TaxTMI Updates e-Newsletter
Feb 14,2026

Refund procedure under Section 54 of the CGST Act - credit to Consumer Welfare Fund - exception under Section 54(8)(e) relating to non-passing on of tax incidence - passing on of tax incidence - invalidity of Notification No. 10/2017-Integrated Tax (Rate) and refundable amounts

Refund procedure under Section 54 of the CGST Act - credit to Consumer Welfare Fund - procedure not contemplated by statute for refund - Validity of the High Court's procedure directing the respondent to deposit the refunded amount in a designated account and seek consumer reimbursement through tariff adjustment instead of crediting the amount to the Consumer Welfare Fund. - HELD THAT: - The Court observed that Section 54(5) requires that an amount found to be refundable, on determination, is to be credited to the Consumer Welfare Fund established under Section 57. Payment to the applicant is an exception only under Section 54(8). The High Court accepted the respondent's proposal to open a designated bank account and to seek tariff relief from the electricity regulator so as to pass on the benefit to consumers. That mechanism introduces a modality for disbursal of refunds which is alien to the statutory scheme and not contemplated by Section 54 or the Rules. Further, the proposed course would involve a gargantuan and unworkable exercise to identify and recompense the actual consumers who bore the tax, and it departs from the statutory prescription that refundable amounts be credited to the Consumer Welfare Fund. For these reasons the impugned judgment was held unsustainable and was set aside, with directions for the respondent to cause the amount to be credited to the Consumer Welfare Fund within a specified period. [Paras 4, 11, 12, 13]

The High Court's procedure was set aside; the respondent is directed to transfer the refunded amount to the Consumer Welfare Fund within three months.

Exception under Section 54(8)(e) relating to non-passing on of tax incidence - passing on of tax incidence - Applicability of the exception in Section 54(8)(e) permitting payment of refund to the applicant where the applicant had not passed on the incidence of the tax. - HELD THAT: - The Court noted that Section 54(8)(e) operates as an exception to the statutory requirement of crediting refundable amounts to the Consumer Welfare Fund and applies only where the applicant can show that it had not passed on the incidence of the tax and interest to any other person. In the present case it was an admitted fact that the respondent-company had passed on the incidence of the tax collected under the invalidated notification to its consumers. Consequently, the statutory exception under Section 54(8)(e) did not apply, and the refundable amount could not be paid to the respondent instead of being credited to the Fund. [Paras 5, 6, 7, 8]

The exception in Section 54(8)(e) was not attracted because the respondent had passed on the incidence of the tax; the refundable amount must be credited to the Consumer Welfare Fund.

Final Conclusion: The appeal is allowed; the High Court's order authorising the alternate refund mechanism is set aside, and the respondent is directed to transfer the refund to the Consumer Welfare Fund within three months.

Scope and ambit of “composite supply” - naturally bundled - supplied in conjunction with each other - principal supply - essential and intertwined part of the contract - supply of services and supply of goods under the contract - HELD THAT:- The appellate authority for advance ruling appears to have ignored this aspect of the contract. A comprehensive reading of the contract, in the light of clause-10, set out above, would show that the contract is for the purposes of managing the drilling activities of M/s. Oil India Limited, which requires the petitioner to monitor the drilling operations and to inject necessary material, as required from time to time. In this process, the petitioner is entitled to charge, for the material which gets consumed, while maintaining the necessary conditions for safe and efficient drilling. The fact that separate bills are being issued, against the supply of goods, would not make any difference for ascertaining the nature of the transaction/contract. Some of the criteria for determining whether a contract is a composite supply, is to see whether supply of both services and goods are necessary for execution of the contract and whether they are in conjunction with each other. In the present case, the contract is to ensure that the drilling activity of Oil India Limited, is done in a safe and efficient manner. This object is achieved, by the petitioner, by supplying services to monitor the drilling activity and by injecting, into the oil well, chemicals and other substances, whenever injection of such substances are necessary to maintain optimal conditions for drilling. It may also be noted that the chemicals and other substances, supplied by the petitioner, are not off the shelf goods, but compounds, prepared by the petitioner, to suit the peculiar requirements of the drilling site. In the circumstances, the supply of mud engineering services and the supply of chemicals etc would have to be treated as a composite supply.

In that view of the matter, the findings of the authority for advance ruling as well as the appellate authority for advance ruling have erred in holding that the supply of services and goods, by the petitioner, to M/s Oil India Limited, is not a composite supply.

The petitioner had also sought a direction for fixation of the applicable rate of tax. This Court does not propose to go into the said question inasmuch as the said issue was not decided by the authority for advance ruling or the appellate authority for advance ruling. The said issue is left open.

In view of the above findings, this Writ Petition is allowed, setting aside the impugned order of the authority for advance ruling, date 13.05.2020, as well as the impugned order of the appellate authority for advance ruling, dated 09.11.2020, leaving it open to the petitioner to approach the appropriate authority for fixation of the appropriate rate of tax, for such composite supply. There shall be no order as to costs.

Admission by failure to specifically deny under Order VIII Rule 3 and Rule 5 CPC - effect of admissions in pleadings under Order XII Rule 6 CPC and Section 58 of the Evidence Act - right to be heard in bill verification proceedings / audi alteram partem in verification of claims - quashing of ex-parte bill verification report as violative of principles of natural justice - liability of the State for accommodation requisitioned for protected persons and remedial mandamus to liquidate undisputed dues -

Admission by failure to specifically deny under Order VIII Rule 3 and Rule 5 CPC - effect of admissions in pleadings under Order XII Rule 6 CPC and Section 58 of the Evidence Act - HELD THAT:- In terms of Order VIII Rule 3 of the Code of Civil Procedure, it is not sufficient for a defendant in his written statement to make a general denial of the grounds alleged by the plaintiff, he is required to specifically deal with each allegation of fact of which he does not admit the truth and it is a settled principle of law of pleadings that if every allegation of fact in the plaint is not denied specifically or by necessary implication, it shall be taken to be an admission in terms of Rule 5 of Order VIII of the Code. Now, when law relating to admission is examined in the light of Order XII Rule 6 CPC, I need not say anything more than what the legislature has intended in its framework that where admission of fact is made in the pleadings or otherwise, the Court at any stage of the proceedings has the jurisdiction to pass such order or give such judgment as it needs fit, having regard to such admission. It is also settled in law that such admission includes one that can be inferred from facts and circumstances of a case without any dispute, as held by Hon’ble Supreme Court in “Charanjit Lal Mehra vs. Kamal Saroj Mahajan”; [2005 (3) TMI 815 - SUPREME COURT] It is also settled in law that facts admitted need not be proved in terms of Section 58 of the Evidence Act and a party’s admission is substantive evidence ex proprio vigore.

In the light of afore-stated statutory and crystallized position of law, insofar as first claim of the petitioner, is concerned that pursuant to circular dated 07.11.2020 and communication dated 12.12.2020 issued by Divisional Commissioner, Kashmir, its Hotel came to be hired by the respondents to accommodate protected persons on sharing basis w.e.f. 18.11.2020 to 05.08.2021, same having not been denied by the respondents amounts to admission and petitioner is entitled to the relief prayed for.

Right to be heard in bill verification proceedings / audi alteram partem in verification of claims - HELD THAT:- There is difference between a fact-finding committee and Bill Verification Committee. The fact-finding committee has a different job altogether to perform. It is constituted to investigate, gather evidence and establish the facts surrounding a specific incident. Even a fact-finding committee would ordinarily follow the principles of natural justice. On the other hand, the Committee constituted for the verification of bills would embark upon verifying the authenticity, calculation and validity of bills/invoices or claims presented by a claimant. The job of such Committee is to verify if services were rendered, goods were delivered, calculations made are correct and claims adheres to the policy/contractual norms or not. The claimant, in the circumstances and for the purpose for which the Committee is constituted, is to be accorded a right of hearing to submit explanations during the process of verification of bills, particularly when Committee proposes or intends to reject or reduce the claim. Principle of Audi alteram partem applies with full force if the rejection of a bill is based on allegations of fraud or misconduct or that claim is inflated. To ensure procedural fairness, the Committee must provide the claimant an opportunity to produce evidence, explain the discrepancies identified during verification and justify the claim.

As stated, the premises in question came to be de-hired by the respondents on 01.06.2022, but Committee was constituted much later on 05.11.2022, and Committee submitted its report three months thereafter on 02.02.2023. There is nothing in the stand of the respondents to indicate that Committee has bothered to verify the record of the petitioner Hotel regarding actual occupancy of the persons, whose names were provided by them. As stated, since after the Hotel in question came to be hired and re-hired by the respondents, petitioner was obliged not only to provide accommodation to the protected political persons but also reserve the accommodation for the protectees, those were being guarded round the clock by the security forces, there is force in the contention of the respondents that after this arrangement, petitioner was not able to put the Hotel for any other use. The Bill Verification Committee has not verified that whether said accommodation was provided by the petitioner to anybody else during the period, the premises were hired by the respondents at the Divisional or District level. Under these circumstances, it is not open to the respondents, at this length of time, to dispute the claim of the petitioner.

Thus, present petition is allowed and order dated 05.11.2022, by virtue of which respondents constituted a Committee for verification of Bills and ex-parte report dated 10.02.2023 of the said Committee are quashed. Respondents are directed to liquidate claims of the petitioner within a period of eight weeks from the date a copy of this judgment is made available, failing which they shall be liable to pay interest @ 6% per annum.

Entitlement to input tax credit u/s 16(5) despite limitation in Section 16(4) - retrospective amendment to Section 16 with effect from 01.07.2017 - extension of deadline for availing ITC for FYs 2017-18 to 2020-21 up to 30.11.2021 - quashing of assessment orders insofar as they disallow ITC on limitation grounds - reliefs on consequence of quashing - restraint on recovery, de-freezing of bank accounts and refund/adjustment of amounts - preservation of departmental rights to proceed on merits in cases of alleged fraud, excess or wrongful ITC - HELD THAT:- When these Writ Petitions are taken up for hearing, the learned counsel for the petitioner and learned counsel for the respondent, would submit that the issue involved in the present Writ Petition, has been squarely covered by the common order of this Court [2024 (10) TMI 1631 - MADRAS HIGH COURT].

Therefore, petitioner would submit that the above said order will hold good for the present Writ Petitions also and hence, prayed to dispose of the Writ Petitions. The learned counsel appearing for the respondent would fairly accede to the same.

This Court passes the following:

The impugned original orders dated 29.02.2024 & 09.03.2024 are quashed insofar as it relates to the claim made by the petitioner for ITC which is barred by limitation in terms of Section 16 (4) of the CGST Act, 2017 but, within the period prescribed in terms of Section 16 (5) of the said Act.

Therefore, the respondent-Department is restrained from initiating any proceedings against the petitioners by virtue of the impugned order based on the issue of limitation.

It is also made clear that if at all, if there is any tax amounts collected from the petitioner based on the impugned assessment order from the cash ledgers/credit ledgers of the petitioner concerned, the same shall be refunded to them or by means of orders of this Court or even in the absence of any order from this Court, if any amount is deposited either in the cash ledgers/credit ledgers of the petitioner concerned, the same is permitted to be utilized/adjusted by the petitioners towards payment of future tax.

If there is any challenge related to issues such as discrepancies in availing the ITC/wrong availment of ITC/excess claim of ITC/Fake ITC claim, as the case may be, or such other issues, liberty is be granted to the respondent-Department to proceed against the assessee/petitioner in furtherance of the impugned order in accordance with law.

Accordingly, the present Writ Petitions are allowed on the aforesaid terms.

Omission of Sections 73 and 74 with effect from 01.04.2024 - Applicability of Section 74A from financial years 2024-2025 onwards - Jurisdictional validity of show cause notice and assessment - Remand for fresh consideration under the correct statutory provision - HELD THAT:- As rightly contended by the petitioner, the provisions of Sections 73 & 74 of the GST Act stood omitted with effect from 01.04.2024 and only the provisions of Section 74A of the GST Act will apply from the financial years 2024-2025 onwards. Hence, it is clear that the show cause notice dated 04.07.2025 and assessment order dated 19.08.2025 came to be passed without any jurisdiction.

Upon perusal of the show cause notice dated 04.07.2025, it appears that though the respondent had assumed jurisdiction under Section 74, in the later portion of the said notice, he had highlighted the provisions of Section 74A(5) of the GST Act. In such case, it is clear that the respondent had issued the said show cause notice in total non-application of mind, which leads to unnecessary confusion and hardship to the petitioner in filing their reply.

In such view of the matter, this Court is inclined to set aside the impugned order dated 19.08.2025 passed by the respondent. To avoid any further delay and inconvenience to both the parties, this Court is inclined to direct the petitioner to treat the impugned assessment order as a notice issued under Section 74A of the GST Act and file reply to the same.

Impugned assessment order dated 19.08.2025 set aside as passed without jurisdiction; matter remitted for fresh adjudication under Section 74A of the GST Act with directions.

Condonation of delay - liberty to file appeal - challenge to assessment order - duty of an assessee to monitor the GST web portal - interest and penalty imposed in assessment - HELD THAT:- As rightly contended by the respondent, having filed the reply and participated in the personal hearing, now, it is not proper for the petitioner to make a plea that he is not aware of the uploading of assessment order and hence, the reason assigned for delay in filing the appeal is not acceptable.

Normally, after participating in the proceedings, it is the duty of an Assessee to verify the GST web portal for subsequent development in the said proceedings. However, in this case, though the assessment order was passed as early as on 18.06.2025, no steps were taken by the petitioner to challenge the assessment order for a period of 8 months. Now, the petitioner had filed this petition by taking a stand that he is not aware of the uploading of assessment order and also he is seeking for liberty to file an appeal against the said order.

