TaxTMI Updates e-Newsletter
Mar 03,2026

Condonation of delay - Classification of goods - HELD THAT:- Delay condoned.

No grounds made out to interfere with the impugned judgment/order [2025 (7) TMI 1983 - CESTAT KOLKATA] passed by the Customs Excise and Service Tax Appellate Tribunal, Kolkata.

Appeal is, accordingly, dismissed.

Revival of appeals - restoration of statutory appeal - limitation and delay in filing appeals - pre deposit requirement - refund of cash payment and refund of excess recovery - interpretation of Sections 49 and 107 of the Act read with Circular dated 06.07.2022, instructions dated 28.10.2022 and Notification No. 53/2023-Central Tax dated 02.11.2023.

Revival of appeals - HELD THAT:- The petitioners herein to make appropriate application(s) before the concerned appellate authority for the purpose of revival of their appeals having regard to the order of the Patna High Court in Raiyan Traders Vs. State of Bihar [2024 (10) TMI 957 - PATNA HIGH COURT].

The issue of delay in filing the appeals and making predeposit amount shall not be raised either by the Department or by the appellate authority.

Refund of cash payment and refund of excess recovery - HELD THAT:- The petitioners are at liberty to make appropriate application(s) seeking relief with regard to refund of cash payment and refund of the excess amount which has been recovered in the aforesaid special leave petitions respectively.

Interpretation of Sections 49 and 107 of the Act read with Circular dated 06.07.2022, instructions dated 28.10.2022 and Notification No. 53/2023-Central Tax dated 02.11.2023 - HELD THAT:- The respondents shall give instructions with regard to interpretation to be given to Sections 49 and 107 of the Act read with clarification Circular dated 06.07.2022, instructions issued on 28.10.2022 and Notification No. 53/2023-Central Tax dated 02.11.2023 and file an affidavit in that regard.

Pending disposal of this special leave petition, liberty is reserved to the respondent herein to seek restoration of the statutory appeal by making an appropriate application having regard to earlier interim order dated 03.02.2025.

Final Conclusion: Interim directions permitting both parties to apply for restoration/revival of statutory appeals have been issued, with a two week deadline for petitioners; considerations of delay and pre deposit/limitation are suspended for purposes of those restoration applications; respondents must file an affidavit stating instructions on the interpretation of the identified statutory provisions and communications; matters listed for further hearing on 20.01.2026.

Validity of the impugned show cause notice issued under Section 74 -Prima facie satisfaction to issue a show cause notice - patent illegality or a pre-determined mindset - expression “reasons to believe” - No opportunity of personal hearing - breach of Section 75(4) -violation of right to personal hearing under principles of natural justice.

Prima facie satisfaction to issue a show cause notice - Validity of the impugned show cause notice issued under the Act - HELD THAT:- A mere notice to show cause does not give rise to any cause of action since it does not constitute an adverse order affecting the rights of the party and that being so a writ court is loath to interfere with a show cause notice unless an exceptional case of total lack of jurisdiction to issue such a notice or patent illegality in the such notice is made out.

The writ Court limited its review to whether the jurisdictional facts for issuing a show cause notice prima facie existed and whether the issuing authority had jurisdiction. The Court held that a mere show cause notice does not constitute a final adjudication and interference is warranted only where there is total want of jurisdiction or patent illegality such as a closed or predetermined mind. The impugned notice contained detailed factual material drawn from the ITC chain indicating possible routing of invoices through entities whose registrations were cancelled and raised a prima facie case of collusion and wrongful availing/utilisation of ITC.

The use of expressions such as "reasons to believe" and repeated references to "prima facie" demonstrate that the authority had formed a provisional view and had not reached a final conclusion. Given the material placed before the authority and the limited scope of judicial interference at the notice stage, the Court found no patent illegality or predetermination that would vitiate the notice. The authorities cited by the petitioner did not assist because those decisions either involved undisputed bona fides or were decided after full adjudication; conversely, where genuineness is questioned on the basis of an ITC chain a higher standard of proof may be required at adjudication but not to sustain issuance of a show cause notice. [Paras 14, 15, 20, 23, 34]

The challenge to the show cause notice is rejected and the notice is not interfered with.

Violation of right to personal hearing under principles of natural justice - HELD THAT: - The adjudication order passed during pendency of the writ petition confirmed the demand but was recorded to have been passed without providing the petitioner an opportunity of personal hearing. The Court observed that such omission violates the statutory requirement and the principles of natural justice embodied in the Act (notably Section 75(4) as referred to in the judgment). Because the order visited the petitioner with adverse consequences and lacked the mandatory hearing, it could not be sustained. The Court therefore set aside the adjudication order and directed that the petitioner be granted thirty days to file a reply to the show cause notice; the proper officer was directed to consider the reply and afford an opportunity of hearing before passing an appropriate order. The period during which the writ petition remained pending was excluded for computing limitation, and the petitioner cannot raise a limitation objection in the remand proceedings unless that point was available at the time the show cause notice was initially issued. [Paras 35, 36, 37]

The adjudication order dated November 04, 2025 is set aside; fresh adjudication to follow after affording personal hearing and giving the petitioner thirty days to reply.

Final Conclusion: The Court refused to quash or interfere with the show cause notice which was supported by prima facie material drawn from the ITC chain, but set aside the adjudication order for non compliance with the petitioner's right to personal hearing and directed fresh adjudication after affording the petitioner thirty days to reply and a hearing; the period of pendency of the writ petition is excluded for limitation purposes.

Examination of the statutory scheme governing provisional attachment - formation of an opinion connected to protecting revenue -discrepancies of non payment of taxes on taxable supply of construction services to existing owners namely the society and MHADA -right to submit objection and to be heard under Rule 159(5) -requirement to record reasons when rejecting objections to attachment.

Provisional attachment requires formation of opinion and reasoned order - right to submit objection and to be heard under Rule 159(5) - requirement to record reasons when rejecting objections to attachment - HELD THAT: - The court held that provisional attachment under Section 83 is a draconian power that must be exercised only upon formation of an opinion proximate to protecting government revenue and after due deliberation. Rule 159(5) entitles the person whose property is attached to file objections and to an opportunity of being heard; the Commissioner hearing such objections must pass a reasoned order accepting or rejecting them. The impugned orders of attachment and the order rejecting the petitioner's objections contained no reasons and therefore demonstrated non-application of mind contrary to the requirements recognised by the Supreme Court in Radha Krishan Industries [2021 (4) TMI 837 - SUPREME COURT ] and by this Court in Originative Trading [2022 (3) TMI 262 - BOMBAY HIGH COURT ] In these circumstances the attachments could not stand. The Court did not decide the correctness of the underlying demand but confined its review to the procedural defect of failing to record reasons and to deal with the petitioner's detailed submissions before maintaining the attachments. [Paras 14, 15]

Impugned attachment orders quashed and set aside; proceedings remitted to respondent No.3 to afford hearing and pass a reasoned order under Section 83 read with Rule 159.

Final Conclusion: The attachment orders were quashed for failure to record reasons and to deal with the petitioner's objections; the matter is remitted to the Commissioner for fresh decision after affording an opportunity of hearing and passing a reasoned order under Section 83/Rule 159. The court expressed no opinion on the pre-show cause notice under Section 74.

Refund of accumulated unutilised Input Tax Credit (ITC) - inverted duty structure -clarificatory circular bearing no.181/13/2022-GST issued by the Central Government and the corresponding State circular bearing no.13/2022, whereby it had been clarified that restriction imposed by the said notification would be applicable in respect of all refund applications filed on or after 18.07.2022 -Retrospective application of executive circular to curtail accrued limitation - cause of action to claim refund arose -define “relevant date” - accrual of refund right on filing return under Section 39 - rate of tax on inputs used by the petitioner was higher than the rate of tax on the outward supplies of the manufactured foods of the petitioner - HELD THAT:-

Retrospective application of executive circular to curtail accrued limitation - accrual of refund right on filing return under Section 39 - HELD THAT: - Sections 54(1) and Explanation 2(e) to Section 54 establish that the relevant date for refund of unutilised input tax credit under the inverted duty proviso is the due date for furnishing the return under Section 39 for the period in which the claim arises. For the petitioner the due date was June 20, 2021, and the refund application filed on June 16, 2023 fell within the two-year period under Section 54(1). The court applied the settled exception to retrospective curtailment of limitation: a provision or executive instruction which seeks to shorten an existing period of limitation cannot be given retrospective effect against an already accrued cause of action.

The judgment rendered by the Hon’ble Andhra Pradesh High Court in the case of M/sPriyanka Refineries Pvt. Ltd. [2025 (2) TMI 302 - ANDHRA PRADESH HIGH COURT], the Hon’ble Allahabad High Court in the case of Vaibhav Edibles Pvt. Ltd. [2025 (11) TMI 1265 - ALLAHABAD HIGH COURT], the Hon’ble Rajasthan High Court in the case of Shree Arihant Oil & General Mills [2025 (9) TMI 968 - RAJASTHAN HIGH COURT] and the Hon’ble Gujarat High Court in the case of Patanjali Goods Ltd. [2025 (3) TMI 367 - GUJARAT HIGH COURT] in unison state that merely because an application for refund had been made subsequent to the circular but within the time prescribed under Section 54(1) of the said Act of 2017, the same would not disentitle the registered tax prayer from claiming refund, if such person was otherwise eligible to return and his right to claim refund had arisen/accrued prior to the said circulars. There is no good reason for this Court to take a divergent view.

The impugned orders are set aside; the proper officer shall reconsider the petitioner's refund application on merits and deal with it in accordance with law without being inhibited by the clarificatory circulars, as expeditiously as possible and preferably within six weeks.

Final Conclusion: The writ petition succeeds; the appellate and adjudicating authority orders rejecting the refund solely on the basis of the clarificatory circulars are quashed and the matter is remitted for merits consideration uninhibited by those circulars.

Maintainability of writ against show cause notice - challenge to show cause notice u/s 74 and 74A - admissions in pleadings construed as binding against the petitioner - administrative adjudication as the appropriate remedy; writ not to be entertained against show cause notice - liberty to file reply and requirement that authority consider reply without being influenced by court observations - HELD THAT:- Upon perusal of the pleadings, it is clear that the case of the petitioner himself is that the petitioner is the supplier.

This Court in the case of Smt. Rakhi Disawal and Others Vs. Ujjain Vikas Praadhikaran and Others [2024 (7) TMI 1750 - MADHYA PRADESH HIGH COURT ] has declined to entertain the petition against the show-cause notice considering the law laid down by the Apex Court in the case of Special Director Vs. Mohd. Ghulam Ghouse and Anr. [2004 (1) TMI 378 - SUPREME COURT] and the judgment of the Division Bench in the case of Sanjay Malveeya and Ors. Vs. State of M.P and Ors [2018 (2) TMI 2154 - MADHYA PRADESH HIGH COURT]

Thus, we are not inclined to entertain the writ petition against the show cause notice.

