TaxTMI Updates e-Newsletter
Feb 26,2026

Maintainability of writ petition under Article 226 in presence of alternative remedy of appeal - rectification u/s 161 - assessment under GST and consequence of non-filing of objections to show-cause notice - exercise of extraordinary jurisdiction and disputed questions of fact - HELD THAT:- On perusal of the averments made in the affidavit filed in support of the writ petition, absolutely nothing is stated as to the illegality committed by the respondent authorities except making bald allegations that the respondents have not followed the procedure contemplated under law, nothing is placed on record to substantiate the said contention.

Further, on perusal of the record, it is succinctly clear that before passing orders on the rectification applications, the petitioner was issued notice dt.18.01.2025 asking him to attend for personal hearing to be conducted on 20.01.2025. Accordingly, the petitioner attended for personal hearing on the said date and the objections raised by him were also considered and passed orders on the rectification applications dt.06.07.2023 and 08.07.2023, which are being impugned in the present writ petition.

As already noted, the petitioner has not challenged the assessment order dt.17.04.2023. Further, as per Section 161 of GST Act, the authorities are empowered to rectify any error which is on the face of record in such decision or order or notice or certificate or any other document.

In the case on hand, as observed, the applications filed by the petitioner were considered and orders were passed. If at all, the petitioner is agreed the said orders, he ought to have challenged the same by filing appeal as provided under the Act. Therefore, the present writ petition cannot be entertained in view of involvement of disputed questions of fact, which cannot be gone into while exercising power under Article 226 of the Constitution of India.

This Court is not inclined to exercise its extraordinary original jurisdiction vested in it by virtue of Article 226 of the Constitution of India and accordingly the writ petition is dismissed leaving it open to the petitioner to avail the remedies available under law.

Refund of Integrated Tax (Rate) under the reverse charge on account of Ocean freight paid for imports made on a CIF basis - composite supply and application of Section 8 - prospective operation of amendment versus entitlement to retrospective refund - HELD THAT:- Admittedly, the petitioner paid the tax during the currency of Notification No. 10/2017-Integrated Tax (Rate) dated 28.06.2017. The validity of the said notification was challenged before various High Courts and thereafter before the Apex Court. The Apex Court, in the case of Union of India vs. Mohit Minerals [2022 (5) TMI 968 - SUPREME COURT], has not only dismissed the SLP, but also upheld the order passed by the Gujarat High Court by holding that the Indian importers are liable to pay IGST on composite supply, comprising the supply of goods and service of transportation, insurance, etc., in a CIF contract. Hence, the separate levy on them for the supply of service by a shipping line would be in violation of Section 8 of the GST Act. Therefore, in view of the aforesaid judgment, the GST is not liable to be paid on Ocean freight under the reverse charge mechanism, in the terms of Notification No.10/2017.

Once the Notification No.10/2017-Integrated Tax (Rate) dated 28.06.2017 has been struck down by the High Court as well as by the Supreme Court, and any amount of tax paid or recovered was not saved either by the High Court or the Supreme Court, then the same is liable to be recovered. Even if this Notification dated 26.09.2023 has been made effective from 01.10.2023, the tax and interest paid under Notification No.10/2017 are not liable to be refunded by the respondent department.

The number of writ petitions has been disposed of by this Court in view of the judgment passed by the Apex Court in the case of Mohit Minerals (Supra). Hence, this petition is also disposed of. The amount of tax and interest paid by the petitioner be refunded.

Prohibition and seizure of goods - continuance of seizure/prohibition in absence of confiscation proposal - confiscation u/s 67(2) of the GST enactments - input tax credit limitation u/s 16(4) and remedial scope of Section 16(5) - de-freezure of bank accounts consequent to quashed assessment - HELD THAT:- It is confirmed both by the learned counsel for the Petitioner and the learned Special Government Pleader for the Respondents that no de novo orders have been passed pursuant to the Order dated 12.03.2025 in W.P.No.8284 of 2025.

Thus, the issue that remains to be considered is whether the impugned Prohibition Order dated 07.02.2024 in Form GST INS-03 accompanied by the impugned Seizure Order dated 27.02.2024 in Form GST INS-02 can be continued in the light of the remand proceedings pursuant to the order of this Court.

It is confirmed by the learned counsel for the Petitioner and the learned Special Government Pleader for the Respondents that there has been no proposal in the Notices that have been issued to the Petitioner for confiscation of the seized goods in accordance with Section 67(2) of the respective GST Enactments.

In absence of such a proposal, continuance of the Prohibition Order or Seizure Order cannot be countenanced. Therefore, the impugned Orders are liable to be quashed and are accordingly quashed.

Writ Petition is accordingly allowed.

Quantification of demand in show cause notice - limitation on adjudicated demand u/s 75(7) - interest payable whether or not specified in the order u/s 75(9) - validity of adjudication where interest not quantified in the notice - HELD THAT:- Upon a perusal of the order passed under Section 73(9) of the Act, 2017, it is clear that the interest liability is for a period starting from 2020-21, which was very well known to the authorities when they issued the show cause notice on November 29, 2024. Having not quantified the amount of interest till the date of issue of the show cause notice would definitely be in contravention of the provisions of Section 75(7) of the Act, 2017.

The contention of the GST authorities that Section 75(9) of Act, 2017 would apply and the interest on the short paid tax would be payable even though not specified in the order has no application in the present case, as it deals with the situation wherein the interest liability is not quantified in the order passed and not in the show cause notice.

Thus, we are of the view that the impugned order and the impugned show cause notice cannot stand and are accordingly quashed and set aside.

Writ petition is, accordingly, disposed of.

Order passed against deceased is non est - Remand for fresh consideration - Legal heir's right to represent deceased's estate and file reply - Opportunity of personal hearing after issuance of notice - HELD THAT:- The petitioner’s father died as early as on 29.11.2023. Thereafter, the show cause notices 14.07.2025 & 24.09.2025 were issued for the AYs 2021-2022 and the impugned orders dated 27.11.2025 and 18.12.2025 respectively were passed by the respondent against the petitioner’s father, who is a dead person.

As rightly contended by the petitioner, an order, which was passed against a dead person, is non-est in law and the same is liable to be set aside. Now, the petitioner, who is one of the Legal Heirs of the deceased Proprietor, undertakes to file a reply to the show cause notice on behalf of all the legal heirs. Therefore, this Court is inclined to set aside the impugned orders and remand the matters back to the respondent.

The impugned orders dated 27.11.2025 & 18.12.2025 are set aside and the matters are remanded to the respondent for fresh consideration.

Matters remanded to respondent for fresh consideration.

Condonation of delay in filing appeal - Setting aside rejection of appeal on ground of limitation - Pre-deposit as condition for admission of appeal - Direction to represent appeal and adjudicate on merits after opportunity - HELD THAT:- According to the petitioner, due to the failure on the part of the petitioner's Accountant, he remained unaware of the said order and hence, there was a delay of 150 days in filing the appeal.

The above reason assigned by the petitioner, for the delay in filing the appeal against the assessment order, appears to be genuine. Thus, this Court is inclined to condone the delay, in filing the appeal against the impugned assessment order.

Therefore, though the petitioner had already paid 10% of the disputed tax amount as statutory pre-deposit while filing the appeal, considering the delay, this Court directs the petitioner to pay additional 10% of the disputed tax amount to the respondents, as agreed by the petitioner.

Accordingly, the appeal rejection order dated 16.10.2025 passed by the 1st respondent is set aside and the delay of 150 days in filing the appeal is hereby condoned, subject to the payment of additional 10% of the disputed tax amount by the petitioner to the respondents.

Liability of directors of private company u/s 89 - Burden of proof on director to show non-attribution to gross neglect, misfeasance or breach of duty - Quashing of recovery/attachment and remand for fresh adjudication on merits - Opportunity to be heard and filing of reply before recovery - HELD THAT:- Reading of the Section 89 of the respective GST Enactments, makes it clear that the burden of proof lies on the Director to establish that the non-recovery of tax cannot be attributed to any gross neglect, misfeasance, or breach of duty on his part in relation to the affairs of the company.

It is therefore, open for the petitioner to discharge the burden of proof required to be discharged under Section 89 (1) of the respective GST Enactments before the respondents. Therefore, the impugned recovery notice is quashed and the case is remitted back to the first respondent to pass a fresh order on merits, as expeditiously as possible, within a period two weeks from the date of receipt of a copy of this order.

Within such time, the petitioner shall also file a proper reply, explaining the case as to why no recovery can be made against the petitioner for the tax liability of the company.

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 with the above observations.

Confirmation of tax in absence of reply - determination of wrongly availed Input Tax Credit - penalty u/s 73 - interest u/s 50 - cancellation of GST registration - remand for de novo hearing - abeyance of recovery pending fresh adjudication -HELD THAT:- It appears that excess Input Tax Credit has been availed by the Petitioner at Integrated Goods and Services Tax (IGST) which seems to have however remained unutilized by the Petitioner. However, whether the Petitioner had utilized the same or not is not evident from the reading of the impugned Order.

Considering the same, the impugned Order is quashed and the case is remitted back to the 1st Respondent to pass a fresh order on merits, after hearing the Petitioner, as expeditiously as possible, preferably within a period of three (3) months from the date of receipt of a copy of this order.

Since the case is being remitted back to the 1st Respondent, all recovery proceedings initiated against the Petitioner / Director of the Petitioner Company shall be kept in abeyance pending further order in the de novo proceedings.

This Writ Petition stands disposed of with the above observations.

Refund claim - rate of tax for works contract services - applicability of tax rate increase from 01.01.2022 - statutory obligation for sanction of refund - recovery from principal under Section 64A of the Sales Tax Act, 1956 - HELD THAT:- The petitioner cannot seek for refund of the amount which was paid by the petitioner on 21.03.2022, pursuant to extension that was made by the respondent on 17.08.2022, in the light of the increase in the rate of tax in terms of Notification No.22 of 2021-Central Tax (Rate) dated 31.12.2021whereby the rate of tax was increased from 12% to 18% with effect from 01.01.2022.

The refund also pertains to the period of supply by the petitioner to Tamil Nadu Housing Board from 01.01.2022 to 18.07.2022, if at all the petitioner is entitled for refund, it is to be from the Tamil Nadu Housing Board and not from the respondent. This would also be in consonance with the principle under Section 64 A of the Sales Tax Act, 1956.

Therefore, the writ petition is liable to be dismissed. At best, liberty can be granted to the petitioner to recover the same from the Tamil Nadu Housing Board in terms of Section 64A of the Act in terms of the letter dated 23.01.2024. Consequently, there shall be a direction to the 2nd respondent to examine the issue and pass appropriate orders within a period of three months from the date of receipt of a copy of this order.

Writ petition stands disposed of with the above observations.

