TaxTMI Updates e-Newsletter
Feb 12,2026

Validity of electronically issued assessment order in absence of a visible Document Identification Number (DIN) - legal sufficiency of portal-generated Reference/ RFN number as indication of digital signature - validity of show-cause notices lacking a physical signature where issuance is electronic - laches and delay in filing appeal or writ petition as ground for dismissal

Validity of electronically issued assessment order in absence of a visible Document Identification Number (DIN) - legal sufficiency of portal-generated Reference/ RFN number as indication of digital signature - validity of show-cause notices lacking a physical signature where issuance is electronic - Assessment order and antecedent notices uploaded electronically are valid notwithstanding absence of a separately visible DIN or handwritten signature where the portal assigns an exclusive Reference/RFN number upon digital affixation. - HELD THAT: - The Court rejected the petitioner's contention that the assessment order dated 12.06.2024 is invalid for want of DIN and that earlier notices are invalid for lack of signature. The assessment order bears an auto-generated Reference No (37AAQFK8683D17Q/2019-20/DRC-07) assigned by the portal when the order was uploaded, and the Court accepted the view, following its earlier orders, that the presence of a portal-generated Reference/RFN number is sufficient evidence that a digital signature has been affixed to electronically issued proceedings. The Court recorded that show-cause notices and summary assessment orders are required to be issued electronically and cannot be uploaded without digital signing; consequently the RFN/Reference number generated by the system demonstrates valid digital affixture even when a conventional visible DIN or handwritten signature is not present. The petitioner's challenge on these grounds was therefore negatived as without merit. [Paras 9, 10, 11, 12]

Contentions regarding absence of DIN and signatures on the electronically issued notices and assessment order are rejected; the portal-generated Reference/RFN number suffices to validate the proceedings.

Laches and delay in filing appeal or writ petition as ground for dismissal - Writ petition liable to be dismissed on account of unexplained delay and laches in preferring the statutory appeal and in approaching the Court. - HELD THAT: - The Court found that the petitioner did not adequately explain delay in filing the appeal before the appellate authority or in approaching the High Court after rejection of the appeal. The petitioner's own averments showed prior awareness of assessment proceedings (objections filed on 06.05.2023), undermining the contention of ignorance of portal uploads. In the absence of explanation for the intervening delay between the impugned orders and the present writ petition, the Court held that laches barred equitable relief and contributed to dismissal of the petition. [Paras 8, 12]

The writ petition is liable to be dismissed on the ground of laches for unexplained delay in pursuing remedies.

Final Conclusion: The writ petition is dismissed; the electronic assessment order and antecedent notices stand validated by the portal-generated Reference/RFN number, and the petition is also barred by laches for unexplained delay. No order as to costs.

Show Cause Notice - Summary of the Show Cause Notice in FORM GST DRC-01 - Statement of determination of tax under Section 73(3) - Authentication by the Proper Officer / digital signature - Opportunity of hearing under Section 75(4) - Initiation of proceedings under Section 73 - Limitation period for passing order under Section 73(10)

Show Cause Notice - Summary of the Show Cause Notice in FORM GST DRC-01 - Statement of determination of tax under Section 73(3) - The Summary in FORM GST DRC-01 and the attached statement of determination cannot substitute for the Show Cause Notice required by Section 73(1). - HELD THAT: - The Court held that Section 73(1) mandates issuance of a Show Cause Notice specifying the reasons for invoking Section 73, and Section 73(3) requires a statement of determination; Rule 142(1)(a) only requires that a summary in FORM GST DRC-01 be served along with notices and statements. A conjoint reading of Section 73(1), (3) and Rule 142 shows the summary is additional and cannot replace the substantive Show Cause Notice. Therefore the attachment to the FORM GST DRC-01 in the present case, being only a statement of determination, did not put the provisions of Section 73 into motion and could not serve as the statutorily required Show Cause Notice. [Paras 13, 14, 15, 16, 27]

Summary in FORM GST DRC-01 with the attached statement is not a valid Show Cause Notice under Section 73(1); initiation under Section 73 without a proper Show Cause Notice is invalid.

Authentication by the Proper Officer / digital signature - Initiation of proceedings under Section 73 - Notices, statements and orders required under Section 73 must be authenticated by the Proper Officer as envisaged by Rule 26(3), and lack of such authentication renders them ineffective. - HELD THAT: - Rule 26(3) prescribes electronic issuance of notices, certificates and orders by the Proper Officer through digital signature or e-signature. Although Rule 26(3) expressly refers to Chapter III, the Court observed that the statutory mandate that Show Cause Notices, statements and orders be issued by the Proper Officer (Section 2(91) and Section 73) makes authentication by the Proper Officer imperative. In the absence of rules or Board notifications filling any void, the authentication standard of Rule 26(3) is to be applied to notices/statements/orders under Chapter XVIII so as to ensure validity. The attachments in the present case bore no proper authentication and thus lacked efficacy. [Paras 18, 19, 20, 21, 22]

Unauthenticated notices/statements/orders that are required to be issued by the Proper Officer are ineffective; proper authentication as provided by Rule 26(3) must be applied.

Opportunity of hearing under Section 75(4) - Where Section 75(4) mandates an opportunity of hearing on request, an adverse order cannot be passed without affording that opportunity; failure to grant hearing violated statutory mandate and principles of natural justice. - HELD THAT: - Section 75(4) requires that when a written request for hearing is received from a person chargeable with tax or penalty, or when an adverse decision is contemplated, an opportunity of hearing must be granted. The petitioner had indicated a request for personal hearing in the prescribed reply form but was not afforded any hearing; the summary attached only specified a date for submission of reply and left hearing particulars blank. The Court held that proceeding to pass an adverse order without granting the statutory hearing would render the protection under Section 75(4) nugatory and contravenes natural justice. [Paras 23, 24, 25, 26, 27]

An adverse order passed without granting an available statutory opportunity of hearing under Section 75(4) is unlawful.

Initiation of proceedings under Section 73 - Limitation period for passing order under Section 73(10) - Impugned order dated 29.08.2024 set aside; respondent authorities granted liberty to initiate de novo proceedings under Section 73 and the period from issuance of the FORM GST DRC-01 until service of certified copy of this judgment is excluded for computation under Section 73(10); bank accounts to be defreezed. - HELD THAT: - The Court quashed the impugned order because it was founded on procedural defects: absence of a proper Show Cause Notice, lack of authentication by the Proper Officer, and denial of statutory hearing. In the interest of justice the Court permitted the authorities to initiate fresh proceedings under Section 73 for the relevant financial year if they deem fit. The Court directed that the period from issuance of the FORM GST DRC-01 till service of certified copy of the judgment be excluded while computing the time limit under Section 73(10). It also ordered defreezing of the petitioner's bank accounts which had been frozen pursuant to the quashed order. [Paras 15, 27, 28, 29]

Impugned order quashed; liberty to initiate de novo proceedings; prescribed period excluded for limitation computation; bank accounts to be defreezed.

Final Conclusion: The writ petition was allowed: the order dated 29.08.2024 was quashed as proceedings under Section 73 had been initiated and adjudicated without a proper Show Cause Notice, without required authentication by the Proper Officer, and without granting the statutory opportunity of hearing; the authorities may initiate fresh proceedings under Section 73 if so advised, subject to the Court's direction excluding the period from issuance of the FORM GST DRC-01 until service of the certified copy of this judgment for computation under Section 73(10), and the petitioner's frozen bank accounts were ordered to be defreezed.

Binding contractual agreement - termination for breach - delay in payment and interest - Goods and Services Tax applicability - fundamental breach - principles of natural justice - alternative remedy under contract - writ jurisdiction under Article 226 - validity of the termination notice dated 17.12.2025 in view of the petitioner's alleged defaults in payment of license fee, GST and interest - HELD THAT:- We find that the License Agreement dated 08.12.2023 entered into between the parties is a binding contractual document governed by its own express terms and conditions. The petitioner has admittedly failed to comply with the payment schedule stipulated therein, resulting in substantial arrears. The obligations under the agreement, including timely payment of license fee, GST, and interest on delayed payments, are clear and unambiguous. The petitioner's plea regarding confusion over GST liability is unsubstantiated, as GST is a statutory levy applicable as per law and the agreement does not exclude its applicability. Furthermore, the agreement itself contains a clause for dispute resolution before the Civil Court. In such circumstances, we are not inclined to exercise our extraordinary writ jurisdiction under Article 226 of the Constitution of India to interfere with the contractual arrangement between the parties or to substitute the remedy available under the contract. However, the petitioner is at liberty to avail the alternative remedy as enshrined in the agreement itself, if so advised.

The writ petition is accordingly disposed of with the aforesaid liberty.

Denial Of the Input Tax Credit (ITC) - non-speaking order - wrongly availed or utilized by reason of fraud and willful misstatement/suppression of facts - natural justice - reasoned order - de novo hearing - show-cause notice - non-genuine taxpayer - cancellation of registration - HELD THAT:- It is the Petitioner’s contention that in spite of the aforesaid letter dated 29th August 2024, the impugned order is passed without considering the submissions made therein and has confirmed the demand of Rs. 12,07,594/- without appreciating the facts of the case. It is also the Petitioners contention that the impugned order has only taken the reply of the Petitioner on record and not dealt with any of the submissions made therein.

This Court by an earlier order dated 08th July 2025 had noted that the impugned order was a non-speaking and unreasoned order and which prima facie amounted to violation of natural justice.

On perusal of the impugned order dated 04th September 2024, we find substance in submissions advanced on behalf of the Petitioner that Respondent No. 3 has not considered the case of the Petitioner in the reply filed by the Petitioner dated 29th August 2024, as also has not dealt with submissions made therein in passing a non-speaking order rendering the same liable to be set aside on the ground of nonapplication of mind.

Impugned order dated 04th September 2024 is hereby quashed and set aside;

Place of business (inclusive definition) - fixed establishment (sufficient degree of permanence and suitable structure) - location of supplier of services (establishment most directly concerned with the supply) - agent (person carrying on supply on behalf of another) - liability to register from where taxable supply is made

Place of business (inclusive definition) - location of supplier of services (establishment most directly concerned with the supply) - agent (person carrying on supply on behalf of another) - Repair and maintenance services provided by the Head Office through Field Service Engineers do not constitute a "place of business" in Odisha under Section 2(85) of the CGST Act. - HELD THAT: - The Authority found that all contracts, invoicing and receipt of consideration are effected from the Head Office in Maharashtra and that the Field Service Engineers (FSEs) in Odisha are employees deployed to execute HO's contractual obligations. The FSEs do not enter into contracts, do not maintain separate books, and act under the direction and control of the HO; they are not agents carrying on business on behalf of the HO as contemplated by the Act. The spare parts temporarily retained by FSEs are incidental, limited in quantity and returned to the mother warehouse; they do not amount to a warehouse or place from which the business is ordinarily carried on. Applying the inclusive tests in Section 2(85) to the facts, the activities in Odisha do not satisfy any of the illustrative categories that would convert the Odisha location into a place of business. [Paras 5, 6]

No; the activities do not constitute a place of business in Odisha.