As stated above, the reason assigned by the petitioner for delay in challenging the assessment order is not acceptable. Further, this Court does not find any force in the submission made by the petitioner and hence, not in a position to grant liberty as requested by him.

This Court is inclined to dismiss the present petition as devoid of merits.

Denial of Input Tax Credit in bona fide transactions - Interpretation and reading down of provision to avoid arbitrariness under Article 14 - Liability of purchasing dealer for seller's failure to deposit tax collected - Distinction between proceedings under Section 73 and Section 74 - Constitutional validity of denying ITC to bona fide purchasers - HELD THAT:- The show cause notice dt.14.01.2021 issued by the sixth respondent to the petitioner in the instant case, as well as the order passed on 17.02.2022 by the said officer, do not contain any findings therein that the transaction between the parties i.e. the petitioner and the seventh respondent, is not bona fide, or is a collusive, or a fraudulent transaction to defraud the revenue.

If such a situation had been there, certainly the sixth respondent would not have invoked Section 73 of the Act which lays down the procedure for determination of tax for reasons other than fraud or any wilful misstatement or suppression of facts. He would certainly have invoked Section 74 of the Act which lays down the procedure for determination of tax not paid or short paid or erroneously refunded or input tax credited wrongly availed or utilized by reason of fraud or any wilful misstatement or suppression of facts.

Therefore, the ratio of the judgment in M/s Sahil Enterprises [2026 (1) TMI 385 - TRIPURA HIGH COURT] is clearly attracted, and the transaction between the parties i.e. the petitioner and the seventh respondent in the instant case, has to be held to be a bona fide transaction, and consequently for the failure of the seventh respondent to make over the tax collected by it from the petitioner, the petitioner cannot be punished by applying Section 16(2)(c) of the Act.

Therefore, the Writ Petition is allowed, and the order dt.17.02.2022 passed by the sixth respondent is set aside, and the respondents are directed to forthwith allow the petitioner ITC to the extent of Rs. 22,09,964/-.

Pre-deposit requirement for filing an appeal under the Goods and Services Tax regime - no judicial or administrative exemption from statutory pre-deposit - condonation of delay in filing statutory appeals - appellate authority's power to admit delayed appeals and decide merits - effect of payment of tax during adjudication on liability for penalty - HELD THAT:- Since there is no exemption for any taxpayer from making pre-deposit while filing the appeal under the GST regime, whether the liability of penalty or tax was rightly imposed or not would be the subject matter of appeal on merits, the same cannot be a ground to seek exemption from making the pre-deposit. However, since the petitioner had been in correspondence with the respondent authorities on this issue and has missed the cut off date for filing the appeal, we grant liberty to the petitioner to file an appeal within a period of two weeks with statutory deposit and a delay condonation application. The petitioner may take all such grounds of law and facts in the memo of appeal as are available to it. Needless to say, the appellate authority would consider the question of delay sympathetically taking into account the aforesaid facts and circumstances and if he is satisfied on the point of delay, he would proceed to decide the appeal on merits in accordance with law within a reasonable time, preferably, within twelve weeks from the date of receipt of a copy of this order.

Accordingly, the instant Writ Petition is disposed of.

Efficacious alternative remedy of appeal u/s 107(1) - no interference by writ court where alternative statutory remedy is available - composite order for multiple tax periods - validity of Summary of Order in Form GST DRC-07 and effect of absence of digital signature - requirement of pre-deposit for filing statutory appeal - HELD THAT:- We are of the considered view that the petitioner has an efficacious remedy of appeal under Section 107(1) of the Act and it is open for him to take all such grounds of law and on fact. In the absence of alternative remedy, we are not inclined to entertain the instant Writ Petition at this stage.

The instant Writ Petition is therefore disposed of with liberty to the petitioner to file an appeal along with pre-deposit within the statutory period by taking all such grounds of law and on facts as are permissible to him. Needless to say, the appellate authority would consider the appeal on merits if filed within the statutory period in accordance with law. Let it be made clear that we have not made any comment on the merits of the case of the parties. There shall be no order as to costs.

Blocking of Electronic Credit Ledger - beyond the period of one year on the ground that it is void ab initio, without jurisdiction and violative of the statutory Rules - proceedings u/s 73/74 - availability and utilisation of Input Tax Credit - duty to disclose material facts in writ proceedings - interference by writ court with statutory adjudication -HELD THAT:- Petitioner submits that the challenge in the present writ petition is limited to blocking of the Electronic Credit Ledger only. Therefore, other ancillary facts now being brought to the notice of the Court were not required to be referred to.

In writ proceedings, a party has to come clean before the Court disclosing all relevant material facts germane to the issue in controversy. The blocking of the Electronic Credit Ledger was accompanied by a proceeding under Section 74 of the TGST Act. This was a material fact required to be disclosed in the writ petition for the Court to form an opinion on the cause of action raised herein. We do not encourage such an approach on the part of the petitioner. At the same time, since the re-blocking of the Electronic Credit Ledger has a background in the imposition of tax, interest, fee and penalty in a proceeding under Section 74 of the TGST Act to the tune of Rs. 4,95,64,354/- and the period of one year has not expired since the blocking of the Electronic Credit Ledger on 30.05.2025, this Court does not find any reason to interfere in the matter.

The Writ Petition is, accordingly, dismissed.

Liberty to prefer statutory appeal subject to deposit - extension of time to file appeal on terms - conditional waiver of limitation for appellate consideration - appellate authority to decide on merits without reference to limitation if conditions complied with - provisional deposit as precondition for entertaining appeal - non-attachability of bank overdraft account - recourse against securities/movable and immovable assets offered to bank - confirmation of tax demand in GST adjudication - HELD THAT:- This Writ Petition is disposed of by granting liberty to the Petitioner to challenge the impugned Order dated 26.07.2024 passed by the first Respondent before the Appellate Authority/Commissioner, CGST & Central Excise (Appeals) Chennai 600 034 within a period of 30 days from the date of receipt of a copy of this Order, subject to the Petitioner depositing 50% of the disputed tax as confirmed vide the impugned Order.

It is made clear that, in case, the Petitioner fails to comply with the above stipulation, the Appellate Authority shall dismiss the Appeal on the ground of the Petitioner having violated the Order passed by this Court, in which case, the first Respondent is 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.

Since the Bank Account maintained by the Petitioner with the second respondent is only an OD Account, there cannot be any attachment of such OD Account. However, the first Respondent is at liberty to proceed against the assets, including the movable and immovable assets, which might have been offered by the Petitioner as security, subject to the rights of the second Respondent pursuant to the outcome of the Appeal to be filed by the Petitioner.

This Writ Petition is disposed of with the above observation.

Show cause notice for cancellation of registration - violation of Rule 21(e) of the CGST Rules - availment of Input Tax Credit from non-existent/non-operating suppliers - principles of natural justice - communication by DGGI and its use as supporting material - reply in Form GST REG-18 and subsequent reply - HELD THAT:- Though it appears that the impugned show cause notice for cancellation of registration simply alleges violation of Rule 21(e) of the Rules by the petitioner by availment of ITC in violation of provisions of Section 16 of the Act and the Rules made thereunder, the show cause notice annexes the supporting document, which is the communication between respondent No. 2-Deputy Director, DGGI, Hyderabad, and respondent No. 3-Deputy/Assistant Commissioner of Central Tax, Shamshabad Division, Hyderabad. Petitioner had, in its replies dated 25.12.2025, categorically come out with a stand on the allegation of availment of ITC from non-existent suppliers thereby indicating that it has understood the contents of the impugned show cause notice. No prejudice is likely to be caused, as the petitioner, having understood the contents of the charges contained in the show cause notice, adequately replied thereto. Respondent No. 1-Proper Officer, in such circumstances, is at liberty to proceed on the basis of the replies to the show cause notice for cancellation of registration, in accordance with law and take a decision thereon within a period of two weeks. In the facts and circumstances, we are of the view that the decisions relied upon by the petitioner would not come to its aid.

The Writ Petition is disposed of with the aforesaid observation.

Input Tax Credit- Immovable property - Plant and machinery (explanation to Section 17) - Doctrine of fixtures / attachment to earth - term “movable property” or “immovable property” - Restriction on ITC u/s 17(5)(c) and 17(5)(d) - manufacturing activities and pipelines laid outside their factory premises - services by way of transmission of natural gas in pipeline. - HELD THAT:- As per the Section 3(26) the General Clauses Act, 1897, immovable property includes land, benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth. Further, Section 3 of Transfer of Property Act defines the expression “attached to the earth” to mean things embedded in the earth or attached to what is so embedded for the “permanent beneficial enjoyment” of that to which it is attached. As per the “Doctrine of Fixtures” based on the Latin maxim “Quicquid plantatur solo, solo cedit”, whatever is attached to the ground becomes part of its meaning thereby that chattels (movable goods) permanently annexed to land become immovable. The common test for deciding whether an article is a fixture or chattel turns on the purpose of attachment. Intention of attachment is to be seen as to whether to treat an article as chattel or as a part of freehold.

Whether cross-country pipeline for transmission of natural gas is an immovable property? - HELD THAT:- Since the statute specifically bars availment of ITC on works contract services when supplied for construction of immovable property and the cross-country pipeline being an immovable property, the appellant is not entitled to avail ITC on works contract services provided for construction of such pipeline for transportation of natural gas.

Further, clause (d) of Section 17(5) bars entitlement to ITC in respect of goods or services used for construction of immovable property on assesse's own account.

The cross-country pipeline being an immovable property, the appellant is not entitled to avail ITC on goods or services received for construction and laying of such pipeline for transportation of natural gas.

Whether cross-country pipeline is “Plant & Machinery”? - HELD THAT:- It is evident that the natural gas has to be re-gasified at the terminals i.e., a designated processing plant for converting the liquefied natural gas to gaseous form before being transported in gaseous form through these cross-country pipelines which are laid outside thereto. The plant at the terminals is a place where there are workers who are working and the process that takes place there, is of conversion of LNG to gaseous form and thus can be treated as factory or factory premises. In this case, the pipelines laid by the Appellant for transportation of natural gas cross-country are laid outside the factory preemies.

The pipelines laid cross-country by the Appellant on the direction of PNGRB do not form part of “plant and machinery” as these are laid outside the factory premises meant for processing the LNG, RLNG or CNG and therefore fall under the restriction clause as prescribed under Section 17(5)(c) and (d) of Act. Therefore, we are of the considered opinion that underground pipelines laid by the Appellant as per the requirement of the PNGRB, do not form part of plant and machinery as such pipelines laid outside factory premises are excluded from the definition of plant and machinery.

To sum up, a pipeline cannot exist in vacuum without a factory. The expression “pipelines outside the factory” signifies that the pipeline is to transport some product from the factory to the end user. In the instant case, the gasified natural gas is transported through the pipeline which is outside the factory. Hence, we are of the view that the said pipeline is a “pipeline outside the factory” for which the appellant cannot avail ITC by treating pipelines as “plant & machinery”.

Whether cross-country pipeline is covered under “apparatus, equipment, machinery”? - HELD THAT:- In common parlance, a pipeline cannot be treated as an apparatus, equipment or machinery. When a specific description is available, it is not justified to bring a pipeline within a meaning of “apparatus, equipment or machinery” by quoting convenient meanings just in order to avail ITC.

As per the observation of the Hon'ble Apex Court in case of Commr. (CGST) v. Safari Retreats (P) Ltd [2024 (10) TMI 286 - SUPREME COURT], plant and machinery have a restricted meaning in the definition provided in the GST Act. When the legislature uses the expression plant and machinery, only a plant will not be covered by the definition unless there is an element of machinery. Further, plant and machinery have been defined as apparatus, equipment and machinery fixed to the earth by foundation or structural support, unlike the case of pipeline which is not laid on a foundation or structural support but simply laid underneath the earth.

So, we are of the considered opinion that cross-country pipelines laid by the appellant are immovable property. The pipelines also cannot be considered as “plant & machinery”. Thus, the appellant is not entitled to ITC on goods or services towards construction and laying of the said pipelines as per the restrictions provided in Section 17(5)(c) & (d) and the explanation appended to Section 17.

Supply of electrical energy - exemption under Notification No. 02/2017-CT (Rate) dated 28-06-2017 - nil rate/exemption for transmission and distribution of electricity under Notification No. 12/2017-CT(Rate) dated 28-06-2017 - classification as generation, transmission or distribution utility - Energy Storage System as part of the power system - support services to electricity transmission and distribution (HSN 998631) - GST registration and taxability at 18%

Supply of electrical energy - classification as generation utility - Energy Storage System as part of the power system - Whether development and operation of standalone BESS amounts to supply of electrical energy and attracts exemption under Notification No. 02/2017-CT (Rate). - HELD THAT: - The Authority found that the applicant receives electricity from the grid and converts it into chemical form for storage and later reconverts it to electrical energy for delivery; the applicant does not generate electricity from primary sources and therefore is not a generating company. BESS functions as a flexible asset whose legal character depends on its application and interconnection; standalone ownership does not convert the storage activity into generation. The contractual arrangement is capacity-based for making storage capacity available on demand rather than a sale of electricity as goods. Consequently, the activity is storage/support to utilities and not supply of electrical energy eligible for the exemption at Sl. No. 104 of Notification No. 02/2017-CT (Rate). [Paras 21, 26, 30, 34, 36]

Standalone BESS is not supply of electrical energy by a generating company and the exemption under Notification No. 02/2017-CT (Rate) is not available to the applicant.

