TaxTMI Updates e-Newsletter
Mar 02,2026

Dismissal as withdrawn - liberty to file review - condonation of delay - exercise of jurisdiction under Article 136 - no interference with impugned order -

Dismissal as withdrawn - liberty to file review - HELD THAT:- The Court accepted the submission that the High Court had not addressed the first prayer in the underlying writ petitions and permitted the petitioners to withdraw the Special Leave Petitions. Consequent relief granted was dismissal of the SLPs as withdrawn while preserving the petitioners' right to seek review of the High Court order.

Condonation of delay - exercise of jurisdiction under Article 136 - no interference with impugned order - HELD THAT:- Delay in filing the SLP(C) Diary is condoned.

We do not find a good ground to interfere with the impugned order/judgment in exercise of our jurisdiction under Article 136 of the Constitution of India. Accordingly, the Special Leave Petitions stand dismissed.

Notice to show cause must contain relevant particulars - principles of natural justice - unreasoned adjudication order violates Section 75(6) - adjudication without hearing violates Section 75(4) - orders passed without jurisdiction / functus officio - setting aside of adjudication orders - remand for fresh consideration after provision of particulars - reversal and recredit of electronic ledger debits - HELD THAT:- The notice to show cause is clearly bereft of particulars. It has been time and again held by the Hon’ble Supreme Court that all relevant particulars must be set out in the notice to show cause to enable the noticee to answer the charges levelled against the noticee. Not having done so, the respondent GST Authority has acted in breach of the principles of natural justice.

It is not in dispute that the said order which clearly visits the petitioner with adverse consequences has been passed without hearing the petitioners which is a clear violation of the provisions of Section 75(4) of the said Act of 2017 apart from the violation of principles of natural justice even in usual course. On that ground too the adjudication order cannot withstand scrutiny under judicial review.

The second repetition of the same adjudication order on June 05, 2023 was clearly without authority. Similarly the order dated June 09, 2023 communicating acceptance of the petitioner’s reply could also not have been issued by the Proper Officer concerned at all inasmuch as the Proper Officer became functus officio after having passed the adjudication order dated May 29, 2023. Both the said order are without jurisdiction.

Both the adjudication orders i.e. the order dated May 29, 2023 and June 05, 2023 passed by the adjudicating authority, which are impugned in the present writ petition as well as the order dated June 09, 2023 deserve to be set aside and are accordingly set aside.

As already indicated hereinabove, since the notice to show cause does not contain the relevant particulars, the notice issuing authority shall provide all relevant particulars to the petitioners in support of the show cause notice dated February 21, 2023 and the petitioners shall be entitled to file reply thereto in accordance with law.

Since a sum of Rs. 2,51,858/- has been debited from the petitioners’ electronic credit ledger on the basis of the adjudication order dated June 5, 2023, which has no basis in law, in terms of the respondents own report in the form of an affidavit, therefore the debiting of electronic cash ledger of the petitioner on the strength of such order cannot also be held to be valid.

Accordingly it is directed that the respondent GST authorities shall reverse the debits and recredit the amount debited from the petitioner’s electronic cash ledger on the strength of the order dated June 05, 2023 within a period of two weeks from the date of communication of this order.

Cancellation of GST registration for non-furnishing of returns - Proviso to Rule 22(4) of the CGST Rules - restoration on filing pending returns and payment - Power to drop proceedings and pass order in FORM GST REG-20 - Application for restoration/revocation after expiry of statutory timeline - Computation of limitation under Section 73(10) - HELD THAT:- As per Section 29(2)(c) of the Act, an officer, duly empowered, may cancel the GST registration of a person from such date, including any retrospective date, as he deems fit, where any registered person, has not furnished returns for a continuous period of 6 (six) months. Rule 22 of the CGST Rules, 2017 has laid down the procedure for cancellation of the registration.

Having regard to the fact that the GST registration of the petitioner has been cancelled under Section 29(2)(c) of the Act, for the reason that the petitioners did not submit returns for a period of 6 (six) months and more and the provisions contained in the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017 and cancellation of registration entails serious civil consequences, this Court is of the considered view that in the event the petitioner approach the officer, duly empowered, by furnishing all the pending returns and make full payment of the tax dues, along with applicable interest and late fee, the officer duly empowered, may consider to drop the proceedings and pass an appropriate order in the prescribed Form.

This writ petition is disposed of by providing that the petitioner shall approach the concerned authority within a period of 2 (two) months from today seeking restoration of her GST registration. If the petitioner submit such an application and complies with all the requirements as provided in the proviso to Rule 22 (4) of the Rules, the concerned authority shall consider the application of the petitioner for restoration of GST registration in accordance with law and shall take necessary steps for restoration of GST registration of the petitioner as expeditiously as possible.

The petitioner herein would also be liable to make payment of arrears i.e. tax, penalty, interest and late fees. It is clarified that this order has been passed on the peculiar facts of this case and shall not be taken as a precedent.

The writ petition accordingly stands disposed of.

Mandatory requirement of Form GST DRC-07 - condonation of delay u/s 107(4) - appellate authority's duty to consider grounds raised in the memo of appeal - HELD THAT:- It is not in issue that on 01.08.2022, the order in original came to be passed by the Adjudicating Authority and an appeal stands provided under Section 107 of the UPGST/CGST Act, 2017. The period of limitation of preferring an appeal is three months with a grace period of one month totalling to four months. Notably, the order in original came to be passed on 01.08.2022. The appeal was preferred by the writ petitioner on 03/09.01.2023.

According to the writ petitioner the delay is being sought to be condoned on the pretext that the Form GST DRC-07 happens to be a mandatory requirement for filing of the appeal. A copy of the application dated 26.11.2022 requesting for uploading of the Form GST DRC-07 has also been appended at 59/60 of the paper book. The said contention so raised by the writ petitioner has not been considered while deciding the appeal and rejecting the same.

In the opinion of the Court, once a ground is taken in a memo of appeal, then the Appellate Authority is to consider the said ground. Might be the same may be accepted or rejected.

Since the grounds taken by the writ petitioner for condonation of the delay have not been adverted to in correct perspective, thus the appellate order cannot be sustained.

The order dated 21.07.2023 passed by the Addl. Commissioner, Grade-2 Appeal-2 Commercial Tax, Noida is set aside.

Appellate jurisdiction - power to grant interim orders - incidental powers - stay of recovery pending appeal - Scope of Section 111 - procedure before the Appellate Tribunal -power to regulate procedure - inherent powers - principles of natural justice - Whether the Goods and Services Tax Appellate Tribunal (‘the Tribunal’), in its constitution under the Central Goods and Services Tax Act, 2017(CGST Act), has jurisdiction to pass interim orders. - HELD THAT:-Chapter XVIII of the CGST Act provides for Appeals and Revisions. Section 109 deals with the constitution of the Appellate Tribunal. Section 111 provides for the procedure before the Appellate Tribunal. Section 112 provides for Appeals to the Appellate Tribunal. Section 113 provides for orders of the Appellate Tribunal.

In our opinion, the aforesaid provisions are required to be read conjointly. Sub-section (1) of Section 111 provides that the Appellate Tribunal, while disposing of any proceedings or an Appeal before it, shall be bound by the procedure laid down in the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice and, subject to the other provisions of the Act and the Rules framed thereunder, shall have the power to regulate its own procedure. Sub-section (2) of Section 111 provides that the Appellate Tribunal shall, for the purpose of discharging its functions under the Act, have the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 while trying a suit, in respect of matters specified in clauses (a) to (h) therein. Sub-section (3) provides that any order made by the Appellate Tribunal may be enforced by it in the same manner as if it were a decree made by a Court in a suit pending therein, and it shall be lawful for the Appellate Tribunal to transmit its order for execution to the Court within the local limits of whose jurisdiction the subject matter is situated, as contemplated under clauses (a) and (b). Sub-section (4) provides that all proceedings before the Appellate Tribunal shall be deemed to be judicial proceedings within the meaning of Sections 193 and 228 of CGST Act and for the purposes of Section 196 of the Indian Penal Code, 1860 and that the Appellate Tribunal shall be deemed to be a Civil Court for the said purposes.

Considering the nature of the powers conferred under sub-section (1) of Section 113 to pass such orders “as it thinks fit”, in our opinion, it cannot be inferred, that although the Tribunal is vested with the jurisdiction to pass substantive final orders on the Appeal to confirm, modify or annul the decision or order appealed against, or may refer the case back to the Appellate Authority or the Revisional Adjudicating Authority with appropriate directions as it may think fit, for a fresh adjudication or decision in the manner as provided in sub-section (1) of Section 113, it would nonetheless lack jurisdiction to pass appropriate interim orders. The power to grant interim relief, including protection against recovery pending the Appeal, is inherent and incidental to the appellate jurisdiction conferred upon the Tribunal. Thus, the appellate power of the Tribunal being wide in its sweep, necessarily wields with the appellate tribunal, the authority and jurisdiction to pass appropriate interim orders relevant to subject matter of the appeal, so as to make the appellate remedy effective.

Also, on first principles, we are unable to accept a proposition that although the Appellate Tribunal is a statutory forum created under the scheme of Sections 111, 112 and 113 of the CGST Act, 2017, it would nevertheless be powerless to grant interim relief. Such an interpretation would render the appellate remedy illusory and defeat the legislative intent, cumulatively and wholesomely gathered from the provisions as noted hereinabove, surrounding the constitution of the Appellate Tribunal.

Thus, we are not inclined to accept the Petitioner’s contention that the Tribunal lacks jurisdiction to grant interim reliefs of the nature sought. Consequently, we are of the opinion that the Petitioner ought to move an appropriate interim application before the Appellate Tribunal and invite appropriate orders in the pending Appeal.

Considering that the Petitioner has approached this Court urgently in view of the Recovery Notice dated 6th February 2026, we deem it appropriate and in the interests of justice, to grant limited interim protection to the petitioner, so as to enable the Petitioner to approach the Appellate Tribunal. Accordingly, the Petitioner is at liberty to file an interim application before the Appellate Tribunal within a period of two weeks from today. Till such interim application is filed and decided by the Tribunal, the Recovery Notice dated 6th February 2026 shall not be acted upon by the Respondents.

The Petition is disposed of in the aforesaid terms.

Company under the control of a liquidator, failed to discharge the tax liability - pre-deposit requirement - liquidation under insolvency proceedings - period of limitation - Input tax credit -

Period of limitation - HELD THAT:- The impugned order is dated 16.10.2025 and the present writ petition was filed on 15.12.2025, which is within the period of limitation prescribed for filing an appeal before the Appellate Authority against the impugned order.

Pre-deposit condition - Since the issue is stated to be pending before the said forum, this Court is inclined to dispose of the writ petition by granting liberty to the petitioner to challenge the impugned order before the Appellate Authority.

Accordingly, the petitioner is granted liberty to file an appeal before the Appellate Authority, subject to the condition that the petitioner complies with the statutory requirement of depositing 10% of the disputed tax as pre-deposit within a period of thirty (30) days from the date of receipt of a copy of this order.

Appellate authority to consider subsequent favourable NCLT order - In case the petitioner secures any favourable order from NCLT, the same shall be taken into consideration by the Appellate Authority at the time of final disposal. In case the petitioner fails to file such an appeal, the respondent shall be at liberty to proceed against the petitioner in the manner known to law.

This writ petition is disposed of with the above observations.

Validity of show-cause notice issued u/s 74(1) - Construction-related blocked credit u/s 17(5)(d) - Wrongly availed or utilised input tax credit by reason of fraud Or wilful-misstatement or suppression -

Construction-related blocked credit u/s 17(5)(d) - Application of Section 17(5)(d) to the petitioner's transactions relating to transfer of leasehold rights in GIDC sub-plots. - HELD THAT:- A plain and simple reading of provision of Section 17(5)(d) of the GST Act exposits that the apportionment of credit and blocked credit relates to the goods or services or both by a taxable person for the purpose of construction of any immovable property. Thus, the legislative intent is clear that the bar on credit applied exclusively to construction related expenditure and the apportionment of credit and blocked credits relating to such business. The respondent has not established that the petitioner has undertaken any construction activity whatsoever and apart from transferring the leasehold rights in GIDC Plot, is also accordingly, undertaking the construction activities.

Thus, the provision of Section 17(5)(d) of the GST Act would not even remotely apply to the petitioner. Hence, the allegation of availing block credit by resorting to the provision of Section 17(5)(d) of the GST Act, is uncalled for and there is a complete non-application of mind on behalf of the respondent.

Wrongly availed or utilised input tax credit by reason of fraud or wilful-misstatement or suppression - Validity of the notice issued under Section 74(1) alleging wrongly availed/utilised ITC by reason of fraud or wilful-misstatement or suppression. - HELD THAT:- Section 74(1) can be invoked only where input tax credit has been wrongly availed or utilised by reason of fraud, wilful-misstatement or suppression of facts. The Court found no material to establish fraud, wilful-misstatement or suppression by the petitioner. It was undisputed that an inadvertent utilisation of a portion of ITC in July 2022 was subsequently reversed by Form DRC-03 dated 11.04.2023 and the petitioner discharged the output tax liability in cash. The respondent therefore lacked the statutory pre-requisite to issue the Section 74(1) notice and the proceeding was held to be without jurisdiction.