Fixed establishment (sufficient degree of permanence and suitable structure) - place of business (inclusive definition) - Temporary storage of spare parts and toolkit at the Appellant's location in Odisha does not constitute a "place of business" under Section 2(85) nor a "fixed establishment" under Section 2(50) of the CGST Act. - HELD THAT: - The Authority applied the twofold test for fixed establishment - sufficient degree of permanence and suitable human/technical resources - and found these lacking in Odisha. The presence in the State is limited to deployed employees (FSEs) without administrative set-up, separate books or infrastructure; the retention of leftover spare parts is transient, operationally incidental and not indicative of ordinary carrying on of business or a structured establishment capable of supplying services independently. Accordingly, the temporary holding of spare parts/toolkit does not meet the statutory standard for either a place of business or a fixed establishment. [Paras 5, 6]

No; temporary storage and toolkit do not constitute a place of business or fixed establishment in Odisha.

Liability to register from where taxable supply is made - location of supplier of services (establishment most directly concerned with the supply) - The Appellant is not required to obtain separate GST registration in Odisha solely on account of the activities performed there. - HELD THAT: - Registration liability attaches to the State from where taxable supplies are made. On the facts, the Authority concluded that the supplies (contracts, invoicing and receipt of consideration) are made from the Head Office in Maharashtra; the Odisha activities are executional and incidental. There is no separate supply emanating from Odisha that would trigger registration under Sections 22 or 24. Consequently, no separate GST registration in Odisha is required based on the present activities. [Paras 5, 6]

No; separate GST registration in Odisha is not required on the present facts.

Final Conclusion: The Appellate Authority for Advance Ruling, Odisha answered all questions in the negative: the HO's post sale service operations through FSEs and the incidental temporary retention of spare parts in Odisha do not amount to a place of business or fixed establishment in Odisha, and do not impose a requirement for separate GST registration in Odisha.

Admissibility of advance ruling under Section 98(2) proviso - threshold limit - supply of medicines, lifesaving equipment and procuring medicines and medical related items from within and across the State - Manual filing and processing under Rule 107A and CBIC Circular for Advance Ruling - exemption as per Notification No. 10/2019-CT - Whether the applicant is liable to pay tax for turnover less than the threshold limit of Rs. 40 Lakhs as per the Notification No. 10/2019-CT dated 07-03-2019? -HELD THAT:- In the instant case, the date of issue of GST ASMT-10 to the applicant by the assessing officer is on 24-02-2023. Only after the clarification is sought by the tax authorities, the applicant has filed the Advance Ruling application on 27-04-2023 seeking clarity on the queries raised.

As a result of scrutiny of the mandatory returns filed by the applicant, three adjudication orders in FORM GST DRC-07 dated 01-07-2024 for the periods from 2019-20 to 2021-22, confirmed the demands raised in DRC-01A.

Whether the questions raised in the application is similar or same on which proceedings have been initiated. - After filing the application for Advance Ruling, the applicant has not submitted the application and its enclosures to the Advance ruling authority for processing. Only after being addressed by the authorities on 03-06-2025, that the applicant has submitted the application with enclosures which was taken on record for issuing clarification.

To that effect, CBIC has issued Circular No. 25/25/2017-GST dated 21st Dec, 2017 and prescribed procedures for manual filing of applications for Advance Ruling and appeals before Appellate Authority of Advance Ruling. Para-4 of the circular states that the applicant is required to download and take a print of the challan and file the application with the Authority for Advance Ruling. Para 5 of the circular further states that all the relevant documents accompanying the application should be signed. Only after the insistence of tax authorities, the applicant has filed the application manually along with relevant documents.

The first proviso to Section 98(2) restricts admission of application seeking advance ruling where the questions are already pending in any proceedings in the case of an applicant under any of the provisions of the Act. Therefore, the term ‘proceedings’ assumes immense significance in the context of the instant case.

Non-payment of GST on the turnover declared in their GSTR-1 return - The applicant replied that they claimed increased threshold exemption provided under Notification No. 10/2019 -CT dated 07-03-2019. The notice in form GST DRC-01 was issued to the applicant since they have not opted out of the scheme and hence, they fall under Section 25(3) as voluntarily registered and person intended to stay under this Act. As they have failed to collect the tax and submit it through GSTR-3B which resulted in the revenue loss to the department and hence demand issued and adjudicated.

Further, it is seen that while the application for advance ruling in the instant case was filed by the applicant online on 27.04.2023, the GST ASMT-10 seeking clarification on the mis-match issued by the assessing officer is on 24-02-2023. The manual filing of application for Advance ruling was filed by the applicant on 19-06-2025 only after the department’s insistence with a delay of more than two years of filing the same online. The application for clarification filed by the applicant before AAR is only after initiating scrutiny and assessment process by the department against them.

Therefore, we are of the considered opinion that the application for advance ruling filed online dated 27.04.2023 and manual filing on 19-06-2025 by the applicant is liable for rejection under the first proviso to Section 98(2) of the CGST / TNGST Acts, 2017, in view of the fact that ‘proceedings’ on the same issue was already pending against the applicant.

Thus, advance ruling application is rejected.

Advance ruling - eligibility for refund of unutilised input tax credit due to inverted duty structure - scope of advance ruling u/s 97(2) - advance ruling must relate to supply undertaken or proposed to be undertaken by the applicant - authority may reject application where question is pending or already decided in proceedings - advance ruling rendered void ab initio if obtained by fraud or suppression of material facts - binding nature of advance ruling on the applicant and concerned officer - HELD THAT:- In the instant case, it is seen that the applicant has raised questions seeking an answer to his query whether the applicant is eligible to claim refund under Section 54(3)(ii) of the CGST Act, 2017 for the accumulated Input Tax Credit arising due to inverted Duty Structure in respect of manufacture and outward supply of 100% Cotton Yarn (HSN 5205). The applicant is a consultant and the question raised is on behalf of their client who are manufacturers and suppliers of 100% Cotton Yarn.

Even otherwise also, the query raised by the applicant pertains to refund of unutilised ITC, which does fit into any of the clauses at (a) to (g) of Section 97(2) of the CGST Act, 2017.

During the Personal Hearing held on 17.12.2025, to a specific query raised by the Members, it was stated by the applicant that the question raised by them in the present application is already decided in a proceeding. Therefore, the application for advance ruling filed by the applicant is liable to be rejected on the counts discussed.

The question put forth by the applicant is not in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant - applicant does not fall under the scope of Section 97(2) of the CGST/TNGST Acts, 2017.

Licensing services for the right to use minerals including exploration and evaluation - Royalty as consideration for grant of mining rights (licensing) -Reverse Charge Mechanism for services supplied by Government to a business entity - Distinction between leasing of tangible goods and grant of mining rights (residuary entry 17(viii)) - HELD THAT:- The applicant submits that as per the notification no. 1/2017-CT (Rate), dated 28.06.2017 Schedule I - the stone boulders extracted by the applicant are covered under HSN 2516 attracting 5% GST i.e. 2.5 % CGST+ 2.5% MGST (At Sr. No. 124 of the notification). Thus, the applicant submits that the rate of tax on the royalty payments would be 5% by virtue of entry no. 17 (iii) considered with 5 % GST rate on the goods mined.

We observe that, what has been provided by the Government to the applicant is the right to excavate the minerals from the leased property. This right is different from the right to use any goods for any purpose covered under the aforesaid entry.

Regarding the nature of supply, the royalty payment is clearly towards the licensing services for exploration & excavation of natural resources. The consideration is payable in the form of royalty.

In the landmark judgment of Mineral Area Development Authority vs. Steel Authority of India Ltd [2024 (7) TMI 1390 - SUPREME COURT (LB)] the Supreme Court held that royalty paid to the Government for mining rights is not a tax but a compensatory payment or consideration for parting with the right to extract minerals, governed by the Mines and Minerals (Development and Regulation) Act, 1957. This distinction is significant under the GST regime, where “supply” includes licensing and leasing services made for consideration. Accordingly, royalty paid for mining rights qualifies as consideration for a licensing service and aligns with SAC 997337 - “Licensing services for the right to use minerals including its exploration and evaluation.” This classification confirms that such services constitute a taxable supply under GST and are liable to 18% GST under the Reverse Charge Mechanism (RCM) as per Notification No. 13/2017-Central Tax (Rate), supporting the legal treatment of mining leases as services.

Whether the services of leasing of mines of which royalty is charged by government merits classification under the heading No. 9973 specifically under sub heading no 997337 (licensing services for the right to use minerals including its exploration and evaluation)? - HELD THAT:-The royalty paid in respect of Mining Lease is a part of the consideration payable for the Licensing services for right to use minerals including exploration and evaluation falling under the Head 9973 which is taxable at 9% CGST and 9% SGST under the entry at Serial No.17(viii) of the Notification No.11/2017-Central Tax dated 28.06.2017. Since the supply of services by the Government to a business entity located in the taxable territory, are covered under Serial No.5 of Notification No. 13/2017-Central Tax dated 28.06.2017, the liability to pay tax is on the recipient of such services under reverse charge mechanism as the licensing services are provided by the State Government to a business entity, i.e., the applicant.

Whether the said service can be classified under Sl. No. 17(iii) of notification no 11/2017 central tax (rate) dated 28/06/2017 attracting rate of 5 percent (same rate of central Tax as on supply of like goods involving transfer of title goods)? - HELD THAT:- Answered in the negative.

Extension of time for filing statutory appeal - judicial interference with impugned order - dismissal of petition subject to directions

Judicial interference with impugned order - The Court refused to interfere with the impugned order. - HELD THAT:- We do not find a good reason to interfere with the order impugned [2025 (12) TMI 1789 - DELHI HIGH COURT]. However, the time for filing the statutory appeal, as provided in para 23 of the impugned order, is extended upto 01.03.2026.

Pending application(s), if any, shall stand disposed of.