Classification as transmission/distribution utility - nil rate/exemption for transmission and distribution of electricity under Notification No. 12/2017-CT(Rate) - co-located BESS and ownership distinction - Whether development and operation of co-located BESS amounts to supply of electricity or transmission/distribution service and attracts exemption/nil rate under Notifications cited. - HELD THAT: - The Authority observed that 'co-located' describes ownership/placement and does not alter the essential function of BESS as storage. Clause (4) of Rule 18 confers legal status for licensing/certification purposes but does not transform an independent storage operator into a transmission or distribution utility for GST exemption purposes. The co-located facility continues to perform the same storage function; therefore the applicant cannot be treated as a transmission or distribution utility entitled to the exemption or nil rate under the notifications relied upon. [Paras 23, 28, 33, 34, 36]

Co-located BESS, like standalone BESS, is not a transmission or distribution utility for purposes of the exemption notifications and those exemptions are not available to the applicant.

Support services to electricity transmission and distribution (HSN 998631) - taxability at 18% - GST registration requirement - If exemptions are not available, what is the proper classification, applicable GST rate, and registration obligation? - HELD THAT: - Having concluded that BESS activities are neither generation nor transmission/distribution supplies, the Authority classified the applicant's activity as support services to electricity transmission and distribution (HSN 998631). The supply of such support services is taxable under GST and, in the absence of applicable exemption, attracts tax at 18%. Consequently, the applicant must obtain GST registration in Tamil Nadu and discharge tax liability if the BESS is established in the State. [Paras 37]

The activity is classifiable as support services to electricity transmission and distribution (HSN 998631), taxable at 18%, and the applicant is required to obtain GST registration in Tamil Nadu if the BESS is established.

Final Conclusion: The Authority ruled that neither standalone nor co-located BESS projects qualify as generation, transmission or distribution utilities for the purpose of the cited GST exemptions; the activity is support services to electricity transmission and distribution taxable at 18%, and the applicant must obtain GST registration in Tamil Nadu if the facility is established.

Valuation mechanism under paragraph 2 of Notification No. 11/2017-CT (Rate) as amended - treatment of transfer of land under Schedule-III of the GST Act - application of concessional rates under Entry 3(i) and 3(ia) of Notification No. 11/2017-CT (Rate) as amended by Notification No. 03/2019-CT (Rate) - definition and applicability of Residential Real Estate Project (RREP) and promoter - binding nature of an Advance Ruling

Application of concessional rates under Entry 3(i) and 3(ia) of Notification No. 11/2017-CT (Rate) as amended by Notification No. 03/2019-CT (Rate) - definition and applicability of Residential Real Estate Project (RREP) and promoter - Whether the applicant is eligible to apply the concessional GST rates specified in Entry 3(i) and 3(ia) for construction of residential apartments in an RREP commenced on or after 01-04-2019. - HELD THAT: - The Authority examined the factual assertions that the applicant is a promoter, the project qualifies as a Residential Real Estate Project (RREP) with no commercial carpet area, construction commenced after 01-04-2019, consideration is being received prior to issuance of completion certificate/first occupation, and the applicant has not exercised the alternative option to pay tax under other entries. The Authority held that the construction activity falls within the scope of supply of services under Schedule-II (Rule 5(b)) and the project characteristics fit the definitions of "promoter", "RREP" and "original works" as reproduced from the notification and RERA provisions. The Authority further noted that the amended Notification No. 03/2019-CT (Rate) is applicable to projects commenced on or after 01-04-2019 and the conditions in the respective entries must be strictly complied with. On these findings, the Authority concluded that the applicant is eligible to claim the concessional rates under Entry 3(i) and 3(ia) and is liable to pay GST at the specified concessional rates subject to adherence to the conditions prescribed in those entries. [Paras 8, 11, 13, 15, 23]

The applicant is eligible to avail Entry 3(i) and 3(ia) concessional rates and liable to pay GST at the prescribed concessional rates for construction of affordable and other than affordable residential apartments respectively, subject to fulfillment of the conditions in those entries.

Valuation mechanism under paragraph 2 of Notification No. 11/2017-CT (Rate) as amended - treatment of transfer of land under Schedule-III of the GST Act - prohibition on deduction of actual land value where paragraph 2 prescribes deemed one-third - Whether the applicant can deduct the actual value of land (as per sale deed) from the total amount charged for arriving at the taxable value, or whether the deemed one-third deduction under paragraph 2 must be applied. - HELD THAT: - Schedule-III excludes sale of land from supply of goods or services, but where a supply falls under the specified entries involving transfer of land, paragraph 2 of Notification No. 11/2017-CT (Rate) prescribes that the value of land in such composite supplies shall be deemed to be one-third of the total amount charged and that the taxable value shall be the total amount charged less such deemed land value. The Authority observed that the notification mechanism was introduced to avoid under- or over-valuation arising from regional variations in land value and noted the CBIC clarification in FAQs (TRU letter) which states that actual land value cannot be deducted in place of the deemed one-third. Applying this reasoning to the applicant's facts, the Authority held that the applicant is entitled only to the one-third deduction prescribed in paragraph 2 and cannot claim deduction of the actual land value shown in the sale deed. [Paras 19, 20, 21, 22, 23]

Taxable value must be determined in accordance with paragraph 2 of Notification No. 11/2017-CT (Rate) as amended, permitting only the deemed deduction of one-third of the total amount charged for the land component; deduction of actual land value as per sale deed is not allowable for valuation purposes.

Final Conclusion: The Advance Ruling holds that the applicant qualifies for concessional GST rates under Entry 3(i) and 3(ia) of the notification for an RREP commenced after 01-04-2019 subject to compliance with the entries' conditions, and that valuation for taxable value must follow paragraph 2 of the notification, allowing only the deemed one-third deduction for land and not deduction of actual land value.

TDS u/s 194I - TDS on annual lease rent paid to Greater Noida - Scope of the term Rent - appeals of the respondent-assessee has been allowed in light of the judgment rendered by this Court in the case of Rajesh Projects (India) (p.) Limited [2017 (2) TMI 1109 - DELHI HIGH COURT]

HELD THAT:- As appellant could not point out any substantial difference between the facts in the present case and the facts which were involved in the case of Rajesh Projects (supra). In the case of Rajesh Projects (supra) this Court held that TDS is required to be deducted from the payment of annual lease rent paid to Greater Noida Development Authority. The same was however, held to be prospective from the date of judgment.

The aforesaid judgment has also been affirmed by Hon’ble the Supreme Court vide its judgment dated 02.07.2018 rendered in the case of New Okhla Industrial Development Authority [2018 (8) TMI 1374 - SUPREME COURT]

In view of the above legal position, all the three appeals are hereby rejected. The issue which is involved in the present case remains undecided by this judgment, and the same shall remain open for subsequent relief.

Application for condonation of delay in filing Form 10B - denied benefit of exemption u/s 11 - delay of 50 days in filing Form No. 10B - “genuine hardship” - Petitioner is a public religious cum-charitable Trust carrying out various activities, including providing aid and relief to the poor and needy, education, aid in education, and such other various relief activities

HELD THAT:- In the present case, considering that the delay was merely fifty days, and further considering that the main ingredient on which Respondent No. 1 based its rejection of the application was a perceived delay in earlier years, we find that there has been a gross violation of the directions u/s 119(2)(b) read with the Circular for the relevant period issued thereunder. Respondent No. 1 was necessarily bound to follow the law both in letter and spirit and not cause its exercise of discretion to be coloured by non-existent conditions.

As decided in Sarvodaya Charitable Trust [2021 (1) TMI 214 - GUJARAT HIGH COURT] has observed that the provision regarding furnishing of Audit Report with the Return of Income has to be treated as a procedural provision. It is a directory in nature and its substantial compliance would suffice.

Not granting the benefit of Section 11 to the Petitioner would certainly cause genuine hardship to the Petitioner and may adversely affect the functioning of its activities which provide relief to thousands of students who are utilising its educational aid and schools run by it. The purpose of Section 119(2)(b) is to mitigate such genuine hardship faced by the Assessees and hence the phrase “genuine hardship” is to be construed liberally. In contrast, when the delay is condoned, especially a delay of merely 50 days, the highest that can happen is that the case would be decided on merits after hearing the parties.

We quash and set aside the impugned order dated 07/10/2025 for A.Y. 2018-19 and condone the delay of 50 days in filing Form No. 10B. Since the delay is now condoned, the Respondents shall treat the Form No. 10B filed by the Petitioner to have been filed within time and process the Return of Income filed by the Petitioner in accordance with law within 3 months from the date of uploading this Order on the High Court’s website.

Effect of order of tribunal or court in respect of business reorganization u/s 170A - NCLT Order approving the scheme of amalgamation with assessee -re-scrutiny of a modified return

HELD THAT:- Respondent No. 2 was not only under an obligation to assess the total income of the said assessment year in accordance with the order of the business reorganisation and taking into account the modified return so furnished, but in discharge of the said obligation, it has actually carried out that exercise examining the aspects arising from the amalgamation of Nirlep Appliances Pvt. Ltd. Since, the modified return of income has already been subjected to scrutiny and an assessment order passed thereon, we are of the opinion that issuance of the impugned notices with a view to again scrutinize the said modified return of income is contrary to the express provisions of Section 170A(2)(b) of the IT Act.

The clarification from the office of DDIT (Systems), Delhi, to the effect that the impugned notice dated 24.06.2025 issued under Section 143(2) of the IT Act itself infers that the said notice has been issued in a mechanical manner and without application of mind, which would vitiate such notice.

Section 170A(2) makes a distinction between two scenarios, one being that covered by clause (a) thereof, where the assessment stood completed on the date of furnishing of the modified return of income, and the other being that covered by clause (b), where the assessment was pending on the date of furnishing of such return of income. It is only in the cases covered by clause (a) that the assessing officer has to pass a separate order on the modified return of income. In the cases covered by clause (b), which is also the present case, the assessment order passed has to be in accordance with the order of the business reorganisation and taking into account the modified return so furnished. If the contentions as canvassed by the Respondents is accepted, then no distinction will be left between cases covered by clause (a) and those covered by clause (b). Hence, the same needs to be rejected.

The impugned notices issued u/s 143(2) and 142(1) of the IT Act by Respondent Nos. 2 and 1, respectively, are hereby quashed and set aside.

Deduction u/s 80-IA - Claim denied as assessee has not satisfied conditions for availing benefit under said section since assessee has entered into agreement with a Corporate and not with authorities as prescribed in said Section - fuel farm is located outside the airport premises and does not constitute an integral part of the airport - ambit of an “infrastructure facility” -

Assessee has established a fuel farm facility at the Bangalore International Airport AND he respondent has entered into an agreement with BIAL for developing, operating, and maintaining the aviation fuel facility - HELD THAT:- As decided in Menzies Aviation Bobba (Bangalore) (P.) Ltd [2021 (9) TMI 606 - KARNATAKA HIGH COURT] M/s. Bangalore International Airport Limited (BIAL) is a statutory body. Upon perusal of the layout map of the airport, the cargo complex has been held to constitute an infrastructure facility. It has been further held that the establishment of the cargo complex and the fuel farm is in accordance with the Concession Agreement entered into between BIAL and the Government of India. By referring to sub-section (2) of Section 2 of the Aircraft Act, 1934, it has been held that the cargo complex forms part of the aerodrome.

Contention of the Revenue that the respondent has no agreement with any statutory body, as one of the requisite conditions for claiming deduction under Section 80-IA of the Act, is unsustainable. BIAL has been held to be a statutory body, and the agreement entered into between the respondent–assessee and BIAL satisfies the requisite conditions contemplated under Section 80-IA of the Act.

Second contention of the Revenue that the fuel farm facility does not form part of the airport is also not acceptable. An airport is held to be an infrastructure facility in terms of Explanation 2 to Section 80-IA of the Act. The term “airport” is not defined under the Act. However, the expression “aerodrome” is defined under the Aircraft Act, 1934.

We have no hesitation in holding that the supply of fuel to aircraft is an integral part of airport operations, without which an airport cannot function. The fuel farm is, therefore, an indispensable component of airport activity. Under the Concession Agreement entered into between the Government of India and BIAL, BIAL has been expressly authorised to enter into agreements for developing aviation fuel facilities within the airport through oil companies. This, in our considered view, clearly indicates that the fuel farm is an integral part of the airport facility. The finding of this Court in Menzies Aviation Bobba (Bangalore) (P.) Ltd [2021 (9) TMI 606 - KARNATAKA HIGH COURT] though rendered in the context of cargo handling services, applies to the fuel farm facility with equal force and for the very same reasons.

Allowance of deduction u/s 36(1)(iii) in respect of interest on Hedge (Swap) transactions - The said issue has been answered by the Tribunal by following the judgment of the Hon’ble Supreme Court in Core Health Care Ltd. [2008 (2) TMI 8 - SUPREME COURT] Revenue is not in serious dispute with regard to the applicability of the said judgment to the facts of the present case.

Reopening of assessment - reasons to believe OR reasons to suspect - entries found noted in the loose paper /documents - Borrowed satisfaction or independent application of mind - sole basis for initiating the proceedings is alleged entries found noted in some loose papers impounded during the course of survey in the case of third party - HELD THAT:- Hon’ble Jurisdictional Delhi High Court in the case of PCIT vs Meenakshi Overseas [2017 (5) TMI 1428 - DELHI HIGH COURT] has held that proceedings u/s 148 is bad in law since the AO has quashed the reassessment proceedings initiated on the basis of borrowed satisfaction.

