TaxTMI Updates e-Newsletter
Feb 13,2026

Release of goods under section 129(1)(a) in the absence of an e-way bill and other prescribed documents - Suspension of registration and prohibition on taxable supply - Validity of tax invoice during suspension of registration - Requirement to generate e-way bill by supplier/recipient/owner - Specified documents accompanying goods in transit - Inapplicability of administrative circular where prescribed documents are absent -HELD THAT:- No material has been brought on record to show that the supplier's registration has been restored. It was the duty of the petitioner that before movement of consignment it should have furnished information relating to the said goods as specified in Part A Form GST- EWB 01 respectively at the common portal along with such other information as required at the common portal i.e. e-way bill, but the petitioner at its own wisdom has not done so. Once there is no specified documents accompanying the goods as no e-way bill was found, the tax invoice which was found accompanying the goods cannot be treated as specified documents in view of Rule 21-A (3) of the Rules along with sections 2(66) and 31 of the Act. Once there is neither any prescribed document or tax invoice accompanying the goods in transit, the Circular dated 31.12.2018 Clause (6) is of no aid to the petitioner.

In the present case, it is admitted fact that the registration of the supplier was suspended on 21.11.2025, tax invoice was issued hereafter on 3.12.2025 and the suspension of registration of the supplier is not revoked. Further e-way bill as required under Rule 138(3) has not been generated before passing of the seizure order by the petitioner. The petitioner cannot be treated as owner of the goods as no specified documents could be found accompanying the goods.

In the facts and circumstances as well as reasons stated herein above, no interference is called for with the impugned orders. - Both the writ petitions fail and are dismissed.

Enlargement on bail - Bail conditions for a foreign national with expired visa - Economic offence triable by Magistrate with maximum sentence of five years - Documentary and electronic evidence bearing on tampering risk - Abuse of liberty of bail and consequences - Judicial instruction on manner of citing judgments (avoid naming presiding judges) - HELD THAT:- It is evident that the applicant has been arrested as being an accused in a matter relating to evasion of tax. The investigation was conducted by the CGST Department subsequent to which the quantum of evasion was calculated and then a complaint was filed arraying the applicant and three other persons along with company as accused. During investigation, a letter of appointment was recovered by the Investigating Agency showing the appointment of the applicant in the said company from 21.02.2024 in its security department. The applicant is stated to be having a child aged about 3 years. The matter is triable by the court of a Magistrate. The maximum punishment attracting in it is five years. Co-accused Vinay Kumar has been granted bail by a co-ordinate Bench of this Court. The applicant is a lady. Admittedly the applicant is a Chinese national and her visa for stay in India has expired for which as per learned counsel for the Union of India she has applied for its extension on 03.02.2026.

Looking to the facts and circumstances of this case, the nature of evidence and also the absence of any convincing material to indicate the possibility of tampering with the evidence, this Court is of the view that the applicant may be enlarged on bail.

The identity, status and residential proof of sureties will be verified by court concerned and in case of breach of any of the conditions mentioned above, court concerned will be at liberty to cancel the bail and send the applicant to prison.

The bail application is allowed.

Pre-deposit requirement for instituting an appeal before the Appellate Tribunal - acceptance of earlier pre-deposit made at first appellate stage as satisfaction of Tribunal pre-deposit - filing appeal in physical format where e-filing system is not accepting appeals - refusal to invoke limitation where petitioner bona fide pursued remedy before High Court - exercise of extraordinary jurisdiction by High Court when Appellate Tribunal is not fully functional - HELD THAT:-Considering the deposit already made at the first appellate stage, we agree that there would be no question of making any further pre-deposit for instituting an appeal against the impugned order dated 30.06.2025.

In case there are any issues about the system not accepting the petitioner’s appeal within four weeks from today, then, the petitioner, is allowed to file the appeal in the physical format. The same should be accepted by the Tribunal without insisting upon any fresh pre-deposit.

All contentions of all parties on merits are, however, left open for the Tribunal to decide. This Court has not adverted to the rival contentions on merits of the matter.

Writ petition is disposed of in the above terms without any costs order.

Provisional attachment u/s 83(1) of the CGST Act - Provisional attachment under Section 83(2) - cessation after one year - Non-extension or re issuance of provisional attachment after efflux of statutory period - Bank's obligation to defreeze accounts upon cessation of provisional attachment - Effect of efflux of time on enforceability of executive orders - HELD THAT:- The writ petition is partly allowed by observing that not only the provision of the said Act clearly provide that the order under Section 83(1) of the said Act in terms of Section 83(2) ceases to have effect after expiry of the period of one year from the date of the order, the Hon’ble Supreme Court in the case of Kesari Nandan Mobile [2025 (8) TMI 992 - SUPREME COURT], has also while interpreting the above section in no uncertain terms held that by efflux of time of one year in terms of the provisions of Section 83(2) of the said Act the order of provisional attachment ceases to have effect. Accordingly, in my view, the order of attachment dated 3rd January, 2025 which is clearly beyond the period of one year, cannot be continued any further.

Since, by efflux of time and having regard to the provisions contained in Section 83(2) of the said Act, the provisional attachment order has ceased, neither can the Commissioner, CGST and Central Excise Patna-II, nor can the petitioner’s Banker continue with the freezing of the petitioner’s property and/or the bank accounts on the basis of the above order of provisional attachment.

Writ petitions partly allowed.

Quashing of ex-parte demand order -maintainability of the petition as an alternative remedy -opportunity of hearing and principles of natural justice - conditional deposit for adjudication - direction to pass fresh reasoned order after personal hearing - non-apportionment of deposited amount pending consequence of order - HELD THAT:- It is the case of the counsel for the petitioner that post-show cause notice, a reply was tendered, however, the petitioner couldn’t appear for the personal hearing of the matter particularly when there was a default on the part of the advisors so also that of staff in noticing the notice of hearing. The counsel would further urge that the claim is barred by limitation as 2017 liabilities is sought to be imposed on the petitioner without observing the issue of limitation. She would further urge that the issue was subsequently considered and an order was passed thereby closing the liability of the petitioner.

Respondent has raised a preliminary objection on maintainability of the petition as an alternative remedy is provided for.

We permit the petitioner as undertaken before this Court to deposit the entire amount under the order impugned dated 3rd August, 2024 with the respondent within a period of four weeks from today.

In case if the amount is deposited as has been undertaken, the petitioner shall also submit written notes of argument in addition to show cause notice and shall appear for personal hearing before the respondent on 30th March, 2026.

The respondent shall pass an order within a period of four weeks thereafter and in case if the order is adverse to the interest of the petitioner, the amount be not apportioned by the respondent for a period of two weeks from the date on which the order is served on the petitioner.

Accordingly, the petition along with pending applications, stands allowed and disposed of in the above terms.

Wrongful availment of ineligible input tax credit - use of fake invoices - regular bail in economic/CGST offences - custodial detention vs. investigation concluded - documentary evidence-based prosecution - offences triable by Magistrate and sentencing ceiling - clean criminal antecedents as bail factor - prohibition on influencing prosecution witnesses - precedential reliance on Vineet Jain and Ratnambar Kaushik - HELD THAT:- The case being based on documentary evidence, the investigation having been concluded, the nature of allegations levelled, the offence being triable by the Court of Magistrate, clean criminal antecedents of the petitioners and the law clarified as per the judgments passed in the matters of Vineet Jain [2025 (5) TMI 925 - SC ORDER] wherein the Hon’ble Supreme Court granted the benefit of bail when the accused reflected no criminal antecedents and after noticing the prosecution was based on the documentary evidence and the maximum sentence was 5 years., Ratnambar Kaushik [2022 (12) TMI 263 - SUPREME COURT] wherein similar benefits had been extended to the petitioner(s) therein and Jashanpal Singh [2026 (2) TMI 324 - PUNJAB AND HARYANA HIGH COURT]. I deem it appropriate to allow the instant petitions.

Accordingly, both the petitions are allowed and the petitioners are ordered to be admitted to regular bail subject to their furnishing bail/surety bonds to the satisfaction of the trial Court/Duty Magistrate/Illaqa Magistrate concerned.

The observation made hereinabove shall not be construed as an expression on the merits of the case and the trial Court shall decide the case on the basis of available material.

Restoration of GST registration - Physical verification and corroboration of documents - Setting aside administrative orders - Grant of hearing before administrative authority - Remand for fresh decision on restoration and amendment of registration - HELD THAT:- Since the claim of the petitioner upon verification was found to be genuine, in our opinion, the respondents ought not to have disallowed the claim as was sought to be canvassed by him.

That being so, we deem it appropriate to set aside the order in original dated 31st January 2024, so also the order dated 28th March 2025.

The petitioner to appear before the respondent/authority in support of his claim made in the application and we direct the respondent to decide the same upon granting hearing to the petitioner qua the restoration of registration number with effect from 12/13 July 2017 expeditiously and in any case, within a period of three months from the date of passing of the Order.

The petition stands partly allowed.

Anticipatory bail - non-cooperation with investigation - fraudulent transactions - creation of bogus firms and misappropriation - absconding - parity in grant of bail - post-charge-sheet cooperation principle - cognizance after submission of offence report - offence u/s 132 of the Central Goods and Service Tax Act, 2017 read with Section 20 of the Integrated Goods and Service Tax Act - HELD THAT:- This is not a case that the petitioner has co-operated in the investigation and after the offence report, the petitioner is being deliberately absconded, in that view of the matter, the principle laid down by the Hon’ble Supreme Court that after the chargesheet, if the petitioner has co-operated and not taken into custody, he is required to be granted bail, however, the facts of the present case is otherwise and this principle will not apply in the present case, as the petitioner is still absconding and further heavy amount i.e. Rs. 55.66 crores of the Government money has been misappropriated upon forming the bogus firms, created by this petitioner and the round chain has been made by the petitioner and other co-accused persons.

Thus, not inclined to grant anticipatory bail to the petitioner, named above.

Prayer for anticipatory bail is rejected.

Territorial Jurisdictional competence of adjudicating authority - extended period of limitation/proviso to Section 73(1) invoked - adjudication by Superintendent excluded for cases involving taxability, classification, valuation and extended period - Compliance of the conditions mentioned in exercising jurisdiction under Article 226 of the Constitution of India - Circular No. 1049/37/2016-CX para 2(i) - HELD THAT:- It is well settled that mere existence of an alternative remedy before a statutory forum would not deter the writ Court from exercising jurisdiction under Article 226 of the Constitution of India if the case presented before the Court satisfies any of the following exceptions-

a) violation of principles of natural justice;

b) infringement of fundamental right;

c) challenge thrown to the vires of an Act and/or provision(s) thereof;

d) an act wholly without jurisdiction

In the case at hand serious issues as regards jurisdiction of the Superintendent to take up and decide the petitioners’ case have been raised. Thus, entertainability of this writ petition cannot be questioned. What is required to be seen is whether the challenge thrown to the jurisdiction of the Superintendent can be sustained by the petitioners.

In the instant case, the notice to show-cause issued to the petitioners is clearly one where extended period of limitation has been invoked.

It is now well settled that inherent lack of jurisdiction would render an order passed by the authority concerned a nullity (See. - Kiran Singh [1954 (4) TMI 48 - SUPREME COURT])

It is well settled that a point of law, more so like the one at hand, which goes to the root of the matter can be taken at any stage of litigation even if the same was not taken earlier. In any case, if the Superintendent, CGST and CX did not have jurisdiction mere participation of the petitioners in the hearings held by the said authority or in the proceedings conducted by such authority would not have conferred jurisdiction on such authority.

Since the adjudicating authority i.e. the Superintendent, CGST and CX has been found to have acted without jurisdiction in adjudicating the petitioners’ case, no purpose would be served by sending the petitioners to the statutory Appellate Authority. The order impugned dated October 29, 2024,being wholly without jurisdiction, is set aside.

Since the matter has been decided only on the issue of the jurisdiction of the Superintendent in view of the discussion, the other points raised by Mr. Khan have not been gone into and have accordingly not been decided.

WPA stands disposed of.

Cancellation of GST registration - business of Providing Security Services -revocation of cancellation of registration - limitation and condonation of delay - power of writ court to condone delay - suspension of registration - rehearing on merits by appellate authority - HELD THAT:- Under Rule 23(1) of the GST Rules of 2017 it is provided that no application for revocation shall be filed unless such returns are furnished and any amount due as tax in terms of such returns has been paid along with any amount payable towards interest, penalty and late fee in respect of the said returns.

It is the further case of the petitioner that against the order of cancellation of its GST registration, the petitioner had preferred an appeal before the Appellate Authority under Section 107 of the GST Act, 2017.

The purpose of limitation being prescribed in a statute is two folds, namely, to ensure compliance of the statutory provisions by the persons on whom the provisions of the statute are applicable and further to ensure that no third party rights which may have been created in the meantime are permitted to be non-suited/unsettled. Under the scheme of GST Act and Rules, the non-revocation of cancellation of GST registration is likely to prejudice the assessee alone. In cancellation of such GST registration for the reasons mentioned under the Section, it cannot be said that any third party rights are created against the assessee.

No prejudice is caused to any other person, if the GST registration of the petitioner/assessee is revoked. No prejudice is caused to the revenue. Rather as discussed above, it will be in the interest of the revenue to permit the revocation of a cancellation of GST registration of an assessee like the petitioner so that it felicitates collection of revenue as mandated under the GST Regime.

A writ Court is empowered to condone the delay of any statutory or quasi-judicial authority. Such power is inherent in a Writ Court [Commissioner of Income Tax-12 –Vs- Pheroza Framroze and Company [2017 (5) TMI 436 - SUPREME COURT] Accordingly, in view of the above discussions and on the facts and circumstances of this case, this Court is of the considered view that the appeal before the Appellate Authority should be re-heard on merits by passing appropriate orders regarding the revocation of cancellation of GST. The impugned order dated 16.12.2025 dismissing the appeal is hereby set aside. It is, therefore, ordered that the appeal be heard again after afresh disposed of by the Appellate Authority on merits rather than dismissing or rejecting the same on the ground of limitation and requiring the petitioner to approach this Court once again by filing a writ.

With this direction, the writ petition stands disposed of in terms of the above.

Bail cancellation - Grant of bail on conditional deposit - Compoundability of offences - Cognizability and non-bailable offences based on tax evaded - Approach to bail in economic offences - High Court supervisory jurisdiction - Consent of Special Public Prosecutor - Section 132 of the CGST Act - HELD THAT:- The provisions outlined in section 132 of the act clearly specify that if the tax violation amount is up to Rs. 5 Crores, the offence is non-cognizable. However, once the violation exceeds Rs. 5 Crores, the offence becomes both cognizable and nonbailable. In this case, the deposit of Rs. 5 Crores from an allegedly evaded Rs. 9,39,79,589/- does not alter the classification of the offence as either non-cognisable or bailable. Additionally, under section 138 of the act, tax evasion up to 5 crores is compoundable, whereas amounts above 5 crores are not compoundable. Therefore, the analogy used by the trial court is flawed and cannot justify granting bail to the respondent.

Nevertheless, beyond this analogy, the court also found that the respondent intends to deposit 50 per cent of the alleged evasion amount. The department’s counsel has agreed to this and in accordance with the court’s order, the respondent has already deposited five crores in the trial court.

it is noteworthy that other co-accused, such as Gulam Fareed and Yash Chandani, have been granted bail by the Hon’ble Apex Court. The maximum punishment for the offence is five years, a term a magistrate can impose. There’s little risk of witness intimidation, as most witnesses are officials, and there are no prior criminal records or allegations that the respondent has misused bail or violated conditions.

The judgment of the Hon’ble Apex Court in the matter Gajanan Dattaray Gore [2025 (7) TMI 1966 - SUPREME COURT], the directions were passed after the grant of bail. In this case the respondents' grant of bail on the ground of depositing the money is not the sole consideration.

Therefore, the instant application to cancel bail is dismissed.

Liberty to prefer statutory appeal subject to conditional deposit - requirement of production of payment certificate from assessing officer - appellate authority to decide on merits without reference to limitation upon compliance - vacation of bank attachment upon compliance with deposit conditions - respondents entitled to recover tax on non-compliance - rectification application rejected - assessment order confirmed following non reply to show cause notice - HELD THAT:- In case the Petitioner complies with the above stipulations, the 1st Respondent/Appellate Authority shall proceed to pass a final order on merits without further reference to limitation. Subject to the Petitioner complying with the above stipulations, the attachment of the bank account of the Petitioner shall also stand automatically vacated.

It is made clear that bank attachment shall be lifted subject to the petitioner depositing 50% of the disputed tax as ordered above and the Petitioner not being in arrears of any other amount barring the amount demanded under the impugned Order.

In case the Petitioner fails to comply with any of the stipulations, the Respondents are at liberty to proceed against the Petitioner to recover the tax in accordance with law as if this Writ Petition was dismissed in limine today.

Writ Petition stands disposed of with the above observations.

Violation of principles of natural justice - Show-cause notice for cancellation of registration (Form GST REG-17) - Physical verification upload requirement (Rule 25 of CGST Rules, 2017) - Retrospective cancellation of GST registration - Efficacy of alternative remedy and appeal under the CGST Act - HELD THAT:- With regard to alternative remedy as argued by the respondents, it is true that there is efficacious statutory remedy available in favour of the petitioners to prefer an appeal but the petitioners have been denied their right to file a response to the show-cause notice and to submit relevant documents before the Assessing Authority. Further, the Appellate Authority has no jurisdiction to remit back the matter to the Assessing Authority as provided under Section 107(11) of CGST Act, 2017.

In the matter of Viswaat Chemicals Limited [2024 (10) TMI 782 - BOMBAY HIGH COURT], the High Court of Bombay dismissed the writ petition on the ground that the petitioner did not challenge the show-cause notice though a detailed reply was filed and later on, they challenged the final order, therefore, it was held that it was an attempt to circumvent the alternate remedy and to take a chance to see whether any relief can be wriggled out.

In the present case, show-cause notices were issued to the petitioners in contravention to the provisions of Rule 25 and REG-17 of CGST Rules, 2017 and in between, one of the directors of the company was arrested and reply could not be filed by the petitioners. Further opportunity of personal hearing was also not afforded. Thus, the facts of these cases are distinguishable from the facts of cited case.

In the matter of M/s Shubham Sales [2025 (10) TMI 1356 - CHHATTISGARH HIGH COURT] the provisions of Rule 25 and REG-17 of CGST Rules, 2017 were not considered and the petition was dismissed solely on the ground that an efficacious alternative remedy is available.

In the result, both the petitions are allowed. Show cause notices and the subsequent final orders passed by respondent No. 2 are hereby quashed. Respondent No. 2 shall be at liberty to initiate fresh proceedings against the petitioners strictly in accordance with REG-17, Rule 25 of CGST Rules, 2017.

Show Cause Notice u/s 73(1) - Statement of determination u/s 73(3) - Summary of Show Cause Notice in FORM GST DRC-01 - Summary of Statement in FORM GST DRC-02 - Summary of Order in FORM GST DRC-07 - Requirement of authentication/digital signature under Rule 26(3) - Requirement of issuance of notice and opportunity of hearing u/s 75(4) - Proper Officer requirement for issuance of notice, statement and order - Rule 142(1)(a) - obligation to issue summary along with notice - HELD THAT:- In the instant writ petitions, the attachment to the Summary of Show Cause Notice in GST DRC-01 is only the Statement of the determination of tax in terms with Section 73(3). The said Statement of determination of tax cannot substitute the requirement for issuance of the Show Cause Notice by the Proper Officer in terms with Section 73(1) of the Central or the State Act. Under such circumstances, initiation of the proceedings under Section 73 against the petitioners in the instant batch of writ petitions without the Show Cause Notice is bad in law and interfered with. This Court further noticed that the Show Cause Notice and the Statement in terms with Section 73(1) and 73(3) of both the Central Act or the State Act respectively are required to be issued only by the Proper Officer as defined in Section 2(91). Additionally, the order under Section 73(9) is also required to be passed by the Proper officer.