Bogus LTCG - exemption from Long Term Capital Gains by virtue of Section 10(38) denied - ongoing investigation by the Securities Exchange Board of India ['SEBI'] as well as the Serious Fraud Investigation Office ['SFIO'] - ITAT held AO merely declared this company to be penny stock company without bringing any evidence on record - As decided by HC [2024 (1) TMI 1528 - DELHI HIGH COURT] Ongoing investigation, in any case would neither be impacted nor impeded or influenced by any findings that have been returned by the ITAT while considering whether Long Term Capital Gain benefits were liable to be claimed. The findings of fact as recorded by the Tribunal could not be assailed before us. Since the issue itself appears to be concluded by findings of facts, we find that no substantial question of law arises

HELD THAT:- We are not inclined to interfere with the impugned order in exercise of our jurisdiction under Article 136 of the Constitution of India. Special Leave Petition is, accordingly, dismissed

Estimation of income - bogus purchases - as alleged purchases are sham transactions fabricated through bogus paper concerns - CIT(A) restricted addition @6% of the bogus purchases as confirmed by ITAT -HELD THAT:- When the Tribunal has thought it fit to reduce the disallowance at 6% from 12.5%, the Tribunal had before it the facts which were duly analysed by it. No interference is called for in the said conclusion and findings of the Tribunal in the present appeal by this court.

Addition under section 68 of the Income Tax Act - taxation under section 115BBE of the Income Tax Act - treatment of cash deposits during demonetisation as explained by prior cash on hand - acceptance of books of account and requirement of patent or glaring defects to justify rejection - rejection of book results on comparison with standard margins without corroborative evidence

Addition under section 68 of the Income Tax Act - taxation under section 115BBE of the Income Tax Act - treatment of cash deposits during demonetisation as explained by prior cash on hand - Deletion of the addition of the cash deposit of Rs. 33,20,000/- treated as unexplained and taxed under sections 68 and 115BBE. - HELD THAT: - The Tribunal accepted the assessee's contemporaneous books showing cash on hand in the three proprietary concerns immediately prior to demonetisation and personal books, demonstrating a total cash balance in Specified Bank Notes as on 09.11.2016 sufficient to account for the deposits subsequently made into bank. Absent any finding by the lower authorities that the pre demonetisation cash balances were fictitious, the subsequent deposit of that cash could not be treated as unexplained. The assessee had also credited the receipts to sales in the profit and loss account and there was no allegation or evidence that debits (expenditures) in the books were bogus. In these circumstances, the AO's conclusion that the deposit was unexplained was not sustainable and the addition under section 68 (and consequent application of section 115BBE) was deleted. [Paras 13, 14, 15]

Addition of Rs. 33,20,000/- treated as unexplained and taxed under section 68/115BBE deleted.

Rejection of book results on comparison with standard margins without corroborative evidence - acceptance of books of account and requirement of patent or glaring defects to justify rejection - Deletion of the addition of Rs. 94,903/- computed by applying an alleged standard margin (10%) of Karnataka State Beverages Corporation to the assessee's gross profit. - HELD THAT: - The Tribunal held that the assessee's audited books, maintained with stock control, cannot be displaced merely by comparing the assessee's gross margin with an asserted margin of the Karnataka State Beverages Corporation unless authentic evidence is placed on record. The AO did not produce evidence establishing the 10% margin, nor did he demonstrate what expenses such margin excludes or point to any patent, latent or glaring defects in the books. Absent cogent proof of defect or other corroboration, the book results could not be rejected and the addition on account of alleged shortfall in gross profit was deleted. [Paras 16]

Addition of Rs. 94,903/- on account of alleged shortfall in gross profit deleted.

General grounds of appeal - Disposal of general grounds of appeal not specifically argued. - HELD THAT: - Grounds numbered 1, 4 and 5 in the appeal were general in nature and not elaborated with distinct contentions; the Tribunal dismissed these general grounds. [Paras 17]

General grounds (grounds 1, 4 and 5) dismissed.

Final Conclusion: The appeal is partly allowed: the Tribunal set aside the additions of Rs. 33,20,000/- (treated as unexplained cash under section 68 and taxed under section 115BBE) and Rs. 94,903/- (alleged shortfall in gross profit), while dismissing the general grounds; the AO is directed to delete the said additions.

Deduction u/s 80P - Assessee is a primary agricultural credit society and rural development bank - HELD THAT:- We find that the issue is now squarely covered in the favor of the Assessee by the decision of Kerala State Co-Operative Agricultural & Rural Development Bank Ltd. [2023 (9) TMI 761 - SUPREME COURT] wherein it has been held that state rural agricultural and rural development bank which is engaged in providing credit facility to its members are necessarily co-operative society and not members of public.

It is also not a co-operative bank within meaning of section 5B r.w.s. 56 of Bank Regulation Act, 1949, deduction u/s. 80P could not have been denied to the Assessee.

Assessee is a primary agricultural credit society and rural development bank. Provisions of section 80P(4) does not debar the Assessee from claiming deduction u/s. 80P of the Act.

By the above judgment, the Hon’ble Supreme Court has set aside the decision of Kerala State Co-operative Agricultural & Rural Development Bank Ltd. v [2016 (5) TMI 1164 - KERALA HIGH COURT]. This very judgment is relied upon by the Ld. CIT(A) for holding that Assessee is not eligible for deduction u/s. 80P of the Act by virtue of sub section 4. As the above decision has been set aside, the natural corollary is that now the Assessee is eligible for deduction as it is not bound by the provisions of sub section 4 of the Act.

Therefore, we direct AO to consider the claim of the Assessee by virtue of the above decision and allow the claim u/s. 80P of the Act.

Deduction u/s. 80P(2)(a)(i) - The second issue involved is that Assessee is engaged in the earning of the interest from various entities. Such interest income is also eligible for deduction u/s. 80P(2)(a)(i) of the Act as the income of interest etc., is attributable to the business of the Assessee.

Deduction u/s. 80P(2)(c)(ii), the deduction to the expenditure of Rs. 50,000/- is available. Assessee has earned the e-stamping charges fees of Rs. 12,945/-. The above activity is authorized by the government agencies and therefore such profits and gains are allowable for deduction.

Appeal of the Assessee is allowed.

Addition u/s 69A r/w section 115BBE - addition on the basis of information received from the Investigation Wing and the statement of a third party recorded during search proceedings - CIT(A) deleted addition

HELD THAT:- We find that the CIT(A), after examining the assessment record, has recorded a clear finding of fact that the AO did not bring any evidence on record in the form of date of transaction, place of transaction or bank details establishing any receipt of accommodation entries by the assessee.

The name mentioned in Annexure-A was “Kala Enterprises” and that the Assessing Officer failed to establish any connection between the assessee and the said concern.

It is well settled that an addition u/s 69A cannot be sustained merely on suspicion or on the basis of unverified third-party information. The burden lies on the Assessing Officer to establish, by cogent evidence, that the assessee was in possession of unexplained money. In the present case, apart from the statement of a third party recorded behind the back of the assessee, no independent or corroborative evidence has been brought on record. Further, the denial of opportunity of cross-examination also vitiates the addition.

Whether CIT(A) failed to exercise co-terminus powers? - As we are of the view that when the AO himself has failed to conduct basic enquiry and the addition is found to be unsustainable on the material on record, CIT(A) was justified in deleting the same rather than restoring the matter for a roving enquiry.

Appeal filed by the Revenue is dismissed.

Addition u/s 56(2)(x) - difference between stamp duty value and consideration - applicability of the 10% tolerance band - scope of amendment made by introducing proviso for tolerance band

HELD THAT:- In the case of Maria Fernandes Cheryl [2021 (1) TMI 620 - ITAT MUMBAI] it was held that amendment made by introducing proviso for tolerance band of 5% and later on increased to 10% applied w.e.f. 01.04.2003 when the provisions of section 50C were introduced.

Third proviso to section 56(2)(vii) provides reference to section 50C for determining the valuation of the property by Valuation Officer. The third proviso to section 50C provides that where the value adopted or assessed or assessable by the Stamp valuation Authority does not exceed 10% of the consideration received shall be taken as full value of consideration, i.e., if the difference is less than 10%, the same can be taken as fair market value.

Though this provision is brought in the statute w.e.f. 01.04.2019, however, Courts have consistently held that the same is a beneficial provision and therefore benefit should be given with retrospective effect.

Thus, we find that assessee is eligible for 10% tolerance limit u/s.56(2)(x)(b)(B). Appeal of the assessee is allowed.

Addition u/s 69A - unexplained cash deposits during the demonetisation period - HELD THAT:- As assessee has filed substantial documents and evidences to prove his claim before the lower authorities. However, despite of this, the assessing officer made addition u/s. 69A

AO proceeded on entirely on incorrect proposition.Once the assessee has produced the day-to-day cash book supported by bank statement etc, there is no room to make any presumption. The assessing officer did not find any entry in the cash book, as incorrect, as such assessing officer's allegation on this ground is misplaced.

Some of the documents and evidences filed by the assessee before the lower authorities are self-servicing documents, hence should not be relied on, fully, and have noted that there are some inconsistencies in these documents and evidences. Considering all it is fair and reasonable to disallow 10% of Rs. 8,46,500/-, which comes to Rs. 84,650/-, which would take care of inconsistencies, if any, in the documents and evidences filed by the assessee, before the assessing officer. Appeal of the assessee is partly allowed.

Unexplained income - unaccounted money in the form of accommodation entry from a company - Thrust of the assessee in this regard is that entry for this transaction did not appear in its bank account and addition is made merely on a third party confirmation without verifying the same with corroborative documentary evidences on record - HELD THAT:- Assessee has placed on record its own bank statement claiming that it had only one bank account with Abhyuday Bank, wherein no such entry of unaccounted money appears in relation to the transaction with named accoomadation provider/Anubhav Commosale Private Limited.

Assessee has by all means demonstrated non-existence of any such transaction alleged by the AO which is based on a mistaken identity, there being similarity in the name of the assessee with the other party. Assessee cannot be made to prove negative beyond what it has already demonstrated by placing on record corroborative documentary evidences. Addition sustained by CIT(A), made by the AO is deleted. Decided in favour of assessee.

Fastening the liability for failure to deduct TDS as per section 199 and 201 - whether the payees had paid tax directly? - HELD THAT:- The Explanation to the provisions of section 191 fastens liability on the Deductors to pay tax in the event TDS, as required by the Act, is not deducted/deposited, and the assessee has also not paid the tax directly, whereas the provisio of section 201 mandates that if income tax is not deducted at source (TDS), the person responsible for deducting or depositing TDS may be deemed an "assessee in default".

The conjoint and harmonious reading of the Explanations to section 191 and 1st Proviso to section 201, the Deductor has to furnish a certificate under Rule 31ACB of the Income Tax Rules in Form 26A that the payee has paid the tax due on the income.

There is no finding in the order u/s 201(1) that there is any information regarding payment of tax by the assessee, as per the Explanation of section 191, is available nor the assessee has submitted any certificate in the prescribed format as required under 1st Proviso to section 201 of the Act.

As in the interest of justice, the issue may be remanded to the file of the AO to examine the payment of taxes by the relevant payees and adjudicate the matter of considering the assessee as “assessee-in-default” afresh. The additional ground is allowed for statistical purpose.

Addition u/s 69C for alleged bogus accommodation entries - HELD THAT:- Following the order of Hon’ble ITAT [2021 (10) TMI 1487 - ITAT MUMBAI] the AO was directed to restrict the addition with respect to expenses from M/s Radhika Enterprises to 12%.