Hon’ble Jurisdictional Delhi High Court in the case of CIT vs Anil Khandelwal [2015 (5) TMI 86 - DELHI HIGH COURT] has held that the presumption u/s 132(4A) & 292C of the Act is available only in the case of the person from whose possession and control, the documents are found and it is not available in respect of the third party.

Hon’ble Supreme Court in the case of CBI vs V.C.Shukla [1998 (3) TMI 675 - SUPREME COURT] has held that the documents were found from the possession of the third person at the best could be held as corroborative evidence and not the substantive evidence.

Thus, we find that the AO has recorded the satisfaction before re-opening the assessment on the basis of material supplied by Investigation Wing impounded from the control and possession of third person in whose case, survey was carried out and further the ld. PCIT has taken contrary view and at one place alleged the said entries related to some other person and in the case of assessee alleged as pertained to him.

Thus by respectfully following the order of the coordinate bench in the case of Ranjan Rajesh Kumar [2024 (2) TMI 541 - ITAT DELHI] in whose case, under identical circumstances, the hon’ble court has held the reopening as invalid, we hold that the re- of the assessment in the case of the assessee is bad in law and thus, the notice issued u/s 148 is invalid and consequent reassessment order passed u/s 147 of the Act is hereby, quashed. Assessee appeal allowed.

Estimation of income - bogus purchases u/s 69C - CIT(A) restricting the impugned addition to the extent of 25%

HELD THAT:- Assessee is engaged in trading activities and made sales and purchases. The books of accounts are duly audited as required under law. The assessee has furnished details of opening stock, closing stock and sales. The sales have been accepted by AO. The assessee as well as the suppliers has filed respective GST returns. The quantity details of sales and purchases were duly furnished by the assessee before lower authorities.

It is quit logical that without purchases, there could not be any sales. The financial results in earlier years stood accepted in scrutiny assessment proceedings. The assessee has duly furnished confirmed copy of accounts before lower authorities. Adjudication of CIT(A) in restricting the impugned addition to the extent of 25% could not be faulted with. We see no reason to interfere in the same.

Rejection of books of accounts - estimation of profit - HELD THAT:- We direct AO to estimate profit rate of 1.25% on sale of material. The estimation of 6% on gross contract receipts is correct. The corresponding grounds stands partly allowed.

Addition of unsecured loan - addition u/s 68 - Unsecured loan has been advanced through banking channels and the same has been sourced by the lender out of FDR maturities. Therefore, the onus of Sec.68 stood discharged by the assessee. This addition is thus deleted. This ground stand allowed. No other ground has been urged in the appeal.

Short deduction being donations - Appellant has not filed documentary evidences regarding donations claimed as a deduction - HELD THAT:- The assessee has claimed donation given to an eligible trust and claimed deduction under Chapter VIA of the Act. On perusal of the donation receipts placed on record, we are satisfied that the assessee is eligible for the said deduction. Accordingly, the deduction is directed to be allowed.

Non granting of credit for taxes paid - AO denied the same solely on the ground that Form No. 67 was filed belatedly - Having gone through the entire record, we hold that this is merely a procedural lapse and the AO is hereby directed to grant credit for taxes paid which relates to income that has been duly taxed in the hands of the assessee.

Assessment u/s 144 - estimation of profit @ 8% u/s. 44AD - assessee failed to produce books of account before the A.O - none appeared for the assessee nor any adjournment petition has been filed

HELD THAT:- From CIT-A/NFAC’s order that the adjudication regarding the estimation of profit @ 8% remained substantively incomplete due to non-compliance by the assessee before the A.O and for non-furnishing of the books of account and therefore, it would be fit and proper in the interest of substantive justice to provide final opportunity to the assessee enabling him to furnish books of account and other details before the A.O and after careful consideration of these documents the A.O shall pass necessary order as per law. Appeal of the assessee are allowed for statistical purposes.

Unexplained cash credit u/s 68 - Bogus share capital / share premium - non-compliance of summons by the share subscribers - HELD THAT:- It is observed that the ld. AO had laid much emphasis on the non-compliance of summons by the share subscribers to the enquiry being conducted after more than seven (7) years from the date of transactions. AR has rightly relied on the decision of Jealous Commercial Private Limited [2025 (11) TMI 102 - CALCUTTA HIGH COURT] wherein on similar facts, it was held that mere non-appearance of directors before the AO cannot prompt the AO to render a finding that no satisfactory explanation u/s 68 was offered by the assessee

On analysis of the assessee’s return of income undertaken by the ld. AO is concerned, we are of the view that the same was of no relevance to ascertain the identity, creditworthiness and genuineness of the investors. In the instant case before us, the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but ld. AO has not commented on these evidences filed by the assessee. Besides the investors have also furnished complete details/evidences before the ld. AO which proved the identity, creditworthiness of investors and genuineness of the transactions. Decided in favour of assessee.

Addition u/s 56(2)(viib) - issuance of shares to existing promoters -excess share premium received over the fair market value of shares issued during the year - assessee adopted Discounted Cash Flow (DCF) valuation under Rule 11UA and issued shares to existing promoters.

HELD THAT:- In the present case, the assessee is found to have been promoted by three reputed real estate groups and one of existing promoter through their well-reputed company had infused fresh capital into the assessee company out of its accounted resources. Neither of the lower authorities has doubted the source of the investment and as such they cannot hinder the genuine and bonafide business transactions.

Therefore, in the absence of any allegation of involvement of unaccounted monies, we find that, in the given facts, the invocation of section 56(2)(viib) of the Act in relation to issuance of shares to existing promoters was against the legislative intent of the provision.

We also note that the provisions of Section 56(2)(viib) would come into play where the issue price is higher than the FMV and therefore, where the issue price is equal to or lower, the said provision will have no implication. The valuation method is set out in sub-clauses (i) and (ii) of Explanation to Section 56(2)(viib) read along with Rule 11UA(2)(A)(a) & (b) of IT Rules, 1962. It is well settled law that the assessee enjoys the discretion to adopt any of the valuation methodology as prescribed, for which, it has to obtain any valuation report from an independent Chartered Accountant. Though the Revenue is at liberty to scrutinize the valuation report and determine the valuation by himself or from an independent valuer, but he cannot change the method of valuation which has been obtained by the assessee.

Assessee had adopted the DCF valuation method as set out in Rule 11UA(2)(A)(b) as prescribed in the context of Section 56(2)(viib) - We find that the lower authorities had observed that the DCF valuation exercise was based on fanciful assumptions and not backed by any evidences nor supported by actual results. AR has rightly pointed out that, the DCF method inherently requires the working to be based on assumptions and the valuation exercise is not an exact science but is required to be carried out in an informed and reasonable manner.

DCF method is a reflection of the potential value of business which assists the investor to ascertain the viability of his investment. What could be relevant at that point of time may not be relevant later on or in hindsight and therefore, only because the projections done at that time did not materialize and the actual results were different, cannot be the sole reason to reject the DCF valuation.

We thus find that, if the NAV method is applied in the true sense, by adopting the market value of the land parcels as prevailing during FY 2014-15, then the NAV per share would work out to Rs. 310/-, which is higher than the issue price of Rs. 189.40/share. It is observed that, though this contemporaneous fact was brought on record by the assessee before both the lower authorities, none of them dealt with the same, and rather ignored it by arbitrarily taking the book value of land of Rs. 33.66 crores as the fair market value for estimating the FMV of the shares. Such action of the lower authorities is held to be unjustified.

We are of the view that, (a) the AO could not have substituted the DCF method adopted by the assessee, (b) the DCF valuation is found to be based on valid assumptions and the FMV of Rs. 189.40/share computed therein was based on fair and reasonable parameters, (c) even otherwise as per the NAV method, the FMV works out to Rs. 310/share as opposed to Rs. 87.30/share worked out by the AO. We thus hold that, the share premium charged by the assessee was not excessive and hence, by setting aside the appellate order, direct the AO to delete the addition made u/s 56(2)(viib) of the Act. Appeal of the assessee is allowed.

Denial of exemption claimed by the assessee u/s 10(38) on sale of listed shares - CIT(A) deleted addition - HELD THAT:- AO could have legally disputed the purchase cost in the hands of the assessee in the year in which the assessee had acquired the shares i.e. AY 2015-16 and not in the relevant AY 2017-18. It is not the case of the Revenue that the assessee had either acquired the shares or paid the purchase cost in the relevant AY 2017-18. On these facts therefore, we are thus unable to countenance the action of the Revenue disbelieving the cost of acquisition in the year of sale and substituting the same with the market price prevailing as on the date of dematerialization, when the cost of acquisition has been found to be verified, examined and accepted in the year of purchase i.e. AY 2015-16. We also find that there was no legal basis to tax the differential sum computed by the ld. AO by way of income u/s 56 of the Act in the relevant AY 2017-18.

Revenue has failed to establish its case and thus we do not see any reason to interfere with the findings of the ld. CIT(A) deleting the impugned addition and allowing the exemption claimed by the assessee u/s 10(38). Appeal of the Revenue is dismissed.

Addition u/s 68 - bogus Share premium and bogus Unsecured loan taken from other Shell companies - HELD THAT:- As decided in Filatax India Limited [2025 (7) TMI 1285 - ITAT DELHI] ​​​​​​​once it is accepted that the lender has creditworthiness for part of the amount, the remaining amount cannot be held as unexplained. There is no case of any cash deposition in the account of any of the lender companies at the time of issuing cheques/RTGS in favour of the Assessee. Therefore, Appellant has duly discharged the burden casted upon it u/s 68. Assessee appeal allowed.

Validity of reopening of assessment - valid grant of approval u/s 151 or not - PCIT has remarked in column for grant of approval “As per Annexure” - HELD THAT:- The said ‘Annexure’ is nothing but reasons recorded by the AO for reopening the case. We, therefore, agree with the contention of the ld. counsel for the assessee that there is no valid approval granted by the ld PCIT u/s 151 of the Act for reopening the case.

Since the proceedings have been initiated on invalid assumption of jurisdiction, the entire assessment proceedings got vitiated and deserves to be quashed.

Thus, in the absence of valid grant of approval u/s 151 of the Act, the entire re assessment proceedings are vitiated and the same is therefore quashed. Assessee appeal allowed.

Revision u/s 263 - "borrowed" and "dictated" satisfaction of A.O. v/s independent satisfaction - As argued assessment order passed u/s. 147 r.w.s. 144B is void and illegal - HELD THAT:- The plea taken by the assessee through additional ground does not sustain as the assessee has valid remedy at the particular time to challenge the said order stating therein that the assessment order passed u/s. 147 r.w.s. 144B is void ab-initio before the CIT(A). The assessee cannot take the challenge of the validity of assessment order in the proceedings which are derived u/s. 263 of the Income Tax Act. Thus, the additional ground No. 2 of appeal taken by the assessee is dismissed.

Assumption of jurisdiction by Pr. CIT u/s. 263 is “borrowed” and “dictated” satisfaction of the AO instead of “independent satisfaction” - Pr. CIT has invoked the said provisions as the PCIT considered that the AO has not made inquiry relating to the issue of purchase and sale of share i.e. Excel Castronics Pvt. Ltd. Thus, it will not amount to borrowed and dictated satisfaction. Besides this, as per Sec. 263 of the Income Tax Act, provisions of Sec. 263 can be invoked only when it is erroneous in so far as prejudicial to the interest of revenue, secondly, if the assessment order is passed without making inquiries or verification and if the order has not been made in accordance with any order, direction or instruction issued by the Board u/s 119 or the assessment order is not in accordance with the decisions of the jurisdictional High Court or Supreme Court. But in the present case, the submissions made by the Ld. AR that it is solely based on audit objections appears to be incorrect, as the Pr. CIT is invoking the provisions of Section 263 of the Act on the basis that the Assessing Officer passed assessment order without inquiry and without any evidence produced by the Assessee. Thus, additional ground nos. 1 and 3 are dismissed.

As per CIT AO has not taken into account the fact that the assessee has not filed any details regarding the loss or profit derived in equity/derivative trading especially relating to sale transaction of shares of M/s Excel Castronics Pvt. Ltd. before the AO - The replies of the assessee pertained only to the reopening of the case and reasons recorded by the Assessing Officer. Since, no submission was made by the assessee on merit, the Assessing Officer could not have examined the issue for which the case was reopened. Thus, the PCIT had rightly concluded that the assessment was completed without making any enquiries which were required to be made in the facts of the present case and therefore, the order of the Assessing Officer was erroneous and prejudicial to the interest of revenue. Therefore, the Pr. CIT has rightly invoked revisionary power as the Assessment Order is found to be erroneous and prejudicial to the interest of revenue. The case laws relied upon by the Ld. AR also will not come to support the assessee’s case as the Assessing Officer failed to take the cognizance that the assessee did not file any details during the reassessment proceedings. Thus, the order passed u/s. 263 of the Act passed by the Pr. CIT, thereby invoking revisionary powers is just.

Appeal of the assessee is dismissed.

Benami transaction - fiduciary relationship - Section 4(3)(b) of the Benami Act - Order VII Rule 11 CPC - summary dismissal - mixed question of law and fact - onus of proof - repeal and effect of Section 7 on Section 4(3)(b) - tenant on account of non-payment of rent and legal proceedings for eviction were initiated - HELD THAT:- A reading of the plaint, as a whole, reveals that the Appellant specifically pleaded the existence of a fiduciary relationship between himself and his father and asserted that the suit property was held by the latter for the benefit of the former. The learned Single Judge extracted portions of the plaint wherein the Appellant described the transaction as “benami”. However, whether the fiduciary relationship pleaded was genuine, real and pre-existing, or whether the transaction was merely a benami arrangement clothed as a fiduciary one, could not have been conclusively determined without permitting the parties to lead evidence.