The Summary of the Show Cause Notice, the Summary of the Statement under Section 73(3) and the Summary of the Order passed in terms with Section 73(9) are to be issued in GST DRC-01, GST DCR-02 and GST DRC-07 respectively. The issuance of the Summary of the Show Cause Notice, Summary of the Statement and Summary of the Order do not dispense with the requirement of issuance of a proper Show Cause Notice and Statement as well as passing of the Order as per the mandate of Section 73 by the Proper Officer. As initiation of a proceedings under Section 73 and passing of an order under the same provision have consequences. The Show Cause Notice, Statement as well as the Order are all required to be authenticated in the manner stipulated in Rule 26(3) of the Rules of 2017. Accordingly, this Court is of the opinion that the Impugned Order challenged in the writ petition are in violation of Section 75(4) as no opportunity of hearing was given as already discussed herein above.

Accordingly, the impugned order dated 13.12.2023 issued by the respondent no. 3 is hereby set aside and quashed. This Court also cannot be unmindful of the fact that it is on account of certain technicalities and the manner in which the impugned order was passed, this Court interfered with the impugned order and hence set aside and quashed the same. It is also relevant to take note of that the respondent authorities were under the impression that issuance of attachment of the determination of tax which was attached to the Summary of the Show Cause Notice would constitute a valid Show Cause Notice.

In the interest of justice, this Court while setting aside the impugned Order-in-Original dated 13.12.2023, grants liberty to the respondent authorities to initiate de novo proceedings under Section 73, if deemed fit for the relevant financial year in question. This Court further observes and directs that the period from the date of issuance the Summary of the Show Cause Notice in Form GST DRC-01 dated 28.09.2023 Cause Notice upon the petitioner till the date a certified copy of the instant judgment is served upon the Proper Officer, be excluded while computing the period prescribed for passing of the order under Section 73(10) of the Central Act as well as the State Act as the case may be.

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

Entitlement to exemption, as Notified at Sl.No. 3 of the Notification No. 12/2017-CT (Rate) - Qualification as a Government Entity - Non-qualification as a Governmental Authority - procurement of quality medicines, surgical and EIF (Equipment, Instrument and Furniture) - Pure services (excluding composite supplies involving supply of any goods) - nil rate for pure services provided to Government in relation to functions under Articles 243G/243W - valuation of supplies by a pure agent (inapplicability for defining "pure services") -

Whether the services entrusted and provided by the Appellant to Govt. falls under article 243G or 243W of the Constitution. -

HELD THAT:- The AAR Authority has discussed about Rule 33 of CGST Rules, 2017, for the purpose of interpreting the expression “Pure Services”. However, on plain reading of Rules, it is observed that Rule 33 of the Rules, is prescribed under Chapter-IV of the said Rules which describes “Determination of Value of Supply”. Rule -33 of the Rules prescribes value of supply of services in case of pure agent. Accordingly, any inference drawn as to the meaning or ambit of “pure services” from a provision solely concerned with valuation of services rendered by a pure agent is misplaced and legally untenable.

Therefore, the pure services provided to State Government by way of any activity which are under 234G or 243W of the Constitution will attract nil rate of GST. As discussed above, the services provided by the Appellant are “pure services”.

The scope of supply, objective of the Scheme, approval accorded by Hon’ble Chief Minister of Odisha and nature of the activities undertaken by the appellant, clearly demonstrates that timely procurement and assured supply of good quality medicine, which involves procurement as well as logistic management, constitutes an indispensable component of an effective public health system. The Government of Odisha has the mandate to ensure access to essential healthcare services, including the provision of quality medicines free of cost to patients attending Government health facilities through “Free Medical Distribution Scheme”. The Appellant functions as an implementing arm of the State in furtherance of this mandate. Accordingly, the activities undertaken by the Appellant are integrally and intrinsically linked to “Health and Sanitation, including hospitals, primary health centres and dispensaries”, which is specifically enumerated at Sl. No. 23 of the Eleventh Schedule (Article 243G) and Public health under Sl. No. 6 of the Twelfth Schedule (Article 243W) of the Constitution of India.

Thus, the services rendered by the Appellant squarely fall within the scope of functions entrusted to Panchayats and Municipalities under Articles 243G and 243W of the Constitution. Consequently, the Appellant is entitled to exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as well as the corresponding notification issued by the Government of Odisha, as amended from time to time.

Validity of Order u/s 154 - Validity of adjustments made by the AO-CPC - AR pointed out that the Ld. AO’s order is not properly signed and hence that order itself is invalid - DR pointed out that the Ld. AO’s order is digitally signed and hence it cannot be said that the order is unsigned.

HELD THAT:- It is seen that on the bottom, right side of the copy of document pasted above reveals that there is a mention: “Signature invalid”, and it is written N Sayiraj, IRS, DDIT, CPC-Bengaluru. It is obvious that the Ld. AO’s order is not signed and legally an unsigned order has no validity in the eyes of law. Thus, on this ground itself, the Ld. AO’s order is quashed. However, we have considered the fact of signature or otherwise purely on the basis of records before us, however, in case a valid signature is available elsewhere then the Revenue may move an appropriate order for rectification in this matter. Assessee appeal allowed.

Validity of order passed u/s 92CA(3) - copies of the referred agreements denied -Authority to supply relied upon documents - right to fair opportunity to defend - petitioner submitted that unless copies of the agreements are supplied to the petitioner, it cannot take defence as required inasmuch as the ‘parties involved in the agreements’ and the ‘nature of agreements’ so also the ‘activities involved’ may differ from business to business

HELD THAT:- It is the settled position of law that any authority is bound to provide copies of the relied upon documents.

There may be variety of agreements and factors including the ‘nature of business’ and the ‘nature of transactions’ and the ‘goodwill involved’ of a contracting party. Since the issue raised by the respondent is that the petitioner had paid excess royalty, we are of the view that unless copies of the agreements, on the basis whereof, the TPO is proceeding against the petitioner are provided to the petitioner, its right to defend his cause will be adversely impacted.

We are, therefore, persuaded to allow the writ petition and set aside the order as the same has been passed without providing copies of the relied upon agreements to the petitioner.

The order passed by the TPO is set aside and he is directed to supply copies of the relied upon agreements to the petitioner on or before 15.02.2026. He may redact the name of the parties to maintain confidentiality of the parties.

Condonation of delay under Section 119(2)(b) of the Income Tax Act - CBDT Circular limiting revision to five years - revised return - rectification under Section 154 - mistake apparent from record - judicial interference under Article 226

Condonation of delay under Section 119(2)(b) of the Income Tax Act - CBDT Circular limiting revision to five years - judicial interference under Article 226 - Validity of the order at Annexure-P rejecting the application for condonation of delay and refusing permission to file a revised return for AY 2018-19. - HELD THAT: - The Court noted that the authority had acted in accordance with the CBDT circular which provides a five-year outer limit for entertaining applications for revision/revised returns. The petitioner, however, had initiated rectification and grievance proceedings within the five-year period and, on the material placed (the original and rectified return tables), there was a prima facie bonafide mis-declaration in Schedule-EI. Without adjudicating the merits of the revised return, the Court found that the authority ought not to have summarily rejected the application at Annexure-P and that the matter required fresh consideration in accordance with law. Exercising constitutional jurisdiction under Article 226, the Court set aside Annexure-P and remitted the matter to the authority to consider the petitioner's revised return for assessment year 2018-19 in accordance with the applicable legal framework and the CBDT circular's limitations. [Paras 12, 13, 14]

Annexure-P set aside; matter remitted to the authority for consideration of the petitioner's revised return for AY 2018-19 in accordance with law.

Rectification under Section 154 - mistake apparent from record - revised return - Whether there was a prima facie bonafide mistake in the original return warranting consideration of rectification/revision. - HELD THAT: - On comparison of the original return and the subsequently filed rectified return, the Court observed a manifest discrepancy in the declaration of exempt dividend income in Schedule-EI. The revenue's counsel did not controvert the petitioner's contention on the merits that the original entry appeared incorrect. The Court limited itself to a prima facie finding of a bona fide error and refrained from entering into detailed adjudication of the contents of the revised return, directing that such merits be considered afresh by the tax authority when adjudicating the remitted application. [Paras 4, 5, 12, 13]

A prima facie mistake in the declaration was recognised; merits to be examined afresh by the authority on remand.

Final Conclusion: The order rejecting the petitioner's application for condonation and refusing to entertain the revised return is set aside. The matter is remitted to the tax authority to consider the petitioner's revised return for assessment year 2018-19 and related rectification issues in accordance with law and the observations made, with all contentions kept open.

Addition of revaluation of closing stock - AO noted that the assessee had revalued damaged stocks less than the market value - reason, basis and procedure of revaluation of such stock - HELD THAT:- It is seen that, the assessee society which is dealing in hardware items would conduct stock verification exercise at the year end and thereafter quantify the old / damaged stock and estimate their realizable value. The stock verification statement for the immediately preceding year read along with the TAR of AY 2014-15 reveals that, the assessee Society had already provided for reduction in value of old / damaged stock upto 31.03.2014. We thus find merit in AR’s contention that the reduction in valuation of closing stock debited in the accounts for the relevant FY 2014-15 was Rs. 26,88,599/- and not Rs. 1,25,98,834/- as quantified by the ld. AO.

Basis of valuation - The assessee has demonstrated that the valuation was undertaken in a scientific and reasonable manner in terms of which, the Director of Societies would supervise the physical stock exercise undertaken by the branch heads at the respective locations, identify the old damaged stock and thereafter estimate the net realizable value with the approval of the auditor. According to us, it cannot be said that the method and manner of valuation adopted by the assessee was arbitrary or unreasonable. It is also not a case that the ld. AO had invoked Section 145(3) and rejected the audited books of accounts and in that view of the matter, the valuation of closing stock as undertaken by the assessee society could not have been interfered with. Hence, the addition on account of valuation of closing stock is held to be unjustified.

Disallowing expenses at the rate of 10% of total amount debited under miscellaneous expenses - AO observed from the Profit and Loss account that the assessee has debited under the head miscellaneous expenses under the head other expenses schedule 19 -assessee submitted before the AO that these are the composite expenses of 7 branches of the bank to meet the day-to-day expenses

CIT (A) confirmed the disallowance by observing that since, the assessee has failed to establish the genuineness of the expenses before the AO and before the appellate authority and there was also no explanation apart from furnishing the debit vouchers self-generated for meeting the day-to-day expenses of the bank - HELD THAT:- We find that the authorities below have disallowed the expenses on the ground that these are the petty expenses incurred by the branches to meet the day-to-day expenses for which there were no proper evidences. Therefore, the genuineness of which could not be established. In our opinion, the authorities below have failed to give any plausible and reasonable findings as to how these were non-genuine.

In our opinion, the disallowance of expenses merely on presumption and surmises at the rate of 10% of the said expenses incurred is incorrect and cannot be sustained. Disallowance cannot be made on estimation and presumption basis as has been held in the case of CIT vs. Daulat Ram Rawatmull [1972 (9) TMI 9 - SUPREME COURT] and Omar Salay Mohamed Sait [1959 (3) TMI 2 - SUPREME COURT]. Consequently, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition.

Disallowance of provisions made against the non-performing assets under the head other expenditure schedule-19 of the Profit and Loss account - as argued same are allowable under Provisions of Section 36(1)(viia) and was created in accordance with the RBI and NABARD guidelines - HELD THAT:- Both the deductions 36(1)(vii) AND 36(1)(viia) are independent of each other. We note that Section 36(1)(vii) of the Act deals with the writing off bad debts whereas the section 36(1)(viia) deals with creation of provisions for bad and doubtful debts based upon the non-performing assets of the bank, which is in accordance with the guidelines issued by the Reserve Bank of India and NABARD.

Therefore, considering these provisions of these sections, we are of the view that the assessee is entitled to deduction u/s 36(1)(viia) of the Act. The case of the assessee is squarely covered by the decision of Catholic Syrian Bank Ltd. [2012 (2) TMI 262 - SUPREME COURT]. We note that the decision relied by the ld. AO in case of Southern Technologies Ltd.[2010 (1) TMI 5 - SUPREME COURT] is not applicable to the assessee as the decision was rendered in the context of Section 36(1)(vii) of the Act, where the assessee is a co-operative bank and therefore, the Section 36(1)(viia) is appliable for rural branches. We also note that the issue has been decided in case of Tamilnadu State Apex Coop Bank Ltd [2014 (1) TMI 1737 - ITAT CHENNAI] wherein it has been held that the assessee is entitled to deduction claim in respect of provision for bad and doubtful debts. Decided in favour of assessee.

Validity of notice issued u/s. 143(2) for the purpose of limited scrutiny - deduction u/s 80P - HELD THAT:- We find that selection of the scrutiny was made for the specified purpose of verification of examination of claim of deduction u/s. 80P which has been verified by the AO and therefore there is no violation of such notices. Accordingly, this ground of appeal is dismissed.

Deduction u/s. 80P - Assessee provides credit facilities to its members as a member’s credit co-operative society - claim of the AO that Assessee is not eligible for deduction is squarely against the revenue by the decision of Karnataka Souhadra Federal Cooperative Limited [2022 (1) TMI 540 - KARNATAKA HIGH COURT] wherein it has been held that Assessee which was a co-operative society registered under the Karnataka Souhadra Sahakari Act, 1997 would be considered as a co-operative society within the ambit of section 2(19) and thus, would be entitled to claim deduction u/s. 80P of the Act. AO is directed to grant deduction u/s. 80P of the Act.

Deduction u/s. 80P(2)(a)(i) - Assessee derived income from activity of providing credit facility to its members - Assessee has also earned interest from SEDCC Bank Limited - As the Assessee has claimed it as a business income, the Ld. Assessing Officer has treated it as income from other sources based on the decision of the Hon’ble Karnataka High Court. We find that there are decisions of the Hon’ble Karnataka High Court also in case of Tumkur Merchants [2015 (2) TMI 995 - KARNATAKA HIGH COURT] and Totgars sales [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] wherein such deduction is allowed. Therefore, we direct the Ld. Assessing Officer to grant deduction to the Assessee u/s. 80P(2)(a)(i) of the Act and not u/s. 80P(2)(d) of the Act as it is not the claim of the Assessee.

Addition being disallowed on interest provision made by the Assessee - Provision is made on the basis of the accounting policies followed by the Assessee regularly and also mandated by the Karnataka Co-operative Societies Act. The Assessee is undoubtedly maintaining the accounts on mercantile system basis. The above provision is based on the monthly working, as mandated by statute, compliance of law for accrual of interest cannot result in to disallowance s, unless specifically prohibited by the Income tax Act, therefore same cannot be disallowed.

Non-performing advances which is also mandated according to the direction of the Reserve Bank of India as well as the commissions related to the co-operative societies. It is an asset and liability. Accordingly, we direct the Ld. Assessing Officer to delete the disallowance.

Reopening assessment u/s 147 v/s proceeding u/s 153C - Bogus LTCG - notice after the lapse of four years - reasons to believe - Search and survey action was carried out at the residence and office premises of one Shri Shirish Chandra Shah and at the residence of his key-employees and associates

HELD THAT:-In the present case, as is revealed from the reasons recorded by the AO for reopening of the assessment, the only information available to the AO was that the assessee had traded in the shares of Sawaca and has claimed tax exempt long term capital gains and nothing more.

AO, in the reasons recorded under the heading "Enquiries made by the AO as a sequel to information collected/received," has stated that “on examination of return it was found that the assessee had shown exempt income therefore no further enquiry is required in this case”. This shows that the crucial fact on the basis of which the assessment was reopened, in this case, after the lapse of four years from the end of the relevant assessment year, was already on record during the original scrutiny assessment. Therefore, the reopening, in this case, is hit by first proviso to section 147 of the Act.

As noted from the reasons recorded, in case of search action in case of third party, no direct incriminating evidence has been found against the assessee otherwise the AO could have proceeded u/s 153C of the Act.

Even the AO has wrongly observed that no assessment was carried out u/s 143(3) of the Act and hence the AO proceeded to reopen the assessment on the wrong premises, whereas, the original assessment was carried out u/s 143(3) of the Act.

Hence, the AO erred in reopening the assessment despite the said action being hit by the first proviso to section 147 of the Act under the misbelief that the original assessment was not carried out u/s 143(3) of the Act. This shows a complete lack of application of mind and a failure to correlate the portal information with the actual assessment records on the part of the AO.

AO also failed to identify what specific material fact remained undisclosed; instead, the AO made a bald assertion of nondisclosure, which as per the settled law is not a valid ground for reopening of the assessment beyond 4 years.

As per the settled law, the AO must examine the information in the context of the facts on record to determine if there was a failure to fully and truly disclose the relevant facts necessary for the assessment.

In this case, the AO's own reasons admit that the claim was on record, and there was no direct incriminating evidence found against the assessee. The wisely crafted reasoning by the AO that the information was "embedded" in the records is a mere pre-tense when the AO had already examined the exempt income in the original u/s 143(3) of the Act proceedings and, hence, the reopening in this case is squarely hit by the restriction as imposed under first proviso to section 147 of the Act, therefore, the assumption of jurisdiction by the AO in this case under section 147 of the Act was invalid and without jurisdiction. Accordingly, the notice under section 148 and the subsequent reassessment order are quashed. Assessee appeal allowed.

Addition u/s 68 - interest paid on unsecured loans at rates exceeding 12% is excessive and unexplained - HELD THAT:- Section 68 applies where any sum is found credited in the books of account of the assessee and the assessee either offers no explanation about the nature and source thereof or the explanation offered is not satisfactory in the opinion of the Assessing Officer. In the present case, the impugned amount does not represent any sum found credited in the books of account during the year. It is not a loan received, share capital introduced, or any fresh credit entry.

The interest has been paid through disclosed banking channels, to identified parties, and forms part of the loan transactions already reflected in the balance sheet. AO has not doubted the identity of lenders in this context while making this particular addition. What has been doubted is the rate of interest. Determination of reasonableness of interest expenditure falls within the domain of allowability of expenditure under the appropriate charging provisions. It does not fall within the ambit of section 68. Therefore, we hold that invocation of section 68 in respect of alleged excess interest is legally unsustainable. On this short ground alone, the addition made under section 68 cannot be sustained.

Rather, it is an amount computed by the Assessing Officer by restricting the interest rate on unsecured loans to 12% and treating the differential portion of interest paid as “excess”. Thus, the addition does not arise from any unexplained credit entry in the books. It arises from a comparative working based on substitution of a benchmark rate. Section 68 does not empower the Assessing Officer to determine the reasonableness of an expenditure or to substitute a rate of interest and treat the differential as unexplained credit.

Assessing Officer cannot mechanically add the entire differential amount as income. The correct approach, assuming any disallowable portion exists, would be:

- To identify the amount of interest capitalised into Work-in-Progress;

- To reduce the capitalised cost to the extent considered inadmissible; and

- To recompute the resultant income or loss for the year accordingly.

Since the primary addition under section 68 has already been held to be unsustainable, the matter does not survive as an addition per se

Core grievance of the Revenue is that CIT(A) accepted the assessee’s explanation that the difference arose merely on account of regrouping of balances between unsecured loans and loans and advances, and that the addition was deleted without proper verification of the creditors’ identity, genuineness and creditworthiness - Section 68 contemplates a situation where any sum is found credited in the books of the assessee and the assessee fails to satisfactorily explain the nature and source thereof. In the present case, the AO has not pointed out any particular credit entry which remained unexplained. Instead, he has merged figures appearing under two different heads and, on that basis, worked out a difference. Such an approach, in our considered view, does not satisfy the statutory requirement of section 68.

The material placed before us, including the ledger accounts, indicates that the balances with the concerned parties were running balances and that the nature of the closing balance depended upon the net position as on 31.03.2018. If an account which had an opening credit balance results in a closing debit balance due to repayment and further advances, its classification in the balance sheet would necessarily change in accordance with its character. Such regrouping or presentation in the financial statements cannot, by itself, give rise to an inference of unexplained cash credit.

There is nothing on record to show that the Assessing Officer carried out any substantive verification to rebut the specific entries in those ledgers or to demonstrate that any particular credit entry lacked identity, genuineness or creditworthiness. The addition has thus been made on the basis of perceived accounting presentation rather than on detection of an unexplained credit.