Final Conclusion: Writ petition allowed. The impugned notice under Section 74(1) is quashed and the respondent is directed to unblock the petitioner's electronic credit ledger amount within three weeks from receipt of the order.

Delay and laches - limitation u/s 112 of the Goods and Services Act, 2017 - effect of COVID-19 limitation extension on pending appeals - HELD THAT:- Admittedly, the statutory period for filing to challenge the order dated 11.03.2020 had expired long back. According to the petitioner, he received a copy of the impugned order on 23.09.2024. The petitioner is also admitting that an appeal was preferred under Section 107 of the Act, 2017, in which the respondent No.3 issued a notice of hearing on 31.01.2020 at the official address, which was received after the date of hearing on 31.01.2020. Thereafter, the petitioner sent a request letter dated 04.02.2020 seeking adjournment upto third week of February, 2020.

According to the petitioner, thereafter the COVID pandemic started, and all the proceedings were stayed by the Apex Court by taking suo moto cognizance. The petitioner filed an appeal; therefore, he should have taken care of listing his appeal from time to time. Once, notice was received for appearance, although the date of appearance has expired, but the petitioner should have followed its appeal.

The stay granted by the Apex Court came to an end on 28.02.2022. Thereafter, the petitioner has not taken care to know the current status of the appeal. Therefore, the petitioner was negligent in pursuing the appeal.

This petition is dismissed, as it suffers from delay and latches.

Tax Deduction at Source - specified person under Section 51 - interpretation of notification vis-a -vis clarificatory circular - binding nature of Supreme Court precedent over administrative circular - concept of control (substantive/regulatory control versus day-to-day operational control) - contractual threshold for TDS - value of supply under each contract - continuous supply and aggregation of invoices under a contract - principles of statutory interpretation (plain meaning, punctuation, disjunctive 'or') - HELD THAT:- The Indian Institutes of Management Act, 2017, as amended by the Amendment Act of 2023, it can be seen that the applicant has to provide reservations to the Scheduled castes/ Scheduled Tribes/Other Backward Classes as per the Central Educational Institutions (Reservation in Admission) Act, 2006.

It can, be seen that there is a substantial amount of control over the functioning of the applicant. The submission of the applicant that the powers granted vide the Act do not translate into the day-to-day operational control may be to an extent correct, but Notification No. 50/2018-CT does not mandate a pervasive control by the Government on the applicant. The term “control” as contemplated in the Circular and Notification cannot, therefore, be interpreted to refer to day-to-day operational control, as there is nothing in the wordings of the notification which conveys so. A substantial regulatory control is what is required. The Supreme Court in Balmer Lawrie & Co. Ltd. Vs. Partha Sarathi Sen Roy [2013 (4) TMI 132 - SUPREME COURT] while discussing pervasive control has held that the term “control” is taken to mean check, restraint or influence. Control is intended to regulate, and to hold in check, or to restrain from action. The word “regulate”, would mean to control or to adjust by rule, or to subject to governing principles.” The Act contains sufficient provisions for the Central Government to regulate the functioning of the applicant institute. Further, even the fifty one percent mandated in the Notification is only for the equity, because there is no formula to numerically quantify the control in percentage terms. Thus, the contention of the applicant, that the control is less than 50% as the number of the nominee members from the Government side does not exceed more than 50% of the total members of the Board of Governors, does not appeal to us. Even otherwise, as per Section 11(9) of the IIM Act, the Board is accountable to the Central Government in the exercise of its power and discharge of its functions under the Act. Further, the Director of the applicant institute, who is the Chief Executive Officer, can neither be appointed nor removed by the Board, without the prior approval of the President of India.

Therefore, the composition of the Board cannot be a determinative factor to ascertain the quantum of control by the Central Government. The applicant, therefore, falls under the category of persons notified under Notification No. 50/2018-CT dated 13.09.2018 and is consequently liable for deduction of TDS under Section 51 of the CGST Act, 2017.

We further find that the Authority for Advance Ruling, Tamil Nadu in the case of Indian Institute of Management, Tiruchirapalli [2021 (8) TMI 142 - AUTHORITY FOR ADVANCE RULING, TAMILNADU] held that it is a Government Entity under GST law and is liable to deduct TDS under Section 51 of the CGST Act, 2017 read with Notification No. 50/2018-CT dtd. 13.09.2018.

In any case, the applicant during the course of personal hearing held on 06.02.2026 has fairly admitted that the Supreme Court judgement would prevail over the Board’s Circular and therefore, they are liable to pay TDS.

Contractual threshold for TDS - HELD THAT:- In case, a contract is for continuous supply of goods or services, and if part supplies under the contract are covered in an invoice, the invoice would not be equated to the contract. The set of invoices issued for all the supplies made as a consequence of the contract of supply would summate to the contract and not the individual invoice. The agreement between the supplier and the recipient is of prime consideration and if it is for a continuous supply to be made in parts, then the contract would include all the part supplies made and covered under separate invoices.

In case of separate contracts with the same supplier, each contract would be considered individually for the purpose of applying the threshold value of Rupees 2.5 lakhs. However, if the supply is made on a continuous basis or a recurrent basis, but is part of the original contract, the threshold value would be applicable on the contract and not the individual supplies. Therefore, it is the contract which determines the threshold value of Rupees 2.5 lakhs and not the invoices.

The Authority rules that the Indian Institute of Management, Ahmedabad is a specified person liable to deduct TDS under Section 51 read with Notification No. 50/2018-Central Tax.

Entitlemrnt to the input tax credit of the GST paid to the supplier of services of works contract for the construction of the Break Water Project - Section 17(5)(c) and (d) of the CGST Act, 2017 - Section 16(4) limitation on ITC - non-obstante provision - It can be seen from the submissions made by the applicant from time to time that the breakwater is a composite structure of 2300 Sq. Meters, constructed approximately 750 meters from the jetty and around 2.5 Km from the land. It is a permanent structure constructed using rocks, boulders and accropodes.

Input tax credit - works contract services - plant and machinery - immovable property - Section 17(5)(c) and (d) of the CGST Act, 2017 - HELD THAT:- The applicant is not providing any works contract service and the works contract service received by them is also not for further supply as a works contract. Therefore, we find that all the three basic conditions for denying the benefit of Input tax credit in the instant case is fulfilled. However, the only exclusion in this clause 17(5)(c) is that Input Tax Credit will be available if the so constructed immovable property can be considered as plant and machinery. Therefore, we now proceed to decide whether the breakwater wall project can be treated as ‘plant and machinery’ as envisaged under Section 17 of the CGST Act, 2017.

In the instant case, we find that the work of construction of the breakwater project was handled by M/s. Larsen & Toubro. The applicant themselves has stated that the services provided by the said contractor was a works contract service. Therefore, we find that the clause which restricts Input Tax Credit in such cases would be clause 17(5)(c) and not 17(5)(d). This is a case of supply of works contract for which ITC is restricted under clause 17(5)(c) which restricts availment of ITC in respect of works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service. Therefore, primarily, we find that the decision of the Hon’ble Supreme Court in the case of M/s. Safari Retreats [2024 (10) TMI 286 - SUPREME COURT] is not applicable to the facts of this case and the applicant’s reliance upon the decision of the Hon’ble Supreme Court in the case of Safari Retreats is misplaced as their case is not covered by Clause 17(5)(d) of the CGST Act, 2017. In the instant case, the definition of Plant and Machinery provided under Section 17 has to be considered for deciding the admissibility of Input Tax Credit and resort to any functionality test or the meaning of Plant or Machinery in common parlance would not be applicable.

We find that the provisions of Section 17(5)(d) of CGST Act, 2017, was also amended by the Government vide Section 124 of the Finance Act, 2017.

The arguments raised by the applicant in their submissions dated 18.8.2025 and the various case laws relied upon by them with respect to the functionality test and the meaning of the term ‘plant’ in various judicial forums, especially the Income Tax Act and other Acts become inapplicable in the present case. Since the definition of Plant and Machinery has been provided in the CGST Act, the same has to be taken into consideration for deciding whether the applicant is eligible to avail ITC on the breakwater project.

Whether the services of the works contract by the contractor is covered under item (vii) of S.No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 28.6.2017 - HELD THAT:- As per Section 95 of the CGST Act, 2017, the term ‘advance ruling’ means a decision provided by the authority to the applicant on matter or questions specified in sub section 2 of Section 97, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Since the breakwater project is constructed by a contractor, the supply, if any will be undertaken by the contractor and not the applicant. Further, we find that as per Section 100, an appeal against the order of the Authority for advance ruling and the Appellate Authority for advance ruling can be filed by the jurisdictional officer, concerned officer or the applicant. If any advance ruling is made on this question raised by the applicant, it would affect the rights of the contractor who provided the works contract service to the applicant. However, they will not be able to file any appeal against the said order as they are not party to the application. Such a ruling wherein the aggrieved party is unable to file an appeal against the said order is not envisaged under the GST Act. Further, in terms of Section 103(1), the order of the advance ruling authority is binding on the applicant and the concerned jurisdictional officer. Therefore, an order which affects the activities of the supplier of works contract service but is not enforceable against him is not envisaged under the GST Act. Therefore, we refrain from answering this question.

The Authority rules that the applicant is not eligible to avail input tax credit in respect of GST paid on the construction of the breakwater wall

Reopening of assessment u/s 147 - depreciation on the Written Down value of the goodwill - Delay filling SLP

As decided by HC [2025 (2) TMI 513 - GUJARAT HIGH COURT] addition made on account of the recommendation of the Dispute Resolution Panel which was deleted as per the provision of Section 92BA were not applicable for the year under consideration and only because the Tribunal has not dealt with the merits of the matter, the same cannot be considered as an information, so as to assume the jurisdiction to issue the notice u/s 148 more particularly when the AO has failed to point out the effect of deletion of the addition made in the year 2014-15 and therefore, there is no question of escapement of income for the AY 2018-19 for claim of the depreciation on the Written Down value of the goodwill for the year under consideration.

HELD THAT:- No case is made out for condonation of delay of 262 days in filing the present petition. Even on merits, we do not find any case is made out for interference.

The application for condonation of delay as well the Special Leave Petition are dismissed.

Nature of receipt - assessee withheld recovered sales tax - whether amount recovered from buyers in the name of sales tax was utilized for day to day working of the assessee? - revenue receipt or capital receipt - HELD THAT:- From the perusal of record, it is evident that in Birla VXL Ltd [2013 (7) TMI 655 - GUJARAT HIGH COURT], Munjal Auto Industries Ltd [2013 (10) TMI 650 - GUJARAT HIGH COURT] and Nirma Ltd.[2016 (6) TMI 1023 - GUJARAT HIGH COURT] has considered the legal issue raised herein. The Gujarat High Court has opined that sales tax collected and retained by assessee is capital receipt. The exemption scheme which was before Gujarat High Court is involved in the present case.

The opinion of Gujarat High Court is consistent and appeals filed by Revenue have already been dismissed by Supreme Court. It is apt to notice that Revenue had not filed SLP against judgment of Gujarat High Court whereas civil appeals were filed. There is not even iota of dichotomy between facts and issues involved in the present appeals and appeals which were adjudicated by Gujarat High Court. We find ourselves in agreement with opinion formed by Gujarat High Court. There seems no reason to form any opinion contrary of Gujarat High Court.

Decided against revenue.

Reopening of assessment - same bank-deposit transactions which had already been investigated and finally adjudicated by the Income Tax Officer (ITO) - reasons to believe based on tangible material - double taxation / double jeopardy - maxim, Nemo debet bis vexari pro una et eadem causa - “reasons to believe”

HELD THAT:- This Court is of the considered opinion that for the same transaction relating to deposit in the Canara Bank cannot be subject-matter of assessment u/s 147 twice; one by the ITO and the other by the DCIT.

The legal maxim, Nemo debet bis vexari pro una et eadem causa, meaning thereby, no man should be vexed twice over for the same cause would fit to the present context.

Petitioner-assessee should not face trial for the same cause (subject-matter) twice. See Commissioner of Central Excise, Nagpur Vrs. Shree Baidyanath Ayurved Bhawan Ltd. [2009 (4) TMI 6 - SUPREME COURT]

it is well established that the material on which the Assessing Officer forms his opinion must not be the same material which had been considered at the time of the initial assessment, as in that case, the proceedings under Section 147 of the IT Act would amount to reviewing the Assessment Order merely on a change of opinion, which is not permissible.

It is also well settled principle in the context of assessment undertaken u/s 147 that whilst it is not necessary for the AO to arrive at a firm conclusion that the assessee’s income for the relevant Assessment Year has escaped assessment, which is to be drawn during the assessment proceedings, the AO must have “reasons to believe” based on tangible material that has nexus with the belief that income indeed did escape assessment. Concluded and closed assessments cannot be reopened merely on suspicion or ipse dixit of the AO

It is well settled that a notice u/s 148 of the Act could not be issued on mere suspicion. In order to form opinion, the AO has to have reasons to believe, and it is necessary for the authority concerned to examine the information and satisfy himself regarding the same.