Imposition of penalty under Section 129(1)(a) where no tax is payable on zero rated export - contravention of Rule 138 as a procedural lapse without intent to evade tax - Whether penalty under Section 129(1)(a) of the CGST Act is imposable for expiry of the E way bill in respect of exported goods when the supply is zero rated and no tax is payable, and where the expiry resulted from a transport breakdown shortly before interception -

Imposition of penalty under Section 129(1)(a) where no tax is payable on zero rated export - contravention of Rule 138 as a procedural lapse without intent to evade tax - HELD THAT: - The Court applied the reasoning of the Coordinate Bench in Macrowagon Retail Pvt. Ltd [2025 (6) TMI 1236 - GUJARAT HIGH COURT] recognising that goods exported are zero rated and, although leviable under the IGST Act, remain tax free for the exporter unless the option to pay tax is exercised. A contravention of Rule 138 is procedural and, in the absence of any tax liability on the zero rated export, computation and imposition of penalty under Section 129 fails. On the facts, the E way bill had expired shortly before interception and could not be extended due to a vehicular breakdown; there was no evidence of intent to evade tax. In such circumstances a harsh penalty under Section 129(3) was unwarranted and beyond the scope of Section 129(1)(a). The impugned orders were therefore unsustainable. [Paras 6, 7, 8]

Impugned orders under Form GST APL 04 quashed; respondent directed to refund the penal amount with applicable interest within twelve weeks.

Final Conclusion: The writ petition succeeds: applying the Coordinate Bench precedent, the Court held that where exported goods are zero rated and no tax is payable, and the E way bill expiry arose from a transport breakdown shortly before interception without intent to evade tax, penalty under Section 129(1)(a) cannot be sustained; the impugned orders are quashed and refund with interest directed.

Entitlement to disbursement of interest on the refund already deposited in Court - prohibition on withholding interest due to inter se dispute among authorities - definition of “proper officer” u/s 2(91) - non-justiciability of inter se dispute in writ petition.

Entitlement to interest on refund - HELD THAT:- The Court recorded that it was not denied by the parties that the petitioner is entitled to interest on the refund. Respondent No.3 has deposited the amount of interest on refund with the Registry pursuant to earlier orders. Given the undisputed entitlement, the Court directed the Registry to disburse the deposited interest to the petitioner after proper verification, without adjudicating the underlying inter se dispute between authorities.

The Registry is directed to disburse the deposited interest on refund to the petitioner after proper verification.

Prohibition on withholding interest due to inter se dispute among authorities - non-justiciability of inter se dispute in writ petition. - HELD THAT:- Earlier, while noticing the inter se dispute between the State authorities and the Central authorities, we had directed the respondent No.3 to deposit the entire amount of interest on refund, as it was contended by learned Senior Standing Counsel, while referring to the provisions of the Rule 94 of the Central Goods and Services Tax Rules, 2017 and the definition of “proper officer” under Section 2(91) of the Goods and Services Tax Act, 2017 that the interest is required to be paid by the State authorities.

So far as the inter se dispute amongst the respondents is concerned, the respondents cannot withhold the payment of interest. We cannot delve into the same in the present writ petition. If the respondents have raised a dispute regarding payment of interest and are shifting the burden upon each other without resolving the issue, the petitioner cannot be made to suffer on that account and the interest cannot be withheld.

Final Conclusion: The writ petition is disposed of after recording that respondent No.3 has deposited the interest on refund; the Registry is directed to verify and disburse the deposited interest to the petitioner, and respondents are prohibited from withholding that interest on account of any inter se dispute which is not being decided in this petition.

Conversion of order under Section 74 to Section 73 - requirement of documentary evidence for availing input tax credit - entitlement to avail the benefits under Section 128A of the CGST Act for waiver of interest or penalty or both - absence of supporting documentary evidence for Input Tax Credit -application of Section 74 where fraud, misstatement or suppression is found.

Conversion of order under Section 74 to Section 73 - requirement of documentary evidence for availing input tax credit - HELD THAT: - The Court examined whether the petitioner had produced the requisite documentary evidence to justify treating the adjudicating authority's order as one under Section 73 rather than Section 74. The adjudicating authority had recorded that the petitioner failed to produce documents prescribed for availment of ITC, such as tax invoices and returns (for example GSTR-3B and GSTR-2A), and had concluded that the petitioner had deliberately availed and utilized ineligible ITC, amounting to fraud, misstatement or suppression. A prior order in relation to a different financial year was distinguished on the ground that in that matter relevant documents were produced and the authority proceeded under Section 73; no similar documents were produced in the present case. In view of the absence of supporting records and the adjudicating authority's specific findings of fraudulent availment, the Court held that conversion to an order under Section 73 was not justified.

The Court refused to direct conversion of the impugned order under Section 74 into an order under Section 73 for want of documentary evidence establishing that fraud, misstatement or suppression was not made out.

Final Conclusion: The petitioner's prayer for conversion of the adjudicating authority's order under Section 74 to one under Section 73 was rejected for failure to produce supporting documentary evidence; the writ petition therefore fails.

Mandatory pre-deposit as condition for entertaining statutory appeal - pre-deposit u/s 35F - ex-parte order - personal hearing - delay and laches - reasonableness of filing a writ petition - HELD THAT:- It is duly noted by the First Appellate Authority in impugned order dated 22.12.2023 that personal hearing was afforded at that stage as well. Learned counsel was also called upon to ensure that pre-deposit be made on or before 20.12.2023 but needful was not done. Department has afforded number of opportunities to petitioner to do the needful but apparently no amount of pre-deposit, even as per its own calculation was ever made by the petitioner. This clearly reflects adversely on the conduct of petitioner. Another aspect to be noted is that this writ petition has been filed in September 2025 for challenging order in appeal which was passed on 22.12.2023. There is not even a whisper of an explanation, leave alone a reasonable explanation for the delay in filing of this writ petition. Doubtlessly, there is no limitation for filing a writ petition but at the same time it is a settled position that a writ petition should be filed within a reasonable time.

Admittedly, there is no limitation for filing of writ petition but at the same time, it is a settled position that litigant should approach the Court within a reasonable period of time. Gainful reference in this regard can be made to judgments of Hon’ble the Supreme Court in Bharat Coking Coal Ltd. and others vs. Shyam Kishore Singh 2020 (2) TMI 1756 - SUPREME COURT; Union of India and others vs. N. Murugesan and others [2021 (10) TMI 1375 - SUPREME COURT]; State of Orissa and another vs. Laxmi Narayan Das (Dead) through LRs and others 2023 (7) TMI 1639 - SUPREME COURT and Bichitrananda Behera vs. State of Orissa and others 2023 (10) TMI 1584 - SUPREME COURT

As noted, there is no explanation leave alone a plausible explanation put forth by the petitioner for this delay. Viewed from any angle, we do not find any ground whatsoever for causing interference in this matter at this stage.

Writ petition is accordingly dismissed being devoid of any merit.

Maintainability of the writ petition before the High Court - Availability of an alternate efficacious remedy by statutory appeal under section 107 of the CGST Act - reliance on recorded admission in departmental statement as material for adjudication - applicability of Section 74 of the CGST - tax evasion by wilful mis statement and suppression of facts - Violation of the show-cause notice to the extent of proposed tax demand along with penalty and interest under section 74 of the Central Goods and Services Act, 2017 (“CGST Act”) and the Order-in-Original.

Alternate efficacious remedy by statutory appeal under section 107 of the CGST Act - HELD THAT: - Since the petitioner has alternate efficacious remedy of pointing out the facts and also the violation of any provisions of the Act, if any, before the appellate authority, we are not inclined to entertain the writ petition.

Reliance on recorded admission in departmental statement as material for adjudication - application of Section 74 of the CGST Act for tax evasion by wilful mis statement and suppression of facts - HELD THAT: - The Court examined the investigation material and noted that the petitioner (proprietor of M/s. Maa Logistics Transport Company) had, in a recorded statement dated 05.07.2024, admitted facts relevant to the scheme described by the department, including the role of Shri Dilshad Alam in preparing invoices and e way bills and the movement of goods. The departmental investigation further recorded consistent statements by others linking the petitioner to the operations of M/s. Mahalaxmi Transport and the creation of firms for clandestine removals. The adjudicating authority applied Section 74 of the CGST Act, finding that certain firms failed to self assess tax and ITC eligibility and that there was suppression and wilful mis statement with intent to evade tax. On the material before it, the Court found no basis to interfere with those factual findings and the application of Section 74. [Paras 8, 9, 10, 11]

The adjudication based on the recorded statements and investigation, including application of Section 74 for wilful suppression and mis statement, was sustained on the material; no interference warranted.

Final Conclusion: The High Court, having considered the availability of the statutory appellate remedy and the documentary and recorded statement evidence relied upon by the authorities (including admissions in the petitioner's statement and investigative findings), declined to interfere with the impugned Order in Original and rejected the writ petition.

Interpretation of Section 7 of the CGST Act read with Section 16(1) and Section 2(6) of the IGST Act - Zero Rated Supply and export of services requiring receipt of consideration in convertible foreign exchange.

Zero Rated Supply - export of services - receipt of consideration in convertible foreign exchange - Interpretation of the interplay between Section 7 of the CGST Act and Section 16(1) read with Section 2(6) of the IGST Act in cases of cross border 'unbilled shipments' where no convertible foreign exchange is received. - HELD THAT:- The Court examined the apparent incongruity that, although services described as 'unbilled shipments' were treated by the petitioner as services taxable under Section 7(1)(a) of the CGST Act, the assessees contend that the same should qualify as 'Zero Rated Supply' under Section 16(1) of the IGST Act because the recipient is located abroad. A key statutory requirement for zero rating is export of services as defined in Section 2(6) of the IGST Act, which contemplates receipt of consideration in convertible foreign exchange. The Court observed prima facie that while non receipt of foreign exchange may not relieve the petitioner from tax liability under Section 7, it may simultaneously deprive the petitioner of the benefit of export of services under the IGST provisions, and that these provisions require harmonious interpretation. The Court therefore limited its adjudication to issuing notice on the interpretative question and directed that the matter be considered further after the respondents, including the CBIC, place their stand or issue a clarification. The petitioner's factual stance is treated as a representation for the purpose of administrative consideration. The petitioner's claim for refund was not decided and is deferred for consideration at a later stage if required. [Paras 14, 15, 16, 17, 18]

Notice issued limited to the interpretation of the cited CGST and IGST provisions; the claim for refund is deferred; CBIC permitted to place its stand or issue a clarification and the petitioner's stand is treated as a representation.

Final Conclusion: The High Court has confined its adjudication to the interpretative question regarding the interplay between Section 7 CGST and Section 16(1)/Section 2(6) IGST in respect of unbilled cross border services where no convertible foreign exchange is received, issued notice on that question, deferred adjudication of the refund claim, and invited the CBIC to state its position or issue a clarification while treating the petitioner's stance as a representation.

Profiteering under Section 171 of the CGST Act, 2017 - benefit of Input Tax Credit to the Complainant by way of commensurate reduction relating to their Project - liability for penalty and interest - obligation to pay interest to recipients.

Profiteering under Section 171 of the CGST Act, 2017- HELD THAT:- The Respondent during the investigation, informed the DGAP that he has passed on ITC benefit to his 55 home-buyers to the tune of Rs. 41,41,538/-. The DGAP, on the basis of the document submitted by the Respondent made verification of such claim. It was observed by the DGAP on the basis of the voucher issued by the Respondent to the home-buyers, ITC benefit of Rs. 41,41,538/- was verified and thus adjusted against the profiteered amount. Therefore, the profiteered amount reduced to Rs. 1,70,87,844/-.

Since the Respondent has passed on the benefit of the ITC to its home-buyers to the tune of Rs. 2,02,53,991/- against the computed profiteered amount of Rs. Rs. 1,70,87,844/-, thus the Respondent has complied with the Provisions of Section 171 of CGST Act, 2017. In view of the above, the report of the DGAP is deserved to be accepted.

The Respondent has passed the ITC benefit to eligible home buyers in an amount exceeding the computed profiteered amount; therefore the requirement under Section 171 is satisfied.