We find ourselves in agreement with the conclusion reached by the Ld. CIT(A) that the addition u/s 68 was not sustainable.

Assessee appeal allowed.

Deduction claimed u/s. 80GGC - deduction denied assessee had failed to establish the genuineness of the donation made to the Rashtriya Samajwadi Party (Secular), which was found to be one of the entities involved in providing accommodation entries in the guise of political donations - search operation on RUPPs and related intermediaries - onus to substantiate the claim of deduction - CIT(Appeals)/NFAC had deleted the addition

HELD THAT:- The allegation of the Department is that the said political party in which the assessee had made donation was tainted party providing bogus accommodation entries through donations. A.O had not brought out any evidence which suggests that the said political party has derived commission and has paid money back to the assessee through backdoor.

Nothing has been brought on record by the A.O to establish the direct nexus regarding benefit derived by the assessee from the said political party while making the said donation. Decided against revenue.

Revision u/s 263 - revise the assessment order passed u/s 143(3) read with section 144B on the ground as erroneous and prejudicial to the interests of the Revenue - lack of enquiry” OR “inadequate enquiry.” - scope of statutory architecture of faceless assessment - Principal Commissioner stated that while completing the assessment, the AO failed to make proper enquiries and verification on certain crucial issues which have an impact on the determination of taxable income on allowability of deduction towards re- measurement of post-employment benefit obligations and the treatment of realized foreign-exchange gain on payment to capital creditors.

HELD THAT:- Under section 144B of the Act, the assessment proceedings are conducted through the National Faceless Assessment Centre, which may assign different functions to specialized units, namely the Assessment Unit, Verification Unit, Technical Unit and Review Unit. Where factual verification, examination of records, third-party enquiries or recording of statements is required, the Assessment Unit is empowered to request the National Faceless Assessment Centre to assign the matter to a Verification Unit. The Verification Unit then conducts the necessary enquiries and uploads its report, which forms part of the assessment record and may be relied upon by the AO while framing the order.

On perusal of the assessment order in the present case, however, we find that no such verification exercise was undertaken in respect of the two issues forming the subject matter of revision by the AO. The order is completely silent on the actuarial valuation of postemployment benefits, the details of payments vis-à-vis section 43B of the Act, and the workings furnished by the assessee under section 43A for adjustment of foreign-exchange gains to the block of assets. There is no reference to any questionnaire, to any reply filed by the assessee on these aspects, or to any report obtained from a Verification Unit in respect thereof. In a faceless regime, where all communications and enquiries are digitally recorded, such silence assumes considerable significance and supports the finding of the Ld. Principal Commissioner that the assessment was completed without the requisite verification on material aspects.

Assessment records do not disclose that any enquiry whatsoever was conducted on the two disputed issues in the year under consideration. Mere availability of actuarial reports, tax-audit particulars or depreciation schedules in the file cannot be equated with application of mind by the AO. The acceptance of substantial and technically complex claims without any prima facie verification clearly falls in the category of “lack of enquiry” and not “inadequate enquiry.”

The claims involved are of large amounts and depend on facts specific to the year, such as actuarial calculations under Indian Accounting Standards and adjustments under section 43A of the Act for foreign-exchange changes relating to capital assets. These matters have to be examined afresh in every assessment year. The principle of consistency cannot remove the duty of the Assessing Officer to verify whether such claims are allowable in the year under appeal.

In the present case, having regard to the complete absence of any enquiry on record in respect of the two issues, this statutory deeming fiction clearly comes into operation. We are therefore of the considered view that Principal Commissioner was justified in invoking the said provision and in setting aside the assessment order with a direction to the AO to carry out proper verification and pass a fresh order in accordance with law after granting due opportunity to the assessee. Decided against assessee.

Reopening of assessment - Validity of reassessment as basis of reopening differs from basis of addition - HELD THAT:- We note that in the notice u/s 148A(b) and order u/s 148A(d), the names of the parties mentioned from whom alleged bogus purchases were made by the assessee were different from the party mentioned is found in assessment order.

Thus, it is clear that the ground on which the assessment was reopened is different from the addition made at the time of assessment. Assessment made by the Ld. AO is invalid and is accordingly, quashed. Appeal of the assessee is allowed.

Validity of notice u/s 153A in the name of the deceased assessee HELD THAT:- As in the assessment order, only the 1st notice u/s 153A dated 20.01.2020 has been mentioned. There is no mention of the 2nd notice issued u/s 153A to the L/R nor the return filed in response thereof has been considered by the Ld. AO.

Even after issuing the 2nd Notice to the L/R, Ld. AO has issued the notice u/s 142(1) in the name of the deceased, which also finds mention in the assessment order. Thus, we are inclined to agree with the Ld. AR that the notice in respect of which the assessment has been finalized is invalid in the light of decision of Savita Kapila [2020 (7) TMI 441 - DELHI HIGH COURT] Appeal of assessee allowed.

Admissibility of departmental CRCL test reports over private laboratory reports - self-assessment and transaction value in export duty assessment - artificial splitting of consignments and proof of modus operandi - weight of confessional statements in departmental adjudication - relevance of discharge-port test reports in FOB contracts for assessment - refund of deposit where demand is dropped - HELD THAT:-We find that the Revenue is of the view that the overall Fe content in the combined cargo being more than 58%, export duty @ 30% ad valorem was liable to be paid by the exporter. Thus, we observe that the main issue involved in this appeal is the percentage of ‘Fe’ content in the goods exported. It is seen that samples were drawn by the officer of the Customs in the presence of the Respondent and send to CRCL for test, as per the mandate of the Customs Act, 1962. However, Revenue has not relied upon this Test Report and relied upon some test conducted at Private labs.

We observe that the Ld. AA found that in respect of shipping bills no. 5384026 (MV Prabhu Mihikaa) and no. 8320143 (MV Menalon), the sales proceeds as per BRC matches with the value declared in the final Invoice raised by the exporter M/s KPSPL. The minor variation attributes to the bank/regulatory charges. In respect of the shipping bills no. 8387522 & 8472055 (MV Ithomi), the sales proceeds as per BRC matches to value declared in the shipping bills. The AA found that there is no suppression / mis-declaration of Fe content on the part of M/s KPSPL. The AA further observed that in respect of the shipping bills no. 4801526 & 4801523 (MV Fortune Wing), the sales proceeds have not yet been received by the exporter. The Ld. AA in paragraph 7.3.3.7 concluded that the value of iron ore fines considered in the SCN for the purpose of computation of differential Customs duty is not sustainable. We do not find any infirmity in the finding of the Ld. AA.

Accordingly, we uphold the findings of the Ld. AA and hold that there is no merit in the appeal filed by the Revenue on this score.

As regards the allegation in paragraph 10.5 of the SCN that “M/s KPSPL negotiated with M/s Global Minore Pte Ltd., Singapore for sale/export of 53,860 WMT of iron ore fines but subsequently very cleverly and mischievously entered into two separate contracts with M/s Global Minore Pte Ltd. One contract having No. IOP/KP/003-A dated 10.03.2017 pertained to export of 30,910 WMT (28,548.476 DMT) of iron ore fines having 57.94% ‘Fe’ content @ USD 49.00 PDMT and another contract having No. IOP/KP/003 dated 10.03.2017 pertained to export of 22,950 WMT (21,217.275 DMT) iron ore fines having 63.92% ‘Fe’ content @ USD 64.00 PDMT”, from a perusal of the impugned order, it is seen that the Ld. AA has found that it is fact on record that there are two separate Contracts, signed between the exporter M/s KPSPL and the overseas buyer M/s Global Minore on 10.03.2017, the genuineness of which is not disputed. On 16.03.2017, M/s KPSPL issued letters to the testing agency M/s SGSIPL (RUD page no. 209 and 210 of the SCN refers) to carry out sampling of two consignments of cargo, one of 57% Fe and another of 62% Fe. Further, two sets of shipping bills were filed on 17.03.2017. This chronology indicates that M/s KPSPL has supplied two different consignments of cargo to their overseas buyer. We find that the Ld. AA has opined that the aforesaid allegation levelled in the SCN fails due to lack of substantial evidence. We do not find any infirmity in the findings of the Ld. AA and accordingly, uphold the same.

As regards the allegation in paragraph 10.5 of the SCN that “the manipulation by M/s KPSPL is exposed by the email dated 27.03.2017 from Shri Mansoor Ali of M/s KPSPL to M/s SGSIPL to split the cargo and issue two separate quality certificates instead of one that too after the sailing of the vessel” the Ld. AA found this allegation levelled in the SCN to be incorrect in view of the fact that there were two contracts, two advices to the testing agency for sampling and two shipping bills, one for below 58% Fe iron ore fine and another above 58%. AA has opined that there is no bar to load two different consignments of same cargo into a vessel, even if the buyer is one person. We agree with the above observations of the Ld. AA in the impugned order. In this regard, we find it pertinent to note that unless the alleged modus operandi is substantially proved, it cannot be held that there is contravention. Accordingly, we hold that there is no merit in the issue raised by the Revenue on this count.

As regards allegation that “Shri Debabrata Behera, Managing Director of M/s KPSPL, in his statements given before DRI, Goa, has admitted that he was aware about the misdeclaration of ‘Fe’ content of iron ore fines exported by M/s KPSPL”, it is a settled issue that adjudication proceedings under Customs Act, 1962 cannot solely be based on inculpatory statements of witnesses and noticee alone. The Department is bound to prove case based on balance of probabilities as per well-recognized principle of law in case of departmental adjudications.

Regarding the allegation that “analysis of ‘Fe’ content of cargo at the discharge port (in China), done by CIQ (China Entry Exit Inspection and Quarantine Bureau) also indicate that the ‘Fe’ content was more than 58%”. In this regard, we are of the view that as per the contracts entered into between M/s KPSPL and the overseas buyers, the sale was on FOB basis and “The buyer shall pay to the seller 100% as payment on CAD basis of the value as per load port, weight, Fe and moisture basis analyzed at the load port.” Essentially it means that the exporter i.e. M/s KPSPL would receive 100% payment for the said shipment based on load port test results. Thus, we observe that analysis of ‘Fe’ content of cargo at the discharge port (in China), done by CIQ doesn’t have any bearing for the purpose of assessment of customs duty of the impugned exported goods.

Thus, we do not find any merit in the appeal filed by Revenue and hence we reject the same.

The appeal filed by the Revenue is rejected. - The amount deposited by the Respondent during the course of investigation is liable to be refunded to them, along with interest at the applicable rate.

Extension of time u/s 110(2) - seizure u/s 110(1) - requirement of reasons in writing by the Commissioner for extension - jurisdiction of writ court versus adjudicating authority - forensic examination and mobile tower data as matters for fact finding - interim relief and maintenance of status quo on seized goods -HELD THAT:- This Court is of the opinion that the core dispute hinges on Section 110(2)'s procedural compliance for extension and seizure validity issues essentially factual, involving document authenticity, timelines and investigation sufficiency. While the appellant raises serious allegations of tampering and authority excess, these cannot be conclusively resolved in writ jurisdiction without a full fact-finding inquiry. The Single Judge appropriately noted no "apparent reason to doubt" genuineness post-affidavit review but refrained from final merits, as SCN proceedings remain pending.

The Adjudicating Authority under the Customs Act serves as the designated fact-finding body and any interference by this Court at the interlocutory stage prior to completion of adjudication would amount to usurping its statutory role. The appellant has failed to demonstrate irreparable injury sufficient to warrant immediate release of the seized goods, whose claimed Indian origin remains contestable pending investigation. Similarly, claims for forensic examination and mobile tower verification, while meriting scrutiny, properly fall within the domain of the Adjudicating Authority rather than writ proceedings.

The writ appeal is disposed of by declining interlocutory interference with the seizure.

Discretionary power to grant redemption u/s 125 - absolute confiscation of prohibited goods - classification attracting Minimum Import Price (MIP) and import prohibition - delay, laches and maintainability of writ jurisdiction under Article 226 - finality of statutory appeal and limitation u/s 128 - HELD THAT:- Once the confiscation and penalty have attained finality, no independent consideration of these issues arises. The Customs Act provides specific appellate mechanisms for challenging penalty quantification and confiscation, and writ jurisdiction cannot be converted into a surrogate appellate forum to bypass the statutory provisions, legislative intent and objective of prohibiting import of certain goods.

The record, when examined holistically, clearly demonstrates that the petitioner’s conduct has been evasive, dilatory, and lacking in bona fides. The Order-in-Original specifically records that the petitioner sought to justify its declared classification by placing reliance on an advance ruling which had already been overruled well before the personal hearing, thereby reflecting a conscious attempt to mislead the adjudicating authority and to rely on legally untenable material (para 46 and 49 of the Order-in-Original).

The petitioner’s responses to the departmental proceedings were largely vague, without addressing the core issue of misclassification and violation of the Minimum Impact Price (MIP) condition.

Significantly, despite having knowledge of the adverse Order-in-Original dated 24.09.2021, the petitioner did not take any prompt or effective steps to challenge the same within the statutory framework and approached the appellate authority only after an inordinate delay of 156 days, resulting in dismissal of the appeal on limitation, and thereafter invoked writ jurisdiction belatedly.

The absence of any timely effort to seek provisional release, interim reliefs, or other appropriate relief from the competent authorities, coupled with the belated assertion of rights before this Court, reinforces the inference that the petitioner never intended, in a bona fide manner, to clear or seek lawful release of the goods. Instead, the overall conduct points towards a calculated strategy to avoid the authorities and, after allowing the proceedings to attain finality, to resurrect stale claims through writ jurisdiction. This pattern of behaviour unmistakably indicates that from the very inception, the petitioner’s approach and intention has been to evade statutory consequences rather than to pursue remedies in accordance with law.

Thus, this Court is of the considered view that the writ petition does not disclose any ground warranting exercise of extraordinary jurisdiction under Article 226 of the Constitution of India.

Accordingly, the present writ petition stands dismissed, along with pending application(s), if any.

Maintainability of appeal u/s 129A - scope of adjudicating authority - regulatory scheme under Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 - representation to Chief Commissioner under regulation 13(2) - exclusivity of remedies provided by subordinate regulations -HELD THAT:- In the present case, the Commissioner while revoking the registration of the appellant and forfeiting the security amount and also imposing penalty did not take any decision under the provisions of the Customs Act, as such a decision was taken under the provisions of the 2010 Regulations.

It is, therefore, clear that an appeal will not lie to the Tribunal against an order passed by the Commissioner under regulation 13(1) of the 2010 Regulations.

In this connection, it would also be pertinent to refer to the Customs Brokers Licensing Regulations, 2018 [the 2018 Regulations], which have been framed under section 146(2) of the Customs Act. Under Regulation 19 of the 2018 Regulations, a Customs Broker or a F-Card holder who is aggrieved by any order passed by the Principal Commissioner of Customs or Commissioner of Customs under Regulation 16 or Regulation 17 may prefer an appeal under section 129A of the Customs Act to this Tribunal. It, therefore, clearly transpires that if an appeal by a Customs Broker could be filed under section 129A of the Customs Act, there was no necessity of providing in regulation 19 of the 2018 Regulations that an appeal can be filed before the Tribunal under section 129A of the Customs Act.

The appeal is a creature of the Statute and it can be filed only if the Statute permits. In the present case, as noticed above, 2010 Regulations do not permit of an appeal to be filed before the Tribunal even otherwise. Section 129A of the Customs Act does not provide for an appeal to the Tribunal against an order passed by the Commissioner revoking the courier registration.

Tribunal in Pacific Express vs Principal Commissioner of Customs (DZ), New Delhi- [2025 (9) TMI 1064 - CESTAT NEW DELHI]. The Division Bench clearly held that appal against an order revoking the courier registration under the provisions of 2010 Regulations does not lie to this Tribunal under section 129A of the Customs Act.

The appeal under section 129A of the Customs Act by the Authorized Courier is, therefore, not maintainable. It is, accordingly, dismissed.

Authorization requirement for agents - Obligations of Customs Broker - Order passed beyond the time limit of 90 days under Regulation 17(7) -Benami filing of Shipping Bills - Verification of IEC, GSTIN and PAN and KYC duties - Regulation 17(7) time limit and COVID extension - Proportionality of disciplinary sanction -

Whether the impugned order was passed beyond the time limit of 90 days laid down under Regulation 17(7) of the CBLR? - HELD THAT:- As far as the time limit under section 17(7) is concerned, during the relevant period, due to COVID Pandemic, the Supreme Court had extended the time limits under any law from 1 March 2020 to 28 February 2022. The Inquiry Report was submitted by the officer on February 26, 2020 and the impugned order was passed on June 26, 2020. Both dates squarely fall within the COVID pandemic and the limitation would not apply. Consequently, the impugned order cannot be said to have been passed beyond the time limit of 90 days.

Obligations of Customs Broker - Benami filing of Shipping Bills - HELD THAT:-The most basic requirement about which everyone dealing with imports and exports would know is that IEC is not transferable and the IEC of the importer has to be indicated in the Bill of Entry and the IEC of the exporter must be mentioned in the Shipping Bills. Certainly, Mr. Najib could not have engaged the appellant and asked it to file Shipping Bills in the name of and using the IEC of someone else. If the appellant treated Mr. Najib as its client, it could have filed Shipping Bills in his name alone.

We have no manner of doubt that the appellant violated Regulation 10(a) of the CBLR in filing Shipping Bills in the name of some purported exporters quoting their IECs without any instructions from them and without even contacting or informing them.

If the appellant had treated Mr. Najib as its client, it could have only filed documents in his name, using his IEC, if any. The appellant should have advised Mr. Najib so. Instead, the appellant filed benami Shipping Bills at the behest of the Mr. Najib. Not only has the appellant not advised Mr. Najib properly but it has also actively colluded with him in filing benami shipping bills.

We have no doubt that the appellant violated Regulation 10(d) of CBLR.

Regulation 10(e) of the CBLR requires the customs broker to ensure correctness of the information which it imparts to it’s clients. We do not find any evidence that the Customs Broker had provided any incorrect information to its clients from the records of the case.

We, therefore, find that the appellant did not violate Regulation 10(e) of CBLR.

Regulation 10(n) of the CBLR requires the customs broker to verify correctness of Importer Exporter Code (IEC) number, Goods and Services Tax Identification Number (GSTIN), identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information.

On the other hand, if the appellant had treated Mr. Najib as his client, he should have obtained his IEC, PAN, etc. and filed Shipping Bills in his name. The appellant did not do so and instead filed benami Shipping Bills in the names of some exporters at the behest of Mr. Najib.

In this factual matrix, we have no hesitation in holding that the appellant violated Regulation 10(n).

Proportionality of punishment for violation of Regulations 10(a), 10 (d) and 10 (n) - In the facts of this case, where the appellant had filed benami Shipping Bills without any authorisation from or even the knowledge of the IEC holders at the behest of Mr. Najib, we find the violations are serious enough to impose the maximum penalty of revocation of the licence, forfeiture of security deposit and penalty of Rs. 50,000/-

Thus, we uphold the impugned order and dismiss the appeal.

Eligibility to the exemption benefits allowed under Notification No. 4/2006-C.E., dated 01.03.2006 at Sr. No. 63 - interpretation of amendment by Notification No.4/2011-C.E. - imposition of penalty u/s 114A - levy of interest on CVD by invoking machinery - Confiscation of imported goods -voluntary payment and bona fide mistake - non-applicability of Finance (No. 2) Act, 2024 amendment to earlier tax periods - HELD THAT:- It is an admitted fact on record that the impugned goods imported by the appellants were not used for the intended purpose as per the terms of the notification and the same were sold by them in the open market as fertilizers. We find that the appellants have furnished the explanation that the change in the text of Sr. No. 63 of notification dated 01.03.2006 had gone un-noticed by them and that upon detection of such mistake, they had voluntarily deposited the difference in CVD amount along with interest and prayed for closure of the proceedings initiated by the Department. The facts are also not under dispute that the appellants had discharged their liability for payment of CVD and interest amount before issuance of the show cause notice by the Department. Insofar as the liability for payment of CVD along with interest is concerned, the appellants in this appeal are not contesting the same and their grievance is confined only on confiscation of the goods, interest demands and imposition of penalty by invoking the provisions of Section 114A ibid on the appellants.