ITO had taken into consideration the explanation of the petitioner that it has been filing returns using PAN-2, but not PAN-1, and accepting such fact on verification of evidence and material on record, the ITO had reduced the assessment to NIL for the relevant Assessment Year.

It is pertinent to mention here that for similar ground an Order under Section 147 read with Section 144 passed by the ITO, Ward-1(1), Cuttack on 29.03.2023 computing total income of the assessee as NIL.”, tempted to proceed with the assessment again by issuing Notice under Section 148 on the pretext “to protect the interest of revenue”. The reason so assigned by the DCIT for initiation of proceeding for assessment is, thus, found to be self-conflicting. This Court may observe that a quasi-judicial authority at a subsequent stage should not sit over the view expressed on facts in earlier assessment proceeding on the same subject matter adjudicated upon by another quasi-judicial authority. Factual narration of the ITO, Ward 1(1), Cuttack clearly spelt out that the petitioner has been filing returns using PAN: AATFS3658P, but not PAN: ABAFS4271L.

WP allowed.

Demand Notice u/s 156 issued when the assessment order u/s 143(3) had ‘Nil’ demand - whether Notice of demand u/s 156 requires an existing assessment or reassessment order? - notice issued without prerequisite order is beyond jurisdiction - Validity of a demand notice u/s 156 where the original assessment under Section 143(3) recorded nil demand and no assessment or reassessment order exists - HELD THAT: - The Court held that Section 156 contemplates service of a notice of demand only when a sum is payable in consequence of an order passed under or in pursuance of the Income-tax Act. Therefore a notice of demand cannot properly be issued in the absence of an assessment or reassessment order fixing tax or arrears. In the present case the assessment under Section 143(3) recorded nil liability and no reassessment order was passed; accordingly the demand notice issued u/s 156 had no foundation in any existing order and was legally impermissible. [Paras 7]

Demand notice under Section 156 issued without any assessment or reassessment order is invalid and beyond jurisdiction.

Reopening u/s 147 required before creating fresh tax liability where original assessment recorded nil - change of opinion - impugned notice u/s 156 of the Act is issued after four years without even going for procedure of reopening of the assessment as per Section 147 - HELD THAT:- The Court found that where the original scrutiny assessment considered the same material and resulted in nil liability, the revenue could not bypass the reassessment procedure and directly issue a demand years later. If the revenue wished to alter the conclusion reached in the assessment, it was obliged to invoke the reassessment provisions; absent that, issuing a demand based on the same material would amount to a mere change of opinion, which is impermissible in view of settled law. [Paras 7]

Issuance of the impugned demand without reopening the assessment u/s 147 is unjustified and amounts to an impermissible change of opinion.

Final Conclusion: The impugned Demand Notice u/s 156 for Assessment Year 2012-13 was issued without any antecedent assessment or reassessment order and after several years without invoking Section 147; it was therefore beyond jurisdiction and has been quashed.

Treating fabrication charges received as 'fees for technical services' - section 9(1)(vii) of the Income-tax Act, 1961 as well as Article 12 of the DTAA entered between India and Singapore - role of Article 9 - Taxing income from fees for technical service at the rate specified under the Act - assessee submitted that in the instant case, no Royalty is received by the assessee under Article 12(3) of the India-Singapore DTAA.

HELD THAT:- The issue arising in the present appeal is thus recurring in nature and has been decided in favour of the assessee by the decisions of the Co-ordinate Benches of the Tribunal for the preceding assessment years [2022 (7) TMI 1396 - ITAT MUMBAI] as held that the scope of Article 9 thus is to neutralize the impact of intra- AE relationship vis-à-vis the profits made in dealings with such an AE. Beyond this limited scope, the application of Article 9 cannot restructure the transaction.

OC-US and the assessee, a Singapore-based entity, are distinct entities and, they have distinct legal existences. The mere fact that these entities are part of the same multinational group does not require, or justify, ignoring the distinct identities of these entilies, or the fact that the operations of these entities are in different jurisdictions. It is also not even the case of the revenue authorities that the refurbishing work is not carried out in Singapore. While a lot of emphases is paid by the revenue authorities on the fact that on the same transaction the assessee had paid taxes in India In the immediately preceding year, and the fact that it is part of overall common arrangements that the leasing is done from one jurisdiction and the refurbishing or bushing is done is another jurisdiction. Nothing, however, turns on these arguments also.

We are satisfied that so far as the income of the assessee from the refurbishing of the bushes is concerned, it is not taxable in India as the provisions of Article 12(3) cannot be invoked in this case, and that, so far as the provisions of Article 12(4)(a) are concerned, these provisions cannot be invoked as the assessee has not rendered these services in connection with the services "for which a payment described in paragraph 3 is received by the assessee.

Thus, respectfully following the orders passed by the Co-ordinate Bench of the Tribunal in assessee's own case we uphold the plea of the assessee and delete the impugned addition in respect of fabrication charges received by the assessee. Assessee appeal allowed.

Validity of faceless assessment u/s 151A - jurisdictional validity of assessment framed by faceless unit - reopening assessment u/s 147 - HELD THAT:- We find that the assessment has been framed by the National Faceless Assessment Centre which in our opinion, is without jurisdiction as the Provisions of Section 151A of the Act which provides for faceless assessment were notified from 29.03.2022 vide notification no. 18/2022/F. No. 370142/16/2022-TPL(Part) though the same were brought on statute book by the Taxation and Other Law (realization and amendment of certain provisions) Act, 2020 with effect from 01.11.2020.

Considering these facts, the assessment framed by the National Faceless Appeal Centre is null and void as the same is without jurisdiction and cannot be sustained. The case of the assessee find support from the decision of MD Mahimud SK [2025 (3) TMI 1593 - ITAT KOLKATA] Decided in favour of assessee.

Consolidated satisfaction note u/s 153C - Requirement of year wise satisfaction for initiating proceedings under Section 153C - HELD THAT:- In an identical situation, the Co-ordinate Bench of the Tribunal in the case of SRS Panchratan Diamonds Pvt. Ltd. [2025 (12) TMI 1420 - ITAT DELHI] considered the Judgments of Sunil Kumar Sharma [2024 (2) TMI 116 - KARNATAKA HIGH COURT] and also Shaksham Commodities [2024 (4) TMI 461 - DELHI HIGH COURT] decided the issue in favour of the Assessee holding that the consolidated satisfaction note is invalid, wherein the Co-ordinate Bench of the Tribunal has also distinguished the Judgment of Indian National Congress [2024 (3) TMI 1126 - DELHI HIGH COURT]

Thus, Consolidate satisfaction note recorded by the AO for various assessment years to assume the jurisdiction is invalid. Accordingly, the respective assessments framed u/s 153C of the Act for the years under consideration are hereby quashed. Assessee appeal allowed.

Sustenance of addition made by the Assessing Officer by treating the long term capital gains arising out of transaction in the scrip - penny stock - benefit of exemption u/s 10(38) - addition as unexplained cash credit u/s 68 read with section 115BBE - addition u/s 69C on alleged commission - genuineness of share transactions and evidentiary burden - relevance of SEBI investigation findings to tax assessment - HELD THAT:- In order to establish the genuineness of investment and consequent capital gain, the ld. Counsel has drawn our attention to the evidences in the form of computation of income and acknowledgement of return showing Long Term Capital Gain on sale of shares of M/s Yamini Investment Co. Ltd. and appellant paying MAT @ 18.5%. Thus at outset it certainly becomes questionable that where an assessee has paid MAT @ 18.5 percent then should an assessee’s transaction of claim of LTCG should at all be doubted for possible attempt to falsly claim the LTCG on a penny stock.

Then at PB 83-84 is the copy of assessee's balance sheet as on 31.03.2013 showing investment of 15,00,000/- shares of M/s Anax Com Trade Ltd. and atPB 87 are the submissions of LTCG, transactions through banking channel and that shares were listed on stock exchange even today. Assessee has filed copies of DMAT, cheques, bank statement, share certificate and broker notes.

Coming to most contentious aspect where Ld. CIT(A) has referred in his order at pages 5-8 of impugned order, some orders of SEBI & SEBI circular. Ld. Counsel has initially submitted that these orders were never confronted to the assessee. However, more critical is that fact that these orders do not show as to how the impugned transaction of acquiring shares of M/s Anax Com Trade Ltd. in FY 2012-13 or its split, or merger into M/s Yamini Investment Co. Ltd. by the order of Hon'ble Delhi High Court or broker or agencies involved in transaction of assessee was ever a subject matter of SEBI investigation or any adverse orders. Rather the period of these SEBI reports do not correspond with transaction of assessee.

Thus, we are of considered view that ld. Tax authorities have fallen in error in considering the facts and circumstances peculiar to case of assessee in denying claim of LTCG by doubting the transaction on suspicion of general modus operandi to earn false LTCG. The grounds in ITA 272/del/2024 for AY 2016-17, are sustained.

As in ITA 1272/Del/2024, for AY2017-18, the scrip involved is same and there is same set of evidences, the findings for AY 2016-17 apply mutatis mutandis to AY 2017-18 also.

The appeals are allowed with consequences to follow the event.

Penalty levied u/s 271B - non-compliance of the provision of section 44AB - HELD THAT:- It is pertinent to note that the assessee at no point of time denied that the assessee has the total turnover of Rs. 10 crore in the assessment year 2022-23. The contention of the ld. A.R. submitted the proviso to section 44AB(2) applicable for the assessment year 2022-23 is not justifiable from the reading of the applicability w.e.f. 01-04-2021 of the said proviso.

Merely providing CA certificate cannot be said that Audit Report was submitted as pr requirement of Section 44AB of the Act. The threshold was for prior to assessment year 2022-23 but once the proviso has given cut off date and the assessment year has fallen into purview of said cut off date of the assessment year then the assessee cannot make plea of applying that cut off date to be taken into account as retrospective for its own convenience.

Thus, the assessee has to file the auditor repot as per proviso to section 44AB(2) of the Act for assessment year 2022-23 for which the assessee failed to do so. Thus, penalty imposed on the assessee was justified. Appeal of the assessee is dismissed.

Addition u/s 56(2)(vii)(b)(ii) - Assessee acquired two parcels of land at Bhisengaon, Karjat, at a consideration significantly lower than the Stamp Duty Value (SDV) - CIT(A) dismissed the appeal of the assessee mainly for the reason that the assessee failed in filing the relevant books of accounts, purchase sales transaction or any other material demonstrating the business nature of the properties, thus sustained the addition primarily on an evidentiary deficit -assessee contested that those properties were reflected as stock in trade in his balance sheet and therefore, provision of section 56(2)(vii) of the Act could not be attracted

HELD THAT:- We note that the proceedings before the Lower Authorities, there was a lack of effective representation and a the assessee failed to present his books of account and purchase-sale registers. Before us, assessee submitted that one more opportunity might be granted to the assessee to file all the documents in support of its contention that properties in question were stock in trade of the business of the assessee. In the interest of justice, and considering the substantial tax implications, the Assessee deserves a final opportunity to substantiate the "business asset" character of the properties.

Without expressing any opinion on the merits of the classification of the asset, we deem it fit to set aside the impugned order. The matter is remanded/restored to the file of the AO for a de novo adjudication.

AO is directed to (i) Examine the books of accounts and the treatment of the subject land in the financial statements; (ii) Verify the applicability of the CBDT Circular No. 1/2011 and relevant judicial precedents concerning the definition of "property" under Section 56; (iii) Afford the Assessee a reasonable and effective opportunity of being heard.

Addition u/s 40(a)(ia) - voluntary disallowance made by the assessee in the return of income u/s 40(a)(ia) of the Act in respect of provision made for expenses - HELD THAT:- Merely because suo moto disallowance has been made u/s 40(a)(ia) of the Act in the computation of income, such sum would not automatically result in assessee being treated as ‘assessee in default’ in terms of section 201(1) of the Act and consequential levy of interest u/s 201(1A) of the Act.

Assessee had only made suo moto disallowance on a conservative basis u/s 40(a)(ia) of the Act, In fact, in the case of Mahindra and Mahindra Ltd [2020 (6) TMI 564 - ITAT MUMBAI] had decided this issue in favour of the assessee holding that there would be no disallowance u/s 40(a)(ia) of the Act in respect of the year end provision where the payee is not identifiable.

Hence, there is absolutely no scope for the assessee to be treated as an ‘assessee in default’ in terms of Section 201. Hence, there cannot be any demand raised on the assessee u/s 201(1) and consequential interest u/s 201(1A) of the Act. Decided in favour of assessee.

Addition u/s 69C - bogus purchases - estimation of income - CIT(A) sustaining the addition being 3.65% - HELD THAT:- We note that assessee has furnished the sample copies of purchase invoices together with e- Way bills and the bank statement evidencing the fact of payment made to the suppliers by account payee cheque.

We note that sales declared by the assessee have not been disputed or doubted by the AO thus, an addition solely on the basis of alleged bogus purchases is inconsistent and unsustainable. The lower authorities failed to discharge the burden of proof which lies upon the revenue to substantiate the allegations of bogus purchase.

The assessee had even produced e-way bills evidencing the delivery of goods from the suppliers. Hence, there is no question of disbelieving the purchase made by the assessee at all. Accordingly, no amount of addition could survive in the facts and circumstances of the instant case.