Disallowance of deprecation -depreciation claimed on plant & machinery which were physically not available during the survey, was disallowed - HELD THAT:- Hon’ble Apex Court in the case of Sargam Cinemas [2009 (10) TMI 569 - SC ORDER] had held that the assessing authority cannot doubt valuation of assets without first rejecting the books of account.

AO did not even doubt the quantitative details of the machinery recorded by the assessee. He has merely doubted on the valuation of machinery, that too without providing any basis as to how the AO had arrived at the values of different machinery.

The fact that AO was able to value all the machineries is particularly surprising in light of the fact that all invoices of the machineries are kept at the HO and very few invoices, if any could have been found by the department during course of survey at factory. It seemed that the different values of machinery computed by the AO were merely guess of survey party without any backing whatsoever.

Thus, such a conclusion drawn by the AO was merely on the basis of surmises and conjectures that the value of machinery recorded in books of accounts were more than that found during the course of survey proceedings.

Entire back up of accounting system was impounded by the survey party but there was no allegation of wrong doing in the same, then merely on the basis of estimates made by the departmental officers that were not expert in valuation of machinery, the additions could not survive. All these invoices and issue of additions to the fixed assets were verified in each prior assessment years which were part of original assessment record and even otherwise complete details of addition to fixed assets are also available in tax audit report.

ITAT had decided the appeals for the earlier years, where the issue stood decided the issue in the favour of the assessee. Following the decision of ITAT, held that the disallowance of depreciation could not be sustained.

Deduction u/s 80IC - delay in filing of return of income - procedural v/s fundamental flaw - HELD THAT:- Filing of audit report is only directory and not mandatory as consistently allowed by several courts of law

For the year under consideration, the deduction was disallowed on technical grounds that the assessee had not filed the return of income in time. It had provided a reasonable cause for not filing return in time. It had filed the Form 10CCB in time where the amount of deduction claimed was quantified. The delay in filing of return of income constituted a procedural irregularity rather than a fundamental flaw in the claim itself.

Proceedings against the legal representative after assessee's death - no formal substitution of the legal heir - HELD THAT:- As during the pendency of the appellate proceedings, the assessee expired on 10.01.2021. This material fact was neither brought to the knowledge of CIT(A) nor before this Tribunal. Though, Form No. 36 was later revised and the thumb impression of the wife of the deceased assessee was appended on both the original as well as the revised Form No. 36, no formal substitution of legal heir was carried out.

The impugned order cannot be sustained. As per Section 159(2a) of the Act, “any proceedings taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased”.

Therefore, as per provisions of Section 159(2a) of the Act, the proceedings should have been taken against the legal representative by the CIT(A).

The impugned order is hereby set aside and the grounds raised in this appeal are restored to the Ld. CIT(A) who would decide the appeal afresh against the legal representative of the deceased assessee. Appeal of the assessee is allowed for statistical purposes.

Disallowance claimed u/s 80GGC - assessee is one of such beneficiary who had made donations amounting to Rs. 2,00,000/- to Rashtriya Samajvadi Party (Secular) - as submitted that AO and Ld. CIT(A) erred in sustaining the disallowance claimed u/s 80GGC despite the fact that the assessee had made donations through account payee cheque through banking channels to the political party which was duly registered u/s 29A of the representation of peoples Act 1951

HELD THAT:- As on verification with the website of regional Chief Electoral Officer where the party was registered i.e. CEO, Gujarat State, it was been found that Rashtriya Samajwadi Party (Secular) had not filed any contribution report, since F.Y. 2013-14 onward (details with respect to fil ing of contribution report was available on the state CEO's website from F.Y. 2013-14 to 2021-22).

It is thus evident that the conditions laid down in section 13A of the Income Tax Act was clearly not fulfilled by the party since F.Y. 2013-14. Accordingly, the party was not entitled to claim exemptions on the income earned since F.Y. 2013-14. In this connection, details of ITR and the date of filing of report u/s 29C of R.P. Act since 2017-18.

Its crystal clear that not only had the party been claiming wrong and invalid exemption, over the years under section 13A of the I.T. Act but it had also been, mentioning in its Income Tax Return of F.Y. 2018- 19 that no contribution report had been filed u/s 29C of the R.P. Act, 1951.

Thus, donation received by "Rashtriya Samajwadi Party(Secular) was bogus and cash had been received back by the assessee in lieu of cheque. The entire modus operandi of said political party was discussed by the AO as well which clearly indicates that donation given by assessee was bogus.

We also observed that there was no retraction of statements given by Smt. Sandhay Singh, Shri Bishwajeet Singh and Shri Amit Kumar, hence their statements were correct and valid.

Since it has been established that the donations received by Rashtriya Samajvadi Party (Secular) was bogus, therefore the assessee was not entitled to claim deduction u/s 80GGC and 80G(5). Appeal filed by the assessee stands dismissed.

Reopening of assessment u/s 147 - Requirement of independent application of mind - as alleged assessee booked bogus purchase expenses for materials through bogus sub-contractors expenses in the name of various dummy entities and assessee’s name is appearing in the dummy evidences which was booked for sub-contractors - HELD THAT:- A.R. placed reliance on the decision of Dineschandra R Agrawal Infracon Pvt. [2022 (1) TMI 1503 - ITAT AHMEDABAD] wherein the search party and its reasons for reopening appears to be identical along with the decision in case of Alpeshsinh K. Jadeja [2022 (12) TMI 1597 - ITAT AHMEDABAD] and in case of Alpeshsinh K. Jadeja [2022 (12) TMI 1597 - ITAT AHMEDABAD] that the wording for reopening are exactly identical except changing the figures of the demand and the name of the assessee.

Assessing Officer has not given an independent reason for reopening and in fact the reasons are identical to that of sister concerns. Besides that, the searched person has also confirmed the expenditure and the Department’s appeal filed before the Tribunal were dismissed and thus the claim of the Department that there was a bogus purchase does not stand on its footing. Thus, the appeal of the assessee is allowed.

Condonation of Delay -Classification of imported goods - Poly Vinyl Chloride Resins (Suspension grade) - classifiable under the CTH 3904 21 10 or CTH 39041090 - HELD THAT:- Delay condoned.

We see no grounds to interfere with the impugned judgment and order of the High Court [2025 (7) TMI 576 - CESTAT KOLKATA]. Hence, the Appeal stands dismissed.

Dismissal for non-prosecution - Default dismissal for failure to prosecute appeal - Representation of a company under liquidation - Duty of Official Liquidator to represent interests of a company in liquidation - HELD THAT:- None appears for the official liquidator.

Accordingly, the present appeal is dismissed in default and on account of non-prosecution.

Pending application(s), if any, shall stand disposed of.

Entitlement to benefit under the Duty Free Credit Entitlement Scheme - accrual of vested right - misuse of statutory incentive scheme - binding effect of a Supreme Court precedent - public interest justification for amendment -HELD THAT:- The question of entitlement of the appellant to the relief sought stands conclusively decided against the appellant by the judgment of the Supreme Court in Director General of Foreign Trade v. Kanak Exports [2015 (11) TMI 80 - SUPREME COURT].

A reading of para 121 of the report from the judgment of the Supreme Court reproduced supra makes it clear that the submissions cannot be accepted. The Supreme Court has clearly held, in so many words, that the appellant was one of those exporters who resorted to pernicious and blatant misuse of the provisions of the DFCE Scheme and that, therefore, no vested right of the appellant and other such exporters had been divested by the notification dated 21 April 2004 and 23 April 2004.

The Supreme Court has gone on, in the same paragraph, to state that in such circumstances, it could not be said that the appellant’s right had been deprived in any way as no right had in the first place accrued in their favour, their export themselves being fraudulent in nature.

We may note that the appellant filed a review petition before the Supreme Court, seeking review of the aforesaid judgment to the extent it was adverse to the appellant. That review petition was also dismissed.

In these circumstances, we are of the view that no occasion arose for the respondents for any re-examination of the entitlement of the appellant to the benefits of DFCE Scheme either by the respondents or by any other authority executive or judicial, hierarchically lower to the Supreme Court.

In view of the judgment of the Supreme Court in Kanak Exportswhich is clearly holds the appellant not to be entitled to the benefit sought by it, we are in no position to come to the aid of the appellant.

Appeal is accordingly dismissed.

Imposition of penalties under Sections 112(a), 112(b) and 114AA - Duty to issue a reasoned quasi judicial order / nonapplication of mind - Knowledge and intention as jurisdictional requirements for penal liability for improper importation and abetment - Penalty for dealing with misdeclared/imported goods and abetment - Liability under provision penalising use or submission of forged or false documents - Obligation to consider defence and relevant instructions/circulars - Remand for fresh adjudication where order is unreasoned - HELD THAT:- It is evident that the adjudicating authority has disbelieved the explanation of the petitioner. However, acting in a quasi-judicial capacity, the adjudicating authority was required to provide a reasoned basis for rejecting the petitioner's explanation, especially when imposing a penalty in a quasi-criminal proceeding. All the more so, since it was the case of the Customs authorities themselves in the show cause notice (as well as in paragraph 2.2 of the order in original) that “Before the examination procedures started, the CHA provided copies of documents related to the import consignment, including the Bill of Lading, Invoice, Packing List, Import License, Letter of Authorisation for the CHA, etc.”.

Since a finding of knowledge and intention has been held to be essential for imposition of penalty under the aforesaid three provisions that have been invoked against the petitioner, therefore such finding and its constituent ingredients (i.e. knowledge and intention) are jurisdictional in nature. Absent such finding and absent the ingredients, on the basis whereof such finding could be arrived at, no penalty can be imposed under either under Section 112(a) or under Section 112(b) or under Section 114AA of the said Act of 1962.

It is also noticed that the submissions made by the petitioner have not been dealt with. As already indicated, it has not been indicated in the order impugned as to why was the petitioner’s explanation as regards the aspect that there is a prevalent practice of the Customs Brokers paying up the shipping and other charges at the first instance as recognised by the Circular dated December 21, 2009 not acceptable. There is no reason why despite specifically holding the importer Shri Lhapa Tshering to be the “mastermind” unequal standards were adopted to impose penalties. To wit, the amount of penalties levied on the importer under each of the three sections aforesaid, has been simply doubled in the case of the petitioner without indicating any basis therefor.

Insofar as the judgment in the case of Sai-Dutta Clearing Agency Private Limited [2025 (1) TMI 234 - CALCUTTA HIGH COURT] is concerned, the Hon’ble Division Bench did not interfere with the order impugned since in the said case it had been established that the appellant before the Hon’ble Division Bench was a party to the entire under valuation exercise. In the case at hand there is no factual finding that the petitioner has acted mala fide with knowledge and intent. The order impugned has repeated the show cause notice without any independent finding clearly connecting the petitioner to the offence.