From the wordings of the exemption entry at Sl. No. 63 of the notification dated 01.03.2006, it would be evident that even though the imported goods cleared for direct use as ‘fertilizers’ was exempt earlier to 01.03.2011, subsequent to amendment vide Notification No.04/2011-C.E. it is only those goods that are used in the manufacture of fertilizers and not those directly sold as fertilizers in the open market was eligible to ‘Nil’ rate of duty; however they were provided with 5%/1% concessional duty of CVD depending on the availment of CENVAT credit facility. On reading of the above changes in the notification and the undertaking given at the time of import before the customs authorities, reveal that the non-payment of CVD at 5% appears to be unintentional on the part of the appellants and there is no element of suppression etc., on the part of the appellants in non-payment of the Government Revenue. In fact, during investigation itself, the appellants had paid the entire differential duty along with interest payable thereon. Thus, under such circumstances, we are of the opinion that the provisions of Section 114A ibid cannot be invoked for penalizing the appellants.

From the above, it clearly transpires that the above amendment introduced in Finance (No.2) Act, 2024 and that such amended provisions of sub-section (12) of Section 3 of the Customs Tariff Act, 1975 shall come into force w.e.f. 16.08.2024 and shall not be applicable during the disputed period in the present case i.e., 24.03.2011 to 02.12.2011, which is prior to the above said amendment. Therefore, we are of the considered opinion that levy of interest and penalty on the appellants in the present case of demand of CVD is not legally sustainable. Thus, we are of the view, that the impugned order to such an extent that it had upheld the confirmation of interest on duty demands and imposed penalty on the appellants, is liable to be dismissed, as it does not stand the legal scrutiny.

Thus, we do not find any merits in the impugned order, insofar as it has upheld the confiscation of the imported goods and had confirmed interest on CVD duty demands and imposed penalty on the appellants under Section 114A ibid. Therefore, the impugned order to this extent is set aside and the appeal to such extent is allowed in favour of the appellants.

Imposition of penalties on the importer u/s 114A and 114AA - short-levy or non-levy of duty - Willful mis-statement or suppression of facts - Self-assessment and reassessment -Mis-declaration versus incorrect classification - Confiscation and redemption fine - HELD THAT:- From the observations made in the impugned order, it is evident that the appellant has not paid the Anti Dumping Duty leviable on the goods as declared by him on the bill of entries referred above. When the matter was taken up for investigation, and summons dated 20.10.2021 for appearance on 28.10.2021 & dated 02.11.2021 for appearance on 12.11.2021 were issued to Shri Pankaj Kumar Sharma, Senior Manager (Commercial), appellant realized their mistake and deposited the Anti Dumping Duty leviable along with interest, vide challans dated 05.11.2021. There is no dispute in respect of levy and payment of the Anti dumping duty. The dispute is limited in respect of the penalties imposed on the appellant under section 114A and 114AA.

The facts as reproduced above do not support the case of the revenue alleging suppressing, mis-statement, misdeclaration etc., with the intent to vide payment of duty. We note that Hon’ble Supreme Court has in the case of Rajasthan Spinning and Weaving Mills Ltd.[2009 (5) TMI 15 - SUPREME COURT] has clearly held that in absence of these ingredients penalty cannot be imposed under Section 11AC of Central Excise Act, 1944 which is pari-materia to Section 114A of the Customs Act, 1962.

Thus, we do not find any merits in the impugned order to the extent it upholds the penalties imposed on the appellant under Section 114A and 114AA.

Computation of period of limitation - exclusion of time spent prosecuting matter before wrong forum - condonation of delay - remand for de novo hearing - compliance with Section 128(A)(4) of the Customs Act - HELD THAT:- We are of the view that there is a difference between computation of period of limitation and co-donation of delay as has been explained by Hon'ble Supreme Court in the case of M.P. Steel Corporation [2015 (4) TMI 849 - SUPREME COURT] and for the purpose of computation it was directed by Hon'ble Supreme Court to take the spirit of provisions contained in Section 4 to Section 24 of the Indian Limitation Act that could be applied in dealing with condonation period. Section 14 of the said act clearly stipulates that for the period in which matter has been prosecuted before a wrong forum, the said period has to be excluded from the period of computation while dealing with limitation aspects.

We, accordingly exclude the period of 253 days during which time matter was before the Adjudicating Authority/Assessing Officer and take note of the fact that after exclusion of that period, the appeal has to be treated as being filed within the period of limitation. We, therefore, are of the view that when appeal was filed before the Commissioner (Appeals) well within the stipulated time he has to pass an order in compliance with Section 128(A)(4) that dictates that while disposing of the appeal, the Commissioner (Appeals) shall state in writing the points for determination, the decision thereon and the reasons for such decision and therefore, the matter is required to be remanded back to the Commissioner (Appeals) for a de novo hearing and passing of orders in compliance with Section 128(A)(4) of the Customs Act. To remove technical difficulty also, we condone delay of 253 days in filing the appeal before the Commissioner (Appeals), in exercise of our appellate power, though there is no formal requirement of doing so, as has been held in the above referred judgment.

The appeal is allowed by way of remand to Commissioner (Appeals) for de novo hearing, after condoning delay of 253 days at this end, who shall dispose of the appeal within a period of six months with due notice to the parties.

Concessional rate of basic customs duty - self-assessment u/s 17(7) - speaking order u/s 17(5) - re-assessment and use of ICES records - natural justice - duty to disclose material and afford opportunity - confiscation and penalty in exercise of powers u/s 111 and section 112 - appellate jurisdiction and inappropriate collateral adjudication - restoration and remand for fresh consideration - HELD THAT:- It is seen from the records that the information obtained from ICES was not made available to the appellant herein by the first appellate authority despite intent to deploy the contents therein to their detriment. This is gross violation of principles of natural justice. The appellant claims that their protest against the re-assessment had, but for seven, had been filed along with the appeal and, from the records, it would appear that these were not just discarded but ignored.

Considering the jeopardy to the outcome in which the primary jurisdiction of the Joint Commissioner of Customs was exercised, it is moot if the order justifying re-assessment should have been issued together considering its binding effect on subordinate officers even as ‘proper officer’ required to apply their mind independently. The impugned order, by foraying into the merit of revision despite absence of ‘speaking order’ in 49 appeals, has, in effect, held that the single order-in-original applies to the other imports, too. This is inappropriate exercise of appellate jurisdiction.

Though both Learned Counsel for appellant and Learned Authorized Representative did argue at length on their respective claims, in the circumstances, narrated supra, of inappropriate disposal of 49 appeals, we may, by deciding on merit, bind the ‘proper officer’ or influence the revisit of the appeals by first appellate authority. In these circumstances, we set aside the impugned order and restore all the 50 appeals before the first appellate authority to reconsider those on merit and maintainability.

Enhancement of assessable value by invoking Rule 5 and/or Rule 12 - requirement of contemporaneous surrogate value - exemption under notification No. 30/2004-C.E. read with Notification No. 11/2003-C.E. - strict interpretation of exemption notifications - denial of benefit of ‘additional duty of customs’ -HELD THAT:- We find that the enhancement of value was affirmed by recourse to rule 5 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. However, the surrogate value adopted for the purpose pertains to imports of later date, viz., bills of entry no. 2081636/09.05.2013 and no. 3068672/22.08.2013 and is, by no stretch, contemporaneous. Consequently, the benchmark value is not tenable and the enhancement is without authority of law. As far as the other imports are concerned, the process under rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 has not been undertaken and, consequently, the enhancement is without authority of law. The appeals of Commissioner of Customs is dismissed and, to the extent enhancement was challenged in appeal by the importer, is set aside.

Denial of discharge of duty liability by recourse to exemption notification - We find that the first appellate authority [order-in-appeal no. MUM-CUSTM-SMP- 26 to 64/2015-16 dated 25th May 2015] has held that " it is clear that a notification benefit shall be extended strictly to the goods mentioned in the said notification but not to any other goods. Since the notification covers only “the goods produced or manufactured in INDIA", therefore, the benefit of the notification no. 30/2004-CX dated 09.07.2004 read with Notification No. 11/2003-C.EX dated 1.3.2013, is not available to the appellants."

In Customs Tariff Act, 1975 makes it clear that duty rate chargeable on like goods produced or manufactured in India is to be applicable. Furthermore, in deciding upon challenge to assessment under Customs Act, 1962, there is no scope for any reference to any other law. It may be noted that section 3(1) of Customs Tariff Act, 1975 makes no reference either. Consequently, the denial of effective rate of duty is not tenable. The impugned orders are set aside to allow the appeals.

Classificationof the Aluminium Layered Oil Coolers/ Plate type heat exchanger unit - use in motor vehicles -General Rules of Interpretation (GRI) - Essential character test- General Rules of Interpretation (GRI) - HSN Explanatory Notes - Preference for specific sub-heading over residual heading - Whether the Aluminium Layered Oil Coolers imported by the applicant, for use in automotive vehicles for cooling of engine oil, are classifiable under Customs Tariff Sub- heading 84195092 as 'Heat Exchange Units - Plate Type', or under Heading 8708 as 'Parts and accessories of motor vehicles'. - HELD THAT:- It is evident that heat exchange units of the type under consideration are excluded from classification under Heading 87.08 by operation of Section XVII, Note 2(e). This exclusion applies notwithstanding the fact that the goods are identifiable for use with motor vehicles of Chapter 87.

In accordance with the General Rules for the Interpretation (GRI)- Rule 1 of the Harmonized System, classification must be based on the terms of the headings and any relevant Section or Chapter Notes. Heading 8419 of the Indian Customs Tariff explicitly covers "Machine for the treatment of materials by a process involving a change of temperature", thereby providing a clear and direct basis for classification. Given the nature and intended function of the product under consideration, it squarely falls within the scope of Heading 8419, as it is designed to transfer heat from hot fluid to cold fluid within a system.

Furthermore, in accordance with General Rule of Interpretation 3(a) of the Harmonized System, classification should be based on the heading that provides the most specific description which is in this case the subject product's description is more specifically covered under the sub-heading 8419.50.92 which states- "Heat Exchange Units - Plate type".

The product does not fulfil two of the three essential conditions provided in Explanatory Notes to Section XVII, for an article to be classified thereunder. Therefore, the product is ousted from the scope of Section XVII and hence, from Heading 8708 by extension.

On examination of the product description, technical specifications and explanatory material placed on record, find that the Aluminium Layered Oil Cooler is a plate-type heat exchanger comprising multiple thin aluminium plates brazed together so as to form alternating and sealed flow channels. the hot engine oil flows through one set of channels while a coolant flows through adjacent channels, thereby enabling indirect transfer of heat across the metallic plate surfaces without any intermixing of fluids.

Further observe that cooling of the engine oil is achieved solely by the principle of thermal exchange based on temperature gradient. The product does not perform any propulsion-related, transmission- related, steering-related, braking-related or structural function of a motor vehicle. Accordingly, the principal function and essential character of the subject goods is that of a heat exchange unit, and not that of a motor vehicle part per se.

The construction, operating principle and functional characteristics of the Aluminium Layered Oil Cooler correspond exactly with the description contained in the Explanatory Notes. Accordingly, the subject goods are specifically and unambiguously covered under Customs Tariff Sub-heading 8419.50.92.

Without prejudice to the foregoing, further observe that even if the subject goods are considered prima facie classifiable under both Headings 8419 and 8708, Rule 3(a) of the General Rules for Interpretation mandates that the heading which provides the most specific description shall be preferred. the Sub-heading 8419.50.92 provides a precise, specific and technically accurate description of the subject goods as "Heat Exchange Units - Plate Type", whereas Heading 8708 is a general residual entry. On application of this principle also, classification under Heading 8419 is clearly warranted.

Find support for the above view from the judgment of the Hon'ble Supreme Court in Commissioner of Central Excise v. Uni Products India Ltd. [2020 (5) TMI 63 - SUPREME COURT], wherein it was held that even if goods are specifically designed for motor vehicles, they cannot be classified under Heading 8708 when they are more specifically covered under another tariff heading and are excluded by the relevant Section Notes.

The Tribunal, in Hero Motocorp Ltd. v. Commissioner of Customs [2021 (12) TMI 490 - CESTAT MUMBAI], held that goods falling under specific headings of Chapter 84 stand excluded from Chapter 87 by operation of the Section XVII Notes and are therefore not classifiable as motor vehicle parts.

Also observe that international tariff practice supports the above interpretation. U.S. Customs and Border Protection, in CBP Ruling HQ 961660 and CBP Ruling H316373, classified engine oil coolers and heat exchangers used in automotive applications under Heading 8419 on the ground that their essential function is heat exchange. Though not binding in the Indian context, these rulings carry persuasive value and reflect a harmonised interpretation under the Harmonized System.

Thus, the Aluminium Layered Oil Coolers imported by M/s. Modine Thermal Systems Private Limited are classifiable under Customs Tariff Sub-heading 8419.50.92 of the First Schedule to the Customs Tariff Act, 1975 as "Heat Exchange Units - Plate Type".

Identical with or resemble too nearly - undesirable name - prominent and distinctive part of corporate name - registered trade mark - powers u/s 16 of the Companies Act, 2013 - Section 4(2)(a) of the Companies Act, 2013 - Section 16(1)(b) of the Companies Act, 2013 - HELD THAT:- It is evident from a comparison of the names of the parties, that the word ‘REFEX’ is the prominent and distinctive part of the names of both the Petitioner and Respondent No. 2. The two names are structurally and phonetically identical.

In view of the law settled by this Court in CGMP Pharmaplan P. Ltd. [2010 (7) TMI 272 - HIGH COURT OF DELHI] and Everstone Capital Advisors Pvt. Ltd. [2019 (3) TMI 2103 - DELHI HIGH COURT] this Court is of the opinion that the dissimilarity in the businesses of the Petitioner and Respondent No. 2 was not a relevant criterion for the Regional Director to consider for declining to exercise the jurisdiction conferred upon him under Section 16 of the Act of 2013.

The word ‘REFEX’ as noted above is the prominent part of the name of the Petitioner, which was incorporated in 2002. Subsequently, in the years 2008, 2010 and 2015 its promoter incorporated six [6] other companies, which similarly had ‘REFEX’ as a prominent part of its corporate name. Thus, as on 27.01.2017, when Respondent No. 2 applied for incorporation with the word ‘REFEX’ in its corporate name, there already existed seven [7] companies all forming part of the same group, on the register.

In these facts, the present petition is allowed, the impugned order dated 23.08.2018 passed by Respondent No. 1 is set aside.

Judicial direction without opportunity to be heard - appointment of neutral expert and access to personal electronic records - tribunal acting sua sponte on substantive relief - quashing order for breach of audi alteram partem - remand for fresh application and adjudication on merits - HELD THAT:-We are not making any remark on this, as to whether at all the Ld. Tribunal after the conclusion of the argument, could have at all made such an observation, which will be exclusively an issue which is to be left open to be decided by Tribunal on its own merits, when the Petitioner/Respondent herein files an appropriate application before the Ld. Tribunal, for the relief, of the nature, as it has been granted by the order dated 22.01.2026. Since the impugned order has been passed at the wisdom of the Ld. Tribunal without hearing the Appellant and without any proceedings being carried in relation to it, and it will be having an adverse effect on the case of the Appellant, the Appellant was required to be heard. The Tribunal ought not have identified itself with any of the parties to the proceedings.

Hence, the impugned order would stand quashed, and the company appeal would stand allowed, but it would be without prejudice to the Respondent/Petitioner, to file an appropriate application for the relief, which has been thus modulated by the Ld. Tribunal on its own in the impugned order and if the same is preferred, the same would be endeavoured to be decided by the Ld. Tribunal on its own merit after offering an opportunity to the Appellant.

Disclosure limited to summary fair value and liquidation value under Regulation 35 - no obligation to provide full valuation report to CoC members prior to amendment - confidentiality undertakings for members of the committee of creditors - procedural fairness and transparency - natural justice - residuary jurisdiction u/s 60(5) of the Code - challenge to distribution to dissenting creditors pending adjudication.

Whether the resolution professional was obliged to furnish the full valuation reports and minutes of the monitoring committee to the dissenting financial creditor - HELD THAT: - The Tribunal held that Regulation 35, as it stood at the time the plan was approved, required only that the fair value and liquidation value be provided in summary form to members of the committee of creditors on receipt of confidentiality undertakings and did not mandate disclosure of the full valuation reports. The RP supplied the liquidation value in summary form and acted in accordance with the Code and the then-applicable Regulation 35. The adjudicating authority's finding that the RP's conduct complied with the statutory regime was endorsed. The Appellant's contention that denial of the full valuation reports violated natural justice and procedural fairness was rejected on the basis that the Appellant had not earlier contested the liquidation value during CIRP, and there was no demonstrable unfair play or denial of justice justifying departure from the regulatory disclosure regime. Accordingly the application seeking production of valuation reports and minutes was rightly dismissed. [Paras 8, 9]

Application for production of full valuation reports and monitoring-committee minutes dismissed; RP was not bound to provide full valuation reports under the Regulation as it existed at the relevant time.

Status of the separate claim for additional payment by the dissenting financial creditor arising from the distribution under the approved resolution plan -HELD THAT: - The Tribunal noted that the appellant's substantive claim for an additional payment (IA) alleging shortfall in amount distributed remains pending before the adjudicating authority and was not decided in the impugned order. The present appeal concerned only the order refusing production of the full valuation reports; the correctness of the distribution and any entitlement to further sums must be adjudicated by the adjudicating authority in the pending application. The Tribunal therefore did not adjudicate the merits of the distribution claim and left open the appellant's right to pursue (IA) before the adjudicating authority. [Paras 7, 9]

Substantive claim for additional payment is yet to be decided by the adjudicating authority and remains pending; Tribunal did not adjudicate that claim.

Final Conclusion: The appeal against dismissal of the application for production of full valuation reports and monitoring-committee minutes is dismissed; the adjudicating authority's order upholding the RP's compliance with Regulation 35 as it then stood is affirmed. The separate application seeking additional payment remains pending before the adjudicating authority and was not decided by this Tribunal.

Pre-existing dispute - Operational Creditor - notice of dispute u/s 8 and Section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, 2016 - Mobilox test - plausible contention requiring further investigation - spurious defence - admission of Section 9 application and initiation of CIRP - agency and effect of notice to agent on the principal - Whether there was any pre-existing dispute between the parties within the meaning of Sections 8 and 9 of the IBC - HELD THAT:- Keeping in view the industry practice of employing agents was being followed by both the Corporate Debtor and the Operational Creditor, the communications relating to supply of contaminated goods exchanged between the agents and their principals and consequential issue of debit-notes which all happened prior to issue of Section 8 Demand Notice did constitute critical communications showing pre-existing disputes but these communications have not been dealt by the Adjudicating Authority in the impugned order.

It is also a well settled legal proposition that for pre-existing dispute to be a valid ground to nullify an application under Section 9, the dispute raised must be truly existing at the time of filing a reply to the notice of demand as contemplated by Section 8(2) of IBC or at the time of filing the Section 9 application. In the present case, we notice that reply was furnished on 01.07.2019 by the Corporate Debtor in response to the Section 8 Demand Notice dated 20.06.2019.

Section 9(5)(ii)(d) of IBC expressly provides that Adjudicating Authority shall reject the Section 9 application if notice of dispute has been received by the Operational Creditor. The above reply to demand notice is clearly a notice of dispute within the meaning of Section 9(5)(ii)(d).

The Adjudicating Authority has failed to appreciate the facts of the case in its entirety having not examined the due applicability of Section 9(5)(ii)(d) to the facts of the present case and instead proceeded to observe that defence of pre- existing dispute raised by the Corporate Debtor is a spurious defence. It is clear that the defence which was raised by the Corporate Debtor in its reply to Demand Notice as well as in their detailed reply filed in Section 9 application cannot be said to be unsupported by evidence. The defence raised by the Corporate Debtor is prima facie plausible and cannot be outrightly rejected as spurious, hypothetical or illusory. We are satisfied that the Section 9 application filed by the Operational Creditor did not deserve admission and was liable to be rejected as required by Section 9(5)(ii)(d) of the IBC. The Adjudicating Authority committed an error in admitting the Section 9 application and we, therefore, hold that the impugned order passed is unsustainable.