On exactly identical facts and circumstances, in assessee’s own case, the Delhi Tribunal vide its order for AY 2019-20 [2025 (8) TMI 1647 - ITAT DELHI] adjudicated the similar issue in favour of the assessee by holding no evidence has been brought on record by the revenue to prove that assessee had indeed made purchase of goods in grey market by paying cash and substituted the same by showing purchase from M/s RK Polymers. The assessee had even produced e-way bills evidencing the delivery of goods from the suppliers. Hence, there is no question of disbelieving the purchase made by the assessee at all. Assessee’s appeal is allowed.

TP Adjustment - determination of the ALP of the AMP expenses - Method adopted by the AO/TPO based on the BLT - Cost Plus and Bright Line Test adjustments made by AO/TPO/DRP to benchmark AMP - whether the Adjusted TNMM Method (Intensity Adjustment) as directed to be applied by the DRP is liable to be upheld or not, the application of Cost Plus Method by the TPO and affirmed by the DRP is correct in light of the decision of Sony Ericsson Mobile Communications India (P) Ltd.? - AR submitted that the assessee is a distributor of goods and has entered into a distribution agreement to this effect with its AE

HELD THAT:- Assessee is only a distributor and not a manufacturer, it markets and distributes the products supplied by its AE. The functions performed by the assessee are to distribute the products and in our view, it is only vanilla distribution services provided, it performed the functions like purchases from the AE, sells the products and incurs business promotion expenses. It has incurred marketing functions/expenses in connection with the sales made in India. We observed that in the final assessment order, the AO had made both the additions on substantive as well as protective basis to the income of the assessee.

Assessee sells the articles in India and retains the margin whatever it earns in India. It claims only the business promotion expenses. It has not compensated separately for any other services received from its AE. The assessee was sufficiently compensated for the services rather it has declared the profit out of trading activities.

AO/TPO had made following ALP adjustments as per the directions of DRP,

a) Based on Bright lint Test

b) Cost Plus Method

c) Adjusted TNMM (Intensity Adjustment)

Method adopted by the AO/TPO based on the BLT, which is not a legally sustainable method as held by the Hon’ble Jurisdictional High Court in various cases. Therefore, the addition made on the basis of BLT method is deleted.

Addition made on the basis of Cost Plus Method - Assessee had traded the goods and no additional documents brought on record by the lower authorities to suggest that the assessee had made any separate arrangements for making expenditure. We observed that the actual expenses incurred by the assessee itself of Rs. 239,24,629/- and making addition more than the actual expenses is uncalled for.

Assessee had achieved the profit before tax of 5.71% in the trading activities, which is healthy profit in line of trading business. Furthermore, the gross profit margin determined by the TPO is also questionable as the assessee had incurred substantial amount in the employee cost, which also should be taken as cost of sales. It was presumed that the assessee had provided brand promotion, whereas the assessee had to incur these expenses to achieve the sales. Therefore, adoption of cost plus method is not justified.

Adjusted TNM Method, we observed that final assessment order, under adjusted TNMM method, the TPO had comparability study of three comparables viz, Cravetex Ltd, Rama Vision Ltd and Archies Ltd and arrived at average adjusted PLI (OP/Net Sales) of 7.41%. At the same time, TPO observed that the assessee’s margin is at 6.05%, therefore he treated the same as NIL. We fail to understand this approach and proceeded to make the addition on the basis of BLT method.

BLT Method is not a proper method, therefore, we are inclined to reject the findings of TPO. Therefore, in our considered view, the AO/TPO to make the adjustment only to the extent of difference between the margin based on the comparative margin of 7.41% against the assessee’s margin as determined by the TPO. We direct the AO to make ALP adjustment of 1.36% on Net sales. Hence, we direct accordingly considering the directions of Ld DRP on this aspect. The directions of the Ld DRP are based on the direct decision of Sony Ericsson Mobile Communicaitons India (P) Ltd. [2015 (3) TMI 580 - DELHI HIGH COURT] We direct the AO to make the above additions, therefore the grounds raised by the assessee in this regard are partly allowed.

Disallowance of deduction claimed u/s 80-IAC -delayed uploading of Form 10CCB - discrepancies in Form 10CCB and Tax Audit - substantial justice and technical considerations are pitted against one another

HELD THAT:- CIT(A) failed to appreciate that when substantial justice and technical considerations are pitted against one another, the cause of the former deserves to be preferred for the other side cannot claim to have a vested right injustice being done due to non-deliberate delay MST. KATIJI AND OTHERS [1987 (2) TMI 61 - SUPREME COURT]. The denial of the exemption is purely on technical grounds which cannot oust the benefit conferred by law.

The denial of the exemption is purely on technical grounds which cannot oust the benefit conferred by law. The First Appellate Authority failed to understand that the filling of Form 10CCB along with the return was simply a technical exercise. The delayed filling of the form was non-deliberate accidental and beyond the comprehension and control of the Assessee. Justice could not have been denied by way of refusing the benefit of exemption to the Appellant Company which admittedly is otherwise registered as start-up as per the recognition to it by the Government itself. The delay in filing form 10CCB has not caused any loss or detriment to the Revenue. On the contrary, the refusal of the exemption, causes the virtual collapse of the foundational base of the start-up. The refusal of the exemption on technical grounds by the CPC is in direct conflict with government policy and programme to provide vigorous impetus to start-ups in the country.

Action of CIT(A) in confirming the disallowance of deduction claimed u/s 80IAC being illegal is set aside. Decided in favour of assessee.

Estimated addition over and above the purchase and sales transaction reflected in the books of account - Non rejecting the books of account u/s. 145(3) - HELD THAT:- It is clearly evident from facts on record that the AO has not resorted to Section 145(3) of the Act but had still proceeded to make further additions on estimated basis on the unrecorded sales.

That on one hand, the AO has not doubted the genuineness of the books of account and on the other hand, he has proceeded to make his own assessment and making additions on estimated basis over and above the transactions recorded in the books of account of the assessee.

Such an exercise is not permissible within the purview of the settled legal principles on this issue. This issue is no more “Res-Integra” and it has been held by ITAT in numerous decisions as well as Higher Judicial Forums order that in order to render books of account as non-genuine and making further additions, the AO first has to reject the books of account and without doing that any additions are not warranted.

Similar issue has been adjudicated in the case of Anil Kumar Jain [2026 (1) TMI 1566 - ITAT RAIPUR] wherein, this issue has been answered in favour of the assessee against the Revenue as held admittedly, the A.O has not resorted to either Section 145(3) of the Act or Section 144 of the Act. On one hand, the A.O accepts the purchase and sales recorded in the books of accounts and thereby, he decides not to reject the same and at the same time, on estimation he adds commission income over and above purchase and sales as reflected in the books of accounts. That as per the judicial precedent referred hereinabove, such addition is unjustified, arbitrary and bad in law and hence, the A.O is directed to delete the said addition from the hands of the assessee while providing appeal effect of this order.

Appeal of the assessee is allowed.

Benami transaction -definition of benami property within the meaning of Section 2(9)(A) - Provisional attachment confirmed - sources of funds for acquiring the property -Evidence and production of documents - Adverse inference for non production of evidence - Beneficial owner - requirement of conclusive material - non- application of mind by the Adjudicating Authority - Power of Appellate Tribunal to affirm, vary or reverse under Section 46(4)(e) - If there is no beneficial owner, in the present case, then whether the property needs to released being not covered under Section 2(9)(A) of the PBPT Act, or, alternatively, the said property is covered under Section 2(9)(D) of the PBPT Act? -

Evidence and production of documents - Adverse inference for non production of evidence - HELD THAT:- There is nothing on record as to when the company M/s Rajasalvam was incorporated and commenced its business and the initial office/business address at the time when it was incorporated. The appellant has also not filed her bank statement to show that she used to get monthly rent of Rs. 80,000, before she took the advance of Rs. 9,09,000/- for purchasing the impugned property vide sale deed dated 03.05.2017.

Further, any person in possession of any material/evidence in his possession is duty bound to produce the same, otherwise an adverse inference can be taken against him, as per Section 103 of the Indian Evidence Act, (now Section 106 of the Bharatiya Sakshya Adhiniyam) as only the concerned persons are aware of the special and particular facts on the said aspects. This corroborates the version of the IO regarding fabrication of the lease deed, in absence of corroborative evidence and we are satisfied with the said conclusion. Moreover, it is mandatory for registration of any lease deed for period of more than 11 months as per Section17(1) Indian Registration Act, 1908.

However, without going into the in-depth discussion, it is pertinent to mention here that the IO has specifically stated that so called rented property claimed by the appellant Smt. Radhamani is also one of the benami property of Mr. MK Rajendran Pillai and hence, the question of leasing the said property by the appellant does not arise. Ld. Counsel for the respondent department also pointed out that Smt. Radhamani is the benamidar of 16 properties purchased by the beneficial owner in her name, however, issue of retrospective application of PBPT Act is involved qua the said properties. We are satisfied with the contention of the Ld. Counsel for the respondent department.

Hence, issues are decided against the appellant, as she has not explained the sources of funds for acquiring the impugned property; the ITRs of 5 years were filed 30.11.2017 as an afterthought strategy; original lease deed not produced; and the copy of the lease deed is a forged document, in absence of any corroborative evidence like her bank statement showing receiving the monthly rent of Rs. 80,000/-, before taking the alleged advance rent of Rs. 9,09,000/-.

Benami transaction - Section 2(9)(A) of the Prohibition of Benami Property Transactions Act, 1988 - Beneficial owner - HELD THAT:- As per the investigation conducted by the IO, the beneficial owner Sh. MK Rajendran Pillai amassed the huge wealth while working as Additional Superintendent of police in State of Nagaland and after retirement, he obtained the large number of contracts through the benamidars i.e.; local naga persons in order to procure contract, as only Nagas were entitled for the same.

Technically, not only Sh. MK Rajendran Pillai is the beneficial owner, but his son and his company are also joint beneficial owners in the present transaction pertaining to impugned property, as the sale consideration was tendered by the appellant through M/s Rajavalsam Motors Pvt. Ltd.

Therefore, we leave this aspect to the IO for independent re- investigation and filing the limited reference on this aspect before the AA.

Hence, issue regarding the beneficial owner is still open for investigation and it cannot be presumed in vacuum that there is no beneficial owner in the present case and make a wrong conclusion that Section-2(9)(A) of the PBPT Act is not attracted in any manner.

Provisional attachment confirmed - Benami transaction - HELD THAT:- The transaction is fully covered under Section 2(9)(A) of the PBPT Act even though the investigation qua the actual beneficial owner is still open for removal of doubts whether Sh. MK Rajendran Pillai, his son Arun Pillai, his company M/s Rajasalvam Motors Pvt. Ltd. or all of them are beneficial owners or not. Hence, question of releasing the property at this stage does not arise. Accordingly, the citation of this Appellate Tribunal in FPA-PBPT-206/MUM/2018 are not applicable to the facts of the present case. Issue are decided accordingly in favour of Respondent department and against the appellant.

Power of Appellate Tribunal to affirm, vary or reverse under Section 46(4)(e) - HELD THAT:- We are of the view that in view of Section 46(4)(e) of the PBPT Act, any modifications, variations can be done in the order passed by the AA to meet the end of justice, even in absence of any departmental appeal regarding the same.

This Appellate Tribunal can certainly modify the order wrt the findings qua the beneficial owner as per clause (e) of Section 46 of the PBPT Act. But since direction for re-investigation on the aspect of beneficial owner is already given by the AA to the IO, we are not inclined to modify the impugned order on this aspect at this stage.

Accordingly, the issue is decided accordingly.

The present appeal filed by benamidar Smt. Radhamani is hereby dismissed being devoid of any merits.

R-export of the goods - Refusal to take the possession of the goods, supplier loaded the goods in the custom yard - Option to pay fine in lieu of confiscation - limitation period prescribed under Section 125(3)​​​​​​​ -penalty after the statutory period of 120 days - ignorance of law is no excuse - HELD THAT:-Undoubtedly, the petitioner paid the penalty and redemption fine on 08.01.2024 and 11.07.2024 respectively, which is almost after a period of one year. It is also an admitted fact that the petitioner accepted the said order and did not file an appeal under Section 128 of the Act before the Appellate Authority. Proviso to Section 128(i) of the Act specifically prescribes the limitation period of 60 days and a further period of 30 days for filing an appeal. Thus, a total period of 90 days has been prescribed by the statute for filing an appeal which the petitioner did not avail. In light of the aforementioned facts and the provision of Section 125 of the Act, if the sub-section (3) of Section 125 of the Act is examined, it exposits that where a fine imposed under sub-section (1) of Section 125 of the Act is not paid within a period of 120 days (which the petitioner did not do and paid after one year), from the date of option given thereunder, such option becomes void unless an appeal against such order is pending. This quintessential feature envisaged in Section 125(3) of filing an appeal and pendency of appeal is missing in the present case.

The permission to re-export the goods was conditional, and accountability lies on petitioner to pay the redemption fine within a period of 90 days, hence the direction sought by the petitioner for re-export of the goods and implementation of the order dated 28.06.2023 cannot be acceded to.