The judgment of CESTAT Bangalore in the case of Access World Wide Cargo [2021 (8) TMI 640 - CESTAT BANGALORE] has taken into consideration the 27th Report of the Standing Committee on finance and held that the provisions of Section 114AA of the said Act of 1962 should not be invoked against a Customs Broker and that the same are actually applicable to a fraudulent exporter.

Thus, the order impugned is set aside and the matter is remanded to the adjudicating authority for a fresh decision, in accordance with law. The adjudicating authority shall be free to initiate such other or further inquiries and seek such other or further clarifications as may be permissible in law, to reach appropriate decision in the matter.

WPO stands disposed of.

Legality of the conditions imposed under Provisional Release Order of goods u/s 110A - consistency and uniformity in exercise of administrative discretion -requirements of High Flash High Speed Diesel (HSD) as per ISI 16861:2018 based on test parameters -bank guarantaee as a condition for provisional release - bond as a condition for provisional release - undertaking to cooperate in investigation and adjudication - re-export under Customs supervision - HELD THAT:- On the similar issue, Commissioner of customs, Kandla [2025 (4) TMI 23 - SUPREME COURT] has permitted release of goods in domestic market on furnishing of Bank Guarantee of 10% of the value of goods and on furnishing bond of 100% value of goods. Thus, department cannot have discriminatory approach and it should have consistent and uniform approach while imposing conditions on provisional release of goods under Section 110A of the Customs Act.

In the present case, imported goods are being re-exported and are not to be cleared in domestic market and appellant has submitted Analysis Report furnished by the foreign supplier.

In view of the observations of the Hon’ble Court in SPA Vet-Min Pvt Ltd vs. UOI [2015 (1) TMI 271 - GUJARAT HIGH COURT], the view that when the learned Commissioner of Customs, Kandla has in similar circumstances relating to similar subject goods on the identical issue vide provisional release order no. CUS/SIIB/MISC/1023/2025-SIIB-O/O Commr- Cus-Kandla dated 06.11.2025, imposed conditions of furnishing bank guarantee to the tune of 10% of the assessable value of the goods for provisional release of the goods then, imposition of condition of furnishing of bank guarantee equal to 50% of the value of goods for provisional release does not appear to be just and proper and for ensuring consistency, uniformity, predictability and certainty of approach, it appears proper that instead of imposition of condition for furnishing of bank guarantee equal to 50% of the value of the goods, the appellant be directed to furnish bank guarantee equal to 10% of the value of the goods.

Consequently, the appeal is partly allowed in terms and impugned order is modified to the above extent.

Relevancy of statements recorded u/s 108 - mis-declaration and undervaluation of furniture and furniture parts based mainly on the printouts of emails and statements of persons recorded -Procedure u/s 138B for admitting recorded statements in adjudication proceedings - Mandatory nature of statutory safeguards before relying on investigative statements - Admissibility of computer printouts and email printouts u/s 138C - Requirement of certificate/evidentiary formalities for computer output to be admissible - Whether the statements recorded u/s 108, can be considered as relevant if the procedure contemplated u/s 138B, 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 sub-section (2) of section 138B of the Customs Act, the provisions of sub-section (1) of the Customs Act shall apply to any proceedings under the Customs Act as they apply in relation to proceedings before a Court. What, therefore, follows is that a person who makes a statement during the course of an inquiry has to be first examined as a witness before the adjudicating authority and thereafter the adjudicating authority has to form an opinion whether having regard to the circumstances of the case the statement should be admitted in evidence, in the interests of justice. Once this determination regarding admissibility of the statement of a witness is made by the adjudicating authority, the statement will be admitted as an evidence and an opportunity of cross-examination of the witness is then required to be given to the person against whom such statement has been made. It is only when this procedure is followed that the statements of the persons making them would be of relevance for the purpose of proving the facts which they contain.

In Additional Director General (Adjudication) vs. Its My Name Pvt. Ltd.[2020 (6) TMI 72 - DELHI HIGH COURT], the Delhi High Court examined the provisions of sections 108 and 138B of the Customs Act. The department placed reliance upon the statements recorded under section 108 of the Customs Act. The Delhi High Court held that the procedure contemplated under section 138B(1)(b) has to be followed before the statements recorded under section 108 of the Customs Act can be considered as relevant.

Thus, 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 Principal Commissioner for rejecting the transaction value and re-determining the same.

Admissibility of computer printouts and email printouts under section 138C - HELD THAT:- A perusal of the order passed by the Principal Commissioner shows that in respect of the printouts of the emails no finding has been recorded regarding compliance of section 138C of the Customs Act. A finding regarded under-valuation has been recorded only on the basis of the printouts of the emails and the statements made under section 108 of the Customs Act. In the absence of any certificate under section 138C of the Customs Act, no reliance can be place on the printouts of the email for recording a finding regarding under-valuation.

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 appellants. 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 May 12, 2020 passed by the Principal Commissioner 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 penalties upon the appellants.

Due diligence - duty to supervise employees - vicarious liability for employees' acts -liability for acts or omissions of employees - obligations of a customs broker under the Customs Brokers Licensing Regulations, 2018 - forfeiture of security deposit - imposition and quantum of monetary penalty - proportionality of disciplinary action - HELD THAT:- The Commissioner himself have found that the appellant himself was not responsible for any act of misconduct in terms of CBLR, 2018. He has in any case refrain from invoking the licence of Customs Broker and have ordered for forfeiture of entire amount of security deposit of Rs.75,000/- in the form of National Savings Certificates furnished by the Customs Broker under regulation 15 of CBLR, 2018. He has also imposed penalty of Rs.50,000/- under Regulation 18 of the CBLR, 2018.

In view of the specific findings of inquiry officer that the appellant was not directly involved in any act of omission or commission and whatsoever have been done in respect of this consignment was done by the employee (H-card Holder) of the appellant. The fact that entire security deposit of Rs.75,000/- has been forfeited by the impugned order. The penalty of Rs.50,000/- imposed under Regulation 18 of CBLR, 2018 is bit harsh - reduce the same to Rs.25,000/-.

Apart from the above modification in the penalty, uphold the impugned order.

Appeal is partially allowed.

Classification Of goods - import of "Resonator-Ceramic. Model CSTLS8M00G53-A0" - mounted piezo electric crystal - application of General Rule of Interpretation 1 (GIR 1) - preference for specific heading - Note 2(a) to Section XVI - parts included in Chapter headings to be classified in those headings - exclusion of residuary headings where specific heading applies - HELD THAT:- The subject goods under import are Resonator-Ceramic components, Model No. CSTLS8M00G53- A0, manufactured primarily from piezoelectric ceramic material (Lead Zirconium Titanate - PZT) with silver inner electrodes and tin-copper solder terminals. encapsulated in epoxy resin. These are electronic oscillator components used for generating stable clock signals at 8.00 MHz frequency for microprocessor-based control circuits. The goods are manufactured as surface-mount devices (SMD) designed for automated assembly onto printed circuit boards. The resonators exhibit specific electrical characteristics: nominal frequency of 8.00 MHZ, frequency tolerance within specified limits, load capacitance, and defined temperature operating ranges. This demonstrates that they are precision electronic components, not generic piezoelectric materials. However, it is noted that the resonators are imported as standalone electronic components, not yet assembled onto printed circuit boards at the time of import, and they function as timing/clock generation elements when integrated into electronic circuits.

The item in question is the piezoelectric ceramic element constructed from Lead Zirconium Titanate (PZT), which is a recognised piezoelectric material that is covered under CTH 8541. The presence of inner electrodes and tin-copper solder terminals establishes that the resonator is not an unworked ceramic crystal but a fully mounted, electrically ready piezoelectric device capable of producing an oscillatory output.

From the facts, technical submission and diagram of the subject goods it is understood that the resonator in question is essentially a PZT Ceramic crystal mounted, with the electric connections for transmitting the electrical signals. The PZT crystal is mounted with an outercoat of epoxy support and connected with terminals. The subject goods are essentially a mounted piezo electric crystal with electrical connections specifically covered under CTH 854160. The resonator can be used in any machine where the resonator function is required and therefore the subject goods is not an identifiable part of any machine. Further, in terms of GIR 1, when goods are specifically described in a heading the classification under that heading is legally correct. Therefore, the subject goods are classifiable under CTH 85416000.

Classification as parts of Washing machine - In terms of the sequential application of ratio laid down by the Hon'ble Supreme Court in the matter of Delton Cables Ltd. [2005 (2) TMI 139 - SUPREME COURT] recourse to Note 2(b) or 2(c) ibid would not be appropriate when the classification of the part in question could be determined by application of Note 2(a).

As already seen the subject goods in question could be classified under CTH 8541 by application of Note 2 (a) to Section XVI. Therefore, classification under CTH 845090 can be ruled out.

Classification under CT 8543 or CTH 8548. - As already submitted the subject goods are specifically covered under CTH 85416000 by application of GIR 1. Therefore, the subject goods do not satisfy the individual function test laid down in clauses (b) and (c) (i) of the individual function tests laid down under CTH 8479. Therefore, classification under CTH 8543 can be legally ruled out.

Further the heading 8548 is a residuary heading. As the subject goods in question could be classified under CTH 8541 as a mounted piezo electric crystal, classification under CTH 8548 is not appropriate.

Conclusion - The products in question attracts merit classification under CTH 8541, more specifically under CTI 85416000 as "Mounted piezo-electric crystals" of the First Schedule of the Customs Tariff Act, 1975.

Complaint maintainability u/s 439(2) - mens rea requirement for prosecution u/s 448 - application of limitation u/s 468 of the CrPC to offences under the Companies Act - non-joinder of the company and vicarious liability of directors - quashing of criminal proceedings as abuse of process - HELD THAT:- It is not a disputed fact that the company has not been named as an accused in the present case. Only the directors and the statutory Auditor have been made out as the accused in the instant case.

Whether the complaint filed by the Deputy Registrar of Companies is maintainable in view of section 439(2) of the Companies Act, 2013? - HELD THAT:- In the instant case, it is not disputed that the complaint has been filed by Deputy Registrar of Companies (Vineet Rai), which is not a complaint in writing filed by the Registrar, a shareholder or a member of the company, or of a person authorised by the Central Government. However, as per section 2(75) of the Companies Act 2013, the term “registrar” means a registrar, an additional registrar, a joint registrar, a deputy registrar or an assistant registrar having the duty of registering companies and discharging various functions under the Act. Therefore, since the terminology and definition of the term ‘registrar’ means and includes a Deputy Registrar as well, it can be conclusively said that he is accordingly duly empowered to file the instant complaint case before the Court of the Learned Second Special Judge at Kolkata. Therefore, complaint made by the Deputy Registrar of the company is well maintainable in law.