Remand for fresh adjudication subject to pre-deposit - pre-deposit as condition for interim relief - deposition of disputed tax from Electronic Cash Register - conditional vacation of bank attachment - time-bar/limitation in filing appeal - opportunity to be heard before passing final order - HELD THAT:- It is noticed that the limitation for filing an appeal under Section 107 of the respective GST Enactments against the impugned Assessment Order has already been expired. This present writ petition has been filed only on 07.08.2025.

In case the Petitioner complies with the above stipulations, the 1st Respondent shall proceed to pass a final order on merits and in accordance with law as expeditiously as possible, preferably, within a period of three (3) months of such reply/deposit. Subject to the Petitioner complying with the above stipulations, the attachment of the bank account of the Petitioner shall also stand automatically vacated.

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

In case the Petitioner fails to comply with any of the stipulations, the 1st 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 with the above observations.

Participation in proceedings and estoppel from claiming ignorance - duty of assessee to monitor GST portal for orders - delay in challenging assessment order / laches - cancellation of GST registration does not absolve notice/knowledge of assessment - liberty to file appeal subject to enhanced pre-deposit - bank attachment and directed release for payment of pre-deposit - HELD THAT:- In the case on hand, initially, after the receipt of notice in DRC-01, the petitioner had filed his reply and participated in the personal hearing. Subsequently, due to the change of proper officer, the new proper officer/1st respondent had once again issued notices for production of relevant documents and personal hearing. However, the petitioner had deliberately failed to produce the said documents and to appear before the respondent. Under these circumstances, the impugned assessment order was passed on 30.03.2025.

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 by the petitioner 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 30.03.2025, no steps were taken by the petitioner to challenge the assessment order for a period of 11 months. Now, the petitioner had filed this petition by taking a stand that he is not aware of the uploading of assessment order and as stated above, this Court is not in a position to accept the reason assigned by the petitioner.

Further, it appears that the petitioner had filed the application for cancellation of GST Registration only after the quantification of tax liabilities by the 1st respondent, which comes around a sum of Rs. 5 Crore. Hence, it is not fair on the part of the petitioner to approach this Court and make such a plea of ignorance. That apart, it was pointed out by the respondent that the petitioner is also involved in bill trading. When such being the case, this Court is not inclined to entertain this petition.

Though this petition has been filed challenging the impugned order dated 30.03.2025, considering the submissions made by the petitioner, this Court is inclined to grant liberty to the petitioner to file an appeal against the impugned assessment order on terms.

Accordingly, the liberty is granted to the petitioner to file an appeal against the assessment order, subject to the payment of additional 10% of disputed tax amount over and above the 10% of statutory pre-deposit to the respondent-Department, as agreed by the petitioner, within a period of two weeks from the date of receipt of a copy of this order. As requested above, the petitioner is permitted to utilize his bank account for the payment of 20% of the disputed tax amount to the respondent. Thus, upon production of a copy of this order, the respondents shall instruct the concerned Bank to release only to the extent of 20% of the disputed tax amount from the petitioner's bank account for making the payment as stated above. Upon such payment, the concerned Appellate Authority is directed to take the appeal on record, if it is otherwise in order, and decide the same, on merits and in accordance with law, as expeditiously as possible.

In the result, this writ petition is dismissed, as devoid of merits, with the above liberty.

Input Tax Credit - Reversal of erroneously availed Input Tax Credit - Interest u/s 50 leviable only on the cash component of tax - Penalty under the respective GST enactments (Section 74) - Remand for fresh adjudication on merits - HELD THAT:- The Petitioner is before this Court against the impugned Order dated 25.09.2024 in Form GST DRC-07 passed for the tax period 2022-23 under Section 74 of the respective GST Enactments, whereby, the proposal in the Show Cause Notice dated 04.06.2024 has been confirmed against the petitioner. The petitioner failed to reply to the Show Cause Notice dated 04.06.2024 and thus suffered the impugned Order.

Since the Petitioner has purportedly reversed the ineligible Input Tax Credit on 20.11.2024, the case is remitted back to the Respondent to pass a fresh order on merits as to whether the Petitioner is also required to pay the interest and penalty.

The Respondent shall also take note of the amendment to Section 50(3) of the respective GST Enactments made vide the Finance Act 2022 w.e.f. 01.07.2022.

The petitioner is directed to file reply along with requisite documents to the Show Cause Notice in DRC-01 dated 04.06.2024 by treating the impugned Order as an addendum within 30 days from the date of receipt of a copy of this order.

Writ Petition is disposed of with the above observation.

Classification of the goods - Harmonized System of Nomenclature (HSN) - Food preparations not elsewhere specified or included - Betel nut product known as Supari - Mouth freshener (Mukhwas) - Commercial/trade understanding as test of classification - GST rate applicability under Notification No. 9/2025-CT(R) -HELD THAT:- After going through the samples produced before us during the course of hearing, we find that the applicant is manufacturing two types of products based on the process of manufacture. In the first type, the ingredients are mixed together and packed in edible capsules, which are then packed in blister packs. In the second type, the finished product is bought from the market and the applicant only packs them in capsule sized blister packing. No capsule is present in the second category. The products falling in the first category are- Paan Kapsul - Silver Coated, Paan Kapsul - Regular and Paan Kapsul - Rose and those falling in the second category are - ChatPata Twins, Tangy Twins, Ginger Shots, Amla Shots and GasGo Candy.

As per the Supplementary Notes of Chapter 21- ‘Betel nut product known as Supari’ means any preparation containing betel nuts, but not containing any one or more of the following ingredients, namely: lime, katha (catechu) and tobacco, whether or not containing any other ingredients such as cardamom, copra or menthol. We find that Paan Kapsul - Silver Coated, Paan Kapsul - Regular and Paan Kapsul - Rose has raw supari (betel nuts) as one of the ingredients as well as menthol and does not contain lime, katha (catechu) and tobacco. Therefore, these products would merit classification under Chapter 21, more specifically HSN 2106 90 30 - Betel nut product known as Supari. We also find that the Advance Ruling Authority in the case of Re: PREM GHAN PRODUCTS [2019 (1) TMI 360 - AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH] has held that Mouth freshener (obtained by mixing various inputs/raw materials like kharak, sugar, khopra, sounf, fennel, dates, mishri, saccharin, menthol, papaya fruit, or natural flavouring substances), will merit classification under Chapter Heading 2106 of the GST Tariff as ‘Food preparations not elsewhere specified or included.

We find that the Supreme Court in Shree Baidyanath Ayurveda Bhavan Ltd. v. CCE, Nagpur [1995 (3) TMI 109 - SUPREME COURT], has held that goods are to be classified according to the popular meaning attached to them by those using the product. Similarly, in Novopan India Ltd. v. Collector [1994 (9) TMI 67 - SUPREME COURT], the Supreme Court held that commercial understanding is the true test and not what scientific books like Encyclopaedia Britannica may say. In Purewal Associates Ltd. v. CCE [1996 (10) TMI 74 - SUPREME COURT], the Apex Court held that goods are to be classified as per trade understanding. We find that the products manufactured by the applicant are commonly understood as products aiding digestion and marketed by the applicant as ‘aftermints’. We also find that the Tribunal in Vinod Kumar & Bros (P) Ltd.[2004 (9) TMI 427 - CESTAT, NEW DELHI], has for similar products manufactured by the applicant, classified it under Chapter heading 2108.99, being ‘edible preparations, not elsewhere specified or included’. However, we find that in the GST Tariff, HSN 2108 has been replaced by HSN 2106, being - ‘Food preparations not elsewhere specified or included.

Therefore, we are of the opinion that these products i.e. ChatPata Twins, Tangy Twins, Ginger Shots, Amla Shots, and GoGas Candy would merit classification under HSN 2106 90 99 as ‘Food preparations not elsewhere specified or included.

GST rate applicability under Notification No. 9/2025-CT(R) - HELD THAT:- As discussed, Paan Kapsul - Silver Coated, Paan Kapsul - Regular and Paan Kapsul - Rose would merit classification under HSN 2106 90 30 and ChatPata Twins, Tangy Twins, Ginger Shots, Amla Shots, and GoGas Candy would merit classification under HSN 2106 90 99. As per SI. No. 145 of Schedule-I of Notification No. 9/2025-CT(R) dtd. 17.09.2025, goods falling under HSN 2106 (other than 21069020-Pan Masala) will attract GST @ 5%. Therefore, the eight products in question for which the applicant has sought advance ruling will attract GST @ 5%.

Release of jewellery seized during search - no fresh assessment is passed within statutory time -submissions of the Revenue seeking directions to complete the assessment cannot be acceded to, since the statutory time limit prescribed u/s 153(3) has expired, and therefore, the assessment has become time barred, which cannot be permitted to be extended.

HELD THAT:- In the present case, there is a lapse of almost nine years on the part of the Revenue, during which it has failed to comply with the order of the ITAT and pass a fresh assessment order. Therefore, we see no good reason for the Revenue to withhold the seized jewellery. It is, therefore, directed that the Respondents shall release the seized jewellery to the Petitioner within a period of six weeks from today.

Intervenor has filed Interim Application not only seeking to intervene in the above matter but also, inter alia, for a direction to the Respondents to hand over the Stridhan i.e. gold and diamond Ornaments belonging to the Applicant/Intervenor, which were seized from the Petitioner.

We are afraid that this relief cannot be granted in the present Petition. If the Applicant/Intervenor has any claim to any jewellery against the Petitioner, who is her mother-in-law, she is free to file her independent proceedings in that regard. The Interim Application is therefore dismissed.

Denial of exemption u/s 11 - filing Form No. 10 belatedly - HELD THAT:- We find that the delay has been explained by the Petitioner by stating that the delay has occurred due to Petitioner’s oversight and as the Petitioner was under the impression that Form No. 10 was physically filed within time. Moreover, due to unavoidable circumstances, in the Covid – 19 pandemic, the Petitioner could utilize only Rs. 2,28,467/- in A.Y. 2020 – 2021 out of the total accumulation of Rs. 47,00,000/- in A.Y. 2015-16. The balance unutilized amount of Rs. 44,17,533/- was offered to tax in the sixth year of accumulation under Section 11(3) of the Act. Thus, the disallowance of exemption in A.Y. 2015-16 would lead to double taxation.

We derive support from the judgment of Nagpur Hotel Owners’ Association [2000 (12) TMI 99 - SUPREME COURT] wherein it was held that furnishing of Form No. 10 before completion of assessment constitutes sufficient compliance.

In any case, this Court, in several of its orders involving a similar issue of delay in filing Form No. 10, post the amendment, has adopted a liberal construction.

We are also of the view that Respondent No. 1 ought to have taken a justice-oriented approach rather than a pedantic one and condoned the delay.

Moreover, not condoning such delay would cause genuine hardship to the Petitioner in as much as the Petitioner has been denied exemption under Section 11 and demand has been raised. Delay ought to be condoned.