Liability to pay penalty - HELD THAT: - On the factual finding that the Respondent has already passed the benefit as determined, the Tribunal considered the consequences under Section 171 and held that since the benefit has been passed to eligible home buyers, the Respondent is not liable to pay any penalty under the said provision. [Paras 20, 23]

No penalty is leviable as the Respondent has passed on the profiteered amount to eligible recipients.

Liability to pay interest under Rule 133(3)(b) of the CGST Rules, 2017 - HELD THAT: - The Tribunal recorded that interest under the applicable rules is payable and accepted the Respondent's undertaking to calculate and pay the quantum of interest within the stipulated time. The Respondent was directed to submit a compliance report to the jurisdictional Commissioners and provide a copy to the DGAP for further action, ensuring that interest, as applicable, is paid to the home buyers. [Paras 22, 24, 25]

The Respondent shall calculate and pay interest to eligible home buyers within the specified period and file compliance reports with the Jurisdictional Commissioners and DGAP.

Final Conclusion: The Tribunal accepted the DGAP's re investigation and computations for the period 01.07.2017 to 10.11.2022, found that the Respondent has passed ITC benefits to eligible home buyers in excess of the computed profiteered amount, held that no penalty is leviable, and directed the Respondent to compute and pay applicable interest to recipients and file compliance reports.

Violation of the Anti-profiteering provisions under Section 171 - application of Reckitt Benckiser[2024 (1) TMI 1248 - DELHI HIGH COURT] methodology for computation of ITC benefit - failing to pass on the benefit of input tax credit to the applicant in respect of the sale of the specified residential unit.

Anti-profiteering under Section 171 of the CGST Act, 2017 - HELD THAT: - The Standing Committee on Anti Profiteering referred the application to the DGAP under Rule 129. DGAP conducted an investigation and, applying the methodology approved by the Hon'ble High Court of Delhi in the Reckitt Benckiser case [2024 (1) TMI 1248 - DELHI HIGH COURT], concluded that no additional benefit of input tax credit had accrued to the Respondent after introduction of GST and accordingly found no contravention of Section 171. The Applicant subsequently confirmed by written communication that the GST matter with the builder was settled at the time of possession and expressed no objection to the DGAP findings. The Tribunal considered the DGAP report and the documents on record and found no reason to disagree with the investigation's conclusion.

DGAP report accepted; no contravention of Section 171 found; proceedings closed.

Final Conclusion: The Tribunal accepted the DGAP investigation and its application of the Reckitt Benckiser methodology, held that the Respondent did not contravene Section 171 by failing to pass on ITC benefit, and closed the proceedings with directions to circulate the order to the parties and the jurisdictional tax authorities.

Regular bail - Pre-charge stage - Custodial period as a factor for bail - Case triable by a Magistrate - Documentary evidence-based prosecution - Bail ordinarily to be granted unless extraordinary circumstances - Prohibition on influencing or threatening prosecution witnesses - HELD THAT:- The Hon’ble Supreme Court granted bail to the accused in the matter of ‘Vineet Jain Vs. Union of India’ [2025 (5) TMI 925 - SC ORDER] noticing that the accused therein had undergone an actual custody of 7 months and reflected no criminal antecedents. The Court also took note of the fact that the case of the prosecution was based on documentary evidence and was triable by the Court of a Judicial Magistrate. Considering that the maximum punishment prescribed under Section 132 (1) of the CGST Act is 5 years with fine, the Court observed that the accused should get bail unless there are some extra ordinary circumstances.

Thus, the period of actual custody undergone by the petitioner, nature of allegations against the petitioner and noticing that the complaint in question is triable by the Court of a Magistrate, deem it fit to allow the instant petition.

Accordingly, the instant petition is allowed and the petitioner is ordered to be admitted to regular bail subject to his furnishing bail/surety bonds to the satisfaction of the trial Court/Duty Magistrate/Illaqa Magistrate concerned.

It is made clear that the petitioner shall not extend any threat and shall not influence any prosecution witness in any manner directly or indirectly.

TCS u/s 206C - compounding fees received from illegal miners/transporters of minerals - Scope of Mines and Minerals (Development and Regulation) Act, 1957/ ‘the MMDR Act’ - offenders who do illegal mining or transportation/storage without having lease or license or have not entered into the contract for transfer of right in Mines or Quarry and from whom Compounding Fine is collected as per provisions under Rule 71(5) of the Chhattisgarh Minor Mineral Rules, 2015 -

HC [2025 (6) TMI 2041 - CHHATTISGARH HIGH COURT] held ITAT is completely unjustified in holding that compounding fee/fine (TCS) would be chargeable u/s 206C(1C) by relying upon the definition contained in Section 2(47) of the IT Act. Accordingly, we are unable to uphold the judgment & order passed by the ITAT relying on Section 2(47) of the IT Act. ITAT making demand and levying interest & penalty for non-compliance of Section 206C(1C) of the IT Act cannot be sustained and accordingly, it is set aside

HELD THAT:- We are not inclined to interfere with the impugned judgment(s) and order(s) of the High Court; hence, the special leave petitions are dismissed.

Withholding certificate at the rate of 4% u/s 197 -mandation to record reasons for withholding certificate - certificate for deduction at lower rate - nature of transaction during assessment proceedings.

HELD THAT:- We find that the Competent Authority has not given any sustainable reason. He was required to dilate upon the nature of transaction and record his prima-facie opinion and also deal with petitioner’s contention and the judgments relied upon.

Since almost 85% of the period is already over and the payments made to the petitioner have been subjected to 4% tax, though the transactions prima-facie looks to be not exigible to tax, we are of the view that it would be just and proper if a certificate of deduction at 2% is issued to the petitioner so that the concern of the Revenue that the petitioner can be subjected to scrutiny assessment can be addressed and some respite can be given to the petitioner as a substantial amount is otherwise being withheld by the respondents. [Paras 9, 10, 12]

Respondent directed to issue a tax withholding certificate requiring deduction of tax at 2% for the petitioner's application relating to AY 2026- 27 within 10 days.

Final Conclusion: The petition is partly allowed: the Competent Authority's failure to record reasons warranted intervention; respondent is directed to issue a withholding certificate requiring deduction at 2% for AY 2026-27 (FY 2025-26) within 10 days.

Adjournment sine-die after reservation - indefinite adjournment of a reserved appeal - Tribunal adjourning the petitioner's appeal sine die after reserving order, solely because a separate appeal had been admitted and questions of law framed - stay petition had been rejected

HELD THAT: - The Tribunal had heard the petitioner's appeal and reserved its order on 03.09.2025 but subsequently posted the matter for consideration/clarification and adjourned it sine-die on 19.01.2026 because an identical matter had been admitted in another appeal before this Court. The High Court examined the position that the appeal in the other matter had been admitted but notes that the operation of the Tribunal's order in that matter had not been stayed.

In those circumstances the Tribunal was not justified in adjourning the reserved appeal indefinitely; if it chose not to decide immediately it should have taken steps to protect the interest of the assessee. The Court observed that the adjournment after reservation resulted in prejudice to the petitioner, wasted the parties' and Tribunal's resources, and aggravated the grievance.

The Court therefore set aside the adjournment insofar as it amounted to an indefinite postponement and directed the Tribunal to decide the appeal in accordance with law within a specified time. The Court expressly declined to express any opinion on the merits of the appeal, leaving those issues to be decided by the Tribunal. [Paras 14, 15, 16, 18, 20]

The order adjourning the appeal sine-die is set aside to the extent of the indefinite adjournment; the Tribunal is directed to decide the appeal in accordance with law within two months from the next date fixed as 10.03.2026.

Final Conclusion: Writ petition allowed - Tribunal's indefinite adjournment of a reserved appeal was held to be unjustified where no stay of operation existed in the admitted matter, and the Tribunal was directed to decide the appeal within the fixed period without the High Court expressing any view on the merits.

Additional interest u/s 244(1A)- application u/s 154rejected -adjudication in view of the subsequent decision of the Supreme Court - High court decision overturned by Supreme court - HELD THAT: - Reasoning of impugned order rejecting the petitioner’s application for interest was based upon the judgment of Bombay High Court rendered in the case of Sandvik Asia Ltd [2004 (1) TMI 45 - BOMBAY HIGH COURT] which judgment and the same has been reversed by Hon’ble the Supreme Court[2006 (1) TMI 55 - SUPREME COURT]

Final Conclusion: Writ petition allowed - order dismissing the Section 154 application for additional interest under Section 244(1A) is quashed and the matter is remitted to the competent authority to pass a fresh order within three months, applying the law as clarified by the Supreme Court and taking into account extant interest provisions and rate.

Registration u/s 12AB and Section 80G - Eligibility criteria - genuineness of the trust's activities and compliance with other laws - Whether in the facts of the present case, the tribunal was justified in directing the CIT Exemption to grant registration u/s 12AB and Section 80G or it should have remanded the matter back to the CIT Exemption? - HELD THAT:- In the case in hands, the application was filed by the Respondent u/s 12A(1)(ac)(iii) which is covered under Section 12AB(1)(b) of the Act of 1961. Hence, the Tribunal was required to undertake the requisite inquiry and then record a finding about genuineness of activities of the respondent/Trust so also regarding the compliance under other laws to be made by the respondent/Trust in order to achieve its objects.

And since such finding has not been recorded by the Tribunal and a sweeping direction granting registration under Section 12AB and 80G of the Act of 1961 has been given, the order impugned cannot be sustained.

When it comes to registration under Section 80G of the Act of 1961, the situation is starkly different. Because, it entails a benefit of deduction to the extent of 50% of the donation to the payer and for such purpose, the genuineness of the trust’s activities is certainly a mandatory requirement and not simply a relevant consideration. In absence of an inquiry and finding as to whether the activities being carried out by the Trust are bona fidely charitable, the registration under Section 80G of the Act of 1961 cannot be granted.

Tribunal was not justified in issuing directions to grant registration under Section 12AB and Section 80G the impugned order [2025 (2) TMI 1583 - ITAT DELHI] of the Tribunal is, therefore, set aside.

The matter is remanded to the Commissioner to decide the respondent’s application for registration under Sections 12AB and 80G of the Act of 1961 in accordance with law and to inquire into the activities of the Trust within the parameters of relevant provisions of the Act of 1961.

Initiation of assessment proceedings u/s 153C by recording consolidated satisfaction note - Validity of a consolidated satisfaction note recorded for multiple assessment years for initiating proceedings u/s 153C and its effect on assessments framed for the years under consideration - HELD THAT:- The Tribunal examined the satisfaction note which was recorded as a consolidated note for assessment years 2014-15 to 2020-21 and found that it did not identify year-wise additions nor bifurcate amounts relevant to particular assessment years.

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 Tribunal has also distinguished the Judgment of the Hon’ble Jurisdictional High Court in case of Indian National Congress [2024 (3) TMI 1126 - DELHI HIGH COURT] [Paras 7, 8, 10, 11]

As against the Judgment of the Hon’ble Jurisdictional High Court in the case of Shaksham Commodities Ltd. (supra), the Revenue filed SLP before the Hon'ble Supreme Court, which has been dismissed along with other connected matters [2025 (6) TMI 1333 - SC ORDER] Thus, consolidate satisfaction note recorded by the AO for various assessment years to assume the jurisdiction is invalid.

Final Conclusion: Assessee appeal allowed - AO's consolidated satisfaction note, lacking year-wise linkage of incriminating material, was invalid.