Limitation for initiation of proceeding - HELD THAT:- The complaint was made in the month of November, 2019. The offence under section 129 of the Companies Act shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than Fifty Thousand Rupees but which may extend to Five Lakh Rupees, or with both and insofar as Section 448 of the Companies Act, 2013, any person makes a statement (a) which is false in any material particulars, knowing it to be false or (b) which omits any material fact, knowing it to be material, he shall be liable under Section 447 of the Companies Act, 2013, which provides for maximum imprisonment up to 10 years, Hence, the period of limitation for instituting the case is not at all barred under Section 468 of the CrPC.

Mens rea requirement for prosecution under Section 448 - HELD THAT:-It is evident that the allegation is of non-disclosure in the balance sheet and not of fabrication of accounts or falsification of records. Section 448 of the Companies Act contemplates punishment for “false statement”, which necessarily imports an element of deliberate falsity and mens rea.

From the complaint and materials placed, this Court does not find any specific allegation that the petitioner made any statement knowing it to be false. At best, the allegation is of omission to disclose particulars in a particular format.

Non-joinder of the company and vicarious liability of directors - HELD THAT:- It is not a disputed fact that the company has not been named as an accused in the present case. Only the directors and the statutory Auditor have been made out as the accused in the instant case.

It is a settled principle of criminal jurisprudence that vicarious liability can be fastened upon directors only when the statute specifically provides so and when the primary offender i.e., the Company is before the Court.

In the present complaint, the allegations primarily relate to defects in the financial statements of the company and alleged non-disclosures in the balance sheet. The acts complained of are primarily attributed to the company. The petitioner is sought to be prosecuted only in her capacity as a director.

Section 129(7) of the Companies Act, 2013 provides for punishment where a company contravenes the provisions of the section and casts responsibility upon the managing director, whole-time director in charge of finance, Chief Financial Officer or any other person charged with the duty of compliance. However, such a provision presupposes contravention by the company. In the absence of the company being arraigned, fastening criminal liability solely upon the directors runs contrary to the settled position of law.

In addition, no specific allegation with regards to non-discloser of any statement knowing it to be false or suppression are not mentioned in the complaint lodged by the complainant. The whole allegations contend in the complaint are not sufficient to allow to continue the proceedings against the present petitioner because it would be only abuse of process of law since allegations are vague and general in nature. Even for the sake of argument, if it continued, it would be merely useless because possibility of conviction is remote and bleak and continuation of criminal cases would put the accused to great oppression and prejudice and extreme injustice would be caused to her by not quashing the criminal case.

This Court is of the view that continuation of the proceeding against the petitioner would amount to abuse of process of law and for securing ends of justice; proceeding against the petitioner is required to be quashed.

Transfer of winding up proceedings u/s 434(1)(c) - corporate insolvency resolution process under the Insolvency and Bankruptcy Code - test of irreversible stage / corporate death - sale of assets by secured creditors and effect on transfer - primacy of IBC and its legislative intent to prioritise resolution over liquidation - prejudice to workmen as a ground to refuse transfer - exclusive jurisdiction of NCLT to determine feasibility of resolution - HELD THAT:- The Applicant has made out a case for transfer of the proceedings to the National Company Law Tribunal under Section 434(1)(c) of the Companies Act, 2013.

The IBC is a special enactment intended to provide a comprehensive, uniform and time-bound mechanism for the resolution of corporate insolvency, replacing the earlier regime under the Companies Act. The legislative intent and scheme of the IBC is to give primacy to resolution over liquidation. Section 238 of the IBC also expressly provides that the provisions of the IBC shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force.

While in the facts of the present case, it is true that from the material placed on record, several assets of the Company in liquidation have been taken over and dealt with by secured creditors in proceedings before the DRT. However, as held by the Supreme Court in A. Navinchandra Steels [2021 (3) TMI 38 - SUPREME COURT], the sale of assets by secured creditors enforcing their security interest while standing outside the winding-up does not, by itself, constitute an irreversible step so as to bar transfer under Section 434(1)(c). Though the Official Liquidator has, in the Affidavit, stated that ‘irreversible steps’ have been taken, on a query from the Court, learned counsel was unable to justify how the steps taken would meet the test laid down by the Hon’ble Supreme Court in the case of A. Navinchandra Steels.

In this case, the winding-up order was passed on 4th February 2008, and to date, the steps taken by the Official Liquidator are limited to (i) taking possession of two immovable properties of the Company in liquidation and (ii) inviting claims from workmen and creditors. The process of verification of claims is admittedly still ongoing. As observed by the Supreme Court in Action Ispat [2020 (12) TMI 535 - SUPREME COURT], such steps do not amount to irreversible progress of winding-up proceedings. Thus, clearly, the Official Liquidator has not taken any irreversible steps in the course of winding up.

Though certain assets of the Company in liquidation have been sold and/or otherwise dealt with by secured creditors, it is not in dispute that the Official Liquidator continues to remain in possession of some assets of the Company, in addition to substantial funds. In these circumstances, it is impossible for me to conclude with certainty that there is not even the slightest possibility of revival or resolution of the Company in liquidation, as bleak as they may appear to be. Further, the determination of whether resolution is ultimately possible or not lies squarely within the exclusive domain of the NCLT and must be undertaken in accordance with the statutory framework of the IBC. Also, the fact that revival under SICA did not materialise is not a factor that, by itself, would assume revival under the scheme of the IBC would fail.

The objection raised on behalf of the Official Liquidator that a transfer of the proceedings to the NCLT would prejudice the workmen also cannot be accepted as a ground to refuse transfer. As held by the Supreme Court in Moser Baer Karamchari Union v. Union of India [2023 (5) TMI 143 - SUPREME COURT], the distribution waterfall under the IBC is a matter of legislative policy. Parliament has consciously recalibrated priorities in furtherance of value maximisation and revival. The Court cannot, therefore, decline transfer on the basis of perceived differences in distributive outcomes under two statutory regimes.

To my mind, it is plain that the real objection to the transfer by IFCI and the Official Liquidator is that such a transfer would affect their position as secured creditors and impact proceedings initiated by them for recovery. That, however, cannot be a valid ground to oppose transfer, having regard to the legislative intent and the larger public interest sought to be achieved by the IBC.

The High Court allowed the application to transfer the winding up proceedings to the NCLT under Section 434(1)(c), holding that the threshold of irreversible corporate death was not satisfied, that sales/enforcement by secured creditors do not automatically bar transfer, and that potential distributive differences under the IBC do not justify withholding transfer; directions issued for filing of a CIRP application and for workmen to pursue claims before the NCLT.

Applicability of Section 33(5) of the IBC to pending suits - Power of the liquidator to institute or defend proceedings u/s 35(1)(k) - Scope of Section 63 of the IBC - bar on Civil Courts - Priority of claims u/s 53 of the IBC and effect on wage claims - Principle that amendment applications should not decide merits of the proposed amendment - HELD THAT:-In the present case, the Trial Court has decided not just merits of the averments sought to be added in the Plaint but also the issue of maintainability of suit and has ruled that the suit itself is not maintainable.

Permissibility to implead the Liquidator to the Suit - In the present case, the Suit has been instituted by the Plaintiff on 4 October 2017, whereas the liquidation order is passed on 19 June 2019.

This Court in Urban Infrastructure Trustees Ltd. [2018 (12) TMI 2032 - BOMBAY HIGH COURT] in which Respondent No.5 therein was ordered to be wound up by NCLT. The Applicant therein had filed application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of Arbitrator. The Applicant therein applied for amendment of Section 11 Application for its substitution with the Liquidator. The Respondent therein opposed substitution by referring to Section 33(5) of the IBC.

There is no embargo on liquidator defending the Suit under Section 33(5) of the IBC. More importantly, Section 33(5) does not apply to pending Suits. In the present case, the Suit has been instituted well before liquidation of Respondent No. 1. Thus, bar under Section 63 of the IBC is not attracted to the present Suit, which is filed for recovery of unpaid salary, which issue cannot be adjudicated by NCLT or NCLAT.

Section 53 is only the priority of debts. Respondent No. 2 is not right in contending that workmen’s dues only for the period of 24 months can be paid from assets by the Liquidator. It is just that the said dues of the workmen for a period of 24 months have priority over other debts. Therefore, provisions of Section 53(1)(b)(i) cannot be read to mean that the wages beyond 24 months get obliterated. Also, the said provision does not mean an embargo on jurisdiction of Civil Court in adjudicating claims towards unpaid salary in excess of period of 24 months.

The learned Trial Judge has erred in rejecting the Chamber Summons for impleadment of the Liquidator. It has erred in holding that it has no jurisdiction to try the Suit or that Plaintiff must appear before the Liquidator to seek his claim. Impugned order dated 17 October 2022 is thus indefensible and liable to be set aside.

Special Leave Petition - Condonation of delay - Short payment of Service Tax under Works Contract Service arising out of Reconciliation - HELD THAT:- Delay condoned.

We are not inclined to interfere with the impugned order [2025 (8) TMI 1348 - DELHI HIGH COURT] in exercise of our jurisdiction under Article 136 of the Constitution of India.

Entitlement to avail Cenvat credit on input service invoices- Non-mentioning of service tax registration number on invoices - Procedural irregularity versus substantive right to credit - Definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004 - Burden of procedural compliance on the service provider - HELD THAT:- Once the Appellant has duly paid service tax on the input services denial of credit for a procedural error on the part of the service provider is wholly erroneous and unsustainable. He, therefore, prays that the demand is liable to be set aside and the appeal be allowed.

Admittedly, the appellant has been able to produce the registration number of the input service provider, on which, the appellant has taken cenvat credit. In that circumstances, we hold that the appellant is entitled to take the cenvat credit. Same view was taken by this Tribunal in the case of A.P. Fashion Pvt. Ltd.[2021 (6) TMI 666 - CESTAT KOLKATA], wherein this Tribunal has observed as under : " On perusal of the documents, it is seen that the registration details of the input service provider were available and therefore, the rejection of refund on the ground of nonavailability of registration No. in the invoices is not maintainable. Consequently, refund amounting to ₹ 67,446/- covered by such input service invoices, are allowable."

Thus, we hold that the appellant has taken the cenvat credit correctly and the same cannot be denied to the appellant as the registration number of the service provider is available on record.

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

Taxability of international roaming services - Telecommunication Service - telegraph authority - service provided by foreign telecom service provider - board clarification - HELD THAT:- This Tribunal in the appellant’s own case vide Final Order No. 21179/2025 dated 03.07.2025 held as follows: "The Board vide Instruction F.No. 137/21/2011-ST dated 15.07.2011 reproduced below has held that since the service provider is located abroad, he is not covered under the definition given in Section 65(109a); thus, the service provided by foreign vendors cannot be taxed under Telecommunication Service."