Reopening of assessment - Reason to believe or change in opinion - some clerical mistake in the working of the change in inventory, and which according to the AO, has resulted into as under assessment - HELD THAT:- As far as this reason is concerned, we find that as on date, the said reason does not survive for the simple reason that this entire addition has been deleted by the ITAT in other order. This is not even disputed by the Revenue. We, therefore, find this reason today does not survive for reopening the assessment.

Certain cash deposits that have been made during the year - We fail to understand how the AO has now come to the conclusion that there was any failure on the part of the Petitioner to disclose fully and truly all material facts in the original scrutiny proceedings. As mentioned earlier, in the original scrutiny proceedings, a specific query was raised by the Assessing Officer in relation to the cash deposits and a sufficient explanation was given in relation thereto. In fact, even the cash book was produced before the AO (during the scrutiny proceedings) for verification. It is after examining the cash book, as well as the explanations given by the Petitioner, that the AO chose not to make any addition in relation to these cash deposits. Once these are the facts, the AO, in reassessment proceedings, could not have come to the conclusion that there was any failure on the part of the Petitioner to fully or truly disclose all facts in relation to the cash deposits.

The present case is nothing but a mere change of opinion on the part of the Assessing Officer to re-open the assessment.

Compensation paid by the National Highways Authority towards acquisition of land under the National Highways Act - refund of tax deducted at source - Whether exempt from payment of income tax, and that the amount deducted towards TDS is liable to be refunded? -

Assessee seeking a direction to refund the TDS deducted from the compensation amount and also for a declaration that, in view of Section 96 of the 2013 Act, the compensation paid for acquisition of land by the National Highways Authority under the National Highways Act, 1956 is exempt from income tax

HELD THAT:- We find sufficient material on record to reasonably infer that, despite having knowledge of the refund already credited, respondent No. 1 attempted to secure a second refund of the tax amount by placing reliance on the pronouncements of this Court regarding the taxability, or otherwise, of compensation awarded on acquisition of land.

In view of the foregoing, the order of the learned Single Judge, having been obtained on the basis of misleading and incorrect facts, cannot be sustained in law and is accordingly set aside. We are constrained to make the above observation, as the order came to be passed on the basis of misleading statements and misrepresentation of material facts at the instance of respondent No. 1.

In view of our findings recorded hereinabove that the writ petition was presented on the basis of misleading and misrepresented facts, and that respondent No. 1, by such conduct, has consumed considerable judicial time, resulting in the learned Single Judge rendering a detailed order running into 56 pages, we are unable to accept the contention that the petition was filed out of ignorance of the refund already credited. For the reasons stated supra, the said explanation does not merit acceptance.

Accordingly, while setting aside the order of the learned Single Judge, we deem it appropriate to impose costs of Rs. 5,00,000/- (Rupees Five Lakhs only) on respondent No. 1.

Withheld refunds of Fringe Benefit Tax (‘FBT’) - wrongful denial of the credit of advance tax - refund of tax with statutory interest u/s 244A - As submitted online rectification facility was not available on the ITBA System. While manual rectification was possible, the functionality to upload manual rectification orders specifically for FBT returns was constrained and resulted in system errors, which prevented the finalization of the orders

HELD THAT:- The only justification offered for this prolonged inaction is a technical issue within the Department’s own ITBA system. In our view, the Petitioner’s grievances are wholly justified. The system is a creation of the Department, and its internal technical glitches or lack of functionality cannot be cited as a reason to deny a taxpayer its legitimate and rightful dues for an indefinite period.

Department cannot remain dormant and expect the taxpayer to wait endlessly for the system to be upgraded. It is incumbent upon the Respondents to find a way, whether through manual means or otherwise, to grant the relief that is legally due to the Petitioner. The inability of the Department’s system cannot come in the way of granting relief that the Petitioner is otherwise entitled to in law.

Petition must be allowed. Respondents are directed to grant refund along with interest u/s 244A, read with section 115WL, of the Act till the date of payment.

Eligible assessee within the meaning of Section 144C(15)(b) - assessment framed by the Income Tax Officer - Petitioner was NRI - proceedings have been initiated by the 1st Respondent without a corresponding Transfer Order u/s 127 - HELD THAT:- The definition of “eligible assessee” in Section 144C(15)(b) of the Income Tax Act, 1961 stood amended by Finance Act, 2020 with effect from 01.04.2020. Section 142(1) Notice was issued on 09.03.2018. At the time when Section 148 Notice was issued by the 1st Respondent on 31.03.2021, the definition of “eligible assessee” was amended to include any non-resident not being a Company with effect from 01.04.2020.

Petitioner is an “eligible assessee” within the meaning of amended definition “eligible assessee” in Section 144C(15)(b)(ii) of the Income Tax Act, 1961.

Petitioner had also acquiesced in the proceedings by challenging the Draft Assessing Order dated 30.03.2022 passed u/s 144C of the Income Tax Act, 1961 by filing an objection before the Dispute Resolution Panel, Bangalore on 26.04.2022. It is also to be noted that the Petitioner is estopped from questioning the jurisdiction of the Respondent / AO in view of Section 124(3) (a)(b) and (c) of the Income Tax Act, 1961 and Section 292BB of the Income Tax Act, 1961.

The attempt of the Petitioner to distance from the status as an “eligible assessee” by filing an application for rectification under Section 154 of the Income Tax Act, 1961 on 30.01.2023 which appears to be pending as on date was merely an afterthought after the Dispute Resolution Panel passed its order.

Since the matter was taken up before the Dispute Resolution Panel under Section 144C of the Income Tax Act, 1961 the limitation gets extended by virtue of Section 144C read with Section 153 of the Income Tax Act, 1961.

As per Sub-Section (13) to Section 144C of the Income Tax Act, 1961 the limitation for passing the Assessment Order gets extended. Therefore, there are no merits in the challenge to the impugned Assessment Order either on the ground that the Petitioner was not an “eligible assessee” within the meaning of Section 144C(15)(b)(ii) of the Income Tax Act, 1961 or that the 2nd Respondent has passed the order without a Transfer Order under Section 127 of the Income Tax Act, 1961.

Writ Petition is liable to be dismissed.

Income escaping assessment u/s 147 - reasons to believe - tangible material and live link - change of opinion - full value of consideration of transfer of stock in trade considering the lowest prevailing fair market value - HELD THAT:- In the instant case, a perusal of the communication issued by the respondent purporting to reopen the assessment will clearly indicate that the same do not constitute reasons to believe or existence of tangible material that there was escapement of income from assessment.

It is also pertinent to note that in the notice u/s 142(1) dated 11.02.2014, the respondent had specifically asked the petitioner to give a break up of the stock value and the basis of the stock value arrived at pursuant to the Joint Development Agreement in relation to the land property entered into during the financial years 2004-05 to 2009-10 and the same was furnished by the petitioner along with the reply dated 19.02.2014 specifically answering the queries in this regard put forth by the respondents.

In pursuance of the said replies/ document/ material submitted by the petitioner, the respondents having proceeded to pass the aforesaid assessment order were not entitled to seek reopening of assessment proceedings on the basis of change of opinion and in the absence of tangible material to come to the conclusion that there was escapement of income from assessment especially when the reasons contained in the communication dated 02.05.2018 do not indicate a live link with the formation of such belief.

Merely because the full value of consideration of transfer of stock in trade considering the lowest prevailing fair market value is said to be calculated by the respondents in the said communication, the same cannot constitute existence of tangible material for the purpose of reopening of assessment which is impermissible in law.

The impugned communication at Annexures-K and V are illegal arbitrary without jurisdiction or authority of law and the same deserves to be quashed. Decided in favour of assessee.

Disallowance of professional fee - non-furnishing of relevant details and evidence - AO made an adhoc disallowance @50% of the total professional expenses adopted by the assessee - HELD THAT:- As gone through the details furnished by the assessee which are exhaustive and each and every entry of professional charges debited in the profit & loss account have been placed in the paper book and all of them have been subjected to deduction of TDS and there remains no reason to doubt the genuineness of professional charges incurred and debited by the assessee during the year under consideration.

Since genuine professional charges has been claimed by the assessee, AO grossly erred in making adhoc disallowance and further CIT(A) also erred in sustaining the adhoc disallowance in spite of the fact that all supporting documents for the alleged professional expenses incurred by the assessee have been placed before him.

Accordingly, finding of CIT(A) is reversed and the impugned disallowance of professional fee is deleted -Appeal of the Assessee is allowed.

Levy of fee u/s. 234E - processing of TDS returns u/s. 200A - delay in filing return prior to 01.06.2015 - HELD THAT:- Applying the ratio laid down by this Tribunal in the case Shrikrishna Laxminarayan Thakur [2025 (1) TMI 1183 - ITAT PUNE] on the facts of the instant case, we hold that fee u/s. 234E of the Act levied for the delay in filing the TDS returns prior to 01.06.2015 deserves to be deleted and for the delay from 01.06.2015 and onwards the fee levied u/s. 243E stands confirmed. Revenue is directed to make necessary calculation and give the relief to the assessee as directed above.

Penalty u/s. 270A - Eligibility of immunity u/s. 270AA(3) - allegation of under-reporting of income - no proof of an online or manual Form 68 - HELD THAT:- Assessee during the penalty proceedings u/s 270A has not produced any application before the AO related to the immunity application in Form 68 u/s. 270AA(3) of the Act. The contention of the ld. A.R. that there was a technical glitch at the relevant time was also not substantiated by any document produced before us at the time of hearing of this appeal.

The contention of the AR is also not correct as the correspondence between FAO and JAO intents to state that the assessee failed to produce any application online or manual before the authorities and there was no order u/s. 270A(4) of the Act. The documents presented before the Bench are simply a document which does not contain Form No. 68 annexed to that and there is no acknowledgment to the same.

Thus, the assessee has categorically under reported her income and liable for penalty u/s. 270A of the Act. Thus, the penalty order passed u/s. 270A is justifiable - Appeal of the assessee is dismissed.

Unexplained cash credit u/s. 68 - revenue from rendition of marketing support and back office support services received by appellant from its group entity in Singapore pursuant to Service Agreement - double taxation of the same income - HELD THAT:- We find that Section 68 is not applicable since there is no element of loan or borrowing in the revenue earned from rendition of services.

It is settled law that Section 68 is applicable only where there is ‘cash credit’ from a ‘creditor’ or ‘investor’ etc., and not on revenue receipts of an assessee, hence, it does not apply the present case wherein assessee’s income from provision of services has been mistakenly considered as ‘unexplained cash credit’ and also this amount does not bear the nature of any loan or credit, but it actually revenue receipt in the hands of the assessee, duly offered to tax, hence, the provisions of 68 are not applicable in the present facts.

Assessee has already recorded this amount in its audited profit and loss account and duly offered it to tax in its return of income and there is no finding in the assessment order that this amount has not been included in the return of income. This addition amounts to double taxation of the same income in the hands of the assessee. However, as per settled law the double taxation of the same income in the hands of the same assessee is not sustainable in law. It is also noted that identity and creditworthiness of the alleged creditor, i.e. Vale SA has been sufficiently established and not even been questioned by the AO/CIT(A). In view of above, the addition made u/s. 68 deserve to be deleted. We hold and direct accordingly.

