing Authority to decide afresh after affording due opportunity of hearing to the petitioner strictly in accordance with the provisions of law. As the orders impugned were passed way back in the year 2016, the Assessing Authority is directed to conclude the proceeding within a period of 6 months from the date of receipt of a copy of this order.

With the aforesaid observations/directions, both petitions are disposed of.

Negotiable Instruments Act - Dishonour of cheque - security cheques -acknowledgement of liability - Quashing of criminal complaint under inherent powers of High Court (Section 482 Cr.P.C.) - summoning order u/s 204 Cr.P.C. - presumption u/s 139 - limits on pre-trial factual adjudication in quashing petitions -HELD THAT:- It is explicit that a complaint can be quashed and an order of issuance of summons can be interfered with by this Court by invoking powers under Section 482 of Cr.P.C.. However at the same time, it is also to be kept in mind that the inherent jurisdiction under Section 482 is to be exercised sparingly and with caution only when such exercise is justified by the test specifically laid down in the section itself.

It is well settled proposition of law that an appreciation of evidence is not permissible at the stage of quashing of proceedings in exercise of this power and the inherent powers so vested do not confer any arbitrary jurisdiction upon the High Court to act according to whims and caprices.

The Court considering the prayer for quashing does not adjudicate upon a disputed question of fact. Similar observations were made by Hon’ble Supreme Court in Rajeshbhai Muljibhai Patel v. State of Gujarat [2020 (2) TMI 412 - SUPREME COURT] wherein it was observed that when disputed questions of facts are involved which need to be adjudicated after the parties adduce evidence, the complaint under Section 138 of NI Act ought not to be quashed by the High Court by taking recourse to Section 482 Cr.P.C.

As per provisions of Section 139 of the NI Act, if signatures on a cheque are admitted, the presumption lies that such question was issued in order to discharge a legally enforceable liability. So far as the contention that the cheque in question was a security cheque is concerned, the well settled proposition of law is that security cheque is integral part of commercial process entered into between the accused and the complainant. Security is not a deterrent for the drawer against dishonouring his financial commitment but it can also be legally and validly utilized towards the discharging of liability of the drawer. Reference in this regard can be had to the observations made in Shalini Enterprise and another vs. Indiabulls Financial Services Ltd. [2012 (9) TMI 1213 - PUNJAB AND HARYANA HIGH COURT], wherein this Court had observed that a security cheque is an acknowledgement of liability on the part of the drawer that the cheque holder may use the security cheque as an alternative mode of discharging his/its liability. The argument that on dishonouring of such cheque, no offence under Section 138 of NI Act was made out, was rejected. In view of this position of law, the argument that cheque in question was a security cheque and hence, should not be utilized by the petitioners for discharging liability of the complainant has no force. More so, it is revealed that the learned Magistrate passed the impugned order after considering the preliminary evidence produced on record. It is discernible that the view taken by the Magistrate is possible view that the cheques in question were drawn in discharge of a legally enforceable debt.

As such in the presence of such legal presumption, it is not judicious to quash the order passed by learned trial Magistrate. The balance of convenience is in favour of the complainant. Though obviously, the petitioners would certainly be given liberty to rebut that presumption. Consequent to the discussion as made above, this Court has no hesitation to hold that the order passed by the learned Magistrate does not warrant any interference at this stage when the factual controversy between the parties is yet to be canvassed and considered by the trial Court nor any ground for quashing of the complaint is made out. Accordingly, finding no reason to allow the petition, the same is ordered to be dismissed.

It is, however, clarified that the observations made hereinabove shall not be construed as an expression of opinion on the merits of the case.