In result, we are of the considered view that the Adjudicating Authority has erroneously admitted the application under Section 9 of the IBC. We allow the Appeal and set aside the impugned order. The orders passed by the Adjudicating Authority initiating CIRP against the Corporate Debtor and appointing Interim Resolution Professional and all other orders pursuant to impugned order are set aside. The Corporate Debtor company is released from the rigours of CIRP and is allowed to function independently through its board of directors with immediate effect. The amount of Rs. 2 lakh directed by the Adjudicating Authority to be paid by the Operational Creditor to the Resolution Professional, if not yet paid, be paid within two weeks from the date of this order. We however add that the Appellant can pursue its remedies before an appropriate forum of law. We also observe that it will remain open for the Intervenor- SBI to exercise its liberty to initiate proceedings against the Corporate Debtor under the statutory provisions of IBC.

As stand closed.

Section 10A suspension of CIRP - Exclusion of defaults arising during Section 10A for computation of debt and default - Continuing default versus completed default - Maintainability of Section 7 application and threshold u/s 4 - Acknowledgement of liability and classification as financial debt - HELD THAT:- In the present case when the Appellant had clearly pleaded the date of default in the first Section 7 petition, as structured in three instalments, falling due in March, April and May 2020 without any assertion of a continuing default and further this Tribunal had given the liberty to the Appellant to file the second Section 7 petition afresh only after excluding the period of default covered u/s 10A, the attempt of the Appellant to circumvent the Section 10A statutory immunity to the default liability by changing the date of default to 01.04.2021 is plainly untenable.

The reliance placed by the Appellant on the judgment of the Hon’ble Apex Court in Laxmi Pat Surana [2021 (3) TMI 1179 - SUPREME COURT] to contend that default cannot be anchored to a single date for it continues until the debt is not paid has no direct bearing on the facts of the present case since in that matter the Hon’ble Supreme Court was deciding on the issue of limitation and in that context had held that the date of NPA is not necessarily the date of default. The Appellant has also unsuccessfully sought the aid of the ratio of the judgment of Madras High Court in Dharamshi K. Patel & Anr. Vs Indian Bank & Anr. [2025 (3) TMI 14 - MADRAS HIGH COURT] as in the present case, the principal default which arose during the Section 10A period was a one-time default and hence under a permanent embargo unlike the interest liability which by its nature being a recurring obligation, the same could be considered even after the end of Section 10A prohibited period.

We are of the considered view that any attempt to negate, nullify, invalidate or erode the protection offered by Section 10A cannot be accepted as it would go contrary to the legislative intent behind insertion of Section 10A. That being so we find that the Adjudicating Authority has not committed any error in holding that the portion of the debt liability arising out of the principal amount having coming into default during the Section 10A needs to be ignored and on consideration of the remaining portion falling short of the threshold limit of Rs 1 Cr, the Section 7 petition was rendered non-maintainable and therefore legally impermissible.

We are satisfied that the Adjudicating Authority did not commit any error in rejecting the Section 7 application. We find no good grounds to interfere with the impugned order. The Appeal is devoid of merit and is dismissed.

We are of the considered view that any attempt to negate, nullify, invalidate or erode the protection offered by Section 10A cannot be accepted as it would go contrary to the legislative intent behind insertion of Section 10A. That being so we find that the Adjudicating Authority has not committed any error in holding that the portion of the debt liability arising out of the principal amount having coming into default during the Section 10A needs to be ignored and on consideration of the remaining portion falling short of the threshold limit of Rs 1 Cr, the Section 7 petition was rendered non-maintainable and therefore legally impermissible.

We are satisfied that the Adjudicating Authority did not commit any error in rejecting the Section 7 application. We find no good grounds to interfere with the impugned order. The Appeal is devoid of merit and is dismissed.

Limitation under the Insolvency and Bankruptcy Code - Date of Default as determinant of limitation - acknowledgement of debt in balance sheets as extending limitation - admission threshold u/s 7(5)(a) - inapplicability of ICAI guidance note Clause 8.3.1.2 to vitiate acknowledgment -

Limitation - HELD THAT:- Section 7 application filed by the Respondent, the date of default was mentioned as 31.10.2019 which was based on the inspection conducted by RBI. We also take into consideration that the Corporate Debtor had acknowledged the debt of Respondent Bank in the letter of acknowledgement dated 31.12.2021, which was signed by the present Appellant along with Ms. Sweety Singh as Suspended Director of the Corporate Debtor i.e. by both the Suspended Directors of the Corporate Debtor. We shall take into consideration the relevant acknowledgements which have been made by the Corporate Debtor. We also need to note that the debt is also acknowledged in the balance sheet of the Corporate Debtor for the period ending 2019 to 2021 under the heading of short terms borrowing and long term borrowings.

As per the Suo-moto judgement of the Hon’ble Supreme Court of India, the period from 15.03.2020 to 20.02.2020, stand automatically excluded for the purpose of limitation. The Section 7 petition was filed by the Respondent on 27.06.2023 which fall within limitation on the strength of acknowledgements of the debts by the Corporate Debtor in the balance sheets as discussed above.

Thus, all six loans have been acknowledged by the Suspended Directors of the Corporate Debtor on 31.12.2021, thereby extending the limitation further.

We are of the considered view that there was clear debt for which default took place and the same was duly acknowledged by the Corporate Debtor in their various balance sheets as well as the acknowledgement letters discussed and quoted above.

Non-compliance of Clause 8.3.1.2 of the guidance note issued by ICAI - HELD THAT:- It is the case of the Appellant that since balance sheets did not provides the bifurcation of borrowing of the Corporate Debtor under proper heads as mandated by the guidance notes issued by the ICAI, the acknowledgement relied upto, for limitation purpose is perverse. On this issue, we do not find any merit in the contentions of the Appellant for the simple reason that it was for the Appellant to prepare the balance-sheet in according with the laid down Accounting standards and guidance note issued by the ICAI. The Appellant, having not complied with the same, if at all, cannot now take shelter of the same at this stage. Having said so, we do not find Clause 8.3.1.2 at all related to the controversy, the Appellant tried to raise in the pleadings before us and has brought out in the rejoinder reply. The purported claims of the Appellant regarding non classification of the borrowing into sub-classification as per guidance note, do not support the cause of the Appellant as the sub-classification is basically for secured creditors and unsecured creditors. In either case, any financial creditor, even being unsecured creditor, is within the right to file Section 7 petition in case default occurs.

Since, the claim 8.3.1.2 of the guidance note itself is negated by us, there is no need for us to refer to the judgement quoted by the Appellant in this regard. However, for the sake of completeness, we shall refer to the said judgement of Collector of Central Excise [1999 (8) TMI 920 - SUPREME COURT (LB)] also.

We are of considered view that the Apex Court judgement only confirms that the ICAI is the authoritative body in the matter of laying down the Accounting standards and the guidance notes. We do not find this issue at all applicable as the applicability of accounting standard is not an issue before us.

Incidentally, the appeal was heard and was reserved for judgement on 19.01.2026 granting 07 days for submitting written submissions vide our order dated 19.01.2026. We are constrained to record that till date no written submissions have been submitted, hence we have decided the same, based on record available with us. In any case, written submissions perhaps would have only given same/similar details, as such no prejudice would have been caused to either of the parties.

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

Extinguishment and release of encumbrances, security interests and attachments by an approved resolution plan - binding effect of an approved resolution plan under the Insolvency and Bankruptcy Code - extinguishment of claims, rights and litigation against erstwhile promoters, directors and guarantors pursuant to plan clause C-13(7) - inability of dissenting financial creditors to continue enforcement or recovery once debt is resolved under an approved plan - irrelevance of pre-existing statutory attachments, including under the Maharashtra Cooperative Societies Act, where the approved plan extinguishes the underlying debt -HELD THAT:- Section 101 is the provision of recovery of certain sums and arrears due to certain societies as arrears of land revenue. When the enforcement action has been initiated by respondent Nos. 1 & 2 for recovery and any asset has been attached the said attachment is only with recovery of dues of the respondents No. 1 & 2 consequent to the financial credit extended to the corporate debtor. When entire debt of respondents No. 1 & 2 has been resolved by approval of the resolution plan in the CIRP of the corporate debtor, it is not open for respondents No. 1 & 2 to submit that it will keep the assets attached under Section 101 of the Maharashtra Cooperative Societies Act, 1960, for recovering its dues. When resolution plan is approved and all debt of the respondents No. 1 & 2 which was filed as a claim in CIRP has been resolved and dealt with in the plan, the submission on behalf of the respondents No. 1 & 2 that is has still some amount due to be recovered is fallacious and contrary of the scheme of the IBC. We thus do not find any substance in the submission of learned counsel appearing on behalf of respondents No. 1 & 2 that respondents No. 1 & 2 can keep third-party securities and securities of personal guarantors and promoters which were not covered by any mortgage and which were under attachment to recover the dues of respondent Nos. 1 & 2.

It is relevant to notice that the respondents No. 1 & 2 who are dissenting financial creditor has been in very beginning after approval of the resolution plan has been objected for extinguishing of their securities against the personal guarantors and promoters which objections were overruled and did not find favour and the issues have already been finalized between the parties vide judgment of this Tribunal dated 24.11.2023 in Comp. App. (AT) (Ins.) No. 661-663/2023 which order has been affirmed by the Hon’ble Supreme Court. It is not open for the respondents No. 1 & 2 to raise the same submissions again and again to contend that it is entitled to retain third-parties securities and assets of the promoters to recover its dues. The action of respondents No. 1 & 2 is clearly contrary to the whole IBC proceedings and need to be deprecated.

It is not open for the adjudicating authority to observe that personal properties of the guarantors which were attached under Maharashtra Cooperative Societies Act, 1960, pursuant to award has to be kept out. The enforcement action under Maharashtra Cooperative Societies Act, 1960 by the respondents No. 1 & 2 to recover its dues and attachment pursuant thereof shall stand released by virtue of Clause C-13(7) and it is not open for the respondents No. 1 & 2 to continue their recovery enforcement action relying on the attachments made. The respondents No. 1 & 2 cannot rely on any attachment prior to in the CIRP process and claimed that those attachments shall continue to entitle it to recovery its dues.

When one of the prayers in the application was to restrain the respondents No. 1 & 2 from taking any steps of recovery or enforcement for the debt which was due and payable by corporate debtor and prayed for direction to respondents No. 1 & 2 to act in any manner in contravention of the resolution plan, the respondents are clearly bound by order passed by the adjudicating authority.

We may also notice that one of the prayers made in I.A. i.e., prayer (a) was to refer the matter to IBBI for filing a complaint against respondents No. 1 & 2 under Section 236 of the Code for offence under Section 74(3) of the Code.

We allow the appeal.

Enforceability of contingent contractual rights dependent on removal of encumbrances - Validity and enforceability of a corporate guarantee/ acknowledgment as contractually binding instrument - principle that an assignee cannot acquire greater rights than the assignor - verification of creditor claims by the Resolution Professional under IBBI regulations - acceptance or rejection of claims and updating of the Information Memorandum by the RP - Whether the impugned order of the Adjudicating Authority affirming the decision of the RP to reject the claim filed by the Appellant suffers from any infirmity. - HELD THAT:- While we are of the view that disputes involving authenticity and genuineness of contractual documents do not fall strictly within the remit of the RP, given the fact that Regulations 10, 12 and 13 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations,2016 enjoins upon the RP to verify claims submitted by creditors, there was nothing unusual on the part of the RP to take notice that there existed grounds for doubting the authenticity and bonafide of the documents basis which claims were raised. Be that as it may, we do not wish to comment on this aspect since records placed before us do not carry proof as to whether the RP had sought further clarifications from the concerned on this aspect while considering the claims of the Appellant to determine their authenticity and accuracy.

Mere existence of documents like the Collaboration-cum-Redevelopment Agreement, Assignment Agreement or the Letter of Guarantee in itself cannot substantiate the claims of the Appellant when the claims were contingent and dependent on removal of encumbrances of the subject property by the Corporate Debtor. We do not find any material on record to substantiate the fact that the encumbrances had been removed and that the title deed of the subject property deposited with the Union Bank of India had been returned to the Corporate Debtor. Further in the present facts of the case when the Appellant has admitted that the Corporate Debtor had not yet fulfilled its obligations to cure the encumbrances over the subject property, though it had expressly undertaken to do so, we have no reasons to disagree with the Respondent-RP that there was no enforceable right enjoyed by RS International or their assignee over the subject property and hence the claim staked by the Appellant lacked foundational basis. It therefore, follows as a logical corollary that the rights of the Appellant still remaining nebulous, amorphous and indeterminate, such contingent rights did not acquire the character of a crystallised and enforceable right, basis which any claim could have been accepted by the RP.

Additionally, we also find that Adjudicating Authority has taken cognisance of the fact that the RP while deciding on the acceptance had noticed that the CIRP of the Corporate Debtor was initiated by the Adjudicating Authority vide order dated 15.04.2021 but the Applicant had filed their claim belatedly almost after four years and that too by asserting their contingent rights over an encumbered subject property.

Thus, we do not find any error on the part of the RP to not have updated the Information Memorandum in respect of the subject property or in rejecting the claim of the Appellant and for the Adjudicating Authority to have upheld these decisions of the RP in the impugned order.

In result we do not find any merit in the Appeal. The Appeal is dismissed.

Invocation of guarantee as condition precedent to personal guarantor insolvency proceedings - maintainability of Section 95 application - effect of compromise/settlement/MoU on guarantor's liability and on requirement to invoke guarantee - interpretation of Rule 3(1)(e) and Rule 7(1) of the 2019 Rules regarding notice in Form B - guarantor liability depends on contractual terms of the deed of guarantee - HELD THAT:- When we look into Clause 2.1 (a) and (b) on which reliance has been placed by the Counsel for the Respondent, they are in reference to guarantee which has been given by guarantors. Before clause (a) & (b), following expression need to be noticed “whereby the Guarantors have unconditionally, absolutely and irrevocably guaranteed and agreed to the Lenders Inter alia i.e. (a) and (b)”. Thus, clause (b) on which reliance has been placed were in reference to the earlier guarantee but above clause (a) and (b) does not in any manner dilute or modify the clauses of guarantee deed, as noted.

We, thus, are of the view that clauses of guarantee deed, as noticed above, were not modified or superseded by Compromise and Settlement Agreement or MoU. The liability of the guarantor was thus on demand being made by the Bank, hence, invocation of guarantee was necessary before issuing demand notice under Form B. We are unable to accept the submission of the Counsel for the Respondent that after Compromise and Settlement Agreement dated 25.09.2018, there was no necessity to invoke the guarantee deed. There being no invocation of the guarantee deed prior to issuance of demand notice in Form B, the present case is fully covered by judgment of this Tribunal in ‘State Bank of India’ Vs. ‘Mr. Deepak Kumar Singhania’ (supra) where it was held that the default before issuance of notice under Rule 7(1) must exist on the part of the personal guarantor and notice under Rule 7(1) cannot be treated as a notice invoking guarantee.

The Financial Creditors having not invoked the guarantee prior to issuing demand notice in Form B, the application under Section 95 could not have been filed by Financial Creditor before invoking the guarantee.

In result, both the Appeals are allowed and order impugned dated 03.05.2024 admitting Section 95 application is set aside.

Related party status u/s 5(24) - Validity of CIRP initiation - Compliance with liquidation process and auction regulations - Doctrine of estoppel and acquiescence - Commercial wisdom of the Committee of Creditors and non-justiciability - Finality of admission - Waterfall distribution - Appellate Tribunal review of NCLT findings -

Initiation of CIRP - HELD THAT:- We do not find any logic in the Appellant’s contention that CIRP was illegal. Despite the fact that prima facie, the loans were not required by the Corporate Debtor at that stage, since its operation was shut way back and also keeping into consideration that no due process of CIRP governance was followed by Corporate Debtor including non-registration of charge or passing any resolution of the BoD while taking loans from the unsecured Financial Creditors/ the Respondent No.2, 3, & 4, however the fact remain that the transaction did happen between the Financial Creditors and the Corporate Debtor. No one has disputed this fact nor anyone has not been brought to our notice, that loan money was not disbursed by the Financial Creditors to the Corporate Debtor. Having established that the loan money has been received by the Corporate Debtor, the Adjudicating Authority was duty bound to allow Section 7 application filed by the Respondent No. 2. In this background, we do not find much merit in the contention of the Appellant that the CIRP was incorrect and illegal.

liquidation process and the e-auctions - HELD THAT:- We note that the Appellant relied upon the balance-sheet of the Corporate Debtor of the Respondent No. 2 for the period 31.03.2019, where it has been indicated that “advance to other includes advance to concern in which directors are interested”. We also note that the said balance-sheet does not contain names of the alleged interested party. As such, the plea of the Appellant is not found to be valid which has correctly been adjudicated by the Adjudicating Authority in the Impugned Order.

It is noted that the relationship between Ahinsa Infrastructure and Developers Limited and M/s Bhilwara Spinners Limited being subsidiary company relationship exist but do not alter status of financial creditor as there is no embargo for such related parties to lend money to any corporate entity.

We are also not inclined to accept logic of the Appellant that CoC did not try for resolution of the Corporate Debtor seriously and jumped to Liquidation process in haste. The Adjudicating Authority has correctly given its finding in this regard after evaluating all details under Section 33(2) of the Code and also taking into account the judgement passed by this Appellate Tribunal in the case of Sunil S. Kakkad v/s Atrium Infocom [2020 (8) TMI 392 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI]

Thus, we reject contention of the Appellant on this issue.

Fraudulent nature of loans - Adjudicating Authority has correctly recorded that the transactions indeed happened between the Financial Creditor and the Corporate Debtor albeit at much higher rate interest of 24% per compounded monthly. We are aware that the Adjudicating Authority held that the loan was not required by the Corporate Debtor since, its operation was shut long ago. There was no documentation of loans, no charge was created and no interest has been provided for in the financial statements of the Corporate Debtor. We tend to agree with the same, however, the fact remains that the money lent were transferred from the Financial Creditors to the books of the Corporate Debtor. As such, the loan amount was payable by the Corporate Debtor to the Financial Creditors. However, we do not find fault in disallowing the exorbitant interest by the Adjudicating Authority as detailed in other connected judgement of CA (AT) (INS) NO in the matter of M/s. Bhilwara Spinners Limited & Ors. vs Prashant Agarwal Liquidator of M/s Global Syntex (Bhilawara) Ltd. [2026 (2) TMI 24 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI]

We note that no specific instance of any violation of the timeline has been provided to us w.r.t. CIRP Liquidation Regulation as well as the manner and to the extend to which reserve price could not have been reduced as alleged by the Appellant has been brought out, as such we do not find any error in the Impugned Order on this issue.

Prima-facie, the Respondent No. 1/ Liquidator had carried out Liquidation process in accordance with laid down process under the Code and the CIRP Liquidation Rules 2016. In view of this background, we are not convinced by the logic of the Appellant that the liquidation process was illegal which need to be interfered with.

We have gone into detail of the Impugned Order and found it logical and rational. Based on above detailed analysis, we do not find any error in the Impugned Order. The Appeal devoid of any merits stands rejected.

Crystallization of debt - initiation of CIRP u/s 7 - effect of undertakings recorded in interlocutory proceedings - finality of findings in interlocutory orders and miscellaneous appeals - acknowledgement of liability as admission of debt - Whether at all, the observation which had been made by the Hon'ble High Court of Bombay in its para 21.2 as extracted above in a miscellaneous civil appeal arising from an interlocutory order, recording an undertaking, could at all be taken into consideration and extracted for the purposes to substantiate the argument that the CIRP proceedings lacked a determination of debt owing to the said undertaking. - HELD THAT:- It has been consistently held in judicial forums that any adjudication made or any finding recorded in any interlocutory proceedings, even when it is on the merits of the claim or right of the parties, will not attach any finality or will affect the right of the parties, jeopardizing their right to litigate or to establish their case in the main proceedings before the regular Court or in any other proceedings. In the case at hand, it is not the argument of the Appellant that the suit itself has been decided on merits, because admittedly that is still pending consideration, yet to be decided on merits.