The prime reason for belatedly filing the payment of redemption fine canvassed before us is the ignorance of the provision of Section 125(3) of the Act. A bare perusal of the adjudicating order dated 28.06.2023 reveals that in the proceedings, the petitioners did not appear, however, he requested for waiver of the show cause notice and personal hearing in the matter, during which his statement was recorded on 29.12.2021. It is trite that ignorance of law cannot be an excuse. Thus, the petitioner cannot in wake of the proceedings before the Adjudicating Authority and before this Court, canvass that he was ignorant of the limitation period and provision of Section 125(3) of the Act.

The writ petition is dismissed on merits: the option to redeem lapsed because payment was not made within 120 days and no appeal was pending; however, the respondents are directed to refund the redemption fine paid by the petitioner within the period ordered by the Court.

Interpretation of S.O. 5379(E) dated 19.12.2023 concerning quantitative import restrictions for 2 Wheeler Automotive Wheel Rims - import entitlement for repairs and after sales service extendable to authorised service agents of the vehicle manufacturer - quantitative ceiling of 24,000 units per financial year for repairs/after sales service - provisional release of imported goods upon execution of bond and bank guarantee - reservation on classification and valuation - HELD THAT:- In the normal course, we find that most of the manufacturers of the cars and 2-wheelers appoint dealers and distributers who act as their service agent for servicing of the vehicles sold by them. Generally, all the service requirements are taken up by such agents and not by manufacturer directly. Therefore, we take a considered view that Para 2(3) (vi) would be applicable not only for the repairs and after sales services directly by the manufacturer but also when the same is provided through their authorized agent. Hence, we do not find that the appellants would invite the prohibition clauses per se on account of they being service providers.

A careful reading of the affidavit filed by the manufacturer and letter submitted to Deputy Commissioner show that both the appellants are duly authorized by the manufacturer of PRAKRITI vehicles, for taking up servicing of their branded vehicles.

Appellant claims that they are rims but hubs. However, we are not inclined to go into this issue at this juncture.

We have already held that the appellants being authorized service centers are eligible to import the same. Since the quantity imported so far plus the present quantity under the live Bills of entry does not exceed 24,000, we hold that the imported goods cannot be held as prohibited items.

Thus, we direct the jurisdictional authorities to release the goods on provisional basis upon fulfillment of the bond and bank guarantee and other terms and conditions as specified in the impugned orders.

The appeals stand disposed off thus.

Transaction value -Includability of software value in assessable value of imported goods - ggdistinctness of hardware and software for customs valuation - principle in PSI Data Systems [1996 (12) TMI 47 - SUPREME COURT]and its subsequent approval - re-opening / reassessment of finalised customs assessment - invocation of extended period and requirement of fraud/misrepresentation - penalty and redemption fine where no prohibition or regulatory violation is shown

Includability of software value in assessable value of imported goods - distinctness of hardware and software for customs valuation - principle in PSI Data Systems and its subsequent approval - Whether value of software loaded into or supplied with diamond scanning machines is includable in the assessable value of the machines for customs duty - HELD THAT: - The Tribunal recognised the settled precedent that software sold with computer hardware is distinct from the hardware and ordinarily not includable in the assessable value of the hardware (noting PSI Data Systems and its subsequent approval). It examined the Commissioner's conclusion that the software formed part of a composite price and was artificially bifurcated into separate invoices for hardware and software, and noted evidentiary material including statements and price lists. The Tribunal found that, while the Commissioner accepted that software per se is not dutiable, he sought to include software value because the machines allegedly could not function without the software and invoicing showed an all-inclusive price subsequently split.

Apart from decisions of Division Bench of this Tribunal, learned Special Counsel has placed on record a decision passed by Larger Bench of this Tribunal in the case of Bhagyanagar Metals Ltd. [2016 (2) TMI 614 - CESTAT HYDERABAD] to justify that when software could not be presented as a separate media and identifiable from the computer, assessment has to be done without any segregation of the value of software considering them as single goods for assessment. He further justified applicability of these decisions, though passed in case of Fixed Wireless Telephone with CDMA FWT Mechanism, into the instant case as the Larger Bench had rightly taken note of the order passed in PSI Data Systems Ltd. [1996 (12) TMI 47 - SUPREME COURT] as well as ACER India Ltd. [2004 (9) TMI 106 - SUPREME COURT] that was subsequently approved by the Constitution Bench and had given the findings which is squarely applicable to this case and therefore, inclusion of value of software in the value of diamond scanning machine is the proper way of assessment that was rightly concurred by the Commissioner.

On the facts before it, and in light of higher judicial precedent which treats software and hardware as distinct for valuation unless the jurisprudential tests for treating them as a single assessable good are satisfied, the Tribunal held that the Larger Bench precedents relied on by the Department cannot override binding Supreme Court authority and therefore the inclusion of software value in the machine's assessable value was not sustainable. [Paras 5]

Value of the software cannot be treated as part of the assessable value of the diamond scanning machines on the facts and legal precedent relied upon; the Commissioner's inclusion of software value is not sustained.

Legality of initiation of reassessment, invocation of extended period by the Department without resorting to appeal provision in these cases when assessment was done by proper officer, duties were duly discharged and goods were released and it is not a case of the Department that invoice price is not correct or any additional sum is paid to the foreign supplier over and above the invoice price or similar or identical goods have been sold to other buyers at a price higher than the invoice price of the Noticees/Appellants and therefore, they are justified in claiming that redetermination of assessable value of diamond scanning machine under Rule 3(1) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is not sustainable.

Penalty and redemption fine where no prohibition or regulatory violation is shown - HELD THAT:- No specific provision under Rule 3 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 was pressed into service in the show-cause notice to effect such re-valuation which we find to be not without substance and also we fully endorse his views that penalties and redemption fine imposed in lieu of confiscation are not in conformity to law for the reason that goods proposed to be confiscated were not imported in violation of DGFT Regulations, or EPCG Scheme or Foreign Trade Development Act or Exim Policy or in violation of Customs Act in the sense that softwares, be embedded in the machines or subsequently installed into the same post importation clearance, are not subjected to levy of Customs duty. Hence the order.

Denial for the benefit of exemption from payment of CVD - imported ‘Manganese Ore’ lumps -Deeming provision in Chapter Note 4 to Chapter 26 - conversion of ores into concentrates - meaning of the term ‘ore’ and ‘concentrate’ - exemption under Notification No.04/2006-CE - beneficiation - strict construction of exemption notifications - onus on importer to prove eligibility for exemption - interest payable on delayed duty payment

Deeming provision in Chapter Note 4 to Chapter 26 - conversion of ores into concentrates amounts to manufacture - distinction between ore and concentrate for exemption under Notification No.04/2006-CE - beneficiation - Whether the imported consignments qualified as 'Manganese Ore' entitled to exemption under Notification No.04/2006-CE or had, by virtue of pre-shipment processes (washing, removal of waste, sizing/screening/crushing), become 'Manganese Concentrates' and thus not eligible for CVD exemption. - HELD THAT: - The Tribunal found on the admitted facts that the consignments were not in Run of Mine form and that ROM ore had undergone washing, crushing, screening and sizing to meet contractual specifications.

Relying on the deeming effect of Chapter Note 4 to Chapter 26 and on this Tribunal's decision in M/s Sarda Energy & Minerals Ltd & Ors [2026 (1) TMI 532 - CESTAT HYDERABAD], (which applied the Supreme Court's observations in Star Industries), the Tribunal held that conversion of ores into concentrates is treated as manufacture and that even simple physical processes which remove foreign matter and enhance suitability for metallurgical use or economical transport may result in emergence of a concentrate. The Tribunal rejected the contention that crushing/screening are always mere preparatory processes, noting that the Board circular and HSN notes do not override the statutory deeming and that where processes materially remove impurities or upgrade the ore, the product is a distinct excisable concentrate and falls outside the exemption which covers only 'ores'. Applying this principle to the admitted factual matrix, the Tribunal concluded that the imported goods were concentrates and not eligible for exemption under Notification No.04/2006-CE. [Paras 11, 12, 30, 31]

The imported consignments are held to be concentrates (resulting from processes such as washing, crushing, sizing) and therefore not entitled to exemption under Notification No.04/2006-CE; the appeals on this ground are dismissed.

Interest payable on delayed duty payment - Whether interest could be demanded on the confirmed duty demand. - HELD THAT: - The Tribunal observed that statutory provisions clearly require payment of interest where there is delay in payment of duty. It held that liability to pay interest arises when a duty demand is confirmed and, in the facts of the related authority relied upon, interest was held to be payable. The Tribunal therefore did not accept the appellants' contention that interest could not be demanded in the absence of a specific provision, and treated interest as payable when the demand is sustained. [Paras 13, 14]

Interest on delayed payment of duty is payable in terms of the statutory provisions; the appellants remain liable for interest on the confirmed demand.

Final Conclusion: Following the Tribunal's reliance on the deeming provision in Chapter Note 4 and on precedent, the impugned orders denying exemption were set aside only to the extent of being found unsustainable; the appeals are dismissed and the appellants remain liable for the confirmed duty and applicable interest.

Revocation of Customs Broker licence - Forfeiture of security deposit - Imposition and confirmation of penalty under Customs Brokers Licensing Regulations, 2018 - Violation of Regulation 10(d) of CBLR, 2018 - duty to advise client and report non-compliance - Inapplicability of Regulations 10(a), 10(e) and 10(n) to unaccompanied baggage clearance where passenger is personally present - Liability for acts of employees - principal-agent (fraud by employee outside authority) - Admissibility and evidential weight of electronic communication in adjudicatory proceedings - Proportionality of penal consequences under CBLR, 2018 - Standard of proof in civil/adjudicatory customs proceedings - preponderance of probabilities - HELD THAT:-In the present case, admittedly there is a violation of the provisions of Baggage Rules. Further, as per the evidence on record, an email communication was recovered from the email of the appellant and from said document, it is evident that the consignment brought by the passenger as bona fide baggage consists of baggage belonging to some other passengers also. Once such an email communication recovered and when not rebutted it amounts to failure of the appellant to inform the same to concerned passenger not to proceed with such clearance. Thus, there is an admitted violation of the Regulation 10(d) of the CBLR, 2018.

As regarding violation of Regulation 10(e) of the CBLR, 2018, appellant has to exercise due diligence while ascertaining the correction of the information.

Though the illegality was committed by one of the employees of the appellant in connivance with the overseas cargo movers, the appellant being a Customs Broker having unblemished record over a period of time, cannot be held personally liable for the said violation to proceed against him under the Provisions of CBLR, 2018. Further, as held by this Tribunal in the matter of M/s. MNS Export Private Limited. [2007 (4) TMI 524 - CESTAT, BANGALORE], fraud committed by an agent which does not fall within the authority, does not affect the principle. Fraud committed by employee, which was not within the knowledge and consent of the company, company is not liable for acts and omissions of his employees in terms of provisions of 13(12) or 10(e) of the CBLR, 2018.

Further, as regarding violation of Regulation 10(n) of the CBLR, 2018, we find that the said provision is also not applicable in such a case where personal presence of the passenger is mandatory before the Customs Officer while clearing the goods. Thus, identification, Import and Export (IE) code, etc., is not relevant in such a situation and it is for the Customs Officer to verify the background of the passenger directly and no failure can be alleged against custom broker in such situation.

In the present case, though it is an admitted fact that there was under valuation, we find that on perusal of the method of valuation adapted by the Investigating Officer, it is not a usual practice and even as per the initial examination, the value was found normal by the proper officer of the customs. In the absence of any authority vested on the customs broker regarding valuation of goods and in the absence of any knowledge regarding such under valuation till it was brought to the notice of the customs broker while conducting examination by SIIB, the appellant cannot be held liable for such under evaluation. Further, it is an admitted fact that there is no contraband or prohibited or restricted goods imported under the guise of baggage rules, and such a harsh penal proceeding can be imposed only when such illegalities are committed with the direct knowledge of the customs broker. In the present case, the only evidence available on record is the email communication, which was received by the appellant through the official email of the appellant and in the absence of any other satisfactory explanation, it is has to be presumed that the appellant had knowledge regarding presence of baggage of other passengers in the said consignment.

Accordingly, revocation of the custom broker license and forfeiture of security deposit as per the impugned order are set aside. However, considering the violation of the provisions of 10(d), penalty of Rs.50,000/- imposed by Adjudication Authority is confirmed.

Classification of imported goods - LCD/LED panels versus Open cells - eligibility for exemption under Notification No. 12/2012-Cus (S.No. 432) - extended period of limitation u/s 28(4) - penalty u/s 114A - confiscation and redemption fine in lieu of confiscation - burden of proof on the Revenue in show-cause proceedings -

LCD Panels vs Open Cells - HELD THAT:- The imported goods were described in the Bills of Entry and also in all the import documents as LED Panels, semi-finished, LSC 400HM09-0 (parts of LED TV) as claimed by the appellant. The case of the Revenue is that they were not LCD/LED Panels but were open cells. This was the allegation in the SCN and the finding in the impugned order. The burden of proving that the goods which were described as LED panels, semi-finished in the documents were, in fact, Open Cells rests on the Revenue.