Addition u/s 68 - trade payables v/s cash credit - HELD THAT:- We find that Section 68 applies to cases where in an amount has been received from a creditor or investor. It does not apply to future liability for expenses recorded in the books of accounts. In the instant case, the assessee recorded a liability i.e. trade payable towards BSR in relation to auditing expense and not any cash credits per se. Accordingly, the AO is wrong in making addition on account of trade payables instead of cash credits u/s. 68 as bogus and unexplained, completely disregarding the explicit language of section 68, which applies to unexplained cash credit and not to such future liability. It is also noted that AO has not proposed this addition in show cause notice - addition made u/s. 68 on this account deserve to be deleted. We hold and direct accordingly.

Addition u/s. 69C -unexplained expenditure - HELD THAT:- Section 69C is applicable in cases where assessee has incurred any expenditure but is unable to explain the source of such expenditure. As noted that assessee has made total payment to BGL and recorded the same in its profit and loss account, which the AO has failed to consider the same. Even as per BGL’s response to notice u/s. 133(6), it has received sum from assessee. However, the AO has mistakenly considered the figure recorded by Assessee and IT maintenance charges and ignored the balance amount recorded as repair and maintenance charges and service tax and accordingly, the AO has treated the amount of difference Rs. 49,605/- as unexplained expenditure u/s. 69C of the Act. In view of above, the addition made u/s. 69C on this account is baseless and hence, deserve to be deleted.

Reopening of assessment - Reason to believe - borrowed satisfaction or independent application of mind - objections of the assessee to the reopening were not disposed of by the AO - Addition u/s 68 - AO formed belief of escapement of income of the assessee on the basis of details and information furnished by the DDIT (Inv.), Unit-1(3), Ahmedabad to the effect that the bank accounts of Orange Tradex had been used for circulation of funds and no actual business activity had been carried out in this concern and there was transactions in the name of the assessee from this entity - HELD THAT:- The assessee had all material with him regarding its transaction with Orange Tradex dug out by the Investigation Wing of the Department. The assessee therefore was aware of the specifics of the information relating to its transaction with Orange Tradex and why it was considered to be not real by the Revenue authorities, i.e both the Investigation Wing and the AO.

That being so the assessee ought to have referred to the information made available to it while alleging that the AO had no knowledge of the nature of transaction or for that matter the quantum of transaction of the assessee with Orange Tradex, so as to attribute non application of mind/borrowed satisfaction of the AO of escapement of income of the assessee.

The assesses case merely rests on the contents of the reason recorded and no reference has been made of the material found by the Investigation wing, which admittedly, was made available to the assessee.

No merit in the contention of assessee that the reasons recorded for reopening the case of the assessee were based on borrowed satisfaction and were without any application of mind by the AO, and accordingly reject the same.

AO had not disposed of the objections raised by the assessee to the reopening of the case - All the objections of the assessee to the reopening of its case are the same which have been raised before us against the validity of assessment framed in the present case u/s 147 of the Act. The same have been dealt with by us above and rejected finding them to be general objections, with no reference to the specific information collected by the Investigation Wing and supplied to the assessee.

Merely referring to the reasons recorded for reopening stating them to be vague for not mentioning the nature or quantum of transaction of the assessee with orange Tradex, would not suffice, until this fact was pointed out from the information supplied to the assessee alongwith the reasons. All objections of the assessee, are clearly with reference to only the reason recorded and there is no reference to the material available alongwith the reasons. These general objections of the assessee, typically do not qualify as objections at all. And therefore the act of the AO in not disposing off the same, we hold, does not effect the validity of the assessment framed u/s 147 of the Act in the present case. The argument of the Ld.Counsel regarding non disposal by AO of the objection of the assessee to the reopening of the case, invalidating the assessment framed, is therefore rejected.

All the case laws relied upon by assessee are also of no assistance to the assessee, since, they have not been demonstrated to have been rendered in identical facts and circumstances as in the case of the assessee before us and hence are all distinguishable on facts.

Unexplained credits u/s.68 - grievance of the assessee is that all its transactions were genuine and, therefore, the Ld. CIT(A) had erred in treating the assessee as an accommodation entry provider - Assessee has made no attempt to controvert whatever adverse information was available regarding the transaction with Orange Tradex being bogus. Without controverting the adverse information against it, the assessee, we hold, cannot claim to have discharged its onus of proving the genuineness of the transactions by filing basic documentary evidences of confirmation, etc. In the light of the same, we hold that the assessee has no case for canvassing and contending before us that the assessee’s transactions with Orange Tradex were shown to be genuine.

Whether this bogus transaction entered into by the assessee ought to be treated as unexplained credit in the hands of the assessee itself or only commission income earned on the same? - No reason to disagree with the Ld.CIT(A) that since the assessee clearly was not a beneficiary of the bogus transaction but only a conduit in the transfer of funds, the receipts from Orange Tradex could not be taxed in entirety in the hands of the assessee u/s. 68 of the Act. The order of the Ld. CIT(A) holding that the assessee, therefore, needed to be taxed only on account of commission income received by it, is held to be correct.

Quantum of transactions carried out by the assessee -The fact relating to the quantum of transaction of the assessee with Orange Tradex has remained unverified and for this limited purpose, we consider it fit to restore the issue to the AO with the direction to verify the quantum of transaction of the assessee with Orange Tradex during the year and, thereafter, compute commission income earned by the assessee by applying the rate of 2% on the quantum of the said transaction, as directed by the Ld. CIT(A).

Grounds raised by the assessee with respect to the findings of the Ld. CIT(A) holding the assessee to have earned commission income are rejected whereas the grounds raised with respect to the computation of commission income is allowed for statistical purposes.

Revision u/s 263 - "Lack of Enquiry" or "inadequate inquiry"- unexplained cash deposits - PCIT observed that the AO has failed to make adequate inquiry to determine the source of unexplained cash and held that the assessment order in question is erroneous in so far as it is prejudicial to the interests of the revenue - HELD THAT:- AO reopened the assessment u/s 148 and conducted enquiries on the precise issue of cash deposit during demonetisation period and carried out due scrutiny.

Upon being satisfied with assessee’s explanation and Audited balance sheet/documents, accepted the return.

PCIT questioned the credibility of amount as ‘imprest to staff’ account, which we find, are duly reflected in the balance sheet under Advances Recoverable (in Cash or Kind) and the schedule of imprest/staff advances. We therefore, agree with the assessee that mere classification under a different accounting head cannot render the source unexplained, particularly when the amount is recorded in audited books.

PCIT has attempted to invoke revisionary powers u/s 263 of the Act based on incorrect appreciation of balance sheet entries and therefore reached a different conclusion. No error or infirmity in the reassessment order which could make it erroneous and prejudicial to the interest of the revenue.

Distinguishing 'lack of enquiry' from 'inadequate enquiry' - As decided in Sunbeam Auto [2009 (9) TMI 633 - DELHI HIGH COURT] one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate that would not by itself give occasion to the CIT to pass orders under s. 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry" that such a course of action would be open.

Assessee appeal allowed.

Reopening of assessment u/s 147 - non fulfilment of the prescribed conditions laid down u/s. 148/149(1) (b) - conditions prescribed for issuance of such notice beyond three years - Valid sanction under Section 151 accorded or not? - assessee has submitted that the alleged incriminating material was found from the Laptop of one Shri Ramesh Kumar Sanaka from his residential premises and therefore, the seizure of the Laptop and collecting the data marked as Annexure A/RKS/RES/01 cannot be considered as books of account or documents seized from the possession of the assessee

HELD THAT:- As decided in M/s. ACE Tyres (P) Ltd., Hyderabad [2025 (10) TMI 936 - ITAT HYDERABAD] reopening of the assessment on the basis of notice u/s. 148 of the Act, without satisfying requirements of section 148 and explanation provided thereon is invalid and thus, quashed the notice u/s. 148 of the Act and consequent assessment order passed by the Assessing Officer, because the notice u/s. 148 of the act issued by the AO failed to fulfil the mandatory conditions provided u/sec.149(1)(b) of the Act.

Thus, we are of the considered view that notice issued by the Assessing Officer u/sec.148 of the Act, in consequence to search operation conducted u/sec.132 of the Act on 04.01.2023 is bad in law, void abinitio and liable to be quashed because, the AO has issued notice without fulfilling the conditions prescribed for issuance of such notice beyond three years from the end of the relevant assessment years which is evident from the reasons recorded by the AO for reopening of the assessment, where the AO has failed to make out a case of income escaped assessment in excess of Rs. 50 lakhs which represents an asset, expenditure in respect of transaction or in relation to an event or occasion or an entry or entries in the books of accounts.

Therefore, the notice issued by the AO on the basis of reasons recorded for issuing such notice without satisfying the mandatory conditions can be said to be without application of mind and hence, the same is bad in law, void abinitio and liable to be quashed.

Approval granted by the prescribed authority in terms of section 151 of the Act, is also repeating the observations of the AO, without any independent verification of relevant seized materials which is basis of information which suggest escapement of income and thus, the approval granted by the prescribed authority can be said to be mechanical, without application of mind and not in conformity with provisions of section 151 of the Act. Therefore, notice issued by the AO u/s. 148 of the Act, is void abinitio. Thus, we quash the notice issued by the Assessing Officer u/sec.148 and consequent, assessment order passed - Decided in favour of assessee.

Rectification of mistake - wrongly claiming exemption u/s. 10(23C)(iv) instead of correct section u/s. 10(23C)(iiiad) - HELD THAT:- As we are conscious of the fact that the assessee’s claim for exemption u/s. 10(23C)(iiiad) of the I. T. Act has not been examined on merits by the authorities of the Income Tax Department while passing the order u/s 154 of the Act and the impugned appellate order of the CIT(A). The authorities have merely followed the outcome of the mechanical and computerized processing of the return u/s 143(1) of the Act.

The assessee itself made a mistake, claimed to be an inadvertent typographical mistake in wrongly claiming exemption u/s. 10(23C)(iv) instead of correct section u/s. 10(23C)(iiiad) of the Act. At this stage, the assessee should not be permitted to get benefit of exemption u/s. 10(23C)(iiiad) of I.T Act without satisfactorily showing that the assessee meets the eligibility conditions for exemption u/s. 10(23C)(iiiad) of the Act.

Impugned appellate order of the Ld. CIT(A) is set aside and the matter relating to the assessee’s claim for exemption u/s. 10(23C)(iiiad) of the I.T Act is remanded to the file of the Assessing Officer, with a direction to pass an appropriate order in accordance with law after examining the merits of the assessee’s claim u/s. 10(23C)(iiiad) of the Act and after providing reasonable opportunity of being heard to the assessee.