Thus, the finding of the commercial court in the proceedings before it cannot be restrictively extracted to be read or interpreted for deciding the Section 7 application, particularly when it is being limited to be extracted to be applied, only relation to the undertaking which had never attained finality in the proceedings before the commercial courts.

We are also of the view that, owing to the fact that the proceedings before the Hon'ble High Court of Bombay [2025 (3) TMI 1597 - BOMBAY HIGH COURT] was initiated as against the order dated 11.06.2024, passed in an interlocutory applications in the Commercial Suit, any finding recorded therein can only be confined to be read, for the purposes of the subject of the proceedings before the commercial courts and that cannot be utilised and borrowed to be applied for the purposes of proceeding under Section 7 of the I & B Code, 2016, which is independent altogether, arising out of an independent and special statute.

We are of the view that the question raised by the Appellant is to be answered in negative and, that the said undertaking cannot be interpreted to reach a conclusion that the debt is yet to crystallize and hence the proceeding under Section 7 of the I & B Code, 2016, is vitiated. As already dealt with by this Appellate Tribunal, once the Appellant himself has admitted the liability it will be an admission of owed debt, and therefore, the initiation of Section 7 proceedings cannot be doubted in any manner whatsoever.

Hence, the 'appeal' lacks merit, and the same is accordingly 'dismissed'.

Liability of a company struck off the Register - Continuing personal liability of directors after striking off - Pre-deposit requirement for appeals u/s 19(1) of FEMA - Civil penalty u/s 13(1) of FEMA and absence of mens rea - Proportionality in reduction of penalty - HELD THAT:- It is clear that Sub- Section (6) of Section 248 read with Section 250 of the Act of 2013 that the liabilities and obligations shall continue and for the purpose sufficient provision has to be made for the discharge of its liabilities. We therefore find that the Appellant Company after imposition of cumulative penalty of Rs. 1,01,13,971/-vide Impugned Order dated 29.07.2019 continues to be liable for the payment of penalty, even after having been struck off.

In view of the failure of the Appellant Company to comply with the statutory provisions of Section 19(1) of FEMA, we dismiss the Appeal No. FPA-FE-62/CHN/2019 filed by M/s Vijeta Marines Pvt. Ltd.

Imposition of penalties - HELD THAT:- The Judgment of SEBI in the matter of The Chairman, SEBI v. Shriram Mutual Fund [2006 (5) TMI 191 - SUPREME COURT] cited the Judgment in Director of Enforcement vs. MCTM Corporation Pvt. Ltd. and Ors. [1996 (1) TMI 351 - SUPREME COURT] wherein even for FERA 1947 it was held that the contravention shall be breach of a civil obligation which would attract penalty irrespective of the fact whether the contravention was made with any guilty intention or not. The Judgment (supra) in the matter of SEBI, also cited a number of previous Judgments wherein it was held that mens rea is not an essential element for imposing penalty for breach of civil obligations. The Judgment (supra) has clarified that the case of Hindustan Steel Ltd. Vs. State of Orissa [1969 (8) TMI 31 - SUPREME COURT] pertained to criminal/ quasi criminal proceeding as the provisions of the Act under consideration in that case imposed a punishment of imprisonment and fine as well. The present appeal deals with provisions which are strictly civil obligations and penalty for the contraventions of these provisions are imposable under Section 13(1) of FEMA which provides for penalty only, up to thrice the sum involved in such contravention.

The individual Appellant has also pleaded to make the penalties proportionate. Since on evaluation of the gravamen of the charges, it is argued that the penalty has been imposed for the inadvertent failures.

Thus, to the ends of justice shall be met on reduction of the penalty on the individual Appellant to Rs. 1,00,000/-. The amounts of pre-deposit already made shall be adjusted towards the reduced penalty.

Accordingly, the Appeal No. FPA-FE-62/CHN/2019 filed by M/s Vijeta Marines Pvt. Ltd. is dismissed. The Appeal No. FPA-FE- 101/CHN/2023 filed by Shri N. Sreenivas is partly allowed.

Provisional attachment - confirmation of attachment under PMLA - prima facie nexus with proceeds of crime - attachment of an undivided share in immovable property - proceeds of crime includes value equivalent - collection of demonetized currency, and its conversion into gold through intermediaries - burden to prove attached portion untainted - non-requirement of recording statements of all co-owners - mere payment of EMIs does not confer title for PMLA purposes - Whether the provisional attachment and its confirmation in respect of the residential property bearing No. B-20, Moonlight Apartments, 70 IP Extension, Patparganj, Delhi-110092, to the extent of 50%, is sustainable in law under the provisions of the PMLA.

HELD THAT:- The alleged conversion of demonetized currency into bullion through fictitious entities and banking channels, followed by sale at a premium of gold and diamond, prima facie discloses a process or activity connected with the proceeds of crime, which squarely attracts the provisions of Section 3 of the PMLA. The existence of the Scheduled Offences and the investigations conducted by the Respondent Directorate provided the reasons to believe for action under Section 5(1) of PMLA, as has been found by the Ld. AA.

The PMLA recognizes attachment of an undivided share in immovable property, and there is no requirement under the Act that the property must be physically divisible or that other occupants must be evicted at the stage of attachment. The plea of indivisibility of the flat or hardship to family members, cannot override the statutory scheme.

It is pertinent to state that the commission which is found to have been earned by the Appellant Shri Prateek Bansal, during the course of investigations is Rs. 37,00,000/-. This amount is estimated to be the proceeds of crime qua the Appellant Shri Prateek Bansal because the said amount has been earned by him by indulging in procuring demonetized currency and thereafter laundering it through transactions in gold and diamonds. The property which has thus been attached as value thereof of the proceeds of crime is only to the extent of Rs. 27,70,157/- (i.e. 50% of the value). It is therefore obvious that the attached property is much less than the proceeds of crime. It is an admitted fact that the attached property is registered jointly in the name of Sh. Prateek Bansal and Smt. Anita Bansal. We therefore do not find that any impropriety has been indulged in the attachment order.

The burden to establish that the attached portion is untainted lies upon the person claiming such exemption, which burden has not been discharged in the present case. We also find no merit in the contention that the impugned proceedings are vitiated on account of non-recording of statements of every co- owner. The Act does not mandate recording of statements of all persons claiming interest in the property as a condition precedent for confirmation of attachment.

Adequate opportunity of hearing was afforded, and no material prejudice has been demonstrated. With regard to the rejection of the impleadment application filed by Shri Ravinder Nath Bansal, we find that the Ld. Adjudicating Authority has correctly held that mere financial contribution, in the absence of title or registered interest, does not entitle a person to be treated as an owner for the purpose of attachment proceedings under the PMLA.

We are of the considered opinion that the Ld. Adjudicating Authority has correctly exercised its jurisdiction under Section 8 of the PMLA and has passed the Impugned Order upon due consideration of the material available on record. We do not find any illegality, perversity or infirmity in the confirmation of the provisional attachment.

We dismiss the Appeal Nos. FPA-PMLA-2315/DLI/2018 filed by Smt. Anita Bansal, FPA-PMLA-2316/DLI/2018 filed by Shri Ravinder Nath Bansal and FPA-PMLA-2306/DLI/2018 filed by Shri Prateek Bansal. The Applications pending, if any, are disposed of accordingly.

Demand founded solely on third party data/Form 26AS vis a vis returns (ST 3) without examination of reasons - exemption under Sr. no. 18 of Mega Exemption Notification No. 25/2012 (as substituted by Notification No. 6/2014 ST) for declared tariff below Rs.1000 per day - obligation on Revenue to establish that differential receipts represent consideration for taxable services - penalty under Sections 78 and 77(1)(c) of the Finance Act, 1994

Demand founded solely on third party data/Form 26AS vis a vis returns (ST 3) without examination of reasons - obligation on Revenue to establish that differential receipts represent consideration for taxable services - exemption under Sr. no. 18 of Mega Exemption Notification No. 25/2012 (as substituted by Notification No. 6/2014 ST) for declared tariff below Rs.1000 per day - Validity of Service Tax demand raised on the basis of discrepancy between Form 26AS/ITR data and ST 3 returns for the period in dispute and the effect of claimed exemption under the Notification. - HELD THAT: - The Tribunal examined whether Revenue could sustain a demand merely by comparing figures in Form 26AS (third party data) with ST 3 returns without inquiring into reasons for the difference or establishing that the entire differential amount constituted consideration for taxable services. It was noted that the assessee was registered and filed ST 3 returns and had produced records and break up of receipts showing amounts attributable to room rent below the declared tariff threshold and amounts allegedly taxable on account of extra amenities. Revenue raised the demand on the basis of the numerical difference without establishing that exemptions or abatements did not account for the variance. The Tribunal held that it is not permissible to presume that the entire differential amount per se represents consideration for taxable services; Revenue must examine and establish the nature of receipts before confirming demand. Applying this principle to the records before it, the Tribunal found the earlier quantified demand had been reduced by lower authorities but ultimately concluded that the remaining demand could not stand in absence of proper examination and establishment by Revenue. [Paras 17]

Service Tax demand for the period in dispute set aside.

Penalty under Sections 78 and 77(1)(c) of the Finance Act, 1994 - demand founded solely on third party data/Form 26AS vis a vis returns (ST 3) without examination of reasons - Validity of penalties imposed under Sections 78 and 77(1)(c) in consequence of the demand computed on the aforesaid basis. - HELD THAT: - Penalties under Sections 78 and 77(1)(c) were imposed downstream of the demand confirmed by the adjudicating authorities. Since the Tribunal concluded that the demand itself could not be sustained because Revenue had not established that the differential receipts constituted consideration for taxable services, the penalties imposed consequentially were also unsustainable. The Tribunal therefore held that in the absence of a legally valid demand, the penalties cannot survive. [Paras 18]

Penalties under Sections 78 and 77(1)(c) set aside.

Final Conclusion: The appeal is allowed: the Service Tax demand confirmed for the period in dispute is set aside and the penalties imposed under Sections 78 and 77(1)(c) are quashed; consequential relief, if any, to be given as per law.

Validity of pre-deposit through DRC-03 by debiting electronic cash/credit ledger - acceptance of pre-deposit made in any form as compliance with Section 35F of the Central Excise Act - requirement to decide appeals on merits with reasons u/s 35A(4) - remand for de novo hearing where appellate order lacks determination on merits - HELD THAT:- This Bench to the judgment passed by Hon'ble Bombay High Court in the case of M/s. In Net India Private Limited & Another’s Vs. Commissioners of Central Excise [2024 (12) TMI 223 - BOMBAY HIGH COURT], wherein clear finding is available to the effect that pre-deposit made in one form or another is to be accepted as valid pre-deposit instead of placing hyper-technical contention by the Respondent that would require refund of the amount of pre-deposit made in one form and depositing again the same amount in another form in the same account maintained by the Government of India for depositing tax. Therefore deposit made through cash in DRC-03 form is a valid deposit and since learned Commissioner (Appeals) had not passed any order on the merit of the appeal as required under Rule, 35A(4) of the Central Excise Act, 1944, equally applicable to Service Tax matters in view of operation of Section 85(5) of the Finance Act 1994, in stating the points for determination, the decision thereon and the reasons for such decision, the matter is required to be remanded back to the Commissioner (Appeals) for hearing afresh.

Appeal is allowed by way of remand to the Commissioner (Appeals) with an observation that valid pre-deposit has been made before filing of appeal before the Commissioner (Appeals).

Exemption of legal services provided by an individual advocate or a partnership firm of advocates to an advocate or partnership firm of advocates under Notification No. 25/2012 and Notification No. 30/2012 - jurisdiction of the Designated Officer in service tax proceedings where exemption is claimed - reverse charge mechanism for legal services - validity of recovery proceedings and creation of lien without notice - compliance with principles of natural justice in tax adjudication -HELD THAT:- From the order-in-original, it appears that the genesis of said action taken against the petitioner is on the verification of third party data received by the Income Tax Department for the period 2016-17, when it was observed that there was an apparent mismatch on the payment of service tax and the turnover of the petitioner. It is observed that the petitioner had not discharged/declared her service tax liability correctly for the period 2016-17 which has resulted in evasion of service tax payment and accordingly a show cause notice is stated to have been issued to the petitioner calling upon the petitioner to discharge the service tax liability which was stated to be of Rs. 26,81,250/-. Admittedly, no reply to the show cause notice was filed, for the reasons which we have recorded hereinabove.

It is accepted that the proceedings would stand covered by the decision of this Court in Advocate Pooja Patil Vs. Deputy Commissioner, CGST And CX Division VI [2024 (2) TMI 355 - BOMBAY HIGH COURT] wherein in similar circumstances, considering the Notification No. 25/2012 issued by the Ministry of Finance (Department of Revenue) as also Notification No. 30/2012 issued by the Ministry of Finance (Department of Revenue), the Court accepted the case of the said petitioner that the Designated Officer would not have jurisdiction to take forward the proceedings inasmuch as the service tax was not leviable on the individual advocate as per the said notifications.

The present proceedings also would stand covered by such notifications and the position in law as held by this Court in Advocate Pooja Patil (supra).

The petition accordingly needs to succeed.

VCES Scheme - Mandatory pre-deposit of 50% of declared tax dues by 31.12.2013 - bar on declarations for the same issue for subsequent periods (second proviso to Section 106(1)) - designated authority's power to reject declarations for noncompliance with scheme stipulations - procedural timetable under the VCES and distinct operation of recovery u/s 110 - strict interpretation of amnesty schemes and inability of courts to enlarge scheme timelines - HELD THAT:- In the instant case the Ld. Designated Authority has rejected the declaration on two grounds: on the ground that the Appellant had not paid fifty percent of the declared amount on or before 31.12.2013 and also on the ground that the appellant could not have filed such a declaration given the prohibition in the second proviso to sub-section (1) of Section 106 which bars a person from making a declaration of his tax dues on an issue for the subsequent period, in case on the very same issue any notice or order of determination has been made.

The plea of the Appellant is that it was prevented from adhering to the time line specified due to severe financial hardship, which incidentally, remains a mere averment sans any evidence. Be that as it may, we find that the scheme does not allow for any variance on this count and the stipulations therein are inviolable. In our considered opinion, the nonpayment of fifty percent of the declared tax dues by the specified date of 31.12.2013 would in itself disentitle the appellant from availing the benefit of the VCES Scheme.

Admittedly in the instant case the appellant has been issued an SCN No.23/2014 (VCES) dated 24.01.2014 in this regard and it is only after due process of law that the Designated Authority has passed the order which has since been upheld vide the impugned order by the Appellate Authority and therefore the said rejection of the appellant’s declaration cannot be faulted. As noticed above, it is a similar rejection that has been upheld by the Hon’ble Jharkhand High Court in the decision in Manpreet Engg & Construction Co v. Union of India, [2016 (7) TMI 560 - JHARKHAND HIGH COURT] reproduced above. We have already noticed the law laid down by the constitution bench of the Apex Court in Matajog Dubey v. H. C. Bhari [1955 (10) TMI 3 - SUPREME COURT]. We, therefore unhesitatingly hold that the Designated Authority, who has been entrusted with the task of receiving the declaration and issuing discharge, also has inherent powers to scrutinize and act if such declarations are not found conforming with the stipulations in the VCES. All such powers that are truly incidental and ancillary for doing all such acts or employing all such means as are reasonably necessary to make the scheme effective, need not always have to be explicitly spelt out in the scheme.

We are of the view that the Declaration filed by the Appellant in respect of the service tax not paid for the period from April 2010 to December 2012, is a declaration that has been made for the subsequent period on the same issue in respect of which an order of determination has been passed, i.e., the Order in Original No.17/2012, and thus it attracts the bar under second proviso to Section 106(1) of the VCES. Hence we hold that the declaration has been rightly rejected by the Designated Authority and the Appellate Authority has not committed any error in upholding such rejection. We find that the decision submitted by the Appellant in the case of Assistant Commissioner v Frankfinn Aviation Services Pvt Ltd, [2018 (7) TMI 2387 - SC ORDER (LB)] whereby the Apex Court dismissed the SLP preferred against the Delhi High Court Judgement as [2014 (4) TMI 133 - DELHI HIGH COURT] is distinguishable as the outcome was premised on facts different from the facts of the instant case.

Procedural timetable under the VCES and distinct operation of recovery under Section 110 - strict interpretation of amnesty schemes and inability of courts to enlarge scheme timelines -
As is evident from the Judgement of the Delhi High Court, the petitioner therein was aggrieved by the rejection of a declaration premised upon the existence of the dispute concerning the previous period between 10-9-2004 - 27-2-2010 before the CESTAT, whereas the declaration had been filed by the said petitioner for the period 01-04-2012 to 31-12-2012. Thus evidently since the dispute pending before the CESTAT was for a period even prior to the period of October 2007 to December 2012 specified in the VCES, the Delhi High Court held the rejection to be unsustainable. Be that as it may, there can be no quarrel with the proposition of law laid down therein, in so far as the requirement of deposit of 50% of the declared dues was concerned. Unlike in the present case, the petitioner therein had also complied with this mandate of the Scheme.

Thus, we are of the considered view that the impugned order does not warrant any interference as it has rightly upheld the order of the Designated Authority rejecting the VCES declaration filed by the Appellant.

The appeal is dismissed as devoid of merits.

Adjustment of tax paid by partner against firm liability - Liability of sub-contractor to discharge service tax despite main contractor's payment - Remand for fresh consideration of computation of tax liability and abatement on works contract and transportation services - computation of service tax liability on ‘Works Contract Service’ and ‘Transportation of Goods’ services - HELD THAT:- In the instant case, we find that the service tax was paid by one of the partners on behalf of the appellant. It is an admitted fact that service was provided by the appellant and service tax was paid using the service tax registration of the partner Shri K. S. Nair. In this context, we note that Section 4 of the Partnership Act, 1932 which defines Partnership partner, firm and firm name.

As observed by the Gujarat High Court in Commissioner of Central Excise Vs. Jai Prakash Motwani [2009 (1) TMI 501 - GUJARAT HIGH COURT] that there is no provision in the central excise law which treats a partnership firm as a separate excisable entity from its partners. Admittedly, a partner is not a separate legal entity and cannot be equated with the employees of a firm”

In view of the settled position of law, we hold that payment of service tax by the partner can be adjusted against the liability of the firm. However, the tax liability of Shri K. S. Nair for any services provided by his proprietorship firm would also have to be taken into account.

Demand on transportation of goods by road - HELD THAT:-We note that the impugned order has held that the appellant did not provide any details of receipt under this head. Hence, the demand has been confirmed. The appellant has submitted some documents which are required to be examined by the adjudicating authority. As regards their work as subcontractor to main contractor M/s Tecpro systems, we find that the liability of the sub-contractor to pay service tax has been decided by this Tribunal in the case of Commissioner of Service Tax versus M/s Melange Developers Pvt. Ltd [2019 (6) TMI 518 - CESTAT NEW DELHI-LB].

Hence, the liability of the appellant to pay service tax is upheld.

Abatement - HELD THAT:- The impugned order has rejected the reconciliation statement observing certain inconsistencies in their manner of calculation of tax as enumerated in para 11.3 of the impugned order. The appellant has submitted copies of payment documents work orders, invoices/bills, challans etc. However, it would be appropriate that these documents are examined by the adjudicating authority. Therefore, it would be appropriate to remand this issue to the adjudicating authority for fresh consideration.

Thus, we hold as follows:-

The payment of service tax under Shri K. Surendran Nair’s PAN is allowed and same should be adjusted against the liability of the appellant.

As regards the computation of the demand on ‘Works Contract Service’ and ‘Transportation of Goods’, we remand the matter to the original authority to consider the issue giving an opportunity to the appellant to submit all the relevant documents in support of their contention.