Allowability of salary exemptions reflected in Form 16 - deduction for home loan interest for self-occupied property

Disallowance of exemption u/s 10 out of salary income - Allowability of salary exemptions reflected in Form 16 - Confirmation of disallowance of salary exemptions (HRA, leave salary and transport allowance) shown in Form 16 - assessee is an individual deriving income from salary and had not filed the return of income for AY 2017-18 u/s 139(1) - HELD THAT: - The Tribunal found that the exemptions claimed by the assessee - transport allowance and leave salary (together reflected as other exemption) and HRA - are duly shown in the employer's Form 16. The Assessing Officer disallowed these amounts for want of supporting evidence, but the Tribunal held that their appearance in Form 16 issued by the employer is sufficient for allowance. Consequently, the disallowance of the aggregate sum claimed as exemption from salary was deleted. [Paras 4, 5, 6]

The disallowance of salary exemptions is deleted and ground A is allowed.

Deduction for home loan interest for self-occupied property - Claim for deduction of interest on home loan for the Goa property treated as self-occupied under income from house property - HELD THAT: - The Tribunal accepted that the assessee paid home loan interest and furnished the interest certificate from the bank. The assessee's place of employment was different from the Goa property, and HRA was allowed, demonstrating that the Goa property was not the place of residence for occupation purposes. The Assessing Officer did not dispute the quantum of interest. The Tribunal held that the interest paid is allowable as a deduction under 'income from house property' by treating the Goa property as self-occupied, and therefore upheld the deduction claimed. [Paras 7]

The deduction of home loan interest is allowed and ground B is allowed.

Final Conclusion: Tribunal deleted the disallowance of salary exemptions reflected in Form 16 and allowed the deduction for home loan interest by treating the Goa property as self-occupied, resulting in the assessee's appeal being allowed.

Exercise of jurisdiction u/s 263 to revise the assessment framed u/s 153C - reliability of statement retracted by witness in search proceedings - claim of exempt long-term capital gains u/s 10(38) - Drastic increase in the share price - mere suspicion or disagreement by a superior authority

HELD THAT: - Tribunal found on record that the Assessing Officer during assessment proceedings u/s 153C had issued a show-cause notice specifically calling upon the assessee to justify the exemption claimed as long-term capital gains, the assessee filed detailed replies and furnished substantial documentary evidence (contract notes, broker ledger, DMAT entries and purchase documents).

Principal Commissioner recorded a contrary view that the AO had not examined the LTCG issue, but the material on record (show-cause notice, replies and supporting documents) demonstrates that the issue was in fact enquired into and a considered conclusion reached by the AO.

A revision u/s 263 requires the order sought to be revised to be erroneous and prejudicial to the revenue; where the AO has applied his mind and reached a conclusion after due verification, there is no basis for invoking section 263. The Tribunal therefore held that the revisionary authority erred in interfering with the AO's conclusion. [Paras 9, 12]

Ld. PCIT's exercise of jurisdiction under section 263 was unsustainable as the AO had duly enquired into and considered the assessee's claim of exempt LTCG.

Reliability of statement retracted by witness in search proceedings - The Tribunal recorded that the assessee consistently denied any association with the said person and produced on record a retraction dated 02.11.2019 by that person retracting earlier statements recorded in October 2019. The retraction was part of departmental records and available to the Revenue; the Tribunal noted that the revisionary authority neither obtained nor placed before the record any contrary material to impeach the retraction. In absence of reliable, un-retracted incriminating evidence, the retracted statement could not be the sole basis to conclude that the exempt LTCG claimed by the assessee was bogus. The Tribunal therefore rejected reliance on the retracted statement as a foundation for section 263 revision. [Paras 10]

The retracted statement could not be relied upon to impugn the assessee's LTCG claim and did not justify revision under section 263.

Drastic increase in the share price - Whether speculative observations about share-price movements and their lack of correlation with business performance can furnish a reasoned basis for invoking section 263 - The Tribunal observed that the Principal Commissioner relied on broad observations about historical increases in the subject company's share price as indicia of possible impropriety. Such speculative or opinion-based conclusions, unconnected to concrete evidentiary findings showing that the assessee's transactions were not genuine, amount to mere suspicion. Invocation of section 263 cannot rest upon suspicion or the superior officer's differing opinion where there is no demonstrable error in the AO's application of mind or omission to enquire. [Paras 11]

Speculative observations about share-price movements do not constitute a valid basis for exercising revisionary jurisdiction under section 263.

Final Conclusion: The Tribunal allowed the appeal, quashed the revisionary order passed u/s 263, and held that the Assessing Officer had duly examined and accepted the assessee's claim of exempt LTCG for AY: 2017-18; reliance on a retracted statement and on mere suspicion arising from share-price movements did not justify interference under section 263. Assessee appeal allowed.

Disallowance of salary expenses - disallowance u/s 40(a)(i) for non-deduction of tax on foreign/reimbursement payments - addition for undisclosed receipts despite claim of TDS credit

Disallowance of salary expenses - salary payment were not genuine or any diversion of funds - HELD THAT: - The Tribunal examined the material placed before the Commissioner of Income-Tax (Appeals) and noted that the assessee produced employee-wise breakup, designation, location and salary details. CIT(A) found no allegation or evidence that the salary payments were not genuine or involved diversion of funds. Revenue's contention of disproportionate salary payments was not substantiated by any contrary evidence on record. In absence of any demonstration that the salaries were not incurred for business purposes or were sham, the appellate authority correctly reversed the AO's disallowance. [Paras 7]

The disallowance of salary expenses was deleted and the Revenue's ground is dismissed.

TDS u/s 195 - Disallowance u/s 40(a)(i) for non-deduction of tax - failure to deduct tax at source on foreign/reimbursement and other related payments - HELD THAT: - The appellate findings record that the assessee characterized the payments as reimbursements for facilitation of foreign services and demonstrated that the USA entity acted as a mediator; the payments were supported by details and shown to be genuine expenditures incurred abroad. The CIT(A) held that mere non-deduction of TDS is not a standalone ground for disallowance where payments are correctly characterized as reimbursements or do not attract TDS under Section 195. The Revenue did not controvert that the expenses were not incurred or produce evidence negating the assessee's characterization. On these facts, the CIT(A)'s conclusion to delete the addition was upheld. [Paras 8]

The addition under Section 40(a)(i) was deleted and the Revenue's ground is dismissed.

Addition for undisclosed receipts despite claim of TDS credit - HELD THAT: - The Tribunal noted that the assessee furnished evidence relating to receipts from four parties together with the corresponding TDS details, which the Assessing Officer ignored in the assessment proceedings. The CIT(A) considered these particulars and observed that the claimed TDS credit and supporting documents negated the AO's basis for making the addition. In view of the material furnished and the absence of contrary proof by the Revenue, the appellate deletion was proper. [Paras 8]

The addition on account of undisclosed receipts was deleted and the Revenue's ground is dismissed.

Final Conclusion: All grounds raised by the Revenue challenging the deletions made by the CIT(A) - relating to salary disallowance, disallowance under Section 40(a)(i) for non-deduction of tax, and addition for undisclosed receipts - were examined and found lacking in evidence; the Tribunal dismissed the appeal and upheld the CIT(A)'s deletions.

Eligibility for any relief u/s 91 - Limited scrutiny - Entitlement to treaty benefit under Article 12 - unilateral relief from double taxation under section 91 - legitimate claim - whether the assessee is eligible for beneficial tax rate of 10% as per Article 12 of the India- German tax treaty?

HELD THAT:- We, have a situation where subject matter of limited scrutiny i.e, claim of relief u/s 90/91 and the explanation so tendered by the assessee has not been examined by the AO. The assessee has explained that for the purposes of working out its tax liability @ 10% of gross revenues under Article 12 of India-German tax treaty, it has notionally claimed relief u/s 91 of the Act. The AO instead of examining the said explanation has gone ahead and determined the tax liability @ 40% and at the same time, allowed relief so claimed u/s 91 of the Act.

The explanation of the assessee in context of notional claim of relief u/s 91, which was well within the scope of limited scrutiny, has to be seen and examined in context of its claim of beneficial tax rate under the tax treaty which has not happened in the instant case. In any case, where a legitimate claim is made in respect of which all material is available on record, the same deserve to be examined as per law and the same cannot be circumscribed by the limited powers of the AO in context of limited scrutiny

In any case, being a legitimate claim, which has been reiterated by the assessee before the Ld.CIT(A) during the appellate proceedings, we find that the Ld.CIT(A) was well within his powers to examine such a claim and various authorities quoted at the Bar including the decision of Pruthi Brokers and Shareholders [2012 (7) TMI 158 - BOMBAY HIGH COURT] support the case of the assessee.

Thus, in absence of any specific finding recorded by the Ld.CIT(A), we deem it appropriate that the matter be set-aside to the file of the Ld.CIT(A) to examine the said claim afresh as per law after providing reasonable opportunity to the assessee.

Final Conclusion: Both appeals (AY 2017-18 and AY 2018-19) are allowed for statistical purposes by setting aside the impugned orders and remitting the matters to the Ld. CIT(A) for fresh adjudication of the treaty benefit claim (and related treatment of any section 91 relief) after giving the assessee a reasonable opportunity of being heard.

Penalty u/s 271D - mandation of recording satisfaction - HELD THAT:- Penalty imposed by the Addl/Joint Commissioner of Income Tax, Range-13, Hyderabad u/s 271D cannot be sustained and is liable to be struck down for want of valid assumption of jurisdiction. See Jai Laxmi Rice Mills Ambala City [2015 (11) TMI 1453 - SUPREME COURT] Asssessee appeal allowed.

Deemed income u/s 56(1) - deemed income by reference to stamp duty / circle rate difference - allowability of deduction under section 54F - effect of gift / co-ownership on eligibility for section 54F -

Addition of deemed income u/s 56(1) - AO alleged that the rebates earned by assessee would be deemed income -treatment of contractual rebates/discounts on purchase consideration - CIT(A) confirmed this addition by alleging that an arrangement cannot be denied between buyer and seller to make such adjustment of cash or value in kind.

Whether the rebates conceded by the builder to the assessee on purchase of the flat constitute taxable income and whether the addition made under section 56 could be sustained? - HELD THAT: - We find that both the tax authorities below have booked rebate to be an income under the head ‘income from other sources’ but it is questionable if in the absence of any specific sources invoking deeming income principles without invoking specific deeming income charging section can at all be sustained. There is actually no real income but it is the benefit by way of rebate which department wanted to cap as income, so it is only by establishing the there was deemed income department could have succeeded and thus it is rightly contended by ld. Counsel that where stamp value or circle rate is lower than actual consideration, then there cannot be any deemed income in acquiring a immovable property. On this basis alone assessee can succeed.

Tribunal found no independent element of 'income' beyond the contractual concessions contained in the apartment buyer's agreement. Where the agreed consideration paid by the assessee exceeded the stamp duty/circle rate, the deeming provision invoked by revenue could not be sustained to treat the contractual rebates as income.

The assessee placed on record the collector/circle rate for the project and evidence that the transaction consideration exceeded that rate, and the schedule in the buyer's agreement showed the rebates were part of the payment terms (down payment, move-in, special and timely payment rebates) and not a post facto adjustment amounting to income. Revenue's suspicion about unusual commercial prudence of the builder and hypothetical adjustments in cash or value in kind were held to be conjectural and unsupported by evidence. On these bases the Tribunal allowed the appeal against the addition under section 56. [Paras 6, 7]

Addition of deemed income on account of rebates disallowed and grounds 1 & 2 allowed.