The issue as to the applicability of the exception carved out under Section 4(3)(b) of the Benami Act is, therefore, a mixed question of law and fact. Once issues had been framed and the suit had proceeded to trial, the learned Single Judge erred in short-circuiting the adjudicatory process by dismissing the suit on the ground of maintainability, particularly when the onus to prove the bar under the Benami Act had been placed on the Respondent and the parties were in process of leading the evidence.

The mere use of the expression “benami” in the plaint could not, by itself, extinguish the statutory exception under Section 4(3)(b), especially when foundational facts constituting a fiduciary relationship were specifically pleaded. The correctness or otherwise of the Appellant’s claim that his father held the suit property in a fiduciary capacity, and that the transaction falls within the protective umbrella of Section 4(3)(b), can only be adjudicated upon a full appreciation of the pleadings and evidence.

In the present case, however, issues had already been framed, the onus to establish the statutory bar under the Benami Act was cast upon the respondent, and the suit had progressed to trial. The plaint herein contains specific and categorical pleadings of a pre-existing fiduciary relationship, including entrustment of funds, management of the property for and on behalf of the Appellant, and holding of the property in a fiduciary capacity, matters requiring adjudication on evidence. Unlike J.M. Kohli, where the plea of trust was held to be a mere incident of a benami transaction barred by statute, the present case raises a mixed question of law and fact falling within the ambit of Section 4(3)(b) of the Benami Act, thereby rendering summary dismissal impermissible.

Thus, the Impugned Order cannot stand and is, accordingly, set aside. The present appeal is allowed. The parties, through their counsels, are directed to appear before the learned Single Judge on 25.02.2026.

Provisional release of seized goods - deposit of enhanced duty as condition for release - quantification by Customs within specified time - bank guarantee as security for provisional release - adjudication to proceed unimpaired by interim release - objective consideration of demurrage waiver applications - right of petitioner to participate in adjudication - HELD THAT:- Pursuant to the disposal of the SLP, this Court has disposed of all such writ petitions whereby the goods were released and the proceedings were pending before the adjudicating authority.

Therefore, we are of the considered opinion that the instant writ petition also therefore can be disposed of at the admission stage itself. Reserving the right of the adjudicating authority to take appropriate decision in the proceedings after permitting the petitioner to represent before the adjudicating authority.

In addition, the petitioners are also directed to provide a bank guarantee worth 10 percent of the total price of the goods imported by them. Further, it is also ordered that in the event if the petitioners upon release of the goods provisionally makes and sell the supply to their customers, details of the customers that of relevant price and details of the respective transactions shall be maintained and made available to the respondent authorities from time to time.

Accordingly, this writ petition is allowed.

Entitlement to provisional release of the seized imported consignment of multifunctional devices - HELD THAT:- Pursuant to the disposal of the SLP, this Court has disposed of all such writ petitions whereby the goods were released and the proceedings were pending before the adjudicating authority.

Similar nature of facts are also there in the instant case also where the stage at this juncture is only the seizure memo and prayer is also only for an interim release of the seized goods.

In the factual matrix narrated in the preceding paragraphs, we are of the considered opinion that the instant writ petition also therefore can be disposed of at the admission stage itself.

In addition, the petitioners are also directed to provide a bank guarantee worth 10 percent of the total price of the goods imported by them. Further, it is also ordered that in the event if the petitioners upon release of the goods provisionally makes and sell the supply to their customers, details of the customers that of relevant price and details of the respective transactions shall be maintained and made available to the respondent authorities from time to time.

Accordingly, this writ petition is allowed.

Diversion of inputs imported under Advance Authorisation - Actual User condition for Advance Authorisation - prohibition on transfer of duty free imports except to authorised job worker with prior permission - maintenance of true and proper accounts under Handbook of Procedures (para 4.21) - liability for customs duty, interest and confiscation on breach of Advance Authorisation conditions - penalty and mens rea requirement for imposition on customs brokers

Diversion of inputs imported under Advance Authorisation - Actual User condition for Advance Authorisation - prohibition on transfer of duty free imports except to authorised job worker with prior permission - liability for customs duty, interest and confiscation on breach of Advance Authorisation conditions - Whether the importer (M/s.Regin Exports) diverted raw cashew nuts imported duty free under Advance Authorisation in breach of the authorisation and Notification No.18/2015 and thereby became liable for duty, interest and confiscation - HELD THAT: - The court found on the material and admissions that the Advance Authorisation carried the Actual User condition and specific factory addresses and prohibited transfer except as permitted. Evidence-including voluntary statements, contemporaneous delivery of containers from the port to multiple third party units, seized stock, unit level statements, sale invoices and bank receipts-established that the imported RCN were sent directly from the port to various units/commission agents controlled by M/s.Regin Agency and were processed/sold from those units. No prior permission or intimation was given to Customs and no co licensee/supporting manufacturer was shown to be authorised under the authorisation. The importer failed to maintain true and proper accounts as required by para 4.21 of the HBP. The Tribunal's contrary conclusion ignored these materials. On these findings the Court held that the conditions of the authorisation and Notification No.18/2015 were violated, attracting liability for duty, interest and confiscation and upheld the adjudicating authority's order in respect of the importer. [Paras 50, 51, 52, 55, 60]

The order of the Tribunal was set aside insofar as it exonerated the importer; the Commissioner's adjudication confirming liability for duty, interest and confiscation on the diverted quantity and imposing the fine on the importer was upheld.

Maintenance of true and proper accounts under Handbook of Procedures (para 4.21) - evidentiary weight of admissions and contemporaneous commercial records - Whether the importer maintained required records and made available requisite particulars to rebut diversion allegations - HELD THAT: - The court examined the seized daily stock registers, admission in statements and the absence of contemporaneous delivery/receipt records at the authorised processing addresses. The proprietor admitted non involvement and that the affairs were run by her husband; the proprietor of the agency admitted that containers were delivered to job worker premises and that registers were not maintained. Purchasers and unit in charges corroborated receipt of imported containers directly at their premises. The respondent failed to produce documents to show lawful receipt and processing at the authorised factory or to prove local purchases sufficient to explain the large sales and exports. The failure to maintain or produce proper accounts under para 4.21 supported the finding of breach of authorisation conditions. [Paras 14, 15, 45, 51, 54]

The respondent did not maintain the mandated accounts and failed to rebut the inference of diversion; this omission supported upholding the adjudicating authority's findings against the importer.

Penalty and mens rea requirement for imposition on customs brokers - scope of liability of customs brokers for mere carriage/clearance - Whether the customs brokers (M/s.Daniel and Samuel Logistics and M/s.Zion Logistics) could be held liable to the penalty imposed on them for the diversion and evasion of revenue - HELD THAT: - The court analysed the role of the two brokers and the material against them. The record showed that the brokers performed customs clearance and transportation on instructions of the importer/agency and there was no material proving that they acted in connivance with the importer with intent to evade government revenue. The brokers produced evidence that they received instructions and processed consignments as per the intermediary/shipper's directions. In absence of proof of deliberate collusion or intention to evade duty, the imposition of the fines on the brokers could not be sustained. [Paras 4, 61, 62]

The appeals filed by the brokers were dismissed; the Tribunal's order insofar as it exonerated them was confirmed and the penalty imposed on the two customs broker respondents was set aside.

Final Conclusion: The High Court set aside the Tribunal's order and upheld the Commissioner's adjudication against M/s.Regin Exports for diversion of duty free imported raw cashew nuts, confirming liability for duty, interest and confiscation and the fine on the importer; however, the Court found the penalties imposed on the two customs brokers unjustified for lack of proof of connivance and declined to sustain those fines.

Entitlement to refund of CVD/SAD paid on excess imports claimed u/s 27 - excess import quantity of raw materials imported under Advance Authorization Licenses -refund in cash u/s 142(3) of the CGST Act, 2017 - cash refund of admissible credit u/s 142(6)(a) of the CGST Act, 2017 - non-availability of CENVAT credit post-GST - unjust enrichment - HELD THAT:-The appellant filed refund claim under Section 27 of the Customs Act towards CVD paid on MEIS Scrips under the provisions of Para 3.02 of Foreign Trade Policy 2015-20, on excess import quantity of raw materials imported under Advance Authorisation Licenses. After 01.07.2017, in GST regime, no credit of such duty was available, therefore, the Appellant filed refund claim for same.

In Epigral Limited vs. UOI [2025 (3) TMI 1405 - GUJARAT HIGH COURT], the Hon'ble Gujarat High Court has held that in view of the Section 142(3) of CGST Act, 2017 any refund accruing to the petitioners after 01.07.2017 is required to be refunded in cash. The Hon'ble High Court further held that it is apparent that the respondent authorities could not have referred to and relied upon the provisions of section 142(8)(a) as the same would not be applicable to the facts of the case as the petitioners did not deposit the amount of duties in any recovery proceedings but the petitioners had voluntarily deposited the amount of duties on reconciliation of the imports made by the petitioners with the Advance Authorisation and EPCG license entitlement. Therefore, the case of the petitioners would be squarely covered by provisions of Section 142(3) of the CGST Act which provides for considering the refund claim of the petitioners as per the existing law at the relevant time when import was made in the year 2016.

In view of the settled legal position, learned Commissioner has failed to appreciate the provisions of Section 142(3) and (6)(a) in its correct perspective and the learned Commissioner has erred in rejecting the appeal of the appellant. I am of the view that refund application filed by the appellant is in accordance with the provisions of Section 142(3) and (6)(a) of the GST Act and the department was bound to allow the refund application of the appellant and the refund application was rejected without any justification.

Unjust enrichment - HELD THAT:- Appellant had submitted that the provisions of unjust-enrichment are not applicable on the ground that the amount of refund is disclosed as receivable in the balance sheet of 2017-18 and also not claimed as expenditure in Profit and Loss Account of 2017-18. Further, the appellant had put-forth certificate of Chartered Accountant certifying that incidence of CVD paid on excess quantity of duty from raw materials imported, is not passed on to any other person before the Adjudicating Authority. Therefore, concept of unjust enrichment is not applicable in the present case.​​​​​​​

Thus, the impugned order passed by learned Commissioner (Appeals) is not sustainable and the appeal is liable to be allowed.

Relevancy of statements recorded during inquiry and admissibility u/s 138B/9D - Mandatory procedure under clause (b) for admitting investigation statements in adjudication proceedings - Abetment and mens rea for imposition of penalty u/s 112(a) - Prohibition on reliance upon statements recorded u/s 108 without examination and judicial opinion - Whether the appellant abetted the doing or omission of an act resulting in imposition of penalty under section 112(a)(i) of the Customs Act - HELD THAT:- A Division Bench of this Tribunal inSurya Wires [2025 (4) TMI 441 - CESTAT NEW DELHI], held that the statements made under section 108 of the Customs Act during the course of an inquiry under the Customs Act shall be relevant for the purpose of proving the truth of the facts contained in them only when such persons are examined as witnesses before the adjudicating authority and the adjudicating authority forms an opinion that the statements should be admitted in evidence.

Both section 138B(1)(b) of the Customs Act and section 9D(1)(b) of the Central Excise Act contemplate that when the provisions of clause (a) of these two sections are not applicable, then the statements made under section 14 of the Central Excise Act or under section 108 of the Customs Act during the course of an inquiry under the Acts shall be relevant for the purpose of proving the truth of the facts contained in them only when such persons are examined as witnesses before the adjudicating authority and the adjudicating authority forms an opinion that the statements should be admitted in evidence. It is thereafter that an opportunity has to be provided for cross-examination of such persons. The provisions of section 138B(1)(b) of the Customs Act and section 9D of the Central Excise Act have been held to be mandatory and failure to comply with the procedure would mean that no reliance can be placed on the statements recorded either under section 108 of the Customs Act or under section 14D of the Central Excise Act. The Courts have also explained the rationale behind the precautions contained in the two sections. It has been observed that the statements recorded during inquiry/investigation by officers has every chance of being recorded under coercion or compulsion and it is in order to neutralize this possibility that statements of the witnesses have to be recorded before the adjudicating authority, after which such statements can be admitted in evidence.

As seen from the show cause notice and the order impugned, penalty upon the appellants has been imposed only on the basis of the statement made by the appellants under section 108 of the Customs Act. A statement made under section 108 of the Customs Act cannot be considered as relevant as the procedure contemplated under section 138B of the Customs Act was not followed.

Thus, for all the reasons stated above, the impugned order dated 31.03.2013 passed by the Commissioner insofar as it imposes penalty upon the appellant and Vikas Chaudhary under section 112(a)(ii) of the Customs Act cannot be sustained and is set aside and both the appeals are allowed.

Classification of “Joss Powder” - Note 1(a) to Chapter 44 - CTH 1211 vis-a -vis CTH 4405 - Extended period of limitation u/s 28 - Imposition of penalty u/s 114A - Remand for verification of eligibility to Notification No.46/2011 - differential duty demand -Requirement of show cause notice and personal hearing - HELD THAT:- Admittedly, the dispute relates to the classification of “Joss Powder” and from the perusal of the Order-in-Original (supra), the Adjudicating Authority has, without labouring much, resorted to Note 1 (a) to Chapter 44 of Customs Tariff Act, 1975 against which, the Importer-Appellant’s case is that the ‘Joss Powder’ which is a bark of lit-sea tree in powdered form is nothing but a saw dust which do not have perfumery effect of its own and hence, the same could never be used directly or indirectly in perfumery. It has adhesive or binder function and hence, used in many industries including Plywood Industries.