Business Auxiliary Services - service tax leviability on sale, marketing and distribution of lottery tickets - principal principal relationship versus principal agent - Negative List exclusion for betting, gambling or lottery - transaction in money or actionable claim - treatment of lottery distributor activity - noscitur a sociis - Whether service tax is leviable on sale, marketing and distribution of lottery tickets. - HELD THAT:-We find that the issue is no longer res integra covered by the judgment of the Hon’ble Supreme Court in the case of Union of India & Others V. Future Gaming Solutions Pvt. Ltd. & Another Etc. [2025 (2) TMI 483 - SUPREME COURT], held that " we find that at each stage, the amendments made to the Finance Act, 1994, in order to impose service tax on the sole distributor/purchaser of the lottery tickets (respondents-assessees herein) have been unsuccessful. We have reasoned that the amendment to the said definition would in no way detract from the substance of the relationship between the State Government and the sole distributor or purchaser of the lottery tickets which is one of principal to principal and not of principal-agent. There being no agency and no service rendered by the respondents-assessees herein as an agent to the Government of Sikkim, service tax is not leviable on the transactions between the purchaser of the lottery tickets (respondents-assessees herein) and the Government of Sikkim.

we find no merit in the appeals filed by the Union of India and others. Hence these appeals are dismissed. The appeal filed by the assessee is disposed accordingly.”

Following the aforesaid judgment, the impugned orders are set aside and appeals are allowed with consequential relief, if any, as per law.

Extended period of limitation - suppression of material facts - appropriation of payments verified from ACES - admissibility of CENVAT credit in absence of ST-3 returns - penalty for failure to furnish returns and late fee - HELD THAT:- It is fact on record that appellant had failed to file the ST-3 returns detailing their service tax liability and payment thereof at the prescribed intervals. However in the event when the appellant was regularly and monthly assessing his tax liability and paying the same, I do not find any reason to uphold, this demand made by invoking the extended period of limitation, as the intention to evade payment of service tax is totally absent and cannot be imputed in the facts of the present case. The case laws relied by the first appellate authority, are completely irrelevant in the facts of the present case. Thus I do not find any merits in demand confirmed against the appellant and penalty imposed under Section 78 of the Finance Act, 1994.

As appellant had failed to file the ST-3 returns as prescribed by the Service Tax Rules, 1994 even if procedural violation, late fees and penalty imposed under Section 77 (1) (c) are upheld. It is settled law that penalty for such violations is imposable even if there was no malafide intention.

Demand of Service Tax and penalty imposed under Section 78 of the Finance Act,1994 is set aside.

Late Fees imposed under Section 70 (1) and Penalty imposed under Section 77 (1) (c) of the Finance Act, 1994 is upheld.

Appeal is partly allowed.

Validity of show cause notice based solely on third-party information - Examination of assessee's books of account before framing charges - Reliance on Form 26AS / TDS information as basis for tax demand - Extended period of limitation and requirement of suppression or willful misstatement - HELD THAT:- Appellant was taken into consideration for entertaining a prima-face view that the Appellant was required to pay Service Tax amounting to Rs.12,66,832/- for the said period. A similar issue had come up for consideration in the case of M/s Sharma Fabricators & Erectors Pvt. Ltd. Vs. C.C.E.[2017 (7) TMI 168 - CESTAT ALLAHABAD].

The decision of the Tribunal in the case of Sharma Fabricators & Erectors Pvt. Ltd. (Supra) has been upheld by the Hon’ble High Court of Allahabad [2019 (2) TMI 2100 - ALLAHABAD HIGH COURT].

Appellant’s case is squarely covered by the aforesaid decision of this Tribunal as upheld by Hon’ble Allahabad High Court. In the present case also, it is very clear that none of the records of the Appellant were taken into consideration for framing charges that the Appellant had short paid Service Tax Rs.12,66,832/- (which was reduced to Rs.1,81,678/- during litigation) and the said charges were framed only on the basis of information in Form-26AS. I therefore hold that SCN dated 20-12-2020 is not sustainable. As the SCN itself being held to be not maintainable, I do not propose to deal with various submissions of the Appellants on merits.

No ingredients of suppression of facts or willful mis-statement with an intent to evade payment of Service Tax. Therefore, the extended period of limitation could also not have been invoked.

Thus, the impugned order cannot be sustained and is accordingly set aside. The appeal filed by the Appellant is allowed with consequential relief, if any, as per law.

Dismissal for default - adjournment limits u/s 35C - discretion to hear or dismiss under Rule 20 of CESTAT (Procedure) Rules, 1982 - service by RPAD and returned notice / no such addressee - restoration of appeal on sufficient cause - condemnation of mechanical adjournments - HELD THAT:- We notice that there is no request on record for the appeal to be decided on merits ex-parte based on the grounds preferred in the appeal in the absence of the appellant’s presence or representation through its counsel. We are of the view that if we were to decide the matter on merits, without having the benefit of hearing the appellant and upon such hearing if we were to hold against the appellant, then, having no locus to review our own judgement since we would be rendered functus officio, we would thus be not only depriving the appellant of a chance to be heard, but also would be relegating the appellant to seek appropriate remedy in a higher judicial forum, if at all the appellant has justifiable reasons for repeated non representation and also lack of representation today. Considering the statutory position and the views expressed by the Hon’ble Apex Court in ISHWARLAL MALI RATHOD VERSUS GOPAL AND ORS, [2021 (9) TMI 1301 - SUPREME COURT] that adjournments can’t be given for the mere asking without any serious reason, backed with proof, for the non-appearance of the Appellant or his authorised representative on the dates of public hearing coupled with the fact that the appellant is not to be found at the address given and also considering that even after exhausting the prescribed methods of service, the appellant’s whereabouts are not known, we find that no purpose would be served in continuing to keep this appeal pending. We are therefore of the considered view that the appellant is not interested in pursuing the appeal that has been preferred and that the appeal is thus liable to be dismissed for default.

Thus, we dismiss this appeal for default as per Rule 20 of CESTAT (Procedure) Rules, 1982. However, liberty is granted to the appellant to file for restoration of the appeal showing sufficient justifications and reasons while seeking such restoration.

Discretion to dismiss appeal for appellant's default - Action on appeal for appellant's default under procedural rules - Limitation on adjournments and requirement of reasons for repeated adjournments - Prohibition on routine adjournments - Right to restoration of appeal on showing sufficient cause - HELD THAT:- The Rule 20 of the CESTAT Procedure Rules, provides that if the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his non-appearance when the appeal was called on for hearing can set aside the dismissal and restore the appeal.

We are of the view that if we were to decide the matter on merits, without having the benefit of hearing the appellant and upon such hearing if we were to hold against the appellant, then, having no locus to review our own judgement since we would be rendered functus officio, we would thus be not only depriving the appellant of a chance to be heard, but also would be relegating the appellant to seek appropriate remedy in a higher judicial forum, if at all the appellant has justifiable reasons for repeated non representation and also lack of representation today. Considering the statutory position and the views expressed by the Hon’ble Apex Court in ISHWARLAL MALI RATHOD VERSUS GOPAL AND ORS [2021 (9) TMI 1301 - SUPREME COURT], that adjournments can’t be given for the mere asking without any serious reason, backed with proof, for the non-appearance of the Appellant or his authorised representative on the dates of public hearing coupled with the fact that even after the notice has been sent and delivered to the appellant, the appellant has chosen not to arrange for representation or appear in person, we find that no purpose would be served in continuing to keep this appeal pending.

We are therefore of the considered view that the appellant is not interested in pursuing the appeal that has been preferred and that the appeal is thus liable to be dismissed for default.

Thus, we dismiss these appeals for default as per Rule 20 of CESTAT (Procedure) Rules, 1982.

Abatement of proceedings on death of sole proprietor - order void ab initio - no machinery to continue assessment or recovery against legal heirs under a taxing statute - show cause notice issued to deceased person legally untenable - HELD THAT:- The Madras High Court in the case of Union of India Vs. M/s. Service Care Pvt. Ltd. [2017 (2) TMI 900 - MADRAS HIGH COURT] considered the issue of service tax liability in respect of a proprietorship firm, whose sole proprietor passed away. Following his death, show cause notice was issued attempting to recover the alleged tax dues of the defunct proprietorship by issuing notice under Section 87 of the Finance Act, 1994. The Division Bench of the High Court dismissed the Revenue’s appeal and upheld the order passed by the Single Judge quashing the recovery proceedings relying on the decision of the Apex Court in Shabina Abraham. It was held that the assessment proceedings cannot be continued against the legal heirs of the deceased person, who was the sole proprietor of the concern or entity by whom tax due was to be paid. Similarly, the learned Single Member of the CESTAT in M/s. J.S. Singh Engineering Contractor Vs. CCE & ST [2019 (7) TMI 1417 - CESTAT NEW DELHI] also upheld that the show cause notice cannot be issued towards the deceased person and that the proceedings against him are legally untenable.

Thus, we are of considered view that on the death of the sole proprietor on 08.12.2018, the proceedings before the Adjudicating Authority stood abated and, therefore, the order-in-original is non-est. Consequently, the impugned order is also not sustainable as the proceedings had already been lapsed. The demand is, therefore, set aside. The appeal is, accordingly allowed.

Refund of accumulated CENVAT credit under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No.27/2012-CE(NT) - Finality of self assessed returns / ST 3 and limitation on refund authority to revisit assessment (ITC Limited, Flock, Priya Blue principle) - Requirement of export realisation evidence (BRC/FIRC) in refund proceedings versus documentary safeguards - Obligation to initiate demand proceedings u/s 73 where revenue seeks to deny export status - Right to re credit Cenvat account or claim cash refund under Para 2(h)/(i) of Notification No.27/2012 CE(NT) and Section 142(3) of the CGST Act -HELD THAT:- In the present case, refund claim of the appellants has been denied on the basis of the findings that the exports of services provisions will not be applicable to the appellants for the reasons that no BRCs/FIRCs were produced for proving their claim and to treat the services as export of services apart from ascertain other reasons stated with regards to debit entries etc. and admissibility of Cenvat credit. We do not find any merits in the said arguments in the impugned order. Evidently, we observe that appellants filed ST-3 at the appropriate time claiming the service as export of services. These ST-3 returns have never been challenged by revenue authorities before any forum. It is only in the refund proceedings under Rule 5 the benefit of the said Rule is sought to be denied by stating that these services are not export of service.

Nothing has been brought on record to show that the show cause notice demanding service tax has been issued to the appellant. In view of the fact that no proceedings demanding service tax in respect of these services provided by the appellant to overseas service recipients have been issued we do not find any merits in denial of refund claims filed by the appellant in terms of Rule 5 of CENVAT Credit Rules, 2004.

In case the refund of the appellant made under Rule 5 is to be rejected then in that case appellant is entitled to take back the credit of the amount for which the refund claim is rejected. In terms of Section 142 (3) of the Central Goods and Service tax Act, 2017, this amount will have to be allowed as cash refund to the appellant.

Thus, we do not find any merits in the impugned order and the same is set aside.

Definition of "governmental authority" in the exemption notification - eligibility for exemption for services provided to the Government, a local authority or a governmental authority - interpretation of the conjunction "or" as disjunctive in definition clauses - application of exemption to bodies established by State Legislature or wholly owned by State Government - temporal applicability of entries 12 and 12A of Notification No.25/2012-ST - HELD THAT:- On examination of records of the party, it was observed that respondent had provided Work Contract Service, Maintenance or Repair Service and Supply of Tangible Goods Service to their client during 2016-17 & 2017-18 (Upto June'2017). On perusal of their Form 26AS vis a vis ST-3 Returns, it was found that they have not discharged service tax in respect of the services provided to their clients Bihar Police Building Construction Corporation, Division Patna and Bihar Medical Services and Infrastructure Corporation Limited. They claimed exemption under SI. No 12(a) of Notification No. 25/2012- ST dated 20.06.2012 for providing their taxable service to Governmental Authority.

On perusal of the copy of Standard Bidding Document for Procurement of Civil work dated 18.08.2016 signed by the party with Ms Bihar Police Building Construction Corporation, the nature of service provided was not clear. Further, the party could not provide any agreement/contract it had entered into with Bihar Medical Services & Infrastructure Corporation Ltd. Hence, the total amount received by the party from their clients was considered as taxable.

We find that we are in the present appeal considered with the period 2016-2017 to 2017-18 (upto June 2017). The definition of the Government Authority as per clause „2 (s)’ of the Notification No. 25/2012-ST dated 20.06.2012 was substituted by the Notification No 02/2014-ST dated 30.01.2014. Impugned order and the Committee of Chief Commissioners reviewing the order, have relied upon the un-amended definition to interpret the phrase “Government Authority” used in the said notification. Both un-amended and amended definition of “Government Authority” were subject matter for consideration by the Hon’ble Supreme Court in case of Shapoorji Pallonji & Company Pvt. Ltd. [2023 (10) TMI 748 - SUPREME COURT]

Thus, we find that Bihar Police Building Construction Corporation, Division Patna and Bihar Medical Services and Infrastructure Corporation Limited, being established by the State Legislature with 100% of holding will qualify to be called government authority. Accordingly, the benefit of S No 12 and 12A of Notification No 25/2012-ST dated 20.06.2012 would be admissible in respect of the services provided to them by the respondent.

We do not find any merits in this appeal filed by the revenue.

Appeal is dismissed.

Liquidated damages - penalty for breach of contract - consideration for declared service u/s 66E(e) of the Finance Act, 1994 - toleration of delay as consideration - no service tax on liquidated damages - Whether the amount received as a penalty or liquidity damage can be considered as consideration for declared service or otherwise. - HELD THAT:- In the case of M/s Bharat Dynamics Ltd. [2022 (9) TMI 1445 - CESTAT HYDERABAD] inter alia, examined similar issue and relying on the judgement in the case of Steel Authority of India ltd., Salem Vs Commissioner [2021 (7) TMI 1092 - CESTAT CHENNAI] held that no service tax is payable on the amount collected towards liquidity damage.

Therefore, we find that the issue is no longer res-integra and therefore in view of the same, the impugned order is set aside.

Condonation of delay - service u/s 37C of the Central Excise Act, 1944 - computation of limitation u/s 85 of the Finance Act, 1994 - power of Commissioner (Appeals) to admit delayed appeal - limits of writ jurisdiction - HELD THAT:- Appellant have not dealt with any kind of sufficiency/insufficiency of service of the order (OIO) which has been delivered at the factory gate. Though Appellant had not produced the copy of COD application filed before the Commissioner (Appeals) despite specific direction given by this Bench vide order dated 02.04.2025 to justify that Order-in-Original was infect delivered to any security person. Infact, the decisions cited have dealt with effect of non-service of order in compliance to Section 37C of the Central Excise Act, 1944 that is equally applicable to Service Tax matters and there is acknowledgement on record i.e. in the appeal memo itself that was filed before the Commissioner (Appeals), which is also reproduced by the Commissioner (Appeals) in his order at para 4 that Appellant had received the order on 17.12.2018 at the factory address. This Tribunal has got no power like that of Hon'ble High Court in the case of Amrita Industries Ltd. Vs. Union of India [2014 (9) TMI 220 - GUJARAT HIGH COURT] to use its Writ jurisdiction to condone delay in extraordinary circumstances. Therefore, no irregularity or illegality is noticeable in the order passed by the Commissioner (Appeals). Hence the order.

By-product versus waste -Mere saleability doctrine -classification under Heading 1522 - liability to Central Excise duty on residues from oil refining - precedential effect of Tribunal and Supreme Court decisions -Whether the appellant M/s Priyanka Refineries Private Ltd., Unit II is liable to pay excise duty on sunflower mud, soap stock, gums, wax, fatty acids, spent earth and similar residues which arise in the process of refining of crude sunflower oil into refined oil. - HELD THAT:- The appellant refines crude sunflower oil and produces refined oils and in the process these products emerge. The case of the Department is that the appellant is liable to pay on excise duty of these products fall under Central Excise Tariff heading 1522 00 20/90 of the Central Excise Tariff. We find that in the appellant’s own case, a Co-ordinate of this Tribunal has, in the case of Commissioner Vs Priyanka Refineries Ltd.[2009 (5) TMI 419 - CESTAT, BANGALORE], held that mere saleability of the waste product does not make it a manufacture product and therefore no Central Excise Duty was payable on the same. This decision was affirmed by the Supreme Court by dismissing the civil appeal filed by the Revenue in [2010 (1) TMI 1167 - SC ORDER]. In another case of appellants Priyanka Refineries Pvt Ltd., Unit-II Vs CCE, Hyderabad – II [2019 (7) TMI 249 - CESTAT HYDERABAD] and Appeal No. E/30153/2015 vide Final Order No. A/30331/2025 dated 01.09.2025, Hyderabad Tribunal decided the issue in the favour of the appellant. The instant appeal is squarely covered under the same issue. Therefore, appeals are liable to be allowed.

Availment of the scheme - Sabka Vishwas (Legal Dispute Resolution) Scheme, 2019 - acceptance of settlement under the Scheme - Discharge Certificate (Form-4) - deemed withdrawal of appeal - HELD THAT:- Department submitted that the availment of the scheme has been accepted by the Department and Discharge Certificate in Form-4 has also been issued by the Designated Committee, which is placed on record. Consequently, the present appeal is dismissed as deemed to have been withdrawn.

Liability to pay excise duty on by-products and residues - manufacture for excise purposes - Classification under Central Excise Tariff heading 1522 00 20/90 - precedential effect of earlier Tribunal and Supreme Court rulings -Whether the appellant M/s Priyanka Refineries Private Ltd., Unit II is liable to pay excise duty on sunflower mud, soap stock, gums, wax, fatty acids, spent earth and similar residues which arise in the process of refining of crude sunflower oil into refined oil. - HELD THAT:- The appellant refines crude sunflower oil and produces refined oils and in the process these products emerge. The case of the Department is that the appellant is liable to pay on excise duty of these products fall under Central Excise Tariff heading 1522 00 20/90 of the Central Excise Tariff. We find that in the appellant’s own case, a Co-ordinate of this Tribunal has, in the case of Commissioner Vs Priyanka Refineries Ltd.[2009 (5) TMI 419 - CESTAT, BANGALORE], held that mere saleability of the waste product does not make it a manufacture product and therefore no Central Excise Duty was payable on the same. This decision was affirmed by the Supreme Court by dismissing the civil appeal filed by the Revenue in [2010 (1) TMI 1167 - SC ORDER] by this Bench in Priyanka Refineries Pvt Ltd., Unit-II Vs CCE, Hyderabad [2019 (7) TMI 249 - CESTAT HYDERABAD].

Thus, we allow the appeal and set aside the impugned order.

Challenge to orders passed for non-participation in adjudication - Right to be heard and principles of natural justice - Doctrine of vires of subordinate legislation - Rule 26(2) of the Central Excise Rules, 2002 - HELD THAT:- The petitioners could have always participated in the proceedings without prejudice to their contentions on the issue of vires. However, the petitioners chose to go by the advice given to them, and now that we have granted an opportunity to the petitioners in [2026 (2) TMI 9 - JHARKHAND HIGH COURT], we think that interest of both parties would be substantially balanced if an opportunity is granted to the petitioners to file their reply and contest the show-cause notices on merits.

Thus, we set aside the impugned orders and grant the petitioners four weeks’ time to file their responses to the show-cause notices. If no responses are filed within four weeks, the Adjudicating Authorities are free to pass fresh orders without awaiting such responses. The Adjudicating Authority, no doubt, would have to comply with the principles of natural justice and fair play and hear the petitioners, as is required under the law, before the show-cause notices are disposed of.

The issue of vires of Rule 26(2) of Central Excise Rules, 2002 is kept open. In fact, all parties' contentions on the merits are explicitly kept open.

The petitioners will not be entitled to take any advantage of their nonparticipation or raise any limitation issues for the disposal of the show-cause notices.

Writ petitioners are disposed of.

Admissibility of CENVAT credit on Goods Transport Agency (GTA) services - definition of "input service" under Rule 2(l) - effect of amendment to "output service" under Rule 2(p) (01.03.2008) - abatement notifications and restriction applicable to GTA service provider (not recipient) - determination of "place of removal" and FOR destination contracts - limited remand for verification of contractual place of removal - extended period of limitation under proviso to Section 11A(4) - requirement of suppression/fraud for invoking extended limitation - penalty under Rule 15(2)/Section 11AC vis-a-vis Rule 15(1) -

Admissibility of CENVAT Credit on GTA Services - HELD THAT:- We hold that the denial of CENVAT credit on GTA services solely on the basis of the amendment to Rule 2(p) of the CENVAT Credit Rules, 2004 and the conditions contained in the abatement notifications is legally unsustainable. We have found that the amendment to Rule 2(p) w.e.f. 01.03.2008 only withdrew the facility of utilisation of credit for payment of service tax on GTA services under reverse charge, and did not operate as a substantive bar on availment of credit where the service continues to fall within the definition of “input service” under Rule 2(l).