Allowability of deduction u/s 54F - investment in the apartment but non-registration of sale deed within two years and prior gifts/transfers of interest in other residential properties - question of transaction of gift being colourable - alleged purchased property was not registered within two years from the date of sale of original asset, and that the appellant was the owner of more than one house as on the date of sale of original asset - HELD THAT:- It is only the question of ‘eligibility’ of fulfillment of conditions u/s 54F was raised and assessing officer has not at all questioned or doubted the earning of long term capital gain. These observations also show that in fact assessee had provided the details of earning of the long term capital gain.

The gift executed by the husband assessee can very well be part of a family arrangement wherein assessee had withdrawn his interest in the joint properties as he was acquiring the new asset independently in his own name. We are of the considered view that gift of a property to wife specially when she is a co-sharer in the property cannot be considered to be a colourable device and camouflage transaction to taint claim of Section 54F. At the same time the co-ownership of the two properties itself makes it doubtful that same can be considered to be an embargo for claim of benefit of Section 54F of the Act. Thus, this discussion leads us to a conclusion that ld. tax authorities below have fallen in error to consider assessee not eligible for exemption u/s 54F of the Act for owning more than one residential house other than the ‘new asset’ on the date of transfer of original asset.

Contention of ld. First Appellate authority that sale deed has not been executed in favour of the assessee of the new asset is also not sustainable to deny benefit u/s 54F of the Act as per ‘purchase’ of new asset is not an incident of execution of sale deed alone. The ‘purchase’ for the purpose of Section 54F of the Act has to be considered on a broader perspective and what is material is to understand if the assessee as the vendee of property has acquired right and interest in a new asset which is superior to the rights of the seller thereby giving assessee right of possession, enjoyment and even right to transfer superior to that of the seller.

It is only the question of ‘eligibility’ of fulfillment of conditions u/s 54F was raised and assessing officer has not at all questioned or doubted the earning of long term capital gain. These observations also show that in fact assessee had provided the details of earning of the long term capital gain.

Thus, the observations of NFAC as relied by ld. DR to question the earning of long term capital gain itself have no substance.

Tax authorities below have fallen in error in declining the claim of Section 54F of the Act

Final Conclusion: Appeal allowed. The Tribunal deleted the additions and disallowance: the addition treating contractual rebates as deemed income under section 56 is set aside, and the denial of deduction under section 54F is reversed; consequential reliefs to follow.

Exemption u/s. 11 - Denial of deuction of Audit Report in Form 10B filed belatedly - as submitted assessee uploaded Audit Report in Form 10B within the extended period on 14-02-2022 due to some technical glitches - HELD THAT:- As decided in the case of Shankeshwar Parshwanath Jain Swetamber Murti Pujak Aradhna Bhuvan Trust [2024 (10) TMI 1777 - ITAT RAJKOT] allowing claim of exemption u/s. 11 of the Act for late filing of Form 10B. Appeal filed by the Revenue is hereby dismissed.

Penalty imposed u/s. 271(1)(b) - Assessee failed to file the submissions to the notices issued u/s. 143(2) and 142(1) - discretionary powers to the assessing officer to levy penalty - Scope of of the word "may" - explanation offered by the assessee that they have not verified the email ID because of the heavy admission work. Therefore the non-reply to the said notices were not wilful.

HELD THAT:- The Statute has given discretionary powers to the assessing officer to levy penalty by considering the reasons given by the assessee and therefore the word “may” has been used in the said provision. We have also considered the orders of the Coordinate Bench which was relied on by the Ld.AR. In the said orders relied on by the AR, in which penalty levied by the AO has been deleted for the reason that the assessment has not been made u/s. 144 of the Act which means that the assessee had subsequently participated in the assessment proceedings and therefore the penalty u/s. 271(1)(b) of the Act need not be imposed.

As in SARDARMAL KOTHARI [2013 (3) TMI 815 - ITAT CHENNAI] ] had taken such a view. Similarly, the Hon’ble Surat Tribunal also in [2023 (2) TMI 1449 - ITAT SURAT] had deleted the penalties by saying that the assessment was made by accepting the return of income filed by the assessee and therefore it could not be said that the assessee had no valid reasons for not complying with the said notices.

As discussed in the earlier paragraphs, the assessee being a school was very much busy in attending the admission work and therefore they have not viewed the email. Further, the AO had also completed the assessment by accepting the return of income filed by the assessee which shows that there is no escapement of any income by the assessee. Apart from that, the provision also gave discretionary powers to the AO for imposing the penalty. Appeal filed by the assessee is allowed.

Rectification u/s 154 - Mistake apparent from the record V/S debatable issue - condition precedent to passing any order u/s 154 - entitlement to interest u/s 244A(1)(b) payable on refunds arising from excess self-assessment tax paid u/s 140A - Whether the AO could invoke section 154 to withdraw interest already allowed on such self-assessment tax as a "mistake apparent from the record"?

HELD THAT:- Section 154 permits amendment only to correct a mistake apparent from the record, which the Supreme Court in T.S. Balaram [1971 (8) TMI 3 - SUPREME COURT] has defined as an obvious and patent error not requiring long drawn reasoning or one on which two opinions may reasonably differ.

We note that the decision of Gujarat Fluoro Chemicals [2013 (10) TMI 117 - SUPREME COURT (LB)] was with regard to the rejection of the claim of the assessee for interest on interest in the light of the earlier decision of Sandvik Asia Ltd [2006 (1) TMI 55 - SUPREME COURT]. In this context, the Hon’ble Supreme Court had held that it is only that interest that was provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest. The Hon’ble Supreme Court did not discuss the issue of payment of interest on self-assessment tax in the said order and therefore, the CIT(Appeal’s) reliance upon the said order as a ground to dismiss the plea of the assessee is incorrect. [Paras 7, 8, 9]

We note that in the case of Stock Holding Corporation of India Ltd. [2014 (11) TMI 899 - BOMBAY HIGH COURT], Cholamandalam Investment & Finance Co. Ltd [2007 (6) TMI 69 - HIGH COURT, MADRAS] and Sutlej Industries Limited [2010 (3) TMI 449 - DELHI HIGH COURT] have held that interest was payable to the assessee on refunds including self-assessment tax under the provisions of section 244A(1)(b) of the Act.

Thus, in view of the fact that there existed at least three Hon’ble High Court judgments, contrary to the position of law being adopted by the AO in his order under section 154, it is clear that there were two possible views that were conceivable on the issue on the date of passing of such order and therefore, the subject could not be addressed by way of rectification order under section 154 as it could not be said to be a mistake apparent from the record.

Final Conclusion: The assessee's appeal is allowed; the rectification order under section 154 withdrawing interest on the refund (inclusive of self-assessment tax) is quashed as not maintainable because the question was debatable and not a mistake apparent from the record.

Condonation of delay - beyond time by 150 days - classification of 'Interactive Flat Panel Displays' (IFPDs) - HELD THAT:- The order under challenge relates to classification of 'Interactive Flat Panel Displays' (IFPDs). A similar issue arose for our consideration in Civil Appeal arising out of Diary (Commissioner of Customs, Nhava Sheva – V vs. M/s. Benq India Private Limited [2026 (3) TMI 3 - SC ORDER] which has been decided against the Revenue vide order dated February 23, 2026. Further, we do not find sufficient explanation for the delay. Consequently, the civil appeal is dismissed both on delay and merits.

Summary order. The appeal against the order classifying Interactive Flat Panel Displays (IFPDs) is dismissed both for delay and on merits; no relief granted and pending applications disposed of.

Condonation of delay - dismissal for delay - appellate interference with tribunal order - disposal on merits - HELD THAT:- There is a gross delay of 236 days in filing the Appeals which has not been satisfactorily explained by the appellant - Revenue.

No good ground to interfere with the common impugned Order [2025 (3) TMI 956 - CESTAT MUMBAI] passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Branch, Mumbai.

Final Conclusion: The Civil Appeals are dismissed both for failure to satisfactorily explain the gross delay and for lack of merit; pending applications, if any, are disposed of.

Validity of imposing penalty on the petitioner for alleged violation of Warehouse (Custody and Handling of Goods) Regulations, 2016 (“Warehouse Regulations”) - Almost after 05 years from the date of cancellation of the registration - respondent issued a show-cause notice - violation of Regulation 11 of the Warehouse Regulations - Applicability of Special Warehouse Regulations to a license granted u/s 58A - invocation of incorrect regulations vitiates penalty proceedings - failed to manage records in digital form, warehouse keeper has not obtained digital signature and failed to renew solvency certificate and risk insurance policy annually.

Business of import, processing of precious metals and has been undertaking imports and has been granted license on 10.06.2016 under Special Warehouse (Bonded Warehouse) under section 58A of the Customs Act, 1962 (“the Act”) - On 29.01.2018, the petitioner surrendered its license and the same was accepted by the Principal Commissioner of Customs, Ahmedabad vide his intimation letter dated 08.03.2019. Thus, from 08.03.2019, the license granted to the petitioner under section 58A of the Act stood cancelled.

Applicability of Special Warehouse Regulations to a license granted under section 58A - HELD THAT:- The licence granted to the petitioner was under section 58A of the Act and the Special Warehouse Regulations were issued under the enabling provisions tied to section 58A. The Court held that activities and regulatory compliance of a Special Warehouse licencee are governed by the Special Warehouse Regulations and, therefore, proceedings premised on the generic Warehouse Regulations were wrongly invoked against the petitioner. The existence of analogous or pari materia provisions in the two sets of regulations does not validate proceedings founded on the incorrect regulatory framework where distinct statutory categories of warehouses are prescribed. [Paras 4, 10, 11, 13]

Proceedings and penalty based on the Warehouse Regulations do not apply to the petitioner licensed under section 58A; the Special Warehouse Regulations apply.

Invocation of incorrect regulations vitiates penalty proceedings - failure to supply foundational audit report and inordinate delay vitiates initiation of penalty proceedings - HELD THAT:- The show-cause notice was issued relying on an audit report which the petitioner had expressly requested but which was not supplied. The audit report post-dated the acceptance of surrender of the licence by several years, and the penalty proceedings were commenced nearly five years after the licence stood cancelled. The Court found that initiating and continuing penalty proceedings on the basis of an undisclosed audit report, and doing so after an inordinate delay, rendered the proceedings unsustainable. The combination of reliance upon incorrect regulatory provisions and non-supply of the foundational document, together with long delay, led to the conclusion that the impugned order was illegal. [Paras 5, 12, 14, 16]

The penalty order is invalid because it was based on the wrong regulations and on an undisclosed audit report after an inordinate delay.

Remand refused where initiation after long delay and proceedings defective - HELD THAT:- Although the respondent sought remand if the Court set aside the order, the Court observed that the petitioner was being roped into proceedings nearly five years after surrender and acceptance of the licence, and that the proceedings suffered from the twin defects of being founded on incorrect regulations and proceeding without disclosure of the audit report. In those circumstances the Court concluded that remand was not appropriate and that quashing the impugned order was the proper remedy. [Paras 7, 16]

Remand was declined and the impugned penalty order was quashed.

Final Conclusion: The writ petition succeeded: the penalty order was quashed because the Special Warehouse Regulations governed the petitioner, the proceedings were founded on incorrect regulations and an undisclosed audit report after an inordinate delay, and remand was refused.

Extended period of limitation under section 28(4) of the Customs Act - willful suppression or intent to evade payment of duty - Applicability of the extended period of limitation u/s 28(4) of the Customs Act to the imports in question.