We find that Note 1 (a) to Chapter 44 (supra), only wood in chips, shavings, crushed, ground or powdered form, of a kind used primarily in perfumery, is excluded from the purview of Chapter 44 of Customs Tariff Act, 1975. CTH 1211 covers ‘Plants and Parts of Plants’ including seeds and fruits of a kind used primarily in perfumery in pharmaceutical or for insecticidal, fungicidal or similar purposes. In effect, the products to be classifiable under CTH 1211 should have an essential perfumery ingredient or medical effect while it is nobody’s case that the goods in question does have any such characteristics.

Invocation of extended period of limitation - HELD THAT:- Since in terms of Section 28 of the Customs Act, 1962 normal period is only one year for which any duty could be demanded that too in cases where duty has not been levied or short-levied or erroneously refunded by reason of collusion, willful mis-statement or suppression of facts, in which event the period for issuance SCN could be extended upto 5 years. Here the period involved is May, June & September 2012 for which the SCN dt.18.09.2013 was issued though service of notice is disputed by the Appellant. It was submitted in this case by the Appellant that the Revenue had issued a notice on 01.10.2013 and without passing an order, another SCN dt. 18.10.2013 was issued which notice was disputed by the Appellant having been not served on them. Even if we consider the same, for argument sake, the same clearly stands hit by limitation since the same is clearly issued after a period of one year under Section 28 ibid.

We find that the ratio of Hon’ble Supreme Court in the cases of Nizam Sugar Factory Vs Collector of Central Excise [2006 (4) TMI 127 - SUPREME COURT], ECE Industries Ltd. CCE New Delhi [2003 (3) TMI 136 - SUPREME COURT] and Hyderabad Polymers (P) Ltd. Vs CCE Hyderabad [2004 (3) TMI 66 - SUPREME COURT] clearly applies to this case.

Thus, we do not find any reasons to uphold the impugned order and hence, we set aside the same and allow the Appeals with consequential benefits if any, as per law.

Rectification of register of members under Section 59 of the Companies Act, 2013 - Summary jurisdiction of the Tribunal in rectification proceedings - Power to award damages and costs in rectification proceedings - Liability of company/Registrar and Transfer Agent for issuance of duplicate share certificates - Compliance with SEBI/RTA guidelines and due diligence for issuance of duplicate certificates - Effect of non-joinder of transferee in rectification petition - Limitation and discovery of fraud - HELD THAT:- In this case, the share certificates were lodged after several years instead of within 60 days, as the transfer deed dated 04.12.2003 was submitted by Mr. Chohan in January, 2015. There were other discrepancies like the amount of consideration shown in the transfer deed was Rs. 2,15,000/- whereas in the brokerage note, the consideration shown, including brokerage was Rs. 2,09,750/-.

We note that the Appellant was negligent and had not followed the due procedure in issue of duplicate share certificates. The registered shareholder was nevour kept in the loop and was never informed. As per the law and guidelines prescribed, the duplicate share certificate could have been issued only to the registered shareholder, and not to any body else.

Admittedly, share certificates were issued in the name of the Respondent, but the Respondent was never informed nor the share certificates were handed over to her. The shares were handed over to Mr. Chaohan, apparently after issuing them in the name of the Respondent and recording of the transfer simultaneously. This assertion of the Appellant is a proof that duplicate shares were issued at the back of the registered shareholder, without any courtesy of informing her. The company by its action had converted valuable original shares held by the Respondent physically in her custody as worthless paper.

The facts of Adesh Kaur [2018 (8) TMI 836 - SUPREME COURT] are quite similar to the present case. The impersonator had got the duplicate share certificate issued. The Hon’ble Supreme Court had directed the company to rectify its register and the concerned depository to rectify the demat records in favour of the original registered shareholder.

Thus, we find that the Ld. NCLT has rightly directed the Appellants to rectify the register and to restore the 5000 shares held by the Respondent herein to her. It is only in the alternative, that the Appellants had been asked to pay damages, which are in the nature of compensation, equivalent to market value of the shares as per the closing rate of National Stock Exchange on the date of the order.

We find no reason to interfere in the well-reasoned order of Ld. NCLT. The Appellants have failed to restore what is rightfully the assets of the Respondent and have instead resorted to litigation. The Appellant No. 1 is a large private sector bank with market cap of more than Rs. 70,000 crores and has branches/offices in every nook and corner of the country as opposed to the individual shareholder who has been made to go through the grind, for no fault of hers. In the facts of this case, we deem it appropriate to levy towards cost reimbursement of legal expenses of Rs. 1,00,000/- on the Appellant No. 1 to be paid to the Respondent within two months. The appeal is accordingly dismissed.

Wilful disobedience of court undertaking - power of liquidator to annul auction and conduct re-auction to maximize value - liquidator's discretion in selection or rejection of bids - acceptance and custody of bank draft subject to appellate orders - supervisory jurisdiction of NCLT/NCLAT over liquidation and auction process - role of Consultative Committee of Stakeholders in advising the liquidator

Wilful disobedience of court undertaking - Whether the liquidator wilfully disobeyed the undertaking recorded on 09.04.2025 and whether contempt findings should be recorded against the liquidator. - HELD THAT: - The Court recorded prima facie apprehensions that the liquidator acted with undue haste and took steps (including obtaining regulatory permissions and moving the Consultative Committee to declare a successful bidder) that went beyond 'internal meetings' contrary to the statement recorded on 09.04.2025. However, in view of intervening proceedings and subsequent developments, the Court refrained from making any adverse findings impinging upon the liquidator's conduct or recording contempt. The matter of the liquidator's prior steps was not finally adjudicated in these proceedings and the Court declined to delve deeper into the allegations given the course correction later undertaken by the liquidator. [Paras 8, 9, 10, 11, 15]

Court declined to record contempt or make adverse findings against the liquidator and did not finally adjudicate the allegation of wilful disobedience.

Power of liquidator to annul auction and conduct re-auction to maximize value - liquidator's discretion in selection or rejection of bids - Whether the liquidator could seek to set aside the e-auction and conduct a re-auction with a higher reserve price and whether the Court would permit and record such a course. - HELD THAT: - The Court took note of the Process Information Document which expressly empowered the liquidator to reject bids, annul the bid process and restart the auction with an aim to maximize the value of the liquidation estate. The liquidator's recorded statement on 21.01.2026 - to request the NCLAT to set aside the e-auction and seek permission for a re-auction with the petitioner's proposed reserve price - was approved by the Court as a means to maximise value. The Court emphasised that the regulatory supervision of auction/re-auction processes lies with the NCLT/NCLAT and that it would be for the NCLAT to consider the liquidator's application and any objections. [Paras 16, 17, 18, 20]

Court recorded and approved the liquidator's stated course to move the NCLAT to set aside the e-auction and seek conduct of a re-auction with the higher reserve price; left final decision to the NCLAT.

Acceptance and custody of bank draft subject to appellate orders - Treatment of the bank draft furnished by the petitioner pursuant to the undertaking recorded on 21.01.2026 and its legal consequences. - HELD THAT: - The Court recorded that the petitioner furnished a bank draft in accordance with the statement on 21.01.2026 and accepted the draft on record. The utilisation or encashment of the bank draft shall be subject to the orders of the NCLAT; the liquidator was directed to apprise the NCLAT of the draft when seeking permission for re-auction. The Court permitted, if deposit into an interest bearing FDR is not possible, that the petitioner may seek return of the draft with an undertaking to re-furnish it as and when required for the re-auction process. [Paras 12, 14, 21]

Bank draft accepted on record; its utilisation/encashment to be governed by further orders of the NCLAT and the liquidator to inform the NCLAT about the draft when moving for re-auction.

Supervisory jurisdiction of NCLT/NCLAT over liquidation and auction process - role of Consultative Committee of Stakeholders in advising the liquidator - Whether objections by the highest bidder-consortium (and related applications seeking recall of the 21.01.2026 order) should be entertained by this Court or left to the NCLAT. - HELD THAT: - The Court declined to entertain CM.APPL. 5867/2026 and CM.APPL. 6240/2026 filed by an entity in the highest bidder consortium, holding that this Court had only recorded the liquidator's statement to approach the NCLAT and that the NCLAT must deal with the liquidator's application and any objections thereto. The order dated 21.01.2026 merely reflected the proceedings before this Court and did not preclude parties from raising objections before the NCLAT, which has supervisory jurisdiction over the liquidation and auction process. [Paras 19, 20]

Applications by the consortium to object or recall the order were not entertained by this Court and were left to be considered by the NCLAT.

Final Conclusion: The petition is disposed of: the Court recorded the liquidator's undertaking to move the NCLAT to set aside the e-auction and seek a re-auction with the higher reserve price, took on record the bank draft furnished by the petitioner (to be dealt with by the NCLAT), refrained from making contempt findings against the liquidator, and left all supervisory and consequential determinations to the NCLAT, declining to entertain related interlocutory applications before this Court.

Maintainability of appeal u/s 61 read with Section 60 - Initiation of Section 7 petition against the Corporate Debtor - summary adjudication u/s 100 - relevance of pre-existing dispute to admission under Part III (Section 95) - requirement of proof of debt and default for admission - treatment of insufficiently stamped instrument in summary IBC proceedings - role of the resolution professional's report u/s 99 - violation of the principles of natural justice - HELD THAT:- There was no violation of the principles of natural justice under Section 95 to Section 100 of the IBC as the Appellant-personal guarantor got the opportunity to participate in the process of the examination of the application by the RP under Section 99 of the IBC. The RP had asked for information/explanations from the debtor before filing the report and the information was provided by the personal guarantor and basis that the resolution professional had filed the report before the adjudicating authority. Till this stage the debtor had the opportunity to provide information/explanation to substantiate their contentions.

We find that as per Section 100 of the Code strict timeline has been prescribed for the Adjudicating Authority to either admit or reject the application bases the report under Section 99 within 14 days. But in this case the matter lingered on for very long time as noted by us herein. The reply was only e-filed and never physically filed or never brought to the notice of the Adjudicating authority that it has been e-filed. In any case the personal guarantor was heard by the Adjudicating Authority and basis that only the order has been passed. The noting of the Adjudicating Authority in the impugned order to the extent that Appellant’s reply has not been filed doesn’t give any ground for the Appellant to claim that natural justice has been denied to him, particularly in the background that he was personally heard, all the grounds raised by him as personal guarantor are same as that of the Corporate Debtor and furthermore the same reply had been noted by us at Appellate stage and we don’t find merit in that. We find these are dilatory tactics and should be discouraged under IBC which provides strict timelines at all stages.

Thus, we find that the appellant has been unduly delaying the proceedings and the Adjudicating Authority was well within rights to not treat the reply which was not properly filed.

Initiation of Section 7 petition against the Corporate Debtor - claims that the application under Section 7 was not maintainable in view of the pre-existing dispute. - The Appellant has claimed that there is a commercial suit which is filed by the Corporate Debtor against R1-SBI which seeks alleged damages suffered by the Corporate Debtor. We also note that the matter relating to existence or non-existence of a pre-existing dispute is irrelevant for the purpose of admission of an Application under Section 7 or Section 95 of the Code and therefore such an argument is unsustainable and that too in Section 95 proceedings. Furthermore, during the hearing, it was informed to us by the Appellant that the suit in Hon’ble High Court of Bombay has since been dismissed. It was also brought to our notice this suit was filed subsequent to the initiation of Section 95 proceedings against the Appellant. Thus, the ground raised by the Appellant relating to a pending dispute is infructuous.

Insufficient stamp duty on the guarantee deed - We note that the proceedings before· the Adjudicating Authority are summary in nature and the IBC, 2016 being a complete code in itself the provisions of the Code of Civil Procedure, 1908 and the Indian Evidence Act, 1872 do not strictly apply to the proceedings before the Adjudicating Authority while adjudicating an application u/s 95 IBC, 2016. Further, unlike a recovery forum where the court before decreeing a suit or a proceeding against the debtor in favour of the creditor has to examine the admissibility of documents is not requirement as such and the proceedings are limited to an aspect of ascertaining default on the part of the Personal Guarantor. We thus find that the ground relating to insufficient stamp duty on the guarantee deed is another frivolous ground which is untenable and is rejected.

Requirement of proof of debt and default for admission - We find that the execution of a guarantee deed, disbursement of amounts and debt is admitted by the Appellant and the R1-SBI had issued a recall notice and thereafter issued a demand notice and thus, the contention of the Personal Guarantor that the amounts were payable on demand only and no demand was raised is untenable and we reject that argument.

Appellant has also argued that the Respondent failed to specify the facility under which the Respondent has called upon the Appellant to pay the said amount, however it is clear from recall notice dated 31.10.2019 under which the Respondent No. 1 has called upon the Corporate Debtor to pay an amount Rs.140,73,58,277.59/-which was the outstanding amount as on 30.10.2019 and further invoking the guarantee deed for further payment of interest amounting to Rs. 85,86,61,167.45/- under Working Capital Credit Facilities within 7 days of receipt. The recall notice further stated that the total dues payable by the Corporate Debtor is Rs. 226,60,19,445/- which is the sum total of interest plus outstanding amount as on 30.10.2019. Thus, on the grounds that there was defect in the recall notice and initial demand notice, we find them to be untenable at this stage, particularly in the background that it was never raised at the initial stage when the appellant had the opportunity to provide information to the RP.