Benami Property - Provisional Attachment - Confirmation of Provisional Attachment - Identification and verification of seized property - Proof of provenance and effect on benami finding - HELD THAT:- It is clear that the seized Jewelleries were not being held as Benami by the alleged Benamidar Smt. Ranjana Roy. Even for the four items of Jewellery the subsequent submissions made by the Appellant do not appear to be afterthought. Her submissions that these Jewelleries were obtained from her own sources of funds appear to be correct. We also observe that Shri Animesh Banerjee had disclosed subsequently the entire Jewellery purchased from M/s SENCO Gold showroom under Pradhan Mantri Gareeb Kalyan Yojana, 2016.

Appellant pleaded that Shri Animesh Banerjee made aggregate disclosure of Rs. 2,47,00,000/- [Rs. 60,62,191/- held in cash + Bank balance of Rs. 1,86,37,809/- received from sale of entire Jewellery purchased from M/s Senco Gold showroom at Gariahat under the PMGKY, 2016 and the same has been accepted by the Income Tax Department. In the light of the Verification Report, we are unable to sustain the attachment of the seized Jewellery under PBPTA as Benami Property.

Thus, we set aside the Impugned Order. The Appeal filed by Smt. Ranjana Roy is therefore allowed

Condonation Of delay - HELD THAT:- Delay condoned.

Having carefully gone through the Review Petitions, the order(s) [2025 (7) TMI 1276 - SC ORDER] under challenge and the papers annexed therewith, we are satisfied that there is no error apparent on the face of the record or any merit in these Review Petitions, warranting reconsideration of the order impugned [2024 (8) TMI 1523 - CESTAT NEW DELHI].

The Review Petitions are, accordingly, dismissed.

Redemption u/s 125 - confiscation for non-declaration at the Green Channel - retraction of statement recorded u/s 108 - jurisdictional error or an error apparent on the face of the record -scope of writ of certiorari under Article 226 (limits on reappreciation of evidence) - Revisional jurisdiction u/s 129DD - eligibility for baggage concessions under Notification No. 50/2017-Cus and the Baggage Rules, 2016 - HELD THAT:- Once the appellate authority accepted the retraction and the ownership claim based on the material placed before it, the consequential exercise of discretion under Section 125 to permit redemption, coupled with imposition of redemption fine and penalty and liability to pay duty, cannot be faulted as an exercise that undermines the statutory scheme. The discretion under Section 125 is intended to be exercised judiciously on the facts of each case. Order-in-Appeal reflects application of mind to the nature of the lapse and to the proportionality of absolute confiscation.

The ground raised of “statutory ineligibility” is also not sufficient, by itself, to warrant interference in writ jurisdiction in the present case. The Revisional Authority has observed the Department’s contention on ineligibility and the Green Channel violation, yet has upheld the appellate order which does not grant any immunity to respondent no. 1. The release is permitted only upon payment of redemption fine and penalty, along with applicable duty. The orders under challenge therefore do not condone the violation and instead calibrate the consequence.

The petitioner’s further submission that the Revisional Authority exceeded its jurisdiction under Section 129DD is equally unpersuasive because the Revisionary Authority has not undertaken any reappreciation of evidence. It has affirmed the appellate reasoning on the limited footing that the Department did not place material to dislodge the claim of ownership or to establish that respondent no. 1 was acting as a carrier or was a habitual offender, and it consequently found no infirmity warranting revisional interference.

No ground is made out for interference - The writ petition is accordingly dismissed. Respondent no. 1 shall be entitled to release of the detained goods upon compliance with the conditions stipulated in the Order-in-Appeal, including payment of redemption fine of ₹1,46,000 and penalty of ₹1,46,000, besides applicable duty, if any.

Maintainability of writ for injunctive relief against Customs authorities - disowning of consignment and its consequences - entry inwards u/s 31 - acceptance/processing of Import General Manifest (IGM) - procedure u/s 48 for unclaimed/uncleared goods - non-joinder of necessary parties - availability of contractual/remedial remedy against foreign buyer - HELD THAT:- It is claimed that the petitioner has no commercial relation with the foreign buyer, and that there exists neither any dispute nor any complaint in relation to the quality of the goods or otherwise. Some foreign party, without any lawful authority, knowledge, consent, or approval of the petitioner, has illegally shipped the goods to India by showing the petitioner’s name as the consignee/importer.

It is an admitted position from the pleadings in the petition that the petitioner, under its IEC, had exported a shipment of PVC flooring granules to United Overseas Trade Pte. Ltd., Singapore. However, the said party has not been impleaded as a necessary party to the present petition.

An appropriate reading of the entire pleadings, particularly paragraphs 12, 13, 14, and 15, cumulatively gives the impression that the consignment in relation to which the petitioner seeks an injunction was returned by the Singapore party, to which it was originally supplied. However, the petitioner has failed to categorically spell-out as to what happened to the export bill with the Singapore firm.

Apart from the above, once the petitioner has disowned the consignment in question for which it was served with the notice dated 16th February 2026 viz., the cargo arrival, the necessary consequences under the Customs Act, 1962, shall follow.

In case, if the petitioner is not the importer of the goods in question or the goods do not belong to the petitioner, Section 48 of the Customs Act, 1962 provides the procedure to be followed where the goods are not cleared, warehoused, or transshipped within thirty days from the date of unloading.

In such an eventuality, in our opinion, not only is the petition misconceived, but also if the relief is granted as prayed in the petition, the same will be in violation of Sections 30 and 31 of the Customs Act, 1962.

If the petitioner has any grievances qua his Singapore party, it is always open for it to take recourse to such remedy as is permissible and available in law.

In that view of the matter, no case for exercising our extraordinary jurisdiction is made out.

The petition, as such, fails and stands dismissed.

Service of show cause notice u/s 28(1) for re-determination of classification - Invocation and applicability of Section 28(2) as waiver of notice on payment of duty and interest - Violation of principles of natural justice due to non-issuance of notice - Limitation for initiation of proceedings u/s 28(1) - HELD THAT:- On examination of record it is ascertained as a matter of fact that the Order in Original was indeed issued under Section 28(2). So, the order of the Original Authority was issued on the basis that no notice was served, as he shall not serve the same as provided under Section 28(2) of the Act. However, the Commissioner (Appeal) examined the application of Section 28(2) itself to the facts of the case and found that the pre-requisite required for invoking the same i.e. payment of duty and interest were absent and the said section was mis- applied. The Respondent also stated in their Memorandum of Cross Objections that they have not accepted the revision of classification and not paid the differential duty. Even though the said section was misapplied, it does not automatically establish the presence or absence of the show cause notice, which is required to be established independently.

We note that the Appellant does not make any claim that the notice was ever served on the Respondent as laid down under the Section 28(1). Therefore, at least the issue of the same should have been put beyond any pale of doubt by placing it on record at the time of filing the appeal itself in 2016 or even later at the earliest, as it was the only ground pleaded. Despite lapse of nearly ten years which was ample time for the Department to make good the assertion made, we had given two more weeks for production of the same during the hearing on 07.01.2026. But the Department failed to place the notice on record even on 21.01.2026. That being the only ground taken by the Appellant, not placing the notice on record even after ten years, if it was issued, knocks the bottom out of the ground taken and becomes fatal for the survival of the appeal.

We find that the invocation of Section 28(2) by the Original Authority is indicative of the fact that the notice was not issued. And the fact that the notice was also not produced before the Commissioner (Appeal) or even before us despite the assertion that the notice was issued confirms the same. The absence of the notice is clearly violative of the principles of natural justice, as enshrined in Section 28(1) of The Customs Act. Consequently, there was no misrepresentation by the Respondent as submitted in the Appeal due to which the Commissioner (Appeals) was alleged to have been misled.

As a result, we are not able to accept the prayer that the Order of the Commissioner (Appeals) vide Order-in-Appeal C.Cus.I. No. 705/2015 dated 30.10.2015 be quashed and take cognizance of the notice issued.

Cassification of the good - Extended period of limitation u/s 28(4) - penalty u/s 114A - confiscation u/s 111(m) - redemption fine u/s 125 - self-assessment and classification in Bill of Entry - HELD THAT:- We find that the extended period of limitation under section 28 (4) can be invoked only if the non-payment or short payment of duty is by reason of collusion or any willful misstatement or suppression of facts by the importer and this is with an intent to evade payment of duty. It is well established principle that the expression “suppression” does not mean mere omission, but an active suppression with an intent.

The show cause notice invoked extended period on the ground that the mis-classification of the goods came to light only on investigation by the department and that the importer had been importing similar models under CTI 8517 69 90 declaring the goods as network equipment. In this Bill of Entry they added the word server and thereby claimed a different classification. The Commissioner also held that by changing the classification for subsequent goods the appellant had shown the intent to evade.

No sufficient evidence to establish the intent to evade on behalf of the appellant especially when the goods were imported on DDP basis and the Bills of Entry were filed by the customs broker appointed by the overseas seller although using the IEC of the appellant. We, therefore, find no justification to invoke extended period of limitation under the facts of this case.

Therefore, the demand for extended period of limitation cannot be sustained. Since the elements required for imposing penalty under section 114A are the same as for invoking extended period of limitation under section 28 (4) of the Act, the penalty imposed under section 114A also needs to be set aside.

Confiscation of the goods - The discrepancy in this case is regarding the CTI under which the imported goods should be classified and not regarding the goods. Claiming the wrong CTI in the Bill of Entry is only a part of its self-assessment. Even if self-assessment is incorrect, it cannot be a ground for confiscating the imported goods. In view of the above that the confiscation of the goods or holding the goods liable to confiscated under section 111 (m) cannot be sustained. Consequently redemption fine imposed under the section 125 of the Act also cannot be sustained.

The appeal is partly allowed and the impugned order is modified by upholding the confirmation of demand of duty with interest within the normal period of limitation.

Mis-classification of the women’s woven jackets as woven knitted fabrics -advertisement and promotion expenses in the assessable value of the goods - interpretation of competing Customs Tariff headings for women's jackets (6102 30 10 versus 6202 93 90) - extended period of limitation for duty recovery under section 28(4) - penalty u/s 114A for collusion, fraud or willful mis-statement - re-assessment following wrong self-assessment - HELD THAT:- When the importer’s representative was asked, he agreed that they were not made of knitted fabrics but were made of woven fabrics. Accordingly, he also agreed with the classification proposed by the department. He could have, if he had any doubt about the nature of fabric, asked for sample to be sent for testing. It is not very difficult to distinguish woven garments (such as a shirt) from a knitted garment, (such as a T-shirt or a banian). There is no dispute that the imported garments were declared as knitted jackets but were found to be woven.

Chapter 61 of the Customs Tariff covers “articles of apparel and clothing accessories, knitted or crocheted”. Chapter 62 of the Customs Tariff covers articles of apparel and clothing accessories not knitted or crocheted. Since the goods in question were woven and not knitted fabric, they deserve to be classified under Customs Chapter 62.