Extended period of limitation u/s 28(4) -HELD THAT:- The Tribunal held that invocation of the extended five year limitation under section 28(4) requires a positive finding of wilful misstatement or suppression of facts with an intention to evade duty. Applying settled Supreme Court principles (including Uniworth Textiles [2013 (1) TMI 616 - SUPREME COURT] and authorities construing the proviso to the analogous provision), the court observed that mere difference in classification or an error based on supplier documents does not, by itself, establish the requisite wilfulness. The appellant had paid the entire differential duty with interest before issuance of the show cause notices and advanced a bona fide belief as to classification based on invoices and packing lists. The Tribunal placed reliance on earlier decisions (including the Tribunal and Commissioner orders in Benetton India [2024 (7) TMI 1469 - CESTAT NEW DELHI]) which treated similar facts as simple mis classification where no willful suppression to evade duty was made out. It also noted that under self assessment schemes the duty of scrutiny lies on officers and that routine self assessment errors are not ipso facto proof of willful suppression. In those circumstances, the essential mental element for invoking section 28(4) was absent and the extended period could not be invoked; consequently, it was unnecessary to decide classification, confiscation or penalty issues. [Paras 19, 23, 29, 31, 34]

Extended period under section 28(4) could not be invoked as there was no willful suppression or intent to evade duty; impugned order set aside on that ground.

Final Conclusion: The Tribunal allowed the appeal, holding that the extended period of limitation under section 28(4) was not invocable on the facts (no wilful suppression/intent to evade), and set aside the Principal Commissioner's order without adjudicating classification, confiscation or penalty.

Classification of goods - imported fabrics - classifiable under the Customs Tariff Item [CTI] 5903 20 90 as against CTI 5903 90 90 (polyester plain dyed fabric laminated with TPU width 58”) and CTI 6006 32 00 (Polyester knitted bonded fabric) - transaction value of the goods under Rule 12 of the Customs Valuation - Anti-dumping duty on the imported goods as per Anti-Dumping Notification no 14/2022-Customs (ADD) dated 20th May 2022 - sequential valuation under Rules 3 to 9 - penalty under section 114A for short-levy

Classification of the goods - HELD THAT:- The goods fell within heading 5903 (textile fabrics impregnated, coated, covered or laminated with plastics). CRCL test reports and the Bills of Entry showed the fabrics were laminated/coated with polyurethane (PU). Heading 5903 is sub-divided by the plastic material used; fabrics with polyurethane fall under sub-heading 5903 20, and since the goods were not imitation leather of cotton, they properly fall under CTI 5903 20 90. CTI 5903 90 90 is for fabrics coated with plastics other than PVC or PU and thus was incorrect; classification under CTI 6006 32 00 was inconsistent with the established composition and tests. [Paras 6, 7, 8]

Correct classification is CTI 5903 20 90.

Scope of anti-dumping notification: PU coated versus PU laminated - HELD THAT: - The well-settled principle of interpretation is that when the same word is used at different places, it should be treated as having been used in the same sense. If different words are used, they should be treated as having been used in different senses. In Customs Tariff Heading 5903, four different words have been used impregnated, coated, covered and laminated. These four words must, therefore, be understood to have different meanings. These words have not been defined in the chapter notes or elsewhere in the chapter. However, the clarification issued by the CRCL specifically indicates that the goods in dispute were laminated.

The charge levied by the Anti-Dumping Notification is on PU coated fabrics. It does not explicitly cover fabrics laminated with PU and therefore, it cannot be interpreted so to charge anti-dumping duty even on fabrics laminated with PU. The demand of anti-dumping duty in the impugned order, therefore, deserves to be set aside as there is no charge of this duty on fabrics laminated with PU.

Rejection of transaction value under Rule 12 of the Valuation Rules - sequential valuation under Rules 3 to 9 - HELD THAT:- In view of Rule 6, the importer may choose the computed value without examining the feasibility of determining value through deductive methods. Rule 9 is a residual method which provides for determining the value where it cannot be determined under Rules 3 to 8. Rule 10, as already discussed, provides for some costs to be added to the transaction value if the valuation is done as per Rule 3. Rule 11 requires the importer to make a declaration. Rule 12 lays down the provision for rejection of transaction value. Rule 13 provides for interpretative notes for the Rules.

The reason given for rejection of transaction value is that the specifications of the fabrics were different. A plain reading of the description of the goods in the Bills of Entry and the Reports of the CRCL about the nature of the goods recorded in Table C of the impugned order which we have reproduced in par 4 above would show that the Bills of Entry gave a general description of the goods and did not give any specifications. After testing, CRCL gave detailed specifications. Thus, there was no mis-match of specifications as held in the impugned order. If the assessing officer thought it necessary, he could have asked the appellant for more detailed specifications at the time of assessment. We do not find any discrepancy in the specifications. The impugned order also does not indicate what specifications, if any, were given in the Bills of Entry and how they differed from the specifications found after testing by CRCL.

We, therefore, find that the rejection of transaction value was not as per Valuation Rule 12. Consequently, re-determination of the value also cannot be sustained.

Penalty under section 114A for short-levy - HELD THAT:- Section 114A provides for imposition of penalty equal to the duty sought to be evaded if the non-payment or short payment of duty is by reason of any collusion, wilful mis-statement or suppression of facts.

Since we have found in favour of the appellant on the question of duty both on re-determination of value and on charging of anti-dumping duty, it must be held that there was no short payment of duty, let alone, short payment by reason of collusion, wilful mis-statement or suppression of facts. The penalty imposed under section 114A, therefore, needs to be set aside.

Final Conclusion: The impugned order is set aside: the goods are classifiable under CTI 5903 20 90; anti-dumping duty demand on the PU laminated textiles is unsustainable; rejection of transaction value under Rule 12 and re-determination under Rule 9 is unwarranted; and penalty under section 114A is quashed. The appellant is entitled to consequential relief.

Exclusive jurisdiction of the licensing authority (DGFT) to determine DEPB eligibility - prohibition on Customs denying export benefits granted by DGFT without reference - re-assessment under Section 17 of the Customs Act confined to pre-export / live consignments and self-assessment verification - cancellation of Let Export Orders by higher officer requires exercise of statutory revision (Section 129D) and not suo moto action - self-assessment regime and availability of appeal under Section 128 - limitations on recovery of DEPB-related liabilities prior to insertion of Section 28AAA -

HELD THAT:- It is not in dispute that the Appellant has been issued with/is in possession of DEPB scrips issued by the DGFT for Telecom Towers exported by them. There can be no doubt with the factual and legal proposition that the goods once cleared for export by the Customs authorities, the DEPB benefit for the goods exported is granted by the DGFT. Viewed in this context, we find force in the submission of the Appellant that the power to question or deny DEPB benefit for items exported solely rests with the DGFT and not with the Customs authorities. We accept this basic contention for more than one reason. The Customs Department denying benefit of DEPB to a particular item despite there being a valid and subsisting DEPB scrip issued by the DGFT for the item as in this case, in effect, amounts to questioning the validity of the very DEPB scrip issued by the latter and hence, as rightly argued by the Appellant, the proper legal course perhaps to be adopted by the Respondent would have been to address the DGFT for cancellation of DEPB benefit by setting out the facts as to why the benefit extended was incorrect or as to why the product in question does not qualify for higher DEPB benefit. Eschewing this procedure, initiating proceedings unilaterally for denying/restricting the benefit as done in this case, is to our mind, clearly impermissible in law.

From the above, we note that the contention of the appellant is right inasmuch as the classification adopted by the appellant (i.e., 7308 2011) and the one proposed by the Revenue (i.e., 7308 2019) for the same description as per the Customs Tariff Act, 1975; the Tariff also does not have words like electricity transmission line tower or telecom tower since it is common for both.

The competent authority, viz., DGFT- the licensing authority has not acted on the reference (SCN) made by the Customs department to deny higher DEPB benefit claimed and availed by the Appellant for restricting the DEPB benefit as alleged in the reference, we have no hesitation to hold that the proceedings initiated, that culminated in the impugned Order is wholly mis-conceived and hence unsustainable. Though we intend allowing the Appeal on this ground alone, we feel it appropriate to record our observations in respect of other issues which were stoutly contested by the Ld. Counsel for the Appellant during the course of hearing.

In terms of Section 51 of the Act, the Proper Officer will permit clearance and loading of goods for exportation if the Duty assessed had been paid. In all the cases covered by the 564 Shipping Bills, Let Export Orders had been issued only after being satisfied with the assessment, needless to say that the Let Export Orders have been passed by the Proper Officers in discharge of their quasi-judicial functions. Hence, as rightly contended by the Counsel for the Appellant, if the Commissioner, on review, found the Order improper, he could have exercised the revisionary power vested in him under Section 129D of the Act and directed the lower adjudicating authority to file an appeal to Commissioner (Appeals) with a prayer for setting aside the LEOs.

Re-assessment under Section 17 of the Customs Act confined to pre-export / live consignments and self-assessment verification - It is clear from the provisions of Section 17 of the Act that re-assessment envisaged therein related to ‘export goods’ prior to export and not after export. Therefore, the Respondent clearly exceeded in his jurisdiction in ordering re-assessment of goods which was already exported.

Our conclusions above find support from the decision of Co-ordinate Mumbai Bench of CESTAT in Bimal P. Shah Vs CCP [2024 (9) TMI 1809 - CESTAT MUMBAI] wherein identical issues arose for consideration. Though the case pertained to import of goods, the conclusions arrived at therein equally apply to the facts of this case.

As we have held above, that only the licensing authority- DGFT is alone competent to say whether DEPB benefit claimed and obtained by the Appellant at the rate termed as higher by the Respondent was correct or not, any decision relating to allegation of mis-declaration or intention to claim higher rate would be within the jurisdictional domain of DGFT alone. Therefore, the impugned Order of the Respondent holding that the license was obtained through mis-declaration suffers from serious legal infirmity and hence, unsustainable.

Limitations on recovery of DEPB-related liabilities prior to insertion of Section 28AAA - In this case, no data is available as to how many scrips were used by the Appellant and how many scrips were sold by the Appellant for use by third parties despite the SCN stating in Para 39 that it was proposed to recover inadmissible amounts of DEPB utilized by the Appellant and others. Further, exports took place during the period from Febraury-2008 to September-2011, much before the insertion of Section 28AAA of the Act effective from 28.05.2012. Therefore, in this case, in the absence of any recovery proceedings under Section 28AAA of the Act against the Appellant relating to DEPB scrips sold and utilized by third parties, no demand would survive.

To conclude, we hold that the Respondent lacked authority to initiate proceedings for cancellation of LEOs and re-assessment in the absence of action by the DGFT with reference to the DEPB scrips issued to the Appellant; no reassessment order could be issued under Section 17 of the Act dehors review proceedings under Section 129D of the Act; and assessments could be reopened under Section 17 of the Act only for live consignments and not for goods that are exported. This apart, we do not find any other issue/s requiring decision or order.

In the result, the Appeal is allowed and the Order of the Respondent is set aside.

Eligibility for concessional Countervailing Duty under Clause 1C of Notification No. 04/2006-CE - requirement of direct purchase from the manufacturer under Rule 2A(b) of the Standards of Weights and Measures (Packaged Commodities) Rules, 2006 - High Sea Sale transactions vis-a -vis direct purchase from manufacturer - strict construction of exemption notifications - limitation u/s 28(1) and extended period u/s 28(4) - wilful misstatement or suppression as condition for invoking extended limitation - penalty u/s 114A linked to determination u/s 28(4) - re-determination of Retail Sale Price and requirement of retail market evidence -

Eligibility of the appellant to concessional CVD under Clause 1C of Notification No. 04/2006-CE - HELD THAT:- The appellant admittedly entered into High Sea Sale agreements and purchased the goods from an intermediary who had acquired title prior to clearance. The contractual nexus, therefore, was not directly with the manufacturer.