Thus, we find that we conclude that the grounds raised by the Appellant do not justify to grant a relief for setting aside the order dated 09.12.2024 passed by the Adjudicating Authority. As we have gone through the affidavit and all the grounds raised by the Appellant have been noted and evaluated by us, we therefore, cannot allow NCLT to hear it afresh. Under these conditions, there is no justification left for the matter to be remanded back to the Adjudicating Authority. Orders

Accordingly, the Appeal is dismissed.

Operational Creditor - Corporate Insolvency Resolution Process - Conflict of interest - conduct of the Committee of Creditors​​​​​​​ - Section 30(5) of the Insolvency and Bankruptcy Code - commercial wisdom of the Committee of Creditors - maxim nemo judex in causa sua -material irregularity vitiating approval - principles of natural justice - maximisation of value under the Insolvency and Bankruptcy Code - role and duties of the Resolution Professional as institutional safeguard - HELD THAT:- In the present case the Resolution Applicant is an Operational Creditor and not a Financial Creditor. In such a situation it is clearly barred, from voting on its own Resolution Plan, submitted for resolution of Corporate Debtor. Such voting and approval of its own Resolution Plan by the Operational Creditor is in the face of express bar provided in Section 30(5) of the Code. The question of commercial wisdom of Committee of Creditors is meaningless in this situation, as the resolution plan approval by the CoC comprising of Resolution Applicant, who is also an OC is in express violation of Section 30(5) of the Code, and such approval of CoC is void-ab-initio.

Thus, we hold that the conduct of the Committee of Creditors in the present case is in clear violation of Section 30(5) of the Insolvency and Bankruptcy Code. The said provision expressly prohibits the Resolution Applicant, who is not a Financial Creditor from voting on its resolution plan in the meeting of Committee of Creditors. In the present case, the sole Operational Creditor acted as a Resolution Applicant and, at the same time, exercised 100% voting rights to approve its own Resolution Plan. Such conduct is in face of the statutory bar provided by Section 30(5) of Code. Permitting a Resolution Applicant, who is not a Financial Creditor, to effectively vote on and approve its own Resolution Plan amounts to a material irregularity in the decision-making process. Accordingly, Issue No. 1 is answered in negative.

We note from the minutes of the 6th meeting of the Committee of Creditors that the Resolution Professional placed on record the stark difference between the competing Resolution Plans. The Resolution Professional specifically informed the CoC that the Resolution Plan submitted by Respondent No.1 (Mahaveer Medicare) was of a value of Rs. 1 Lakh, whereas the Resolution Plan submitted by the Appellant, M/s Pragiti Constructions, was of a value of Rs. 20 Lakhs, out of which Rs. 10 Lakhs was proposed to be distributed to the operational creditor. The Resolution Professional further pointed out that the offer of Rs. 20 Lakhs was only an initial offer and that, if the Appellant’s Resolution Plan was taken up for review and competition, the value could be increased. It was also suggested by the Resolution Professional that consideration of the Appellant’s Resolution Plan would create a healthy competitive process.

The maxim nemo judex in causa sua, that no person can be a judge in his own case, is not a mere technical rule but a foundational principle intended to preserve the integrity of adjudicatory and decision-making processes. When the same entity proposes a Resolution Plan, evaluates competing plans, rejects them, and finally approves its own plan, the process ceases to be fair, impartial, or credible. Even if actual mala fides are not expressly proved, the existence of a real likelihood of bias is sufficient to vitiate the process. Justice must not only be done but must also appear to have been done.

We are satisfied that the rejection of the Appellant’s Resolution Plan is vitiated by material irregularity, violation of principles of natural justice, and non-compliance with binding judicial directions. Accordingly, we hold that the decision of CoC which comprised of a Resolution Applicant who was also an Operational Creditor and had 100% voting rights in CoC on the resolution plan of the appellant was vitiated by material irregularity. A single member of CoC who is also a Resolution Applicant would always have conflict of interest vis-a-vis another Resolution Applicant and his decision in such cases would be in violation of principles of natural justice. The second issue is decided accordingly.

The Resolution Professional plays a pivotal role in proceedings under the Code. It is expected that RP would conduct the CIRP proceedings in accordance with the provisions of the Code including the Rules and Regulations thereunder. It was the duty of RP to highlight the provisions of Section 30(5) to the notice of Operational Creditor and the Adjudicating Authority. Had it been done on time, this proceeding would not have wasted so much of time and resources of NCLT and this Appellate Tribunal. A RP is supposed to be well versed in the relevant legal provisions of the Code. His failure to take note of Section 30(5) of the Code is viewed seriously. The matter is brought to the notice of IBBI for appropriate action against the RP. IBBI is further directed to take note of peculiar legal situation of the present case and initiate necessary amendments to the Insolvency and Bankruptcy Code.

Adjudicating Authority correctly referred the resolution plan of appellant to the CoC vide its direction dated 10.09.2024, but it did not address the concerns arising from non-compliance with its directions i.e. whether the RP and CoC while evaluating the resolution plan of the appellant abided by the principles of natural justice and provisions of the Code.

In our considered view, where the statutory framework is silent and a clear conflict of interest emerges, both the Resolution Professional and the Adjudicating Authority are required to act as institutional safeguards to prevent abuse of the process. Their failure to do so in the present case has materially affected the resolution process.

We note that peculiar situation in the present case reflects a legislative vacuum, wherein the IBC which is a complete Code and provides legal mechanism for CIRP in all types of cases cannot throw light about the manner in which this type of case is to be resolved.

As we have already held that the resolution plan suffers from material irregularity and is in express violation of Section 30(5) of the Code. The resolution of the Corporate Debtor is not possible within the current legislative framework and liquidation is the only solution in this case.

Maintainability of Section 7 petition against a financial service provider - limitation under Article 137 of the Limitation Act in Section 7 proceedings - relinquishment of rights by enforcement of security versus preservation of claim - effect of a settlement agreement on existence and enforceability of an antecedent financial debt - relevance of a 'deep and complex' dispute in a Section 7 petition - HELD THAT:- It is the case of the Appellant that the settlement agreement dated 01.07.2017 does not extinguish or waive the original debt and at best is a repayment arrangement thereby implying that the breach of settlement agreement revives the original cause of action. The Appellant also relies on clause 3.7 in the settlement agreement, which imposes a continuing obligation to repay the outstanding debt. It claims that since no payments have been made either under the loan agreement or under the settlement agreement despite express acknowledgment of liability obligation. Basis the provisions under the Code that “(5) Where the Adjudicating Authority is satisfied that--(a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application” and settled judicial precedents, we could conclude that this is a fit case of admission of debt and default.

To add strength to the arguments of the Appellant we find that in the related case under the same settlement agreement, on the petition of the FC against Perpetual, which is also one of the parties in the settlement agreement, NCLT Mumbai Bench passed admission order in Religare Finvest Limited against perpetual for defaulting.

Adjudicating Authority has gone into the background and finds that loan claimed by the Financial Creditor is subsumed into the settlement agreement dated 01.07.2017 and it is not a stand-alone liability. The terms of settlement are all encompassing on its various terms. Therefore, the question of debt and default in a subsisting agreement which is alive even as of today would not partake the character of debt. It has come to a conclusion that it is a recovery process agreement, the question of default as pleaded by the petitioner does not arise.

There is a fundamental question of the maintainability of the Section 7 petition. The Corporate Debtor had also provided a detailed account of the genesis of the debt, which is available on the material placed on record and at the relevant time its status as NBFC. Briefly speaking it was pointed out by the Respondent that the Financial Creditor had unconditionally and irrecoverably sold, transferred and assigned the loans granted to certain borrowers to the Respondent - SSCPL and Perpetual. Respondent claims that the loans granted to certain borrowers were sold to SSCPL as per the settlement agreement dated 01.07.2017. It also claims that the loans sold out turned out to be the related party’s transaction and a funds siphoning scheme adopted by the Financial Creditor. Upon unearthing the alleged fraud, multiple litigations ensued between the parties and which culminated into a suit before Hon’ble Bombay High Court Eleos Finvestia Acquisition Trust and in the above suit a settlement was arrived at and hence settlement agreement dated 01.07.2017 was entered into and enforced.

We find that the petition itself is not maintainable as the Respondent, being a NBFC, is a Financial Service Provider (FSP) and the impugned transactions had taken place when the Respondent was NBFC. Moreover, there are deep and complicated transactions which are disputed. Furthermore, both parties willingly entered into such transactions, despite being fully aware that it is for purchase of share of ABG Shipyards. Furthermore, Respondent was being controlled by FC and it willingly entered into such transactions. We find both parties were colluding with each other and therefore we are not convinced to allow the admission of Section 7 petition. We also note that Section 7 petition against cannot be filed against Corporate Debtor being a Financial Service Provider. Accordingly, the appeal filed by FC is not maintainable and is liable to be dismissed. Apart from non- maintainability there are other counts also – noted by us herein earlier, which don’t allow admission of Section 7 petition.

Thus, we find sufficient grounds to dismiss the Appeal and accordingly the Appeal is dismissed.

Computation of limitation from date of pronouncement of order - statutory limit on condonation of delay u/s 61(2) of the IBC for filing of Appeal - effectiveness of service and its bearing on limitation - absence of jurisdiction to condone delay beyond thirty plus fifteen days - Validity of service of notice of the Section 7 proceedings and whether the Appellant's plea of non-service justified computation of limitation from date of knowledge - HELD THAT:- Mere mechanical dispatch of notices or postal tracking entries by them, without proof of actual and effective delivery, did not satisfy the requirement of service in law. This denied the Appellant the opportunity to contest the Section 7 proceedings. The Corporate Debtor eventually became aware of the impugned order only after the Interim Resolution Professional had contacted an ex- auditor of the Corporate Debtor’s team. In such peculiar circumstances, where the Appellant remained thoroughly unaware of the Section 7 proceedings even after the pronouncement of the ex-parte order, hence, the limitation period should be counted from the date of acquiring knowledge of the impugned order by them. Any denial of condonation of delay in such circumstances would amount to giving precedence to procedural limitation over substantive justice.

It is the case of the Respondent No.1 that the limitation period commences from the date of pronouncement of the impugned order and that any delay beyond the statutory outer limit of 45 days cannot be condoned under Section 61(2) of the IBC.

There is no material placed on record by the Appellant to show that the registered address and email id of the Corporate Debtor as available on the MCA portal had undergone any change. Though an assertion was made by the Appellant before us that they were in the process of changing such information, the Appellant had no clear answer to the fact as to why and how the MCA database still reflected the same registered address and email- id even after the passing of the impugned order which the Respondent No. 1 has placed at Annexure R-3 in their reply to the delay condonation application filed by the Appellant. We therefore find the stand of the Appellant on change in their address and email to be rather nebulous and do not feel convinced with the credibility of their argument.

Statutory construct of the IBC - condonation of delay under Section 61(2) - HELD THAT:- The impugned order was passed on 21.08.2025. For counting the statutory period of 30 days for filing the appeal, the same is to be counted from the day after the date of pronouncement of the impugned order. The date of knowledge of impugned order is immaterial for limitation computation. Calculated accordingly, the statutory period of 30 days for filing the appeal in the present case came to an end on 20.09.2025. The further extendable period of 15 days in terms of proviso to Section 60(2) of the IBC ended on 05.10.2025. However, the present appeal has been e-filed by the Appellant on 17.11.2025 which date prima facie lies beyond the outer limit of thirty plus fifteen days provided under Section 61(2) of the IBC and therefore beyond the condonable jurisdiction of this Appellate Tribunal as held by the Hon’ble Apex Court in Tata Steel [2025 (5) TMI 661 - SUPREME COURT]

Thus, we are of the considered view that the Appeal has been filed beyond the condonable period of 15 days. The jurisdiction of this Appellate Tribunal to condone delay being strictly limited by statute, we are unable to condone the delay in the filing of this Appeal. Accordingly, the delay condonation application is dismissed.

Provisional attachment under the Prevention of Money Laundering Act (PMLA) - prima facie 'reasons to believe' for attachment - exhaustion of statutory remedies and appellate hierarchy under PMLA - confirmation by the Adjudicating Authority - judicial restraint in exercising writ jurisdiction pending statutory adjudication - academic or infructuous controversy - alternative efficacious remedy - HELD THAT:- It is a settled principle of jurisprudence that Courts refrain from deciding academic or infructuous matters, particularly where a comprehensive statutory mechanism exists for redressal. In Chhabil Dass Agarwal [2013 (8) TMI 458 - SUPREME COURT] the Hon'ble Supreme Court held that when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. The High Court must not interfere if there is an adequate efficacious alternative remedy available unless exceptional circumstances warrant such interference.

The PMLA provides such a complete adjudicatory hierarchy such as, provisional attachment under Section 5, confirmation under Section 8, appeal under section 26 and Special Court trial. None of the recognized exceptions such as futile remedy, jurisdictional defect or natural justice violation are attracted herein.

This position is fortified under the PMLA regime by the Constitution Bench in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)], which upheld the Act's constitutional validity and cautioned that writ courts must exercise utmost restraint against interfering with provisional attachments, interim measures to secure proceeds of crime. 'Reasons to believe' requires prima facie satisfaction only, conclusive proof awaits statutory adjudication.

The Adjudicating Authority's confirmation, despite awareness of writ pendency, underscores statutory primacy over premature writ intervention. Therefore, entertaining parallel writ proceedings post-adjudication would multiply litigation and frustrate public interest in protecting laundered assets. Exhaustion of statutory remedies remains the rule of judicial discipline.