As may be seen, women’s coats and jackets which are knitted or crocheted fall under the 4 digit Customs Tariff Heading 6102. Those which are made of manmade fibers fall under 6102 30. Within that those which are made of synthetic fibers fall under 6102 30 10.

However, women’s jackets which are not knitted or crocheted do not fall under Chapter 61 at all. They fall under Chapter 62. Within that Chapter Heading 6202 and further Customs Tariff Item 6202 93 90 will be the appropriate classification. We, therefore, find in favour of the Revenue and against the assessee on the question of classification.

Extended period of limitation for duty recovery under section 28(4) - However, it is perfectly possible for the appellant to have misunderstood and wrongly classified the imported goods during self-assessment of the Bills of Entry. The remedy against wrong self-assessment is re-assessment by the officer. Such re-assessment does not necessarily mean the appellant had any intention to evade paying duty at the correct rate. Therefore, elements necessary to invoke extended period of limitation under section 28 (4) or to impose penalty under section 114A of the Act, namely, fraud, collusion or any willful mis-statement are not present in the matter. Consequently the penalty imposed under section 114A cannot be sustained.

The appeal is partly allowed.

Doctrine of merger of interlocutory and subsequent orders - interim relief versus final adjudication - Scope of jurisdiction under Sections 241-242 of the Companies Act in company petitions - supervisory powers u/s 242 to regulate management and override internal contractual arrangements - forensic audit and appointment of an Independent Administrator as measures of judicial supervision - infructuousness of appeal where subsequent comprehensive orders render earlier relief incapable of practical effect - HELD THAT:- We are of the view that the issue relating to maintainability had to be agitated before the Ld. NCLT which was the right forum. The appellant is before us only with regard to interim order passed by Ld. NCLT in the CP No. 5 of 2023. This appeal is not against the final orders of the Ld. NCLT in which case such plea could be taken by the appellant. Be that it may be, it is also an admitted fact that the Respondent No. 2 & 3 hold 25% of the share capital of the company and in accordance with Section 244(1)(a) of the Companies Act, 2013 any member or members holding more than 1/10th of the issue share capital of the company can apply under Section 241.

We further note that the Company Petition under Sections 241–242 continued to be heard along with IA No. 8 of 2023, IA No. 9 of 2023, Comp. Application No. 3 of 2023 and Comp. Application No. 13 of 2023. On 18.07.2025, the Adjudicating Authority passed a comprehensive Common Order in CP No. 5 (AHM) of 2023 along with all connected petitions, applications and interlocutory applications. This common order restructures the management and control of the Company; orders forensic audit of the company; and gives other directions in exercise of statutory powers under Section 242.

We are of the view that the issue relating to maintainability had to be agitated before the Ld. NCLT which was the right forum. The appellant is before us only with regard to interim order passed by Ld. NCLT in the CP No. 5 of 2023. This appeal is not against the final orders of the Ld. NCLT in which case such plea could be taken by the appellant. Be that it may be, it is also an admitted fact that the Respondent No. 2 & 3 hold 25% of the share capital of the company and in accordance with Section 244(1)(a) of the Companies Act, 2013 any member or members holding more than 1/10th of the issue share capital of the company can apply under Section 241.

In appellate jurisdiction, the relevant consideration is whether any effective relief can now be granted. Even if we were to examine the correctness of the interim order dated 15.03.2023 independently, such examination would not alter the present position. The management of the Company is under the control of an Independent Administrator. The SPA compliance is under forensic audit. Arbitration proceedings are under oversight. Disputed receivables are subject to scrutiny. Status quo directions are in force.

An appeal becomes infructuous when subsequent judicial developments render adjudication of the earlier interim order unnecessary or incapable of producing practical relief. In the present case, the comprehensive order dated 18.07.2025 has overtaken and absorbed the interim order dated 15.03.2023. The interim direction survives only as part of, and subject to, the larger supervisory regime.

Therefore, the substratum of the present Appeal no longer survives independently. Any grievance concerning interpretation of Clause 6.3 to 6.6 of the SPA, or the handling of disputed receivables, must now be addressed within the framework of the Common Order dated 18.07.2025 or upon submission of the forensic audit report.

We further note that no appeal has been filed by the appellant against the aforesaid common order dated 18.07.2025 passed by Ld. NCLT. The order has therefore become absolute. We have also been informed that both the parties are extending full cooperation to the Administrator.

Validity of initiation of Corporate Insolvency Resolution Process u/s 7, despite pending Company Court proceedings - operative status of a Scheme of Arrangement under Sections 391-394 of the Companies Act on account of non compliance with statutory timelines - overriding effect of the Insolvency and Bankruptcy Code vis a vis inconsistent provisions of the Companies Act (Section 238 principle) - transfer of pending Company Court proceedings to the National Company Law Tribunal under The Companies (Transfer of Pending Proceedings) Rules, 2016 - priority of CIRP and appointment/powers of Interim Resolution Professional during moratorium - HELD THAT:- There was no second motion filed within the period prescribed under the Companies Rules and a delayed motion was made in the year 2009. Nothing was done thereafter and in 2016 specifically on 15.12.2016, the Rules of 2016 came into effect, requiring the transfer of proceedings to the Tribunal as on that date. The second motion filed belatedly was pending and ‘not reserved for allowing or otherwise ordering’. Even if a second motion had been filed within the time prescribed in the rules, that is within seven days of 25.07.2008 and the matter was kept pending, after the constitution of the Tribunal the matter would have to be transferred. In the present case, admittedly, the application was filed in the year 2009 long after the statutory time prescribed and since the same was not taken up even when the rules of 2016 came into force, it should have been transferred to the Tribunal.

We make it clear that the observations are merely prima facie, but we find no reason to stall the proceedings for initiation of the CIRP by resorting to the provisions of the IBC, as has been now attempted by the appellant herein, which would ensure rehabilitation of the Company. Judicial discipline, though a corner stone of justice, equity and fairness; ensuring continued public trust in judicial institutions, cannot be urged by tardy litigators engaged in fractious and opulent litigations aimed at jeopardizing public funds and putting the economy in a hostage situation. In cases having economic implications like the present one, at stake is not only public funds but rehabilitation of an industry, in the larger national interest, wherein financial probity is also of pre-eminence.

Hence, the consideration of an SOA is not alien to a proceeding under the IBC, which as of now could only be on the debt due in praesenti.

As observed, when the Rules of 2016 came into force, the second motion filed before the High Court under Sections 391 was pending without any orders passed nor was it reserved for orders which required the proceeding to be transferred to the Tribunal. We say this without prejudice to our prima facie finding that the application for second motion was grossly delayed, beyond the time prescribed for filing such an application and hence incompetent. Further as seen from the extract above a compromise or an arrangement under Section 230 of the Companies Act, 2013 can also be entered into in an IBC proceeding at the appropriate stage.

We find absolutely no reason to sustain the order of the Appellate Tribunal, and we set aside the same restoring the order of the Company Law Tribunal, the Adjudicating Authority under the IBC. The IRP hence would be entitled to proceed and our interim direction to keep the management in the loop of the day-to-day affairs, stands vacated.

Appeal stands allowed.

Admission of an application u/s 7 - existence of financial debt and default - modification/novation of debenture trust deed by approved instructions - binding effect of unilateral communications between a corporate debtor and a single debenture holder - requirement of express written waiver under a trust deed - duty of a debenture trustee to protect debenture holders' interests - legitimate expectation and estoppel vis-a -vis modification of contractual security - appellate interference for perversity of concurrent findings -HELD THAT:- Presently, the admitted position is that the debenture trustee and the other debenture holders were not even privy to the discussion as to the modification of the DTD at the relevant time, let alone being consenting parties thereto. The question of ‘estoppel’ being pressed into service by the respondent company against ECLF and the other debenture holders also does not arise as any waiver of the terms stipulated in the DTD had to be in accordance with the procedure prescribed therein, under clause 33, i.e., by way of a written document. Admittedly, there is no written document to support such a plea.

The conclusion drawn by the NCLAT as to the debenture trustee colluding with the debenture holders does not hold water as the debenture trustee was enjoined by the DTD to protect the interest of the debenture holders. Even on facts, the question of collusion between them was not made out. The NCLAT’s notion that the debenture trustee was required to act with fairness and protect the interest of the respondent company is contrary to the duty and obligation cast upon the debenture trustee under the DTD, which is to protect the interests of the debenture holders. The finding that the debenture trustee acted in unison with the debenture holders in catalysing their dubious designs to drag the respondent company towards insolvency is, therefore, incorrect. The adverse remarks made against the debenture trustee are, accordingly, set aside.

Though, the NCLAT was persuaded to record that the respondent company, having received ₹600 crore of the ₹850 crore under the DTD, had already repaid ₹508.48 crore, it lost sight of the passage of time, whereby the principal coupled with the interest due were much higher, resulting in gross disparity between what was claimed by the respondent company and the reality of the amount actually due and payable by it.

Ordinarily, this Court would not choose to reappreciate a matter on facts when the jurisdictional National Company Law Tribunal and, in appeal, the National Company Law Appellate Tribunal have recorded concurrent findings. The exception to this self-imposed rule would be when the perversity of such concurrent findings is clearly established. We find the present case to be one such case, where the perversity of the findings recorded by the NCLT and by the NCLAT is glaring and manifest, beseeching interference by this Court at the second appellate stage.

We, accordingly, hold that the NCLT and the NCLAT erred in ignoring the binding terms of the Debenture Trust Deed dated 27.03.2018 and in reframing the terms thereof on the strength of surmises, conjectures and assumptions, which were not borne out on facts and were completely unsustainable in law. Company Petition (IB) 922/MB/C-I/2022 filed by Catalyst Trusteeship Limited, the debenture trustee, deserved to be admitted under Section 7 of the Code.

Negotiable Instruments Act - Registration of sale deed - conveyance/registry on a pro rata phased basis - withdrawal of criminal complaints u/s 138 - approval of resolution plan - HELD THAT:- NOIDA has no objection with respect to conveyance in favour of the allottees/ beneficiaries which is proposed to be undertaken strictly on a pro-rata basis, commensurate with the payments received from the SRA. - Learned Counsel for the SRA submits that first tranche of payment under the plan to the NOIDA is to be made by June, 2026. It is submitted by the SRA that after payment of first tranche, the list of allottess in whose favour the registry is to be made shall be communicated to the NOIDA.

In view of the aforesaid, we are of the view that ends of justice be served in disposing Company Appeal (AT) (Insolvency) with direction to the Respondents SRA as well as NOIDA to execute the registration in favour of the Appellant after payment of the first instalment, which process shall be completed within 60 days from the date of payment. The Appellant to withdraw the complaints within seven days thereafter.

Thus, we dispose of Company Appeal (AT) (Insolvency).