The Commissioner concluded in the impugned order that the imported goods were ‘Open cells’ and not LCD Panels. We find that there is a clear difference of opinion between Shri Malhotra, Shri Thakur and Shri Agarwala, which, in short, is whether the diffusers, reflectors, films, cushions, frame and cover have to be added to the Open cell to make it an LCD Panel or merely adding a T-Con Board to the Open cell will make it an LCD Panel. There is no clear evidence either way. Shri Malhotra was in the business of same goods and would have known how they are known in the market. Shri Thakur is from Samsung India–the Indian subsidiary of Samsung, Korea which manufactured the goods and hence should be familiar with the goods. On the other hand, Shri Agarwal is an exert from IIT Delhi.

The dispute could have been resolved if the experts were examined and cross-examined and if the appellant was also allowed to produce its own experts from Samsung display (who, the department could have cross-examined). Since it is a case where the department alleged in the SCN that the imported goods were not LCD Panels but Open Cells, the burden of proof rests on the department. It has not been discharged in this case.

We, therefore, find that the department has not established its case that imported goods were NOT LCD Panels but were open cells.

Classification of the goods and exemption notification - The case of the department that the imported goods deserve to be classified under CTI 9013 80 10 and were not eligible to the exemption under Sl. No. 432 of Notification No. 12/2012-Cus dated 17.03.2012 is based on the assertion that the imported goods were not LCD panels but were ‘Open cells’.

Since the department failed to prove that they were LCD Panels, the exemption notification no. 12/2012-Cus dated 17.3.2012 (S.No. 432) cannot be denied. It is therefore, not necessary for us to examine the alternative classification claimed by the appellant.

Extended period of limitation - We have found the case in favour of the appellant on merits. Even otherwise, in the light of conflicting expert opinions regarding the nature of the goods, it was perfectly possible for the appellant to have entertained a belief different from that of the department. This is not a case of collusion or wilful misstatement or suppression of facts to invoke extended period of limitation under section 28 of the Act.

Confiscation and imposition of redemption fine and penalty u/s 114A - Since we have found the case in favour of the appellant on merits, the finding that the imported goods were liable to confiscation, imposition of redemption fine in lieu of confiscation and penalty under section 114A also deserves to be set aside.

The impugned order is set aside both on merits and on limitation and the appeal is allowed with consequential relief to the appellant.

Contravention of Section 3(a) of the Foreign Exchange Management Act, 1999 read with Section 4 - holding, transfer or investment of foreign currency acquired while non resident - Legitimacy and source of foreign funds as determinative for statutory protection - Discretion to reduce penalty in exercise of appellate power - HELD THAT:- We observe that Sub-Section 4 of Section 6 of FEMA does allow persons resident in India to transfer funds in foreign currency provided such funds were acquired, held or owned by such person, when he was resident outside India. The statutory provisions cannot be read as to mean that illegitimate funds or unexplained funds could be covered within the said provisions. The explanation of the Appellant that the funds were acquired from his friend is not corroborated by the other facts on record. These facts include description of the said funds, as proceeds from sale of bonds and the mode of its acquisition in cash and in parts. There is no claim made by the Appellant on record, as to the source of funds being from his salary abroad. We therefore concur with the Impugned Order as to the contravention of Section 3(a) and Section 4 of FEMA.

For the ends of justice shall be met on reduction of penalty to Rs. 1.5 Lakhs on the Appellant for the contravention of Section 3(a) and Section 4 of FEMA. The amount of pre-deposit of the penalty, if made, shall be adjusted against the reduced penalty.

Contravention of Section 3(d) of FEMA (unauthorised/false inward remittances and related financial transactions) - contravention of Section 7(1)(a) of FEMA (duties of authorised persons/companies) - standard of proof in adjudication - preponderance of probabilities - corroboration by bank credit entries and TT references - confiscation of seized foreign currency for failure to surrender within prescribed period - adjustment of seized cash towards penalty - independence of FEMA proceedings from Customs Act investigations - HELD THAT:- It is pertinent to appreciate that the present proceedings being of quasi-judicial nature are governed by the standard of proof in accordance with the principles of pre-ponderance of probabilities.

We are convinced that the charge of contravention of Section 3(d) of FEMA is established against the Appellants. Corollary to our finding for the aforementioned charge is the inference that the contravention of Section 7(1)(a) of FEMA is also established against the Appellants. Both the charges are established to the extent of Rs. 4,43,96,119/- since besides the aforementioned 7 TTs, there were two other TTs transferred from Goel Foreign Exchange in Canada and no explanation with respect to these two credit entries has been provided by the Appellants. The pleadings have been made in the Appeals, that nothing has been produced by the Respondent as to show that the contraventions of the Customs Act 1962 have occurred. We observe that the proceedings under the Customs Act and those under the FEMA are independent of each other. Even if for argument sake, it is taken that no proceeding under the Customs Act 1962 could be initiated that does not vitiate the detection and the investigation brought out in the proceedings under FEMA.

Confiscation of seized foreign currency - HELD THAT:- It is undisputed that the Foreign Currency of value Rs. 1,70,880/- was seized and recovered from the premises of the individual Appellant Shri Sanjeev Kumar Gupta. Since, the seizure at his residence was effected on 15.10.2014, there is nothing produced by the individual Appellant as to show that the said Foreign Currency was not lying with him for less then 180 days. We therefore agree with the findings made in the Impugned Order and with the Order of confiscation of the said Foreign Currency.

Adjustment of seized cash towards penalty - HELD THAT:- We find that the Order relating to adjustment towards penalty from the amounts of the Appellant Company only, as reasonable and not unlawful. This Tribunal vide Order dated 24.05.2018 had waived off the pre-deposit of the penalty amounts of Rs. 11,874/- and Rs. 25,000/-. We therefore reduce the total cumulative penalty on the Appellant Company to Rs.11,98,894/- for the aforementioned contraventions of Section 3(d) and Section 7(1)(a) of the Foreign Exchange Management Act, 1999 (FEMA). We also reduce the total cumulative penalty on the individual Appellant to Rs. 15,89,232/- for the aforementioned contraventions of Section 3(d) and Section 7(1)(a) of FEMA in terms of Section 42 of FEMA and of Section 10(6) of FEMA read with Regulation 6 (A) of Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000 to the tune of Rs. 1,70,880/-. We also uphold the confiscation of Foreign Currency of value Rs. 1,70,880/- under Section 13(2) of FEMA.

Manpower recruitment or supply agency service - supply of manpower - reverse charge mechanism - reverse charge liability on recipient for supply of manpower by individual/partnership to a body corporate under Rule 2(1)(d)(i) of the Service Tax Rules, 1994 - extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 - penalty under Section 78 of the Finance Act, 1994 -

Manpower recruitment or supply agency service - HELD THAT:- A perusal of the invoices raised by the appellant on M/s. RailTel indicates that the charges have been raised for “Providing Manpower on Outsourcing Basis at various establishments and premises of RailTel”.

With effect from 01.07.2012, no specific categorization of service is required, with the introduction of the comprehensive Service Tax regime; “supply of manpower” has thus been defined under Rule 2(1)(g) of the Service Tax Rules, 1994

As per Rule 2(1)(d)(i) of the Service Tax Rules, 1994, the Service Tax liability on 'supply of manpower' by any individual or partnership firm, to a business entity registered as a ‘body corporate’ is on the recipient of service. We find that the Scope of Work and Terms and conditions of the agreement/s conform to the definition of 'manpower supply service’ as defined.

Hence, we hold that the services rendered by the appellant in this case are appropriately classifiable under the category of manpower recruitment or supply agency service.

Extended period of limitation - HELD THAT:- It is evident that the issue of rendering of service to M/s. Northern Railway Authority and M/s. IRCTCL was known to the Department at the time of the first audit. Even after raising of the issue and issue of the Audit Memo vide letter dated 18.12.2015, no demand was raised. Thus, we are of the view that the issue of the Show Cause Notice in this case by invoking the extended period of limitation, after the second audit on the same issue, is legally not sustainable. Consequently, we hold that the demand confirmed in the impugned order by invocation of the extended period of limitation is not sustainable and thus, set aside the same.

Demand raised for the normal period - reverse charge mechanism - HELD THAT:- A perusal of the agreement and other documents submitted by the appellant indicates that the services rendered by the appellant squarely fall within the ambit of ‘manpower supply service’. The appellant has also placed on record a work-sheet showing the details of manpower supply service rendered by them during the period from 01.04.2016 to 31.03.2017, to M/s. RailTel.

We find that the demand pertains only to services rendered to M/s. RailTel, and not to M/s. IRCTCL / M/s. Northern Railway Authority, as evidenced by the list of invoices produced by the appellant in support of their claim. As per the amended Notification No. 7/2015-ST dated 31.03.2015, in respect of ‘manpower supply service’, 100% Service Tax liability is cast on the recipient of service, under reverse charge mechanism, for this period. M/s. RailTel qualifies as a ‘body corporate’ and the appellant as a proprietorship firm.

Thus, we agree with the submission of the appellant that there is no liability to Service Tax on them as regards the services rendered by the appellant to M/s. RailTel, under the category of ‘manpower supply service’ and that the liability therefor, if any, lies on the service recipient, under reverse charge mechanism.

As per the submission made by the appellant, during this period, the appellant have not rendered any services to M/s. Northern Railway Authority and to substantiate their claim, they have relied on the invoices raised on M/s. RailTel during the concerned period, which have been duly placed on record.

Having gone through the records placed before us as well as the submissions made, we hold that the entire liability to Service Tax for the normal period of limitation in respect of the services rendered by the appellant to M/s. RailTel, is on the recipient of service i.e., M/s. RailTel, in this case.

Imposition of penalty under Section 78 - HELD THAT:- It has been submitted that the appellant had already declared supply of manpower service in their periodical ST-3 returns and also declared regarding availment of benefit of Notification No.30/2012 (Sl. No.8), thus discharging Service Tax on 25% of the gross value of service as received by them. Therefore, we observe that the element of suppression of facts with intent to evade payment of tax as charged, as alleged in the instant Show Cause Notice, does not exist in this case.

No corroborative evidence has also been brought on record by the Revenue to substantiate the imposition of penalty under Section 78 ibid. Considering the above, we hold that the penalty imposed on the appellant under Section 78 of the Act is unwarranted and accordingly, the same stands set aside.

Liability to pay service tax being eligible for exemption under Mega Notification No. 25/2012 dated 20.06.2012, the Entry no. 14 thereof. - construction, erection, commissioning or installation of original work - explanation to Entry No.14 concerning monorail and metro - eligibility condition of contracts entered into before 01.03.2016 with payment of appropriate stamp duty - nature of service-repair and maintenance versus works/installation - extended period of limitation invoked for suppression/mis-declaration - HELD THAT:- It is observed that the appellant is solely relying upon the Notification No. 2010/E&R/1500/2019 dated 28.12.2010 issued under Section 3 of Railways Act, 1989 to impress upon that vide the said notification Kolkata Metro has been declared to be railways w.e.f. 29.12.2010. However, it is not the only criteria to check eligibility for exemption in question. The foremost requirement for the said exemption is a nature of service rendered.

It is also observed that the copy of said tender document was being asked from the appellant since the stage of issuance of show cause notice but the same was never provided by the appellant. The perusal of all the documents on record falsify appellant submissions. Appellant has absolutely fail to fulfill the eligibility criteria prescribed under Entry 14 of Mega Exemption Notification No. 25/2012 dated 20.06.2012. The case of appellant is also not covered under the explanation to the said entry.​​​​​​​

The services are being provided to Kokata metro. Metro has specifically been excluded from the purview of exemption available to Railways. There is no ambiguity in the language of amended entry no. 14. Notification of 2010 as relied upon by the appellants despite being prior in time finds no mention in the Notification No. 9/2016 which amended the entry no. 14. Hence it is held that the said notification also does not extend any benefit to the appellant. In totality of these observations, it is held that appellant has rightly been denied the exemption benefit of mega exemption notification, amended entry no. 14 thereof.

Extended period of limitation invoked for suppression/mis-declaration - There is also no mention for availment of exemption benefit of Entry No. 14 of Notification 25 of 2012. Availment of exemption benefit without mentioning and declaring the same to the department is definite act of suppression of facts. The only motive for such act is the evasion of tax. Hence, no error to have been committed by the department when the show cause notice was issued invoking extended period of limitation.

Thus, hold that show cause notice is not barred by time. The above framed both the issues stands accordingly decided against the appellant an in the favarour of Revenue. Resultantly, the order under challenge is hereby upheld and present appeal is ordered to be dismissed.

Exemption of transmission and distribution of electricity from service tax - bundled services - interpretation and application of Section 66F(3) - incidental or ancillary services to transmission and distribution of electricity - liquidated damages/penalties not leviable as consideration for a service - extended period of limitation - requirement of willful suppression or intent to evade tax - regularisation of tax treatment for ancillary services by executive/GST Council - HELD THAT:- The facts of the case are that M/s. NESCO Utility (appellant / DISCOM for short) is a wholly owned undertakings of the Government of Odisha by virtue of holding 100% share capital and licensees under section 14 of Electricity Act 2003, engaged in the distribution of electricity in the licensed area of the State. The activities of the appellant are regulated and controlled by the Odisha State Electricity Regulation Commissions (OERC) and Central Regulatory Commission established both at Central and State levels under the Electricity Regulation Commissions Act, 1998.