The impugned order dated June 28, 2022 is set aside. The matter being academic, the parties shall expeditiously pursue Appellate Tribunal proceedings. The application being CAN 1 of 2022 is disposed of.

Restoration of property u/s 8(8) of the Prevention of Money Laundering Act, 2002 - Possession in favour of successful resolution applicant / secured creditor - Attachment of property and jurisdictional challenge to attachment - Interaction between PMLA proceedings and insolvency / liquidation (IBC) developments -HELD THAT:- Though the respondent submits that in view of the order passed by the learned Appellate Tribunal impugned in the present appeal, the attachment of the properties in question has itself been held to be without jurisdiction, we are of the opinion that, in view of the subsequent developments, the present appeal has, in fact, been rendered academic in nature.

Accordingly, leaving the question of law open, we direct that, without prejudice to the rights and contentions of either of the parties, the subject properties be treated to have been restored under Section 8(8) of the PMLA and the possession handed over to the respondent herein, JM Financial Asset Reconstruction Company Limited.

With the above directions, the appeal, along with the pending applications, is disposed of.

Restricted appeal u/s 35G - substantial question of law - admission stage (Hearing on Admission) - cross-objection as a derivative right - jurisdiction to entertain appeal - preclusion of merits adjudication at admission stage - extended period of limitation u/s 73(1) of the Finance Act, 1994 - HELD THAT:- The architecture of a statutory appeal under Section 35G is uniquely structured and admits of no ambiguity. An appeal under this section is a restricted one; it’s very maintainability is contingent upon the Court’s satisfaction that a “substantial question of law” is involved. Until this Court applies its judicial mind and formally admits the appeal by framing such questions, the proceedings remain at an embryonic stage.

To permit a hearing on a Cross- Objection before the main appeal is even admitted would be to adjudicate the merits of a dispute before the Court has determined whether it has the jurisdiction to entertain the challenge.

In any event, a Cross-Objection is, in pith and substance, a derivative right—an appendage to a validly admitted appeal. The stage for pressing such an objection matures only after the main appeal has crossed the hurdle of admission and the Court has directed notice to the Respondent for a hearing on the merits. To permit a hearing on a Cross- Objection before the main appeal is even admitted would be to adjudicate the merits of a dispute before the Court has determined whether it has the jurisdiction to entertain the challenge.

Accordingly, as the main appeal has not yet reached the stage of admission, the Cross-Objection is hereby dismissed as premature.

The Appellant is directed to be ready with the Proposed Substantial Questions of Law, specifically addressing the Tribunal’s findings on the invocation of the extended period of limitation under Section 73(1) of the Finance Act, 1994.

Manpower Recruitment/Supply Agency Services - classification of service -Cargo Handling Service - Reverse Charge Mechanism - Charging Section and levy u/s 66B - definition of ‘Cargo Handling Service’ -Requirement of examination before issuance of show cause notice based on third party information - Application of negative list and exemptions - HELD THAT:- ‘Cargo Handling Service’ has not been defined in the Act but is defined in Circular No. B11/1/2002-TRU, dated 01-082002 as the services of transporting coupled with loading, unloading, packing, unpacking can be called as ‘Cargo Handling Service’ if those are done by the authorities as that of Container Corporation of India, Airport Authority of India, Inland Container Depot, Container Freight Stations etc. Apparently and admittedly the appellant herein is none of these kinds of companies.

In the Larger Bench decision of the Tribunal rendered in the case of M/s Atma Steels Pvt. Ltd. & Others v. CCE, Chandigarh & Others [1984 (6) TMI 60 - CEGAT, NEW DELHI-LB], it was held that once the provisions has been changed, then the existing provisions at the time of issue of SCN should be applicable and not the earlier provisions.

Charging Section 66B of Finance Act, 1994 provides for levy of service tax at a specified percentage on the value of service. Section 67 of Finance Act provides that where service tax is chargeable on any taxable service with reference to its value and such value shall be consideration in money charged by the service provider. Therefore, it is primarily important to determine the value on which service tax shall be levied at a specified percentage and such value should be the value of taxable service. Clause (44) of Section 65B of Finance Act, 1994 has provided for definition of service and it has elaborately dealt with a list of activities which shall not be included in such definition. Further, Section 66D of Finance Act, 1994 has provided for negative list of services where the activities provided covered by such negative list do not qualify to be a taxable service. Therefore, it is clear that while determining the value of taxable service under Section 67 ibid, such aspect as to the activities which are covered by negative list and activities which are mentioned in the definition of service as those which are not covered by such definition become important.

Therefore, amount of service tax not paid or not levied arriving at correct value of taxable service which has not suffered service tax needs to be determined as the first step. Further, there are services where entire or part of service tax is to be paid by service recipient. In addition, mega exemption Notification No. 25/2012ST dated 20.06.2012 has provided exemption to various activities from the levy of service tax. Therefore, unless the data is examined with reference to all the above stated aspects, no one can come to a conclusion about the exact value which has not suffered service tax. Such exercise has not been undertaken in the present case.

Thus, impugned order is not sustainable. The impugned order is set aside and the Appeal filed by the Appellant is allowed.

Levy of service tax on construction of residential complex, construction of commercial complex services, maintenance or repair services and consulting engineers services - nature of works contract services prior to 01.06.2007 - HELD THAT:- As regarding the issue on merit is covered by the judgment of the Hon’ble Supreme Court in the matter of M/s. Larsen & Tourbo Ltd. [2015 (8) TMI 749 - SUPREME COURT] and the judgment of the Hon’ble Supreme Court in the case of Total Environment Building Systems [2022 (8) TMI 168 - SUPREME COURT]

In the case of M/s. Four EF Constructions vs. Commissioner of Service Tax, Bangalore [2024 (12) TMI 1300 - CESTAT BANGALORE] wherein it has held that appellant is not liable to pay service tax prior to 01.06.2007 under the category of ‘Erection Commissioning or Installation Services’ in view of the decision of Hon’ble Supreme Court in the case of M/s. Larsen & Tourbo Ltd. and for the period after 01.06.2007, the activity of the appellant is classifiable under ‘works contract service’ and is eligible for composition scheme under works contract.

Following the ratio of the above said decisions, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.

Suppression of facts with intent to evade payment of service tax - extended period of limitation under proviso to Section 73(1) - taxable value for construction of residential complex after exclusion of sale of plots - abatement under Notification No. 26/2012 ST (as amended) - interest for non-payment of service tax u/s 75 - penalty equal to service tax u/s 78(1) - penalty for failure to file/assess (Sections 77(1) & 77(2)) - officer/agent/director liability u/s 78A - HELD THAT:- Nothing has been brought to our notice to establish that Shri Anil Kumar, Shri Sunil Kumar and Shri Anupam Sharma on whom penalties have been imposed under Section 78A have filed appeal against the impugned order. In absence of any appeal filed by the them we are not considering any submissions made challenging the penalties imposed upon them in this appeal filed by the appellant.

From the above impugned order and the facts of the case we observe that entire demand has been made for the period 2012-13 to 2016-17. It is also well established from the facts that the appellant was through trying to evade the communications made by the department and the summons issued. They adopted a totally non cooperative attitude during the entire investigation. It is also on record that they had not produced the requisite documents at the time of audit and provide explanations to the queries raised during the audit in respect of the value of taxable services provided by them and declared in their ST-3 returns. This clearly indicate that appellant as not inclined to provide the relevant information to the revenue authorities to check the correctness of the returns filed by the appellant. It was only for the reason of non cooperation of the appellant with the audit, that matter was referred to Anti Evasion branch who undertook the investigation of the case. The conduct of appellant, the persons responsible to conduct the business of the appellant and chartered accountant / consultant of the appellant clearly show that appellant had willfully and knowingly suppressed the facts from the department with the intention of evade the payment of service tax. We do not find anything by which a conclusion in favour of appellant can be arrived.

The conduct of the appellant and its functionaries is enough to establish the charge of suppression with intent to evade payment of service tax, leading to invocation of extended period of limitation as per proviso to Section 73 (1) of Finance Act, 1994 for making the demand. The penalties imposed under Section 78 ibid also are justified in view of the decision of the Hon’ble Supreme Court in case of Rajasthan Spinning and Weaving Mills Ltd. [2009 (5) TMI 15 - SUPREME COURT].

Thus we observe that the value of the taxable service has not been determined arbitrarily by taking 25% of the sale value of the flats etc., arbitrarily as claimed by the appellant, but has been done in accordance with the notification No 26/2012-ST dated 20.06.2012 as amended by the Notification No 2/2013_ST dated 01.03.2013. Thus we do not find any merits in the submissions made by the appellant to the effect that the taxable value has been determined arbitrarily without any justification. The determination of the taxable value has been done after allowing the abatement as per the above notification.

Thus in view of the discussions as above we do not find any merits in the appeal filed by the appellant.

We find that the demand was made by taking the figure from the balance sheet/ profit and loss account of the appellant that was collected from the office of registrar of company as appellant was not providing any documents to the investigating officers. We also observe that appellant has provided the information in respect of the value towards the sale of plot which has been taken into account while determining the taxable value. Further appellant has impugned order in para 11.4 specifically discusses the manner of determination of the taxable value in terms of Notification No 26/2012-ST dated 20.06.2012, by treating the entire amount that received by the appellant as per their balance sheet towards sale amount pertaining to construction of residential flats/ houses. The abatement of 25% and 30% as per the Notification No 26/2012-ST has been allowed. The basic determination is on the basis that these amounts were received prior to receipt of completion certificate. When the determination has been done under the said notification for the reason of non production of the completion certificate, revenue cannot be aggrieved to state that Commissioner has failed to take into account the completion certificate.

We also observe that impugned order do not take the value of sale of plot as stated by the appellant but has only allowed deduction of the amount that could have been verified from the sale deed as towards the sale of plot, all the receipts have been taken towards the sale amount pertaining to construction of residential flats and houses. We do not find anything in the show cause notice or in the appeal filed by the revenue to show as to what amount was to e taxed under the category of site formation services. Apart from a bald submission that certain receipts were to be taxed under the category of site formation, nothing has been stated in the appeal providing the details of receipts which needs to be taxed under that category. Neither the show cause notice demanded any tax by treating any of receipts under this category. Thus we do not find any merits in this ground taken in the appeal filed by revenue.

In view of the above we do not find anything in the appeal filed by the revenue substantiating the claims made.

Both the appeals are dismissed.

Inclusion of sales tax incentives in assessable value - transaction value - exclusion of sales tax actually paid or actually payable - deemed payment under Package Scheme of Incentives (PSI/NPV) - benefits of PSI vide Certificate of Entitlement No. TIN-27560000028-V/PSI2001/Nashik/Mega/IPS-126 - penalty u/s 11AC - Whether the Sales Tax Incentives received by the appellants under PSI scheme is includable in the assessable value as per Section 4(1)(a) and Section 4(3)(d) of the Central Excise Act, 1944 read with Rule 6 of the Central Excise (Valuation) Rules, 2000 or otherwise?

HELD THAT:- On perusal of the above legal provisions, it transpires that sales tax amount payable under the Sales Tax Incentive schemes of PSI/NPV is nothing but deferment of the sales tax amounts payable in future based on the eligibility certificate issued for a validity period. The proviso clause to Section 38 of BST or Section 94 of MVAT also specifically state that the amount paid as per PSI is equal to the full amount payable in future date, that the entire sales tax liability is deemed to have been discharged. Therefore, we are of the considered view that the differential amount arising on account of payment of sales tax liability as per PSI after adjusting the incentives received and total sales tax amount, shall not be treated as additional consideration. Hence, such amounts cannot be included in the transaction value in terms of Rule 6 of the Central Excise (Valuation) Rules, 2000.

The Sales Tax Incentives received by the appellants under PSI/NPV scheme were in terms of the policy pronouncements, operation of the scheme as notified by the Government of Maharashtra; and the amount of sales tax incentives were duly accounted for by the appellants in their books of accounts. Therefore, there is no ground for imposition of penalty under Section 11AC of the Act of 1944.

In view of the settled position of law, as discussed in the above referred cases enunciated by the various orders of the Tribunal and in view of the judgement of the Hon’ble Supreme Court dated 05.04.2024, the issue arising out of the present dispute is no more open for any debate. Therefore, the impugned order passed by the learned Commissioner of Central Excise to the extent it had confirmed the adjudged central excise duty demands is liable to be set aside, as it cannot stand for legal scrutiny.

In the result, the impugned order dated 11.09.2018 is set aside and the appeal is allowed in favour of the appellants.

Condonation of delay - Rectification u/s 84 - error apparent on the face of the record - alternative remedy by way of statutory appeal - deposit as per Section 51 of the TNVAT Act, 2006 - conditional lifting of bank attachment on deposit - HELD THAT:- It is noticed that the present Writ Petition was filed only on 16.06.2025 in respect of the impugned orders dated 04.03.2022 and 30.11.2022. The Petitioner has also not secured any interim order from this Court earlier.

Considering the over all facts and circumstances of the case, the Writ Petition is disposed by giving liberty to the Petitioner to challenge the impugned order, subject to the Petitioner depositing 25% of the disputed tax in cash or from the Petitioner's Electronic Cash Register as per Section 51 of the TNVAT Act, 2006, within a period of thirty (30) days from the date of receipt of a copy of this order.

In case the Petitioner complies with the above stipulations, the Appellate Authority shall dispose of the appeal without further reference to the period of limitation. Subject to the Petitioner complying with the above stipulations, the attachment of the bank account of the Petitioner, if any, shall also stand automatically vacated.

In case the Petitioner fails to comply with any of the stipulations, the Respondent is 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.