Commercial wisdom of the Committee of Creditors - limited scope of judicial interference where there is no patent arbitrariness or opacity - feasibility and viability of the resolution plan - implementation requirements under Section 30(2) - compliance with Regulation 38(3) of the CIRP Regulations, 2016 - power to reject a non-compliant resolution plan and to order liquidation u/s 33(1)(b) - HELD THAT:- The jurisdiction of adjudicating authority to interfere with the application praying for approval of resolution plan approved with CoC has applied its mind to the above aspect. Adjudicating authority noticing the Regulation 38(3) of the CIRP Regulations, 2016, has come to the conclusion that resolution plan failed to specify the criteria laid down in the regulation.

The adjudicating authority on valid reasons have observed that the resolution plan is not commercially feasible and viable. Feasibility and viability of resolution plan is one of the statutory requirements as required by Regulations 38(3)(b) of the CIRP Regulations, 2016.

The detailed consideration by the adjudicating authority of the resolution plan and statutory requirement which has not been fulfilled in the resolution plan are the reasons for rejecting the resolution plan. We thus do not find any substance in the submission of the appellant that adjudicating authority without finding any statutory violation of provisions of Section 30(2) has rejected the resolution plan. Adjudicating authority has considered all aspects of the matter and after being satisfied that plan does not satisfy the requirement of Section 30(2) as well as Regulation 38(3) of the CIRP Regulations, 2016 has rejected the resolution plan.

The order of the adjudicating authority thus cannot be said to be beyond the jurisdiction of the adjudicating authority. Thus, we are satisfied that in the facts of the present case no error has been committed by the adjudicating authority in rejecting the resolution plan and directing for liquidation.

We do not find any sufficient grounds made out by the appellant to interfere with the order of the adjudicating authority in exercise of the appellate jurisdiction.

Both the appeals are dismissed.

Handing over of maintenance and IFMS funds to registered apartment owners association - validity of registration of apartment owners association - interpretation of Section 14(5) of the Uttar Pradesh Apartment (Promotion of Construction Ownership and Maintenance) Act, 2010 - proper application of Rule 55 regarding common seal of the association - supervision by Interim Resolution Professional of handover of maintenance - right of maintenance agency to recover outstanding dues under contract - HELD THAT:- Rule 55 deals with seal of the association it provides that the Association shall have a common seal which shall be in the custody of the Secretary and shall be used under the authority of resolution of the Board and every Deed of Instrument to which seal is affixed shall be attested for and on behalf of the Association by two members of the Board and the Secretary or any other person.

Present is not a case that Association is executing a Deed or Instrument. Association is filing an application in company appeal pending in this Tribunal, which application is duly supported by an affidavit sworn by its President. We, thus do not find any substance in the submission of the counsel for the respondent No. 2 that application is not maintainable on the strength of Rule 55 of the 2010 Rules.

Handing over of maintenance and IFMS funds to registered apartment owners association - validity of registration of apartment owners association - HELD THAT" It is relevant to notice that Noida Authority by earlier letter dated 01.06.2022 has directed to handover the maintenance to the registered Association. The Association of the apartment owners which has already been registered namely Supertech Ecociti Apartment Owners Association on 03.01.2022 which registration is valid till 02.01.2027.

Once registration has been granted under the Uttar Pradesh Apartment (Promotion of Construction Ownership and Maintenance) Act, 2010, it is not open for respondent No. 2 to contend that pre-condition for registration were wanting. As noted above, 99% flat owners are residing in the building and association has been registered which registration is current.

We are of the view that appellant has made out a case for issuing direction to the respondent No. 2 to handover the maintenance to the applicant. Respondent No. 2 shall take steps and complete the handover of the maintenance to the applicant registered Association within 30 days from today. The maintenance shall be handed over under the supervision of the IRP.

Treatment of Central Sales Tax dues as secured debt - compliance with Section 30(2) of the Insolvency and Bankruptcy Code - Section 9(2) of the Central Sales Tax Act as a machinery provision not creating a statutory first charge - precedential effect of prior Tribunal decision on classification of tax claims - HELD THAT:- The Adjudicating Authority in its order dated 06.11.2025 rejecting the application for approving the resolution plan has given the reason for the plan being not in compliance is that Sales Tax Department dues qua Central Sales Tax has not been treated as secured debt.

There is no dispute between the Ld. Counsel for the parties that the law has been declared by this Tribunal in the above case has clearly held that Central Sales Tax dues are not secured debt. In view of the aforesaid, the reason given by the Adjudicating Authority for rejecting the plan approval application is unsustainable. Similarly, the order of the Adjudicating Authority allowing the IA No. 1152 of 2025, holding that dues of Central Sales Tax are secured debt is also unsustainable. We are of the view that the impugned order dated 06.11.2025 passed in I.A. IA (Plan)/15 (AHM)/2025 as well as IA No. 1152 of 2025 can not be sustained. In result, all these Appeals are allowed, the order dated 06.11.2025 is set aside. The plan approval application 15 of 2025 is revived before the Adjudicating Authority for passing the consequential order within period of eight weeks from the date, copy of the order is produced.

Obligation to declare full export value - undervaluation/under invoicing of FOB value - realisation and repatriation of export proceeds - admissions recorded u/s 37 - liability of directors for company contraventions u/s 42 - penalty for contraventions u/s 13 - evidential weight of customs settlement and deposit as admission by conduct - proviso to Section 16(6) FEMA - recording reasons for delay in adjudication -HELD THAT:- The term FOB (Free on Board) is typically used so as to define the responsibility, risk and costs for goods which are being consigned from the seller to the buyer, as to what elements of the value of the goods are to be borne by the seller and by the buyer. Generally, the FOB is calculated as the cost of the goods plus all expenses incurred up to the moment the goods are loaded on to the ship. These expenses would not only include ex-factory price of the goods, but also transportation charges from the factory to the port and the packing charges. The expenses relating to loading charges and commission/brokerage charges are also included in the FOB value of the goods. The buyer takes over the costs and the expenses after the goods have been loaded on the ship. Thus, the Ocean Freight charges from the port of loading to the destination, the insurance during the transit and the import duties on arrival are to be borne by the buyer. The commission charges which are in dispute before us relate to payments made with respect to the services provided by the protective agents for testing and analysis of the Iron Ore, both at the ports of loading and discharge and in case of any dispute, help in mediation and resolution of the dispute. The Appellants have accepted the facts of the engagement of the protective agents. They have also not disputed the charter of work for which the protective agents were paid the fees. It is on record that the engagement of the protective agents was mutually agreed upon by the buyer and the seller. It cannot be denied that the FOB price was the basis for determining the amount of export duty which was required to be paid by the seller/exporter. Therefore, any deduction from the FOB price would have direct bearing on the amount of the export duty which was to be paid for each of the consignments.

We observe that the provisions of the Sub-Section only urge the Ld. AA to dispose of the Complaint under Sub-Section 3 of Section 16 as expeditiously as possible. The Sub-Section in its proviso allows for disposing off the Complaint even after one year and for the purpose, the Ld. AA has to record periodically the reasons for such delay. We observe that the Ld. AA has already recorded his finding that the submissions made by the Appellants in this regard are not acceptable, in view of the said proviso. As such there is no basis to challenge the findings of the Ld. AA, since it is the same Authority which is supposed to have recorded the reasons for not having disposed of the Complaint within the recommended timeline in which it had to only make endeavours to dispose of.

The provisions of Section 42(1) of FEMA are clear and hence we hold Shri Ambar Timblo to be responsible for the conduct of the Company and liable for penalty. Nothing has been produced before us to show that the contravention occurred without the knowledge of either of the two individual Appellants. There is also nothing before us to show that all due diligence was exercised by the two individual Appellants. In so far as Shri Apoorva Misra is concerned, his own statements that he was responsible for the final negotiated price along with other personnel of the Company and his admission that the discounts were given cannot lead to his exoneration.

Thus, there is nothing in the Section which can indicate directly or indirectly requirement of mens rea. Words like “willful”, “deliberately”, “intentionally” etc. are missing.

The present appeal deals with provisions which are strictly civil obligations and penalty for the contraventions of these provisions are imposable under Section 13(1) of FEMA which provides for penalty only, up to thrice the sum involved in such contravention.

The Appellants have also pleaded that they have already suffered by virtue of the aforementioned Order of the Customs Settlement Commission. They pleaded for taking that into account to make the penalty proportionate, if in case the Appellants are found liable for penalty.

Taking into consideration the facts and the circumstance of the present case, the ends of justice shall be met on imposition of penalty of Rs. 30,00,000/- on the Appellant Company and Rs. 3,00,000/- each on the two individual Appellants. Pre-deposit of penalty amount paid by the Appellants shall be adjusted against the penalty imposed.

Appeals partly allowed.

Effect of approved resolution plan on pre-existing claims - extinguishment of claims not part of resolution plan - binding effect of resolution plan on statutory authorities - immunity u/s 32A of the Insolvency and Bankruptcy Code - change of management as condition for immunity - HELD THAT:-First and foremost, we note that in paragraph 4.9 of the Impugned Order it is noted that the Appellant Company was under the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016. We find that the Impugned Order was passed on 28.08.2020.

It is on record that the Hon’ble Supreme Court vide its Order dated 28.02.2020 i.e. before the Impugned Order was passed had restored the Judgment dated 25th/27th June, 2019 of the NCLT, Chennai, approving the Resolution Plan filed by M/s Dhanuka Laboratories Ltd. towards the reorganization and corporate revival of the appellate Company. It is also on record that the approved Resolution Plan was implemented in March, 2020. In view of the Judgment of the Hon’ble Supreme Court in JSW Ispat Special Products Ltd. vs. Union of India, [2024 (12) TMI 1698 - SC ORDER] and the facts and circumstances of the present case, the Impugned Order cannot be sustained. We therefore set aside the Impugned Order.

Thus, we allow the Appeal filed by M/s Orchid Pharma Ltd. Applications pending, if any, are disposed of accordingly.

Offence of money laundering u/s 3 punishable u/s 4 - Proceeds of crime - Requirement of a scheduled/predicate offence as condition precedent for proceeds of crime - Prima facie satisfaction for issuing process / sufficient ground for proceeding - Continuing activity and temporal nexus between acquisition of property and proceeds of crime - Exercise of inherent jurisdiction to quash criminal proceedings (Section 482 Cr.P.C. / Section 528 BNS) - HELD THAT:- From the material on record, the property purchased by M/s. Premier Port Links Pvt. Ltd. in the years 2005-2007, unarguably, cannot be said to have any connection with the proceeds of crime, as the acts constituting the scheduled offence took place after its acquisition, i.e. after December 2020 and up to February 2021. Even assuming the prosecution’s case that the moneys were transferred to the Trust account of the principal accused, Anil Deshmukh, from 2013, the property purchased in 2005-2007 would still have no connection to the proceeds of crime.

What is declared as an offence is knowingly dealing with the proceeds of crime, whether by concealment, possession, acquisition, use or by claiming or projecting the proceeds of crime as untainted property. The property at Dhutum Village, acquired between 2005 and 2007, ex facie, cannot be said to have any connection with the proceeds of crime, as the acts constituting the scheduled offence took place during the period 2020-2021, i.e. after its acquisition. The charge-sheet and the material on record do not make out any case for the offence under Sections 3 and 4 of the PMLA, 2002, against the Applicant.