Following the aforesaid precedent, the impugned order is also set aside and the appeal is allowed with consequential relief, if any, as per law.

Liable to pay service tax under the category of ‘Security Agency Services’ -Exemption from service tax for statutory functions performed by sovereign/public authorities - CBEC clarification in Circular No. 89/7/2006-ST that statutory fees deposited into Government Treasury are not subject to service tax - extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 - HELD THAT:- The stand of the appellants is that the activity carried out by them is purely statutory function of the Police in public interest and no service tax is payable by the appellants as clarified by the CBEC vide Circular No. 89/7/2006-ST dated 18.12.2006 wherein it has been clarified that the activities assigned to and performed by the sovereign public authorities under the provisions of law are statutory duties and the fee/amount collected as per the provisions of the relevant statute for performing such functions are in the nature of compulsory levy and are deposited into Government Treasury, therefore, no service tax is payable.

We find that this issue is no more res integra and has been decided by the Tribunal in various cases. This Tribunal vide its earlier Final Order in the case of Senior Superintendent of Police Ferozepur vs. CCE & ST, Ludhiana [2025 (10) TMI 260 - CESTAT CHANDIGARH] has considered the identical issue.

Since the issue is covered in favour of the appellant by the decision of this Tribunal as cited supra, hence, we set aside the impugned order and allow the appeal of the appellant.

Clandestine manufacture and removal - admissibility of electronic records u/s 36B - requirement of corroborative evidence for clandestine removal - electricity consumption as corroborative circumstance not sole basis - CENVAT credit denial in invoice-only / bill-trading cases - penalty u/s 11AC requires proof of fraud, collusion or wilful suppression - personal penalty under Rule 26 requires proof of conscious knowledge and active involvement -

Whether the demand of duty on alleged clandestine manufacture and clearance of MS Ingots is sustainable? - HELD THAT:- In the present case, we find that the Department has not identified any primary computer system from which the alleged data originated. The pen drives seized are merely secondary storage devices, and the Department has not established who created the files, when they were created, or whether they formed part of the regular accounting or production system of the Appellant. Further, no certificate as contemplated under Section 36B(4) has been produced, and the manner of extraction, transfer, and printing of data has not been explained. In such circumstances, the statutory mandate has not been complied with, and therefore the printouts cannot be treated as admissible evidence.

We find that the issue regarding the admissibility of electronic evidence in the absence of statutory certification is no longer res integra, in view of the binding precedent laid down by the Chennai Bench of this Tribunal in Geetham Steels Pvt. Ltd. v. CCE [2025 (3) TMI 1098 - CESTAT CHENNAI] , as well as several other consistent decisions. The Tribunal has categorically held that computer printouts or electronic data retrieved from pen drives or other secondary devices cannot be relied upon unless the mandatory requirements of Section 36B, particularly the certificate under Section 36B(4), are strictly complied with.

The law is well settled that private notebooks and loose papers, even if recovered from the premises of an assessee, are at best weak evidence unless supported by independent and clinching material such as transport documents, seizure of goods, proof of receipt of sale proceeds, or confirmation from buyers.

We observe, and hold as a matter of settled law, that the burden of proof squarely rests upon the Revenue to establish clandestine manufacture and removal through affirmative, positive and tangible evidence, and not by relying upon estimates, presumptions or theoretical assumptions. Electricity consumption, at best, can serve only as a corroborative circumstance, but it cannot be elevated to the status of the sole foundation for confirming a demand of duty. In the present case, the Department’s exercise of extrapolating alleged production for the entire disputed period of nearly two years merely on the basis of one month’s disputed data is wholly speculative, arbitrary and legally unsustainable.

In sum, we find that the Department’s case suffers from fundamental evidentiary defects. The electronic printouts are inadmissible under Section 36B. The private notebooks are uncorroborated. The statements stand weakened by retractions during cross-examination. Electricity consumption extrapolation is speculative. The alleged money trail is unproven. The complete chain required for clandestine manufacture has not been established.

Accordingly, applying the binding ratio of Geetham Steels Pvt. Ltd. v. CCE [2025 (3) TMI 1098 - CESTAT CHENNAI] and the settled law laid down by the Hon’ble Supreme Court in R.A. Castings [2008 (6) TMI 197 - CESTAT NEW DELHI], we hold that the serious charge of clandestine manufacture and removal has not been proved.

The duty demand confirmed against the Appellant Company is therefore unsustainable and liable to be set aside. Consequently, interest and penalties also cannot survive.

Whether the Department’s Appeal against dropping of CENVAT credit demand is sustainable? - In the present case, however, the adjudicating authority has dropped the substantive demand of inadmissible credit itself on the ground that the Department failed to establish non-receipt of inputs through cogent and corroborative evidence. Once the foundational allegation of invoice-only transactions has not been proved, the very basis for invoking Rule 26 penalty disappears. Rule 26 presupposes conscious knowledge and active involvement in dealing with goods or documents liable for confiscation. In the absence of a sustained finding of fraud or clandestine invoice issuance, penalties cannot survive merely on assumptions or general allegations. Therefore, the Revenue’s reliance on the above decisions is misplaced, and those judgments do not advance the Department’s case in the facts of the present appeals.

Coming to penalty under Rule 26, the Department’s reliance on Suraj Medical Agencies and Madhumilan Syntex is legally correct insofar as Rule 26 penalties can be imposed upon persons issuing invoices without goods. However, such penalty presupposes a proven finding of fraudulent invoice issuance. Where the substantive credit denial itself has been dropped for lack of proof, imposition of penalty cannot survive independently in absence of established fraud. Thus, the Department’s prayer for penalty cannot be accepted unless the core allegation of invoice-only credit or Bill trading is first established.

We therefore hold that while the Department has raised arguable grounds based on statements and the principle of preponderance of probability, the adjudicating authority’s dropping of the credit demand cannot be interfered with in absence of invoice-wise proof of nonreceipt, consistent corroboration of cash return, or independent evidence disproving transport and statutory documentation. The reliance on D. Bhoormull does not dispense with the requirement of establishing essential facts, namely non-receipt of inputs.

Accordingly, we find no sufficient ground to set aside the dropping of demand of ₹1,40,10,321/- or to remand the matter merely for verification. Consequently, the Department’s appeal seeking reversal of credit dropping and imposition of Rule 26 penalties is rejected.

Whether Penalty under Section 11AC and Rule 26 is Sustainable? - It is necessary to note that penalty under Section 11AC is not an automatic consequence of every duty demand. The provision, as interpreted consistently by the Hon’ble Supreme Court, requires the presence of specified mens rea elements, namely fraud, collusion, wilful misstatement, suppression of facts, or contravention of provisions with intent to evade payment of duty. Unless these ingredients are established through cogent evidence, penalty under Section 11AC cannot be sustained.

It is well settled that penalty is only consequential and cannot stand independently when the demand itself is set aside. The Tribunal and Courts have consistently held that where the charge of clandestine removal is not proved, penalties automatically fall. In this regard, reference may be made to the Supreme Court ruling in CCE v. Balaji Perfumes., wherein it was held that serious allegations of clandestine removal require strict proof, and in absence of such proof, not only duty demand but also penalties cannot be sustained.

The Appellant has further contended that even assuming duty demand was sustainable, penalty under Section 11AC could not have been imposed mechanically without establishing deliberate intent. The Department has not shown any seizure of unaccounted goods, any recovery of clandestine sale proceeds, or any parallel banking transactions. The absence of such incriminating material strongly negates the allegation of deliberate evasion. Thus, the essential conditions for Section 11AC are not satisfied.

Coming now to penalties imposed upon the Managing Director and the Manager under Rule 26 of the Central Excise Rules, 2002, we find that Rule 26 provides for penalty upon any person who deals with excisable goods which he knows are liable to confiscation, or who is concerned in transporting, removing, depositing, keeping, selling or purchasing such goods with knowledge of their illicit nature. Therefore, Rule 26 requires a clear finding of conscious knowledge and active involvement in dealing with goods liable to confiscation.

The Appellants have rightly contended that during cross-examination, key buyers and suppliers denied receipt or supply of non-duty paid goods, and the Managing Director himself disputed the alleged admissions. Thus, there is no reliable evidence showing that the Managing Director or Manager had knowledge of goods being liable to confiscation. In absence of such proof, penalties under Rule 26 are legally unsustainable.

It is also relevant to note that Rule 26 penalties require proof that the individuals dealt with goods “knowing” them to be liable for confiscation. The impugned order does not record any independent finding of such knowledge beyond the general allegation that they were in charge of the Company. Such omnibus reasoning is insufficient to sustain personal penalties.

Therefore, we hold that penalties imposed on the Managing Director and Manager are wholly consequential, and once the substantive clandestine removal demand fails, personal penalties also cannot be sustained.

Thus, we conclude that the penalty imposed upon the Appellant Company under Section 11AC is unsustainable, and the personal penalties imposed upon the Managing Director and Manager under Rule 26 are equally liable to be set aside.

In view of the foregoing, the impugned Order-in-Original 18/2015(CE) dated 22.12.2015 is set aside to the extent it confirms duty, interest and penalties on clandestine removal. The appeals filed by the assessee and individuals are allowed. The Department’s appeal is dismissed. Consequential relief, if any, shall follow in accordance with the law.

Treatment of by-product for Cenvat credit - technical inevitability of by-product - application of Rule 6(3) of the Cenvat Credit Rules, 2004 - reversal of Cenvat credit - penalty under Section 11AC -Whether the appellant is liable to reverse cenvat credit attributable to “coal tar” during the process of generation of “coal gas”, or not ? - HELD THAT:- The said issue has been decided by this Tribunal in the case of JSW Steel Ltd.[2015 (10) TMI 1559 - CESTAT MUMBAI], wherein this Tribunal held that in so far as the quantity of inputs required for manufacture of dutiable final products, does not change and generation of by-product is an inevitable technical necessity, it cannot be said that any input have been used in the manufacture of by-product. Therefore, the conditions of Rule 6(3) of the Cenvat Credit Rules, 2004, are not applicable to the facts and circumstances of this case. As admitted, no input has been specifically used by the appellant to manufacture this “Coal Tar”, in that circumstances, the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004, are not applicable.

Thus, the appellant is not required to reverse any cenvat credit attributable to the generation of “coal tar” during the manufacture of final products i.e. refractory products. Therefore, the impugned proceedings are not sustainable against the appellant. Consequently, the impugned order is set aside and appeal is allowed with consequential relief, if any.

DTA sales entitlement - deemed exports treated as physical exports for FOB calculation - 90% FOB limit for specific product within overall 50% DTA entitlement - similar goods (Customs Valuation definition applied to DTA sales) - extended period of limitation invoked on discovery/suppression in audit -

Entitlement to demand differential duty under Notification No. 23/2003-CE - HELD THAT:- We find that the appellant has claimed and also supported by various case laws that FOB value of deemed exports should be included in FOB value of physical exports for determining the DTA sales entitlement. We have gone into various case laws and find that the contention of the appellant is correct.