We find that the issue involved in this case has already been settled, in the case of M/s. Wesco Utility & Ors. [2025 (11) TMI 80 - CESTAT KOLKATA] held that " We observe that the appellant is a Public Sector Undertaking working under the Odisha Government. They have recorded all the transactions in the books of accounts, from wherein the Revenue has gathered the data to issue the SCN. Further, the issue has been decided in favour of the appellant in several cases. Therefore, they could have entertained Bonafide belief that they are not required to pay any Service Tax. The Revenue has not brought in any evidence to the effect that the appellants have charged the Service Tax on their clients. All these, point out that rather than suppressing any activity or data, the appellant has been transparent in their dealings. Hence, we find that the Revenue has failed to back their allegation of suppression with any cogent evidence. "

Thus, the issue is no more res integra.

Therefore, we set aside the impugned order qua confirming of the impugned demand of Service Tax, along with interest and penalties, and allow the appeal, with consequential relief, if any.

Limitation and condonation of delay in appeals - statutory condonable period -extended period of limitation and allegation of suppression - principles of natural justice and opportunity of personal hearing - HELD THAT:- Appeal has been not only dismissed on the ground of limitation and also on merits by the First Appellate Authority. It is also evidence that before dismissing the appeal, appellant was heard.

During the hearing, Counsel of the appellant trying to emphasize that he has not being heard by the Commissioner (Appeals) which is contrary to the facts as recorded in the impugned order. First Appellate Authority has categorically recorded that Counsel for the appellant had appeared before him through virtual mode on 05.08.2025 and reiterated the grounds of appeal, which has been taken into account while dismissing the appeal of the appellant. Hence, no merits in the argument advanced by the appellant for denial of principles of natural justice. Hence, no merits in the submissions that the appeal was dismissed without hearing him.

The appeal was to be filed before the Commissioner (Appeal) after the condonable period from the date of the receipt of the Order-in-Original by the appellant. As per the proviso Commissioner (Appeal) has been granted the power to condone delay of one month in filing the appeal on sufficient cause being shown. In the present case appeal was filed before the Commissioner (Appeal) after expiry of condonable period from the date of receipt of Order-in-Original. Hence Commissioner (Appeal) has rightly held that appeal was filed beyond the prescribed period of limitation and has dismissed the same on this ground alone.

This issue is squarely covered by the decision of Hon’ble Supreme Court in the case of M/s Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT], wherein it has been held that Commissioner (Appeals) could not condone the delay beyond the 30 days in filing the appeal before him.

It is also observed that the appellant is not correct in stating that appellant had acted diligently in all manners for filing the appeal before First Appellate Authority. The reasons claimed by the appellant for condonation produced in para 5.2 of the impugned order. It is observed that the appellant/appellant’s Counsel did not appear before the Adjudicating Authority. It is also stated that previous advocate of the appellant did not give any information to the appellant about the impugned Order-in-Original dated 24.02.2023 and the said order was came to knowledge of the appellant only when he visited Customs & Central Excise Office, Mirzapur in connection with another case. All the submission made by the appellant not supported by any of the documentary evidences and not even stated who was the previous Advocate of the appellant to defend the case before the Adjudicating Authority.

Determining the period of limitation in filing the appeal - As per the Section 37C of the Central Excise Act, 1944 it is the date of service of the order, which is material for determining the period of limitation in filing the appeal and not the date of knowledge. It is evident that the Order-in-Original was send to the appellant on 16.03.2023 and would have been received by him within the reasonable time as per Section 27 of the General Clauses Act. Nothing has been stated by the appellant in the appeal before Commissioner (Appeals) to counter the presumption as per this section of General Clauses Act.

Accordingly, no merits in this appeal filed by the appellant.

Processes undertaken in job work - Manufacture v. service - common input services -exempted service - options under Rule 6(3) of the Cenvat Credit Rules - estoppel from acceptance of excise returns / consistency of revenue stance - benefit of exemption notification - HELD THAT:- The submission of the appellant is that the proceedings initiated by the earlier show cause notice dated 18.06.2018 for the previous period culminated in the Final Order No.50625/2022 dated 19.07.2022 passed by the Hon’ble Tribunal in favour of the appellant following the judgement of the Hon’ble High Court of Andhra Pradesh and Telangana in the case of Tiara Advertising [2019 (10) TMI 27 - TELANGANA AND ANDHRA PRADESH HIGH COURT] The Tribunal upheld the contention of the appellant that it was not rendering any service but was manufacturing goods on job work basis for the principal and has been availing the benefit of Central Excise Notification No.214/86–CE dated March 25, 1986 and since the activity amounts to manufacture, it cannot also simultaneously become a service.

Following the decision of the Tribunal in the appellant’s own case, we set aside the impugned order. The appeal is, accordingly allowed.

Liability to pay Service tax - incentives/discounts received by an authorised vehicle dealer from the manufacturer - consideration for provision of service - Business Auxiliary Service - principal-to-principal sale transaction - declared service -HELD THAT:- The issue involved in the present appeal is about service tax demand from the authorized dealers of the vehicle manufacture, on the incentives / discounts received by the appellant from manufacturer, i.e. TML. The amount of the incentives / discounts received by the appellants during the period from 01.01.2014 to 30.06.2017 amounting to Rs. 1,92,26,093/- has been alleged as taxable under Section 65B(51) of the Finance Act, 1994. However, it has fairly been conceded that the said issue stands already decided in the several decisions of the Tribunal wherein it was concluded that the incentives / discounts received by the appellants / dealers of car manufacturer were not taxable under BAS, as they were the part of a business transaction on a principal-to-principal basis.

We are of the considered view that the amount of incentives and discounts cannot be treated as consideration for any service and therefore no Service Tax is leviable thereon. Having decided the issue on merits in favour of the assessee, it is no longer required to go into the question of limitation raised by the appellant.

The impugned order is, therefore, set aside and the appeals are allowed accordingly.

Exemption application - Legislative competence and ambit of Section 3A - Rules 16 and 22(3) of the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026 -arbitrary, unreasonable - violative of Article 14 of the Constitution - Manufacturer of chewing tobacco - provisions of the Central Excise Act, 1944 - contravention of the procedure mandated under Rule 16 - requirement of disclosure to be made in Form CE DEC-01 Rule 6 regarding details of the CCTV surveillance system installed in the premises - HELD THAT:- The Petitioner has relied upon the plain language employed in Section 3A of the Act, as well as the procedure prescribed under the aforesaid Rules concerning the obligations imposed upon the manufacturer, such as the petitioner, qua the capacity of the manufacturing machines and the duty leviable thereon. According to him, the provisions of Section 3A do not, in any manner, empower the respondent to frame the Rules imposing of conditions such as the installation of CCTV cameras and the preservation of CCTV footage for a period of 24 months.

It is also brought to our notice by the petitioner that a similar issue is pending consideration before the Allahabad High Court in Writ Tax No. 891/2026. He has invited our attention to the order dated 04th February, 2026.

As against above, learned counsel for the respondent submits that the instructions in the matter are awaited, however, the very object for which the Rule has been incorporated is to maintain checks and balances qua the manufacturing, production etc. He would claim that the Rule falls within the legislative competence and ambit of Section 3A of the Act.

As such, he has sought time to file reply in the matter. That being so, issue notice. - Learned counsel appearing on behalf of the respective respondents waives notice.

Wrongly availed the Cenvat credit of service tax paid on various input services - Interest and penalty on three input services namely, ‘courier,goods transport agency (GTA) / freight services and record keeping services’ - services in relation to the manufacture of the final products and clearance of final products upto the place of removal - failure to examine documentary evidence in denial of GTA credit - definition of the input services as provided under Rule 2(l).

Denial of Cenvat credit on input services, namely, courier and record keeping services - HELD TAHT:- These two services have been consistently held by various Benches of the Tribunal as input services.

In the appellant’s own case this Tribunal has also allowed the Cenvat credit on the courier services for the period December 2013 to November 2014 i.e., post 01.04.2011, to the appellant in the case [2016 (7) TMI 632 - CESTAT CHANDIGARH] and for pre 01.04.2011 vide Final Order 60035/2024 dated 30.01.2024 by holding that the courier services are used in relation to manufacturing activity. - Ld. Commissioner has also allowed the credit to the appellant on the courier services vide the Order-in-Original dated 14.05.2013 for the period 2004 to 2011 and Order-in-Original dated 30.06.2014 for the period January 2012 to November 2012 by holding that the courier services are used in relation to the manufacturing process.

Cenvat credit availed on courier services is allowable; demand in respect of courier services set aside.

Record keeping Services - These services are availed to store data and records in exchange for rent and these records are essential for accounting and auditing and for appellant to be a tax compliant entity. Therefore, the record keeping services are intrinsically related to accounting and auditing services.

Tribunal has also allowed the Cenvat credit on record keeping charges for the period December 2013 to November 2014 i.e., post 01.04.2011, to the appellant in the case [2016 (7) TMI 632 - CESTAT CHANDIGARH]and further the Ld. Commissioner also allowed the credit to the appellant for record keeping services vide the Order-in-Original dated 14.05.2013 involving the period post 01.11.2011 and Order-in-Original dated 30.06.2014 for the period January 2012 to November 2012 on the basis that the record keeping services are used in the manufacturing process.

Cenvat credit availed on record keeping services is allowable; demand in respect of record keeping services set aside.

Failure to examine documentary evidence in denial of GTA credit - cenvat credit on GTA (freight) services - eligibility for Cenvat credit in respect of goods transport agency (GTA) freight services - HELD THAT: - The Commissioner denied credit on GTA services on the ground that the appellant failed to prove that such services were received up to the place of removal. The appellant placed invoices and other documents on record before the Commissioner and additionally filed documents with the Tribunal; however, the Commissioner did not examine or make findings on those documents. Because the factual determination whether the services were received up to the place of removal requires examination of the documentary evidence, the Tribunal declined to decide the issue itself and remanded the matter to the Commissioner to consider the documents and give a reasoned finding.

Matter remanded to the Commissioner for fresh consideration of eligibility of Cenvat credit on GTA (freight) services after examination of the documentary evidence.

Final Conclusion: The appeal is partly allowed. - demand of interest penalty is not sustainable because the demand itself is not sustainable.

Manufacture of Lead Ingots from battery scrap and Lead scrap - job work - benefit of exemption under Notification No. 214/86-CE - in relation to manufacture - consistency of departmental treatment

Manufacture - The purification and processing activity undertaken by M/s GM amounts to manufacture. - HELD THAT: - The Tribunal's earlier final decision in the Respondent's own case [2017 (10) TMI 1181 - CESTAT CHANDIGARH] has held that the purification of unrefined lead to refined lead and subsequent manufacture of lead alloy results in a distinct, commercially usable product and therefore amounts to manufacture. The Tribunal's reasoning-applying the tests in Servo Med and categorising processes where a different, marketable product emerges as manufacture-was followed by the Commissioner (Appeals) and accepted by this Bench. The earlier Tribunal order has neither been reversed nor stayed and has attained finality; accordingly the activity is to be treated as manufacture for the disputed period. [Paras 6, 9]

The activity undertaken by M/s GM is manufacture.

Exemption under Notification No. 214/86-CE - in relation to manufacture - The Respondent is entitled to the benefit of Notification No. 214/86-CE because the goods manufactured by the job worker are used in relation to the manufacture of final products. - HELD THAT: - The Commissioner (Appeals) relied on the Tribunal's earlier findings that the refined lead ingots are distinct, meet commercial and specification standards and are used in battery manufacture. Even if the principal's activity were viewed otherwise, the expression "in relation to" must be given an expansive interpretation (per Doypack Systems [1988 (2) TMI 61 - SUPREME COURT]), covering activities integrally connected with or incidental to manufacture. On these bases the Respondent qualifies for the exemption under Notification No. 214/86-CE. [Paras 6, 8]

Benefit of Notification No. 214/86-CE is available to the Respondent.

Consistency of departmental treatment - The department cannot adopt inconsistent positions by treating identical activities as manufacture at one unit and denying the same characterization at another to deprive an assessee of exemption. - HELD THAT: - Following the principle applied by the Tribunal in Dabur India Ltd.[2015 (10) TMI 1839 - CESTAT NEW DELHI], inconsistent departmental treatment of identical products or processes across units is legally unsustainable. The Tribunal noted that treating the same process as manufacture at some units while denying it at another, solely to deny exemption, lacks foundation. This bench affirmed that the department cannot discriminate between assessees manufacturing identical goods at different locations. [Paras 7]

Inconsistent departmental treatment is impermissible and cannot be used to deny exemption.

Final Conclusion: The impugned order of the Commissioner (Appeals) upholding entitlement to exemption and dropping the demand is upheld; the Revenue's appeal is dismissed and the cross-objection disposed of accordingly.