We further observe that exemption notifications must be strictly construed and the conditions attached thereto cannot be relaxed on equitable considerations. In view of the ratio laid down by the Hon’ble Madras High Court in A1 Hollow Bricks [2025 (3) TMI 76 - MADRAS HIGH COURT] relied upon by the Department, we find that the requirement of direct purchase from manufacturer is a substantive statutory condition and not a procedural formality. Being a decision of the jurisdictional High Court, the ratio in A1 Hollow Bricks (supra) is binding on this Tribunal.

We find that the Department has not made out a case of undervaluation nor established that the goods were sold at a higher RSP in the domestic retail market. There is no allegation in the Show Cause Notice as to undervaluation of imported goods nor any proposal to reject the transaction value under the Customs Valuation Rules. The dispute is confined to eligibility under the exemption notification. The dispute is essentially whether the concessional entry under Clause 1C was legally available.

Thus, in the light of the binding ratio of the Hon’ble Madras High Court in A1 Hollow Bricks (supra), we hold that the appellant does not satisfy the statutory requirement of direct purchase from manufacturer and is therefore not eligible for the concessional rate of duty under Clause 1C of Notification No. 04/2006-CE. Issue No. (i) is accordingly decided against the appellant.

Limitation - The RSP printed on the packages was declared in the Bills of Entry and exemption under Clause 1C was expressly claimed in the assessment documents. The goods were assessed and cleared by the proper officer after scrutiny. We therefore observe that all primary facts were disclosed to the Department at the time of assessment and there was no concealment of material particulars.

We further observe that the dispute pertains essentially to interpretation of Notification No. 04/2006-CE and the scope of the statutory definition of institutional consumer. The Hon’ble Supreme Court in Pushpam Pharmaceuticals Co. v. CCE – [1995 (3) TMI 100 - SUPREME COURT] and Northern Plastics Ltd. v. Collector – [1998 (7) TMI 91 - SUPREME COURT] has held that suppression must be wilful and that a mere claim of exemption based on interpretation does not amount to misdeclaration.

In the present case, where exemption was claimed openly and assessments were completed after scrutiny, a subsequent change of legal opinion cannot justify invocation of extended period. We therefore hold that the essential ingredients for invoking Section 28(4) are not satisfied and consequently the demand is barred by limitation.

Penalty under Section 114A - We hold that the appellant does not satisfy the statutory condition of direct purchase from manufacturer and is therefore not eligible for concessional rate of duty under Clause 1C of Notification No. 04/2006-CE. However, we further hold that the Show Cause Notice dated 14.03.2014 has been issued beyond the normal limitation period and that the extended period under Section 28(4) of the Customs Act, 1962 is not invocable in the absence of wilful misstatement or suppression of facts. We also find that the Department has not made out any independent case of undervaluation or diversion of goods to the retail market so as to sustain the allegation of misdeclaration.

Consequently, the demand of differential duty is barred by limitation and cannot be sustained. Once the demand itself fails on limitation, the interest under Section 28AA and penalty under Section 114A are also liable to be set aside.

Accordingly, the impugned Order-in-Appeal No. 26/2016 dated 23.02.2016 is set aside and the appeal is allowed on the ground of limitation, with consequential relief, if any, in accordance with law.

Enhancement of assessable value without any basis - contemporaneous import data- Requirement of comparison at the same commercial level and substantially the same quantities - Requirement of a speaking order on reassessment u/s 17(5) - Whether the enhancement of value of imported goods on the basis of DRI alert and contemporaneous imports of identical goods is sustainable or not, in terms of the legal provisions of Section 14 and the Customs Valuation Rules, 2007 [CVR].- HELD THAT:- In the present case, we find that the appellant had self-assessed the goods in terms of Section 17(1) ibid, by declaring the value of the imported goods, as per invoice value of the supplier from China at USD 2.80 per Kg. involving the total value of USD 61,917.80 for total quantity of 22,113.5 kgs. of imported knitted fabrics. The proper officer of Customs in verification of such self-assessment in terms of Section 17(2) and 17(3) ibid, had based his findings on DRI alert circular dated 09.05.2011 issued indicating the unit price of viscose knitted fabric at USD 4.82 per kg. in order to check undervaluation of imported goods, keeping in view of the international prices from China. Further, he had informed the Custom House Agent of the appellant’s importer about the contemporary import prices by comparing the imports by M/s SSD Vijay Trading Pvt. Limited in B/E No. 7818759 dated 31.08.2012 and B/E No. 9079491 dated 21.01.2013 at USD 4.75 per kg. and enhanced the assessable value on the basis of such contemporary price data given in the NIDB. Accordingly, the proper officer of customs had re-assessed the value of imported goods, in terms of the exception provided under Section 17(5) ibid, as the importer had discharged the duty on enhanced value without any protest.

Admittedly, in this case, speaking order under Section 17(5) of the Customs Act, 1962 has been passed vide Order-in-Original dated 27.11.2014.

We are of the considered view that the legal requirement of re-assessment of imported goods under Section 17(5) ibid, has been complied in this case. However, in enhancing the value of imported goods, whether such order was in compliance with the legal provisions of Section 14 ibid and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 have been duly followed in this case by the proper officer of Customs, is required to be examined. On perusal of the order of the original authority, it clearly transpires that the requirements of Rule 3 and following sequentially Rule 4 to Rule 9 of CVR, 2007 have not been followed.

In the identical facts of the case, the Co-ordinate Bench of the Tribunal in the case of Surbhit Impex Private Limited vide Final Order [2023 (1) TMI 1517 - CESTAT MUMBAI] has held that there was no reasonable cause for discarding the transaction value and set aside the order of the Commissioner (Appeals).

We find that in order to ensure that in re-assessment of imported goods the valuation is required to be done in terms of Section 14 ibid and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. In the context of ‘identical goods’ when applying the Rule 4 of CVR of 2007, the following interpretative notes is required to be complied with.

On perusal of the order passed by original authority, which was upheld in the impugned order, the value of imported goods vide B/E No. 7818759 dated 31.08.2012 and B/E No. 9079491 dated 21.01.2013 at USD 4.80 per kg. was compared with the imports in the present case having declared value of USD 2.80 per kg. However, the requirement of comparison of values at ‘same commercial level’ and ‘at substantially same quantity’ was not examined, as the quantity was never taken into consideration. Therefore, we are of the considered view that the authorities below in re-assessment of impugned goods under Section 17(5) ibid, had not followed the requirements of the legal provisions of Section 14 ibid and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

Thus, we are of the considered view that the impugned order passed by the learned Commissioner of Customs (Appeals) in upholding the order of the original authority to the extent it had confirmed the adjudged demands is not legally sustainable. Therefore, we are of the considered view that the impugned order is liable to be set aside.

Classification of goods - import new off-the- road (OTR) mining tyres of pattern WD989/RLB989 - application of the General Rules for Interpretation giving primacy to headings and Chapter/Section Notes - end-use alone not determinative of tariff classification - Principle of dominant use​​​​​​​ -Whether the goods "new off-the-road mining tyres of pattern WD989/RLB989 proposed to be imported would fall under HS Code 4011 80 00.

Classification of goods - Classification of the imported WD989/RLB989 tyres under the First Schedule to the Customs Tariff Act, 1975. - HELD THAT: - As per the official websites and product literature of the manufacturers, namely Double Coin and Warrior, it has been observed that the tyres RLB 989 (Double Coin) and WD 989 (Warrior) have explicitly been classified by the manufacturers under the TBR (Truck and Bus Radial) tyre category specifically indicating its use in mining and construction operations.

It is a settled principle of classification that manufacturer's technical literature and product categorisation constitute reliable evidence of the nature and identity of the goods, particularly where the tariff heading is design-based.

Therefore, the importer's declaration of the subject goods as OTR tyres is inconsistent with the manufacturer's product categorisation and intended use, therefore cannot be sustained for the purpose of tariff classification.

It is observed that the pneumatic rubber tyres bearing model numbers RLB 989 / WD 989 are consistently marketed, offered for sale, and exported by the manufacturers and sellers on online e-commerce portals and B2B trade platforms (https://prestonetyre.en.made-in- china.com) under HS Code 401120, i.e. radial tyres of a kind used on buses or lorries. The classification adopted by the manufacturers reflects the design, construction, and intended commercial identity of the product.

Applying the General Rules for the Interpretation of the Customs Tariff, particularly Rule 1, read with Rule 3(a), the subject goods with technical parameters satisfying similar to the Truck and Bus radial types (TBR) merit classification under HS Code 4011 20 10 of the First Schedule to the Customs Tariff Act, 1975, which covers "new pneumatic tyres, of rubber, of a kind used on buses or lorries, Radials." Accordingly, the goods are appropriately classifiable under subheading CTI 4011 20 10 of the Customs Tariff Act, 1975.

Final Conclusion: On the material before it, the Authority ruled that the WD989/RLB989 tyres exhibit the design and technical characteristics of TBR tyres and are classifiable under HS Code 4011 20 10; asserted dominant mining use did not displace the design-based classification.

Delay of condonation - beyond time by 278 days -Affirmation of tribunal's decision on merits - HELD THAT:- Upon perusal of materials available on record and consideration of submissions made, we do not find a good reason to take a view different from the one taken by the Appellate Authority as well as the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Regional Bench, Mumbai [2025 (2) TMI 1303 - CESTAT MUMBAI].

Final Conclusion: The civil appeal, which was time-barred, is dismissed both for delay and, upon examination, on merits; pending applications, if any, are disposed of.

Discontinuing / withdrawing the Transport and Marketing Assistance (TMA) scheme with retrospective effect by issuing Notification dated 25.03.2022 - unable to file the claim of reimbursement of expenses incurred towards freight for exporting notified agricultural produce -aim to provide assistance for international component of freight and marketing of agricultural products - Section 5 does not permit retrospective amendments affecting accrued rights - Accrued or vested rights under a notified foreign trade scheme - HELD THAT:-We find that though the Government has power to withdraw the Scheme, however, the question which falls for deliberation before this Court is as to whether the same could have been done retrospectively or not in wake of the fact that for all these years, the Scheme was in operation and was also amended from time to time, giving rise to claims of the petitioners.

The Supreme Court in the case of Union of India & Ors vs. Asian Food Industries [2006 (11) TMI 10 - SUPREME COURT] and in the case of Viraj Impex Pvt Ltd Vs. Union of India & Anr. [2026 (1) TMI 1102 - SUPREME COURT] as well as in the case of Director General of Foreign Trade and Anr. Vs. Kanak Exports & Anr. [2015 (11) TMI 80 - SUPREME COURT] by examining the provisions of Section 5 of the Act, has held that Section 5 of the Act neither permits/empowers the Government to make amendments with retrospective effect, nor it allows to close the Scheme retrospectively, thereby taking away the rights which have already accrued in favour of the exporters under the Scheme. Hence, the impugned Notification dated 25.03.2022 abolition/foreclosing the Scheme introduced vide Notification dated 09.09.2021 retrospectively is hereby quashed and set aside. The Notification dated 25.03.2022 shall become effective from the date it was issued.