The order dated 16.09.2021 passed by the Designated Court in PMLA Special Case No. 1089 of 2021 does not indicate that the Designated Court applied its mind to the material, if any, available against the Applicant. The said aspect has not been considered in the order dated 16.09.2021. The test of “sufficient ground for proceeding” against the Applicant is not satisfied. No reasons are found in the order dated 16.09.2021 to conclude that there is prima facie ground to proceed against the Applicant. The order dated 16.09.2021 is therefore bad in law and liable to be set aside.

The ingredients of the offence under Sections 3 and 4 of the PMLA, 2002, are not established against the Applicant. The present case squarely falls within the principles for the exercise of powers under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (Section 482 of Cr.P.C.), to quash the impugned order dated 16.09.2021 passed by the Designated Court and to quash the complaint in PMLA Special Case No. 1089 of 2021, qua the Applicant (Accused No. 11), to prevent abuse of the process of law.

This Criminal Application is therefore allowed in terms of the prayer clauses (A) and (B). Consequently, the impugned order dated 16.09.2021, passed by the Designated Court in PMLA Special Case No. 1089 of 2021 against the Applicant, is quashed and set aside. The complaint in PMLA Special Case, qua the Applicant (Accused No. 11), is quashed.

Territorial jurisdiction - maintainability of appeal u/s 42 - ordinarily resides or carries on business or personally works for gain - lack of territorial jurisdiction - HELD THAT:- In the present case, by giving his own address at Kolkata, the appellant admits that he ordinarily resides in Kolkata.

The learned counsel for the appellant, in spite of the above, to maintain the present appeal, states that the appellant ordinarily carries on business and works for gain in Delhi. And for this purpose, as noted hereinabove, he has merely relied upon the GST registration certificate without having any other averment or proof in this regard.

As far the averment of the appellant that he appears in the NCLT, it would again not mean that he ‘ordinarily’ works for gain within the jurisdiction of this Court.

Thus, we find that the appellant not only ordinarily resides in Kolkata, but also works for gain at Kolkata.

This Court therefore, lacks the territorial jurisdiction to entertain the present appeal. The appeal is, accordingly, dismissed.

Reason to believe - provisional attachment u/s 5(1) - second proviso to Section 5(1) - nexus between proceeds of crime and attached property - excessive attachment - reverse burden of proof u/s 8(1) - effect of income tax declarations on PMLA liability - HELD THAT:- We do not find any substance in the contention that no reason to believe has been recorded that if the property involved in money-laundering is not attached immediately, the non- attachment of the property is likely to frustrate any proceeding under the Act. On the contrary, we find that the officer has recorded very specific and cogent reasons for invoking the provisions of Second Proviso to section 5(1) of the Act.

Excessive attachment beyond the quantum of Proceeds of Crime - HELD THAT:- The allegations contained in the FIR are only the starting point of the investigations in the predicate (scheduled) offence case. It is not even the final outcome of the investigation in the scheduled offence case, not to speak of the final outcome of the investigation by the ED under the PMLA. If the facts stated in the FIR and the ECIR registered on the basis of the said FIR were to be the final determinant of the quantum of proceeds of crime, there would be no need for a separate investigation by ED for which the Act bestows vast powers on the Directorate.

Coming to the first limb of the argument of ‘excessive attachment’, namely that even if the allegations made by ED are taken at their face value, though denied, the alleged proceeds of crime can be only Rs. 9,90,07,156/- which is much less that the value of property (Cessna aircraft) attached in the hands of the appellant company, i.e. Rs. 30,90,07,156/-, the issue is fully addressed in the discussions under Issue No. 3 below.

Nexus between Proceeds of Crime and Property Attached - During the course of the appellate proceedings, it was pointed out by the respondents that the aircraft in question was purchased in 2009 and the period of the scheduled offence in this case is 2007-2012. Thus, at the outset, there is no merit in the argument of the appellant that the aircraft was acquired prior the period of commission of the alleged scheduled offence.

Upon receipt of a notice u/s. 8(1), the onus is entirely upon the person to whom the notice is issued is to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under section 5(1), the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government. If he is unable to do so, the property in question would be liable to be considered to be proceeds of crime and attached as such, leading to its final confiscation upon successful conviction of the accused. The PMLA places reverse burden on the accused person to produce appropriate evidence to prove that the property did not represent proceeds of crime. The provisions of Section 8(1), and Sections 23 and 24 of the Act lay down the principle of reverse burden firmly and unambiguously.

In the present case, the appellant has entirely failed to discharge its burden. On the contrary, the investigations carried out by the respondent directorate have succeeded in establishing a clear money trail from the proceeds of crime to the asset which has been attached as brought out in the preceding paragraphs. No specific submissions backed by documentary evidence have been made by the appellant even at the appellate stage to rebut the detailed and specific findings of the respondent directorate as discussed above.

It is stated that the source of the repayment of Rs. 21 cr. received from PNB had been declared in the I-T Returns. However, the relevant I-T Returns have not been made a part of the record. The findings of the I-T Department have been briefly referred to in para-3 above. It appears that subsequent to the said investigation by that Department, additional income may have been declared by the appellant. The same cannot absolve the appellant of the consequences under the PMLA. Even otherwise, mere declaration of income from tainted sources as untainted income from legitimate sources for the purposes of income tax cannot constitute a defence under the PMLA. The entire aim of money-laundering is to give the colour of legitimacy to illegitimate income. Filing of ITRs declaring income from tainted sources as income from legitimate sources and paying tax thereon is only one more step in this direction. The appellant did not submit any cogent document to explain the sources of income for the purchase of the subject property.

Accordingly, in light of the elaborate findings recorded in the impugned order which have remained entirely uncontested with any tenable evidence, the argument regarding the lack of nexus between the attached property and the proceeds of crime are also hereby rejected both on factual and legal grounds. Firstly, it was not for the respondent to prove the nexus but for the appellant to disprove the same, and, secondly, the respondent has, in fact, succeeded in establishing a clear nexus in the present case.

The respondent Directorate has also pointed out that a Supplementary Prosecution Complaint has been filed before Special Court on 05.01.2026 praying for confiscation of the attached property, i.e., Cessna Aircraft standing in the name of the appellant company.

Accordingly, the arguments advanced on behalf of the appellant fail, and are hereby rejected. No other arguments were pressed by the Ld. Counsel for the appellant. Consequently, we do not find any reason to interfere with the impugned order.

Provisional attachment of properties - proceeds of crime - burden of proof u/s 24 - money trail and layering of proceeds - confirmation of Provisional Attachment Order - attachment of properties purchased prior to the predicate offence by value equivalent to proceeds of crime - HELD THAT:- The amount transferred by the relatives has been pleaded. It is said to be a loan. However, source to acquire the amount by the relatives has not been disclosed. It is more so, the respondent analyzed it to be out of deposit of the cash in the bank account of relatives and after routing it to other bank accounts, finally transferred to the bank account of the appellant. It was nothing but to layer the proceeds of crime for purchase of properties and in one case for repayment of the loan amount of the property purchased in the year July, 2017.

It is true that check-period of crime is of the year 2019 but proceeds of crime got involved indirectly for the property because the appellant failed to disclose the source of repayment of the loan amount. It may be that initially loan was taken from DHFL to purchase the property but was required to be repaid from the known source. Finding its payment out of the proceeds of crime, the plot was provisionally attached.

The fact remains now for another plot. It was purchased in the year 2020 after taking money from the relatives. However, the appellant failed to disclose the source of the relatives to transfer the money in the account of the appellant. The money trail revealed transaction of the cash out of the proceeds of the crime. It was deposited in cash without disclosing the source of cash and was then transferred in the bank account of the appellant routing it through bank account of her relatives. We find no document or evidence to show the source for repayment of the loan amount to the relatives despite burden to disclose the source on the appellant as per Section 24 of the Act of 2002.

No error in the order passed by the Adjudicating Authority to confirm the PAO of the properties. At this stage, we may further clarify that the plot purchased in the year 2017 could have been otherwise attached for value equivalent to the proceeds of crime in the hands of the appellant’s husband who was one of the main accused of commission of crime in transferring the money of the Municipal Council in connivance with the others and therefore appellant did not file the bank statement of any of the relatives and even husband of the appellant to disclose the source and otherwise properties purchased even prior to commission of crime equivalent value to the proceeds can be attached in light of the judgment of Punjab and High Court in the case of Dilbag Singh @ Dilbag Sandhu Vs. Union of India & Ors. [2024 (11) TMI 833 - PUNJAB AND HARYANA HIGH COURT] and this Tribunal’s order in the case of Sadananda Nayak Versus The Deputy Director, Directorate of Enforcement, Bhubaneswar [2024 (10) TMI 1619 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI]

Thus, we do not find any case to cause interference in the impugned order and accordingly appeal fails and is dismissed.

CENVAT credit- minimum guaranteed CENVAT credit (MGCC) - adjustment of contract price for variation in taxes - reimbursement of excise duty - arbitrator to act within terms of contract - patent illegality - deduction from invoices - HELD THAT:- The arbitrator travelled beyond the terms of the contract to reject the claim. To justify the conclusion arrived at, reference was made to a non-existing clause in the contract that 50% benefit of CENVAT would go to the petitioner. At the cost of repetition there is no clause for deducting the shortfall in MGCC from the invoices. It is a trite law that an arbitrator has to decide the dispute within the four corners of the terms and conditions of the contract. The venture of the arbitrator beyond the terms and conditions vitiates the award by patent illegality.

The law is well settled that the parties are bound by the terms of the contract and the arbitrator cannot go into the fairness of the terms and conditions. In the case in hand in absence of a clause providing for deduction on account of shortfall in MGCC, the arbitrator proceeded on the basis that the petitioner had to make good the shortfall in MGCC but failed to point out the clause for providing such deduction.

The arbitrator erred in holding that the tax component formed part of the contract price and not the MGCC, whereas MGCC was the credit of excise duty paid which was part of the contract price.

The arbitrator while holding that the net outgoing would be the contract price reduced by MGCC, failed to consider that the net outflow of the respondents was not affected by any shortfall in MGCC. There was no basis to hold that the shortfall in MGCC could be deducted from the invoices and this tantamounts to adding terms to the contract between the parties which is not permissible in law.

There is no clause in the contract for deducting the shortfall in MGCC; clause 14.5.2 only stipulates that upon failure of the petitioner to produce documents enabling the respondents to avail CENVAT credit there shall be no reimbursement of the duty paid; despite the shortfall in MGCC the net value of the contract remained unchanged; and the arbitrator relied upon a non-existent clause to the effect that in case of excess CENVAT, the petitioner would gain by 50%. The arbitrator travelled beyond the clauses of the contract and the award is vitiated by patent illegality.

The petition is allowed and the impugned arbitral award is set aside.