We have further held that the restriction in abatement notifications such as Notification No. 32/2004-ST and Notification No. 13/2008-ST applies only to the GTA service provider and not to the service recipient, as clarified by CBEC Circular F. No. 166/1/2006-CX.4 dated 03.10.2007 and Circular No. 354/15/2014-TRU dated 10.07.2014. The Larger Bench decision of this Tribunal in M/s. The Ramco Cements Ltd. v. CCE, [2023 (12) TMI 1332 - CESTAT CHENNAI-LB] has underscored that admissibility of outward GTA credit depends upon determination of the correct “place of removal” based on contractual terms, applying the binding principles laid down by the Hon’ble Supreme Court in Roofit Industries Ltd. [2015 (4) TMI 857 - SUPREME COURT], read with CBIC Circulars dated 20.10.2014 and 08.06.2018. Since the relevant purchase orders, FOR destination clauses, risk transfer conditions and documentary evidence have not been examined, the issue cannot be conclusively decided at this stage. Accordingly, the matter is remanded to the adjudicating authority for the limited purpose of verifying the contractual place of removal and thereafter deciding admissibility of GTA credit strictly in accordance with Rule 2(l) and the binding precedents noted above.

Limitation, extended period and penalty - HELD THAT:-We find that the proceedings arise out of two Show Cause Notices issued on the very same issue of availment of CENVAT credit on GTA services. The availment of credit was consistently disclosed in statutory ER-1 returns and was therefore within the knowledge of the Department. Once the Department had issued the first notice on the same facts, invocation of suppression or fraud again in the second notice is impermissible.

The Hon’ble Supreme Court in Nizam Sugar Factory v. CCE, [2006 (4) TMI 127 - SUPREME COURT] has categorically held that where the facts are already in the knowledge of the Department, the extended period cannot be repeatedly invoked in subsequent notices on the same issue. Accordingly, we hold that the extended period under the proviso to Section 11A(4) is not invocable. The first SCN, to the extent it travels beyond the normal period, is hit by limitation, and the second SCN is necessarily restricted to the normal period alone.

Consequently, penalty under Rule 15(2) read with Section 11AC cannot be sustained. At best, if any inadmissible credit is determined after remand, penalty, if at all imposable, can only fall under Rule 15(1). Interest and penalty shall therefore be purely consequential and shall be re-determined only after fresh adjudication on remand, limited only to such credit as may ultimately be held inadmissible, and subject to verification of actual utilisation of credit in terms of Rule 14.

Accordingly, the impugned Order-in-Original Nos. 32 & 33/2022-C.Ex. (Commr.) dated 25.03.2022 are set aside to the extent indicated above. The matter is remanded to the adjudicating authority for limited verification and fresh decision on admissibility of GTA credit strictly in terms of Rule 2(l), contractual place of removal and the binding judicial precedents. The demand, if any, shall remain restricted to the normal period alone. Penalty under Rule 15(2) read with Section 11AC is set aside, and penalty, if any, shall be confined only to Rule 15(1) on re-adjudication. Interest shall also be re-determined consequentially only upon final outcome and subject to verification of utilization of the disputed credit.

Appeal is thus allowed by way of remand in the above terms, with consequential relief in accordance with law.

Inclusion of freight in assessable value - Place of removal - Valuation at consignment depot / price prevailing at depot - Rule 7 of Central Excise (Valuation) Rules, 2000 - Explanation to Rule 5 of Central Excise (Valuation) Rules, 2000 - Flow back / benefit test for inclusion of freight - Precedent and judicial discipline in following own Bench decisions -HELD THAT:- It was submitted that in all the cases, involving the same appellant and identical facts relating to clearance of goods through consignment agents on "freight to pay basis, the Tribunal had consistently held that freight charges paid by the buyers are not includible in the assessable value. On this basis, it was contended that the said decisions directly cover the issue arising in the present appeal.

This Tribunal has decided vide its Final Order [2025 (10) TMI 1358 - CESTAT CHENNAI] in the appellant’s own case involving the same issue

We find that the judgements for the very same appellant for various periods as mentioned above has decided this issue and therefore we do not see any reason to take a different view. The Ld. Authorized Representative had placed reliance on a few Tribunal Rulings which in our view are not applicable to the facts of the present case. It has not been shown to us that these rulings which are in favor of the appellants for other periods of dispute have neither been appealed nor any stay has been obtained by any higher authorities. Thus, we are of the view that by following judicial discipline as stated in para 6 of Union of India Versus Kamlakshi Finance Corporation Ltd. [1991 (9) TMI 72 - SUPREME COURT], we are of the view that consistency and judicial discipline requires as to follow our own judgements, which we hereby do.

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

Time limit for availing CENVAT credit under Rule 4(7) - Prospective operation of statutory amendment - Non retrospective application of restrictive fiscal provisions - Application of beneficial amendment extending time for CENVAT credit - HELD THAT:- It is an admitted fact on record that the appellants had availed the CENVAT Credit within one year from the date of issuance of the invoices by the supplier of inputs/service providers, except in few cases where the invoices were generated prior to the date of issuance of the notification 11.07.2014 (supra).

Since the Notification dated 01.03.2015 (supra) has extended the period of six months to one year, the benefit of such notification should be available to the appellants, in respect of all the disputed invoices. Since the CENVAT credit was availed within the stipulated time frame of one year, in our considered view, the credit availed by them cannot be denied. We find that this Bench of the Tribunal in the case of EM Services (I) Pvt. Ltd. Vs. Commissioner of Central Excise & Service Tax, Nagpur [2018 (10) TMI 1066 - CESTAT MUMBAI] has allowed the appeal.

We do not find any merits in the impugned order insofar as it has denied the CENVAT benefit amounting to Rs.43,23,742/- to the appellants and the said order dropping the CENVAT Credit demand of Rs. 1,21,37,918/- cannot be intervened at this juncture in view of the settled position of law (supra), relied upon by the learned Advocate for the appellant.

In the result, the appeal filed by the assessee-appellant is allowed and appeal filed by Revenue is dismissed.

Imposition of Personal penalty on co-noticees - effect of settlement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019- Whether the penalties imposed under section 26 of Central Excise Act 1944, on the co-noticees is sustainable when the main noticee has settled the issue under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS, 2019) - 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. This view of the Tribunal has also been followed in the case of Shri Raghavendra, Plant Manager Vs. CC, Mysore [2024 (5) TMI 1335 - CESTAT BANGALORE] Further, this Tribunal in a similar issue in the cases of Shashi Kumar CEO, M/s. Diamond Display Solutions and others Vs. Commr. of Central Excise Bangalore vide Final Order [2025 (1) TMI 1255 - CESTAT BANGALORE] has allowed the appeals.

Thus, the impugned order with regard to imposition of penalty on the 3(three) appellants being co-noticees in the same impugned Order-in-Appeal No. 535/2018 dated 23.05.2018 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.

Principles of natural justice - refund of unutilized Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 - challenge to eligibility of input credit in refund proceedings and interplay with Rule 14 - remand for rehearing

Principles of natural justice - remand for rehearing - Whether the Commissioner (Appeals) order could be sustained where the appellant was not furnished a copy of the departmental appeal memorandum and the matter was decided in the absence of parties. - HELD THAT: - The Tribunal found a breach of the rules of natural justice because a copy of the departmental appeal memorandum was not made available to the appellant and the Commissioner (Appeals) proceeded to decide the matter when neither party appeared. Given this denial of opportunity to know and meet the grounds on which the refund sanction was challenged, the Tribunal declined to express any view on the merits and held that the proper course is to set aside the Commissioner (Appeals) order and remand the matter for fresh consideration. On remand, the Commissioner (Appeals) is to supply the appeal memorandum to the appellant and afford both parties an opportunity to be heard; the department and the appellant remain free to advance their contentions on merit afresh. [Paras 6, 7]

Order of the Commissioner (Appeals) set aside and matter remanded for rehearing after supplying the appeal memorandum and affording opportunity of hearing to the parties.

Refund of unutilized Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 - challenge to eligibility of input credit in refund proceedings and interplay with Rule 14 - Whether the Tribunal adjudicated the substantive question of the department's challenge to the eligibility or nexus of input/input services for refund under Rule 5. - HELD THAT: - The Tribunal expressly refrained from deciding the merits on whether the department may challenge the eligibility of inputs or the requisite nexus in refund proceedings under Rule 5, noting that it had not expressed any view on the substantive entitlement. The parties are left free to argue the legal questions, including reliance on precedents cited before the Tribunal, before the Commissioner (Appeals) on remand. Thus the substantive issue remains for fresh adjudication and is not finally decided by the Tribunal. [Paras 6]

Substantive question of eligibility and nexus in refund claim left undecided and open for fresh consideration on remand.

Final Conclusion: The Commissioner (Appeals) order setting aside the refund sanction is set aside for breach of natural justice; the matter is remanded to the Commissioner (Appeals) to supply the departmental appeal memorandum to the appellant, afford both parties an opportunity to be heard, and decide the substantive issues (including any challenge to eligibility or nexus) afresh without any expression of opinion by the Tribunal on the merits.

Place of removal - Inclusion of freight in assessable value - FOR destination sale - Self-credit refund under Notification No.56/2002-CE - Demand of erroneous refund u/s 11A - Extended period / time-bar - HELD THAT:- The issue is no longer res integra having been decided by the Principal Bench in the case of Ufluex Ltd. [2015 (2) TMI 695 - CESTAT NEW DELHI] involving very same set of facts. Appellants submits that in the instant case, the refund orders were not reviewed and no competent authority has held the same to have been erroneously refunded

We further find that Hon’ble Jammu & Kashmir and Ladakh High Court in the case of Krishi Rasayan Pvt. Ltd. [2023 (7) TMI 661 - JAMMU AND KASHMIR AND LADAKH HIGH COURT] held that unless the refund availed by way of self-credit is challenged, the refund cannot be termed to be “erroneous” and be demanded in terms of Section 11A of the Central Excise Act, 1944; this Bench has followed this judgment in the case of Ravi Crop Sciences [2023 (1) TMI 1298 - CESTAT CHANDIGARH]. The facts of the impugned cases are identical to the case of Uflex Ltd. [2015 (2) TMI 695 - CESTAT NEW DELHI] on merits and to the case of Krishi Rasayan Pvt. Ltd. [2023 (7) TMI 661 - JAMMU AND KASHMIR AND LADAKH HIGH COURT] on legal point, we do not find any reason to take a different opinion.

Thus, the appeals are allowed.

Place of removal- FOR destination sale versus ex works - inclusion of freight in assessable value - valuation on RSP/MRP and exclusion of freight - extended period of limitation for demand - remand for recomputation of duty - penalty for failure to disclose correct assessable value - Whether the freight charges, which were being collected by the appellant from the customers, were liable to be included in the assessable value for payment of Central Excise Duty or otherwise. - HELD THAT:- We find merit in this that when an ad valorem rate was based on RSP/MRP, the element of freight, per se, would not be applicable. This aspect was, however, not clearly brought out in the impugned order. Secondly, as regards quantum of freight charges collected, which became the basis for demand, is also discarded solely on the ground that appellants had themselves given the figure of transportation cost and no other evidence was brought disputing the same. We find that if the appellants are clear that actual freight is much lesser than what actually has been taken by the department, they are well within their right to establish the same for the purpose of recomputing the duty element. Therefore, these two issues need to be remanded back for redetermination of duty liability.

Limitation - HELD THAT:- Appellants were clearly aware of the statutory provisions and in fact, had one round of litigation as regards correct applicability of the notification as well as coverage under RSP/MRP. Despite that they had not paid the excise duty inclusive of freight. At that point of time, there was no judgment in their favour, which could have been held to be the basis for their bonafide belief for not including the same in a clear admitted position of their sale being on FOR destination basis and not ex-works basis.

Moreover, we find that they have discharged the VAT/Sales Tax on the composite value including the freight and also that they had not shown their sales pattern in terms of purchase order/agreement, etc., to the department. Therefore, the department, in absence of these documents, would not have been able to decide the sales pattern and therefore, were not in a position to understand whether it was the sale ex-works or sale on FOR destination basis.

Therefore, Commissioner has rightly held that extended period is invokable and that penalty is also imposable. Therefore, we do not find any infirmity insofar as the merit of the case is concerned, including invocation of extended period. However, we find that the demand needs to be recomputed on two accounts, viz., if there is any sale under RSP/MRP, which also got covered in this demand and also the re-computation of duty based on actual transportation charges collected by them from their customers. The appellants shall provide the necessary information to the department for recomputing this amount. Therefore, to this extent, the matter has to be remanded back to the adjudicating authority.

Thus, the appeals are allowed partly by way of remand.

Rule of exhaustion of alternative remedy / availability of an alternative efficacious statutory appeal - time bar u/s 34 (limitation for assessment and reassessment) - post decisional hearing u/s 74 as compliance with audi alteram partem - assessment to the best of judgment u/s 32 and penalty assessment u/s 33 - transfer of pre existing writ records to statutory Appellate Tribunal and dismissal of later petitions for availability of alternative remedy - HELD THAT:-In the present case, the petitioner submitted that it duly filed returns under the VAT Regulation 2017 for the four financial years in question. This has been denied by the respondents in their affidavit-in-opposition. Copies of returns have not been enclosed to the writ petition. Therefore, the facts of the case, on the hinges of which the issue of limitation has to be decided, are not admitted. Hence, the issue of limitation, in my opinion, does not partake the nature of a jurisdictional issue in the facts of this case.

In my considered view, it cannot be said at this stage that the impugned notices dated December 31, 2024, are without jurisdiction and therefore, this writ petition is maintainable notwithstanding availability of the appellate remedy.

In the course of hearing of this matter, it was mentioned by learned counsel for the respondents that the petitioner had, in fact, approached the writ court earlier. The Court refused to interfere and relegated the petitioner to the statutory avenue under section 74 of the Regulation to file objection to the impugned notices. Although no such court order is on record before me, even if that was the case, still the petitioner would not be entitled to maintain the present writ petition since the petitioner did not assail such order before any higher forum but acted in terms thereof.

Under challenge in this writ petition is also an order of the Joint Commissioner dated July 22, 2025, rejecting the petitioner’s objection to the impugned notices. It is nobody’s case that said order suffers from jurisdictional error. The order may be an erroneous order but that would not entitle the petitioner to invoke the writ jurisdiction to challenge that order, bypassing the statutory remedy of appeal under section 76 of the Regulation.

A taxing statute may provide for issuance of notice imposing a tax burden/penalty on an assessee without providing for a hearing prior to issuance of such notice. But the statute may provide for an objection being filed by the assessee to such notice and a full-fledged hearing being given by the authority issuing such notice. This would be post-decisional hearing but nonetheless would pass the test of fairness. The assessee would have full opportunity of assailing such notice and arguing why such notice should be withdrawn or modified.

There has been no breach of the principles of nature justice on the part of the respondents in the present case. In any event, the petitioner has not been able to demonstrate any prejudice that it has suffered by not being granted a hearing prior to issuance of the notice of assessment of tax and interest and notice of penalty. It had full opportunity of hearing before the Joint Commissioner under section 74 of the 2017 Regulation, albeit post-facto.

Therefore, unable to agree with the petitioner’s contention that this writ petition is maintainable in spite of there being an alternative remedy for the reason that principles of natural justice have been violated by the respondents in issuing the impugned notices.

Whether it can be said that a writ petition is not maintainable when on the date of filing of the petition the alternative statutory remedy was illusory by reason of the statutory appellate tribunal being non-functional for want of presiding officer? - HELD THAT:- Once a writ petition is taken on record and affidavits are exchanged, at the final hearing the writ petition should not be dismissed on the ground of availability of an alternative remedy. However, those cases may not be relevant if at the final hearing the writ court is of the opinion that because of existence of disputed facts or for any other reason, the alternative remedy should be resorted to by the writ petitioner.

This is a case where the disputes between the parties which pertain to a fiscal statute and to an extent are factual in nature, should be adjudicated by the Appellate Tribunal. I do not think that just because the writ petitioner was permitted to file this petition in the absence of a functional Appellate Tribunal, the same would give the petitioner any vested right to have the disputes adjudicated by the writ court.

Therefore direct that the records of all those writ petitions out of the bunch of 47 petitions which have been heard, which were filed prior to August 19, 2025, be transferred/transmitted to the Appellate Tribunal constituted under section 73 of the VAT Regulation, 2017. All those writ petitioners as well as the respondents will be entitled to file additional pleadings before the Tribunal. The Tribunal will decide those cases in accordance with law. In respect of all those pre-August 19, 2025, cases, the Tribunal will not insist on pre-deposit being made in terms of section 76 of the VAT Regulation, 2017. The appeals will be decided within the statutory framework in accordance with the applicable laws, Rules and Regulations. The said writ petitions will be treated as disposed of insofar as the records of this Court are concerned.

Insofar as the writ petitions filed on or after August 19, 2025, are concerned, the same shall stand dismissed solely on the ground of availability of an alternative statutory remedy. Those writ petitioners will be at liberty to approach the Appellate Tribunal. If any question of limitation/time-bar arises, the Tribunal shall decide the issue taking into consideration the applicable provisions of the Limitation Act, 1963, and in particular section 14 thereof as also the factum of pendency of the writ petitions in this Court.

I clarify that I have not touched the merits of the respective cases of the writ petitioners in the 47 writ petitions which are being disposed of by this judgment and order. The Appellate Tribunal is requested to decide the transferred cases or any appeal(s) that may be preferred by any or all of the writ petitioners whose petitions stand dismissed by this order, without being influenced by any observation in this judgment and order.

All the writ petitions are disposed of on the above terms.

Negotiable Instruments Act - Dishonour of cheques - Service of demand notice u/s 138 - presumption of service by registered post and deemed service - relevance of postal receipt and acknowledgment card to prove date of issuance and service for limitation - remand for production of additional evidence by appellant and opportunity to accused to rebut - HELD THAT:- The non-production of postal receipt /acknowledgment card by the appellant/complainant before the Magistrate Court found to be fatal by the learned Magistrate, while acquitting the accused. Indubitably, as regards issuance of demand notice under Section 138(b) of the N.I. Act is concerned, the requirement of law is, issuance of notice in writing in the correct address of the accused and serving of notice is not the requirement of law. In the decision in C.C. Alavi Haji v. Palappetty Muhammed and Another [2007 (5) TMI 335 - SUPREME COURT], the Apex Court dealt with presumption of service of notice and the refusal to accept the notice. Regarding presumption of service, the Apex Court held that when a notice is sent by registered post to the correct address of the drawer, it is deemed to be served under Section 27 of the General Clauses Act, 1897, and Section 114 of the Evidence Act. Regarding refusal to accept the notice, the Apex Court held that if the notice is returned with endorsements like “unclaimed” or “refused”, it would still considered as a valid notice and service of notice in the eye of the law.

At the same time, service of notice either directly or in the form of deemed service is also relevant to complete the offence and to count the period of limitation for filing the complaint within the statutory period. Thus, the date of issuance of notice as well as the date of service of notice or deemed service of notice to be discernible from the postal receipt and acknowledgment card and in its absence, any other document or documents issued by the concerned Postal Authority in this regard have relevance, when considering prosecution alleging commission of offence punishable under Section 138 of the NI Act, to count the period to find out whether a notice was issued within the statutory period and also to count whether the complaint has been filed within the statutory period. Thus, non-production of the above documents would be fatal and the same would result in the acquittal of the accused. Therefore, the finding of the learned Magistrate in the instant case to be found as justifiable.

Therefore, the judgment impugned is set aside and the matter is remanded back, for considering the case afresh, with an opportunity to the appellant/complainant to adduce further evidence including the production of documents.

In the result, this appeal is allowed and the judgment under challenge is set aside.