In the case of M/s Shree Rohini Enterprises Vs Commissioner of Central Excise, Surat-I, this tribunal [2006 (11) TMI 677 - CESTAT AHMEDABAD], held that the value of deemed export is also to be taken into account for determining 50% of the FOB value which will be permitted to be sold to domestic market.

Therefore, this issue needs relook by the learned Adjudicating Authority and he may re-check with the office of the Development Commissioner regarding the practice adopted by them as per EXIM Policy as stood at the relevant time, before determining whether the appellant has exceeded DTA sales beyond their entitlement to demand differential duty under Notification No. 23/2003-CE dated 31.03.2003.

Limit on DTA sale - HELD THAT:- We find that there is a limit on DTA sale of any specific product not more than 90% of the FOB value of export of that particular product subject to not exceeding overall DTA sales entitlement of 50% of FOB value of exports. In fact, wastes, and by products etc if intended to be cleared in DTA, are also to remain within the overall limit of 50% of the FOB value of exports. We therefore, are not convinced with the arguments of the appellant and accordingly, remit this matter to the learned Adjudicating authority to see if this limit has been breached in respect of DTA sales of any specific product. In case, this condition has been breached in respect of any specific product, the appellant shall be liable to pay excise duty as per the relevant provisions.

Invocation of extended period - HELD THAT:- We however, find from their ER-2 returns that consolidated figures/details of goods cleared in DTA sale are mentioned whereas issues involved in the present case have arisen after deeper scrutiny of documents of the Appellant by the officers. The issues such as similarity of the products, DTA sales entitlement with reference to exports and carried forward balance of entitlement at the close of the previous quarter, cannot be known from the details provided by the appellant in their ER-2 returns and/or in other intimations. These were known to the department only when appellant’s records were audited by the officers which otherwise would have remained unnoticed. In para 4.9 of his order, Learned Commissioner has discussed this issue in detail and justified invocation of extended period in this case. Thus, we agree with the findings of the learned Adjudicating authority on this issue and hold that extended period of limitation has correctly been invoked.

Thus, we remit the matter to the Adjudicating Authority for deciding various issues raised by the appellant afresh in the light of above observations and then, re-determine central excise duty liability on the appellant, if any. The appeal is allowed by way of remand.

Effect of SVLDRS, 2019 settlement on penalties imposed on co-noticees - personal penalty under section 26 of the Central Excise Act, 1944 - binding effect of settlement under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 on related proceedings - HELD THAT:- We find that this Tribunal in the case of JPFL Films Private Limited & Others Vs. CCE, Ludhiana [2023 (12) TMI 304 - CESTAT CHANDIGARH], held that once the main appeal is settled under SVLDRS, 2019, the appeals filed by the co-noticees challenging the personal penalty arising out of the same impugned order cannot be sustained.

Thus, the impugned order with regard to imposition of penalty on the 2(two) appellants being co-noticees in the same impugned Order-in-Appeal No. 414-418/2017-CT dated 09.11.2017 is not sustainable and is liable to be set aside, hence the impugned order is set aside. Accordingly, the appeals filed by the appellants are allowed.

Reversal of CENVAT credit under Rule 6 - Exciseability of bagasse / non-excisable goods - Withdrawal of departmental circular - Reliance on Supreme Court precedent -HELD THAT:-The issue involved was reversal of input credit and input services credit which interalia, is issue in this case also, as bagasse has been considered as excisable product and input credit credit is sought to be denied. While opening his arguments, learned Advocate stated that the Circular relied upon by the department is no more in force and has been withdrawn by Circular No. 1084/05/2022-CE dated 07.07.2022.

In the matter of UOI & Others vs M/s Indian Sucrose Limited [2022 (7) TMI 353 - SC ORDER], even the Apex Court has held that Bagasse is non-excisable product and therefore, cannot be considered as manufactured product. Thus, learned AR agrees with the other side and concedes that the order is against them. He therefore fairly reiterates the findings of the lower authorities.

Thus, we find that the issue is no more res integra, we therefore, find that the stand of the department that the Bagasse is exempted item no more holds good as it is held as non-excisable. Therefore, the order passed by the lower authority demanding reversal of credit is liable to be quashed. Order is therefore, set aside with consequential relief. Appeal allowed.

Validity of revisional power exercised under inherent/suo motu revision - Claimed exemption on a turnover - towards commission sales of tamarind - requirement of Form A-5 bearing the official seal of the assessing authority - compliance with Rule 17-C of Andhra Pradesh General Sales Tax Rules, 1957 -burden to prove payment of tax by the principal to claim exemption - HELD THAT:- It is the case of the petitioner that the Deputy Commissioner ought not to have exercised the revisional power on mere suspicion and doubt against Form A-5 declaration filed by the petitioner. The counsel for the petitioner would submit that once the assessing authority has accepted the genuineness of the certificate/declaration filed by the petitioner, the revisional authority cannot conduct a fresh enquiry. He would further contend that no opportunity was granted to the petitioner, so as to get the defects corrected in respect of Form A-5 furnished by the petitioner.

It is further case of the counsel for the petitioner that there is no taxable event occurred in the hands of the petitioner either in entry-170 of I schedule or under entry-14 of II schedule, even assuming that the certificate submitted by the petitioner is not valid.

Admittedly the declaration form filed by the petitioner does not bear such signature and therefore the same cannot be treated to have been filed in tune with Rule 17-C (1) & (2) of Andhra Pradesh General Sales Tax Rules, 1957.

Admittedly, nothing is placed on record to prove that the principal of the petitioner has paid tax in relation to the disputed turnover, so as to claim exemption by the petitioner.

Admittedly, the petitioner not filed declaration form A-5 as per Rule 17 nor placed before the authority to show that its principal paid the tax on the disputed turn over, so as to claim exemption.

This Court does not find any illegality or infirmity either in the order of revision or the order passed by the Tribunal. Viewed from any angle, there are no merits in the revision petitions and accordingly the same are dismissed.

Mandatory issuance of notice u/s 35(3), for offences punishable up to seven years - discretionary power of arrest u/s 35(1)(b) - requirement of "reason to believe" and recorded satisfaction for necessity of arrest - notice as the rule and arrest as the exception - limitations on arrest after issuance of notice u/s 35(6) - safeguards of Article 21 in arrest and investigation -Whether in the absence of circumstances under Sections 35(1)(b)(i) and 35(1)(b)(ii) of the BNSS, 2023 existing, is an arrest by a police officer, qua an offence punishable with imprisonment up to 7 years, legally justified? - HELD THAT:- While making an arrest under Section 35(6) of the BNSS, 2023, after the stage of issuing a notice seeking presence under Section 35(3) of the BNSS, 2023, the circumstances and factors that were in existence at the time of issuing the said notice shall not be taken into consideration by a police officer while making an arrest subsequently. In other words, for effecting an arrest under Section 35(6) of the BNSS, 2023, it must be based upon materials and factors which were not available with the police officer at the time of issuing a notice under Section 35(3) of the BNSS, 2023. Therefore, the power of arrest under Section 35(6) of the BNSS, 2023 is to be exercised rather sparingly, only under circumstances as aforementioned.

The power of arrest under Section 35(6) read with Section 35(1)(b) of the BNSS, 2023 must be interpreted as a strict objective necessity, and not a subjective convenience for the police officer. It does not mean the police officer can arrest to simply ask questions. However, it means that the police officer must satisfy himself that the investigation, qua an offence punishable with imprisonment up to 7 years, cannot proceed effectively without taking the concerned individual into custody. Any interpretation to the contrary would clearly frustrate the purpose and legislative intent of Sections 35(1)(b) and Sections 35(3) to 35(6) of the BNSS, 2023.

An arrest by a police officer is a mere statutory discretion which facilitates him to conduct proper investigation, in the form of collection of evidence and, therefore, shall not be termed as mandatory.

Consequently, the police officer shall ask himself the question as to whether an arrest is a necessity or not, before undertaking the said exercise.

For effecting an arrest, qua an offence punishable with imprisonment up to 7 years, the mandate of Section 35(1)(b)(i) of the BNSS, 2023 along with any one of the conditions mentioned in Section 35(1)(b)(ii) of the BNSS, 2023 must be in existence.

A notice under Section 35(3) of the BNSS, 2023 to an accused or any individual concerned, qua offences punishable with imprisonment up to 7 years, is the rule.

Negotiable Instruments Act - Dishonour Of cheque - Presumption u/s 139 - onus to rebut presumption of a legally enforceable debt - privity of contract and liability u/s 138 - limitation for complaint u/s 138 computed from cheque issuance/presentation and dishonour - limited scope of revisional jurisdiction under the Cr.P.C. - HELD THAT:- As per settled law, since execution of the cheque and the receipt of the legal notice are admitted, a presumption arises in favour of the holder of the cheque i.e. the respondent and that it was issued in discharge, either in whole or in part, of a legally enforceable debt or liability. Based thereon, the Cheque involved [Ex. CWI/B] is a valid instrument issued for dispensing a legal debt.

As such, the presumption under Section 118(a) and Section 139 of the N.I. Act was attracted and the burden lay upon the petitioner to rebut the above presumption by raising a probable defence either by leading direct evidence or by pointing out serious contradictions or improbabilities in the respondent’s case, as held by the Apex Court in Rajesh Jain vs. Ajay Singh [2023 (10) TMI 418 - SUPREME COURT]

In view thereof, since, admittedly, the signature affixed on the Cheque involved [Ex. CWI/B] was of the petitioner, as held by the Hon’ble Supreme Court in judgment Rangappa vs. Sri Mohan [2010 (5) TMI 391 - SUPREME COURT], it was ipso facto sufficient to presume the existence of a ‘legally enforceable debt’, for which the onus was upon the petitioner herein to rebut it. Since, undisputedly the petitioner refused to lead any evidence before the learned Trial Court, his defence was based on his statement under Section 313 of the Cr.P.C., which discloses that he was unable to establish his case beyond reasonable doubt.

Since the Cheque involved [Ex. CWI/B] was issued under the name of M/s Farhan Empexo Export and Import Co., there was no requirement for the respondent to show his relationship with it.

The petitioner can neither be allowed to reagitate the very same issues which have been duly negated twice over nor to raise any new/ fresh grounds herein.

Finding no illegality and/ or perversity therein, no grounds are made out for setting aside of the impugned judgement dated 10.04.2024 passed by the learned ASJ. As such, the judgment dated 26.04.2022 as also the order on sentence dated 07.05.2022 passed by the learned Trial Court are upheld.

Accordingly, in view of the foregoing, the present petition is hereby dismissed.