Cenvat credit - manufacturer/job worker - Endorsed Bill of Entry - contravention of Rule 9 of Cenvat Credit Rules, 2004 (CCR) - requirements of valid documents for availment of Cenvat credit - credit taken on the basis of endorsement - Bill of Entry as evidence of duty paid character - Bills of Entry in the name of the original importer but endorsed in favour of the manufacturer/job worker - effect of amendment to Rule 9 w.e.f. 01.04.2014

Endorsed Bill of Entry - Whether Cenvat credit can be availed by the appellant on the strength of Bills of Entry endorsed in their favour by the original importer. - HELD THAT: - The Circular No. 179/13/96 dated 09.02.1996, where, in view of certain difficulties in availment of credit due to different names etc., appearing on invoices, BoEs etc., a concept of endorsement of BoEs by importer was introduced for availing credit, subject to certain guidelines. Though, this was in the context of Rule 57G/57/T of erstwhile Central Excise Rules, but this is equally applicable in the context of BoEs under Rule 9 of CCR. This is a trade facilitation measure therefore when under erstwhile Rules endorsed BoE was a valid document then endorsed BoE even under Rule 9 of CCR can still be considered as a valid document for taking credit.

Thus, the Tribunal found that Bills of Entry were expressly included within the list of documents under Rule 9 of the Cenvat Credit Rules and that, as a trade-facilitation measure, endorsed Bills of Entry have been recognised for availment of credit by earlier Board Circulars and decisions.

Relying on the ratio of the Hon'ble Supreme Court in Union of India v. Marmagoa Steel Ltd.[2008 (7) TMI 95 - SUPREME COURT], the Tribunal held that a Bill of Entry, even if not originally in the name of the manufacturer seeking credit, cannot be denied effect so long as the duty-paid character of the goods and receipt/use of the inputs by the claimant are not in dispute. The Tribunal examined amendments to Rule 9 (w.e.f. 01.04.2014) introducing importer invoices and registration requirements, but concluded that the inclusion of importer invoices does not oust the continuing validity of Bills of Entry (including endorsed Bills of Entry) as permissible documents for taking Cenvat credit.

The Tribunal further relied on coordinate decisions of the Bench and other Tribunals which have allowed credit on endorsed Bills of Entry where there is no doubt as to payment of duty or receipt/use of inputs by the claimant. Applying these authorities to the admitted facts (no dispute about receipt or use of materials), the Tribunal held that endorsed Bills of Entry constituted valid documents for availment of Cenvat credit in the present factual matrix. [Paras 8, 9, 10, 11, 12]

Impugned order set aside; Cenvat credit legitimately availed on the strength of endorsed Bills of Entry and appeal allowed.

Final Conclusion: In the factual matrix where receipt and duty-paid character of inputs were not disputed, the Tribunal held that endorsed Bills of Entry fall within the scope of Bills of Entry under Rule 9 of the Cenvat Credit Rules and accordingly allowed the appeal, setting aside the demand and penalty confirmed by the Adjudicating Authority.

Levy of Clean Energy Cess as duty of excise payable at time of removal - sale of raw coal to customers - paying Central CED (CED) on coal and also paying Clean Energy Cess (CEC) on coal -central excise duty leviable on coal payable at time of removal - definition of "removal" under CEC Rules - exclusion for captive consumption used for raising of goods - exemption notification 67/95-CE applicable to factory production not to mines - difference between distinct statutory returns cannot alone sustain duty demand; requires reconciliation and factual verification

Definition of "removal" under CEC Rules - exclusion for captive consumption used for raising of goods - levy of Clean Energy Cess as duty of excise payable at time of removal - central excise duty leviable on coal payable at time of removal - exemption notification 67/95-CE applicable to factory production not to mines - Whether coal cleared to the appellant's captive power plant is excluded from CEC and CED as 'used for raising of such goods' or covered by exemption notification 67/95-CE. - HELD THAT: - There is no direct correlation between the coal cleared to power plant and coal raised from the mines. It cannot be said that coal is being used indirectly in raising coal. Therefore, this exclusion, which has been adopted by the appellant for non-payment of CEC on the raw coal cleared to captive power plant, is not tenable. Once the duty has been levied in terms of section 83(3), only the payment of duty has been deferred till the time of dispatch. Therefore, we do not find that activity of generating power from coal in their power plant can be considered as used for further raising of such goods i.e., coal. The exclusion of coal produced and cleared without payment of CEC is not correct.

Admittedly, coal has been produced in India, therefore, the authority to charge CED is under section 3. However, the duty is required to be paid in accordance with manner of payment provided under Central Excise Rules and therefore, the duty is normally required to be paid at the time of removal. The term ‘place of removal’ has been defined under section 4 as, inter alia, a factory or any other place or premises of production or manufacture of excisable goods. Thus, in the present case, since the production of excisable goods has taken place in the mines, the CED would be payable at the time of removal from the mines. We also note that this definition is also consistent with the provision for payment of CEC, where also, the CEC is required to be paid at the time of removal from the mines. Thus, the CED and CEC, which are levied under different statutory provisions, are required to be discharged at the time of removal from the mines in the manner provided under respective statutory provisions.

Once having discharged CEC on the entire quantity cleared from mines to the washery, apparently, within the mines, then there is no requirement for payment of CEC again thereon. All these factual matrix needs to be checked for reconciliation of the statements to establish that whatever coal has been produced in the mines, appropriate CEC and CED has been discharged at the time of removal from the mines and any removal without payment of either CEC or CED has to be covered either by way of exemption or in terms of statutory provisions warranting exclusion of said clearance for the purpose of payment of CEC.

The leviability of both statutory duty and cess are on the same excisable goods, which have been produced in the same mines and the payment has to be made at the time of removal from the mines. Therefore, in case there is any discrepancy between these two figures, the appellant is required to explain in order to satisfy that CED and CEC leviable on entire quantity has been paid on such coal produced in the mines except to the extent permissible. This may require reconciliation of clearances over a larger period as there could be some spillover on account of accountal as well as payment of CEC and CED due to difference in the date of removal of the coal and slurry and rejects, etc. The principal is, however, to ensure that they discharge payment of both the cess and CED on the entire quantity of coal produced in the mines and cannot claim any exclusion on account of its consumption in the power plant for raising the coal or for captive consumption in the absence of any statutory provisions or notification.

Exclusion of coal cleared to captive power plant from CEC and CED is not tenable on the material placed; notification 67/95-CE is not applicable to the facts and cannot justify non-payment.

Discrepancy between returns is not by itself a sustainable basis for demand; matters remanded for factual verification and re-computation to determine any short payment of CEC or CED.

Final Conclusion: The Tribunal rejected the appellants' legal pleas that coal sent to captive power plants is automatically excluded from CEC/CED or covered by notification No.67/95-CE, and held that discrepancies between CEC and ER1 returns cannot alone sustain a demand; both sets of clearances must be reconciled. Both the appellants' appeals and the Department's appeal were allowed to the extent of remanding the matters to the original adjudicating authority for factual verification and re-computation in accordance with the Tribunal's observations.

Entitlement to refund of unutilized CENVAT credit under Rule 5 - Eligibility of input services used in manufacture of exported goods - Applicability of limitation under Section 11B to refund claims under Rule 5 - Relevant date for limitation upon closure and surrender of registration - Scope of remand and limits on raising new grounds in de-novo adjudication - HELD THAT:- In M/s. Gauri Plasticulture [2019 (6) TMI 820 - BOMBAY HIGH COURT], we find that refund pertains to inputs lying in stock without being used in the manufacture of products. Further we find that issue was considered by jurisdiction Hon’ble High Court of Karnataka in the matter of M/s. Slovak India Trading Co. Pvt. Ltd. [2006 (7) TMI 9 - KARNATAKA HIGH COURT], held that " There is no express prohibition in terms of Rule 5. Even otherwise, it refers to a manufacturer as we see from Rule 5 itself. Admittedly, in the case on hand, there is no manufacture in the light of closure of the Company. Therefore, Rule 5 is not available for the purpose of rejection as rightly ruled by the Tribunal. The Tribunal has noticed that various case laws in which similar claims were allowed. The Tribunal, in our view, is fully justified in ordering refund particularly in the light of the closure of the factory and in the light of the assessee coming out of the Modvat Scheme. "

The issue was also considered by the Tribunal in the matter ofM/s. ATV Projects India Pvt., Ltd., Vs. CC [2023 (9) TMI 802 - CESTAT MUMBAI], majority it is held that:- " availment of cenvat credit is an indefeasible right of an assessee and such right conferred under the statue cannot be taken away on the ground of limitation. Further, Rule 5 ibid does not prescribe any time limit for grant of refund of the cenvat credit. Even if the time limit under section 11B ibid is to be applied, then logically it should be effective from the date of surrender of the registration certificate upon closure of the factory. The appellant in this case, since has filed the refund application within a reasonable time frame, from the date of closure of the factory, in my opinion, the same should not be denied on the ground of limitation, inasmuch as the purpose of the cenvat scheme would be defeated, if the benefits accrued in lawful manner is denied.”

We find in the present appeal, though the closure of export were done in June, 2008, it has exited from EOU in 2011 and closure of factory and surrender of Central Excise registration was done only on 30.07.2013 and refund claim was filed on 12.04.2014. Even if it is assumed that the provisions of Notification No. 27/2012-CE(N.T) dated 18.06.2012 are applied, refund cannot be denied, since it is filed within one year from the date of closure of the business activity.

As regards other issues, it is well settled that eligibility of a claim cannot be questioned when refund claim is made under Rule 5 of CENVAT Credit Rules, 2004 for refund of the unutilized CENVAT credit lying in their books of account.

Further as held in the matter of M/s. Simplex Engineering & Foundry Works Pvt., Ltd.[2019 (6) TMI 820 - BOMBAY HIGH COURT], such issues were not the matter of dispute when the first round of adjudication was conducted and Adjudication authority required to act within the scope of remand during the de-novo proceedings and they cannot reject the refund claim on a ground which was not part of the first adjudication / appellate proceedings.

Thus, the impugned order is unsustainable and liable to be set aside.

Valuation under Section 4 - transaction value at time of removal - prohibition on retrospective imputation of value by comparative averaging - clandestine manufacture and removal - burden of proof and corroborative evidence - dual pricing - allegation and evidentiary requirement - denial of SSI exemption consequent on unsustained undervaluation - consequences for interest and penalty where demand is unsustainable

Valuation under Section 4 - transaction value at time of removal - prohibition on retrospective imputation of value by comparative averaging - Admissibility of adopting an average sale price computed for one period to revalue clearances for earlier or subsequent periods and to raise differential central excise duty. - HELD THAT: - The Tribunal held that valuation of excisable goods is governed by the transaction value at the time of removal; there is no method in the statute permitting adoption of an average sale price of one period to determine assessable value for different periods. Any subsequent reduction or inter-period fluctuation in prices, by itself, does not establish evasion of duty. Retrospective imputation of value on the basis of comparative analysis alone is impermissible; undervaluation must be supported by contemporaneous documentary evidence relevant to each removal such as invoices, agreements and flow of funds. [Paras 6]

Demand founded on an average sale price across periods is legally unsustainable and cannot be sustained in absence of transaction-specific evidence.

Dual pricing - allegation and evidentiary requirement - clandestine manufacture and removal - burden of proof and corroborative evidence - Whether the Department proved dual pricing or clandestine manufacture and removal sufficient to justify demand and denial of exemption. - HELD THAT: - The Tribunal found that the Department relied primarily on 24 sample invoices and that verification did not establish existence of another unit or clandestine unit at the Indore address. The Tribunal set out the established requirement that allegations of clandestine manufacture and clearance must be supported by tangible, direct and corroborative evidence (e.g., unaccounted raw material receipt/consumption, excess electricity usage, proof of transportation and receipt by consignees, flow back of sale proceeds). In the present facts none of the necessary ingredients were proved; dual pricing allegation was not substantiated by evidence of separate clearances or corroborative material. Reliance on internal or sample records without independent corroboration was held insufficient. [Paras 6]

Allegations of dual pricing and clandestine manufacture/clearance were not proved; demand based on such allegations cannot be sustained.

Denial of SSI exemption consequent on unsustained undervaluation - Validity of denying benefit of Notification No. 08/2003-CE to the appellant for the Financial Years 2013-14 to 2015-16 on the basis of alleged undervaluation. - HELD THAT: - Because the Tribunal concluded that the alleged undervaluation was not established by adequate evidence and that the Department's method of using an average sale price was legally impermissible, the consequent action of denying the SSI exemption for the stated years was held to be unsustainable. The denial was therefore set aside as it rested on unproven valuation adjustments. [Paras 6]

Denial of SSI exemption for 2013-14 to 2015-16 is legally not sustainable and is set aside.

Consequences for interest and penalty where demand is unsustainable - Whether interest and penalties confirmed by the adjudicating authority survive when the foundational demand is set aside. - HELD THAT: - The Tribunal held that where the primary demand of central excise duty is not sustainable for lack of evidence and incorrect valuation methodology, interest and penalty based on that demand cannot subsist. Applying this principle, the Tribunal set aside the imposition of interest and penalties as consequential to setting aside the demand. [Paras 7]

Interest and penalties confirmed in the impugned order are set aside consequent to quashing the demand.

Final Conclusion: The appeal is allowed: the demand of central excise duty (raised for the periods covered by the audit and for 2011-12 to 2015-16), the denial of SSI exemption for 2013-14 to 2015-16, and the consequential interest and penalties are set aside for lack of legally admissible valuation methodology and insufficient corroborative evidence of clandestine clearances.