Accordingly, the respondents are directed to give the consequential effect of this order and process the applications filed by the petitioner in view of the Scheme. All the benefits accruing till the issuance of Notification dated 25.03.2022 shall be extended to the petitioners, including raising claims for the period prior to the issuance of impugned Notification, for which the petitioners were prevented from filing applications.

The claims/applications shall be processed and the amount shall be paid within a period of 12 weeks from the date of receipt of copy of this order.

Simultaneous proceedings under IBC - Co-extensive liability of guarantor and principal debtor - Doctrine of election - Double enrichment - Discretion under section 7(5)(a) of the IBC - Section 60(2) of the IBC - Updation of claim under Regulation 12A of the 2016 Regulations - IBC not a pure recovery proceeding

Simultaneous proceedings under IBC - Section 60(2) of the IBC - Co-extensive liability of guarantor and principal debtor - Maintainability of simultaneous CIRP proceedings against a corporate debtor and its guarantor - HELD THAT: - The Court held that simultaneous or separate insolvency proceedings against a corporate debtor and its corporate guarantor are permissible. This conclusion follows the reasoning in BRS Ventures Investments Ltd. (noted by the Court) and the statutory contour of section 60(2) which contemplates proceedings with respect to guarantors being filed before the same Adjudicating Authority. The liability of a guarantor being co-extensive with that of the principal borrower under contract law supports this position. Consequently, once the statutory conditions for initiation of CIRP are met, parallel proceedings may be initiated and admitted subject to independent examination by the adjudicating authority. [Paras 72, 77, 78]

Simultaneous CIRP proceedings against the corporate debtor and its guarantor are maintainable; appeals were decided in accordance with that principle.

Doctrine of election - Co-extensive liability of guarantor and principal debtor - Applicability of the doctrine of election to compel a creditor to split its claim between debtor and guarantor - HELD THAT: - The Court rejected the submission that creditors must elect and apportion their claims between the principal debtor and the guarantor. It held that forcing such an election would undermine the nature of a guarantee (co-extensive liability) and effectively deprive the creditor of a statutory right to proceed against one or both parties. The Court emphasised that election of remedies is a principle applicable where statute or law creates mutually inconsistent alternative remedies; absent express statutory provision in the IBC requiring election, the doctrine is not attracted. [Paras 87, 90, 93]

A creditor is not compelled to elect between proceedings against the debtor and the guarantor; the doctrine of election does not apply to bar simultaneous claims under the IBC.

Double enrichment - Updation of claim under Regulation 12A of the 2016 Regulations - Whether fear of double enrichment is a ground to prohibit simultaneous CIRP proceedings - HELD THAT: - While acknowledging the legitimate concern that a creditor might recover amounts in excess of entitlement, the Court found existing statutory and regulatory safeguards adequate to address double recovery. Regulation 12A imposes an obligation on creditors to update claims when satisfied from any source after the insolvency commencement date, and the Resolution Professional has duties under Regulation 14 to assess and revise claims. Judicial precedent was cited to the effect that the same amount cannot be realised twice. Accordingly, double enrichment is not a sufficient reason to bar simultaneous proceedings. [Paras 96, 97, 98, 99]

Apprehension of double enrichment does not warrant prohibition of simultaneous CIRP proceedings; statutory and regulatory mechanisms prevent recovery of the same amount twice.

IBC not a pure recovery proceeding - Discretion under section 7(5)(a) of the IBC - Whether the IBC may be treated as mere recovery proceedings so as to bar CIRP against guarantors or co-borrowers - HELD THAT: - The Court reiterated that insolvency proceedings under the IBC are aimed at maximisation of asset value and balancing stakeholder interests, not merely recovery. Nonetheless, the fact that the IBC is not a pure recovery statute does not authorise a blanket prohibition on proceedings against guarantors. The adjudicating authority retains the discretionary power under section 7(5)(a) to examine the expedience of admission and must exercise that discretion reasonably (not arbitrarily), but exercise of discretion cannot be founded solely on the premise that the proceeding is being used for recovery. [Paras 68, 71, 80, 85]

The IBC is not to be equated with pure recovery law, but that alone cannot bar CIRP against guarantors; the adjudicating authority must exercise the discretionary power under section 7 reasonably.

Final Conclusion: The Court held that simultaneous CIRP proceedings against a corporate debtor and its guarantor are maintainable; the doctrine of election does not compel a creditor to apportion its claim; concerns of double recovery are met by existing regulatory safeguards (including Regulation 12A and the Resolution Professional's duties); and while the IBC is not a mere recovery statute the adjudicating authority retains reasonable discretion under section 7. On application of these principles, certain impugned orders were set aside and others dismissed in the batch of appeals as recorded in the judgment.

Limitation period - pronouncement of order - uploading of order on tribunal portal - condonation of delay - limitation under Section 61(2) of the Insolvency and Bankruptcy Code - exclusion of time for obtaining certified copy under Section 12(2) of the Limitation Act - due diligence in applying for certified copy

Limitation period - pronouncement of order - uploading of order on tribunal portal - limitation under Section 61(2) of the Insolvency and Bankruptcy Code - Commencement of limitation for filing appeal against the NCLT order dated 11.06.2025. - HELD THAT: - The Tribunal determined that the determinative event for commencement of limitation is the pronouncement of the order in open court. The Appellant admitted that the order dated 11.06.2025 was pronounced in open court and that the Resolution Professional was represented by counsel during the hearing; the minutes of the CoC and the Appellant's rejoinder both record arguments and the Bench's directions, demonstrating pronouncement on 11.06.2025. Reliance on authorities establishing that limitation may commence from the date of uploading applies only where no substantive order was pronounced at the hearing. Where an order is pronounced in open court, the period of limitation runs from that date (excluding the day of pronouncement), and the mere fact of later upload (04.07.2025) does not defer commencement. The Tribunal applied the reasoning of the cited Supreme Court precedents to hold that the Appellant's contention that limitation should begin on upload was untenable in the face of pronouncement in open court. [Paras 9, 11, 12, 13]

Limitation for filing the appeal commenced from pronouncement of the order on 11.06.2025 (with 11.06.2025 excluded in computation), and not from the date of upload.

Condonation of delay - exclusion of time for obtaining certified copy under Section 12(2) of the Limitation Act - due diligence in applying for certified copy - Whether the delay in filing the appeal was within the condonable period and whether condonation should be granted. - HELD THAT: - Having fixed commencement of limitation from 11.06.2025, the Tribunal computed the period and found the appeal filed on 28.08.2025 to be beyond the statutory 30 days plus the maximum condonable 15 days. The Appellant's argument that time spent between applying for and receiving the certified copy (28.07.2025 to 08.08.2025) should be excluded could not rescue the appeal because the primary premise that limitation began on upload was rejected. The Tribunal followed the principle that a party aggrieved by an NCLT order pronounced in open court must exercise due diligence, including timely application for certified copy; where the appeal is filed beyond the maximum permissible period under Section 61(2) IBC (30 days plus up to 15 days condonation), the delay cannot be condoned. [Paras 8, 22]

Application for condonation of delay rejected; appeal (Memo of Appeal) dismissed as barred by limitation.

Final Conclusion: The application for condonation of delay is refused; the appeal filed on 28.08.2025 is time barred as limitation began from pronouncement on 11.06.2025 and the delay exceeds the permissible condonable period, consequently the Memo of Appeal is rejected.

Reconstitution of Committee of Creditors - admission and determination of claims by the Resolution Professional - effect of setting aside the constitution of the Committee of Creditors on prior actions of the CoC - procedural recording of appointment/confirmation of Resolution Professional - proportional representation and voting share in the CoC

Reconstitution of Committee of Creditors - effect of setting aside the constitution of the Committee of Creditors on prior actions of the CoC - Survivability and maintainability of appeals against orders in I.A. No.2154 of 2024 and I.A. No.1712 of 2024 - HELD THAT: - The Tribunal held that I.A.2154 of 2024, filed to record the constitution of the first CoC, was superseded when the RP reconstituted the CoC and filed I.A.1712 of 2024 to record that reconstitution; nonetheless I.A.2154 was inexplicably kept alive but effectively merged with subsequent proceedings. Further, the Adjudicating Authority's order in I.A.1418 of 2024 set aside the earlier constitution and directed reconstitution of the CoC; the RP thereafter reconstituted the CoC and filed I.A.76 of 2025, which is pending. Consequently, nothing remains for adjudication in respect of I.A.1712 of 2024 and I.A.2154 of 2024 before this Tribunal, and the appeals against those interlocutory orders do not survive consideration. [Paras 7]

Appeals against I.A.2154 of 2024 and I.A.1712 of 2024 do not survive and are not maintainable for adjudication before this Tribunal.

Procedural recording of appointment/confirmation of Resolution Professional - admission and determination of claims by the Resolution Professional - proportional representation and voting share in the CoC - Validity of the Adjudicating Authority's order in I.A. No.1716 of 2024 recording confirmation of the IRP as RP and whether the appellant was aggrieved by that order - HELD THAT: - The Tribunal characterised the order in I.A.1716 of 2024 as procedural in nature-recording confirmation of the IRP as RP pursuant to the CoC decision-and not an adversarial determination that directly prejudiced the appellant. The appellant's core grievance related to alleged under-admission of its claim and reduction of its voting share; however, after the Adjudicating Authority's directions in I.A.1418 of 2024 the RP revisited and reaffirmed the admitted claim on 03.01.2025, and that reaffirmation has not been challenged by the appellant. Given the absence of a direct challenge to the RP's subsequent self-contained determination and the pending I.A.76 of 2025 (which arises from the reconstitution ordered on 18.12.2024), the Tribunal observed that the appellant's remedy lies in pursuing its contentions in the pending proceedings rather than impugning the procedural recording in I.A.1716. [Paras 7]

No merit in the appeal against I.A.1716 of 2024; the order recording confirmation of the RP is procedural and does not sustain the appellant's challenge, which may be advanced in the pending I.A.76 of 2025.

Final Conclusion: All three appeals are dismissed as devoid of merit: the appeals against I.A.2154 of 2024 and I.A.1712 of 2024 do not survive in view of subsequent reconstitution and proceedings, and the appeal against I.A.1716 of 2024 is without substance because the order was procedural and the appellant has not challenged the RP's subsequent reaffirmation of admitted claims; no costs.

Financial debt - disbursement - commercial effect of borrowing - covenant to pay - contract of guarantee - co extensive liability of surety - English mortgage - secured financial creditor - other secured creditor

Financial debt - disbursement - commercial effect of borrowing - Direct disbursement to the corporate debtor is not a sine qua non for a debt to qualify as a 'financial debt' under Section 5(8) of the Code. - HELD THAT: - The Tribunal held that Section 5(8) requires existence of a debt, disbursement against consideration for the time value of money and the commercial effect of borrowing, but does not expressly mandate that disbursement must be made directly to the corporate debtor. While direct disbursement is a significant factor in determining the nature of the transaction, funds disbursed for the benefit of the corporate debtor (even if routed to third parties) can satisfy the disbursement requirement. The Tribunal relied on statutory language and prior NCLAT precedent in Rajeev Kumar Jain to conclude that direct transfer to the corporate debtor is not indispensable and that the Adjudicating Authority erred in treating direct disbursement as a mandatory condition. [Paras 78, 79, 80, 81]

Direct disbursement to the corporate debtor is not a mandatory prerequisite for classification of a debt as 'financial debt' under Section 5(8) of the Code.

Covenant to pay - contract of guarantee - co extensive liability of surety - secured financial creditor - other secured creditor - A mortgage deed containing an explicit 'covenant to pay' and enforcement mechanism can operate as a contract of guarantee and convert the mortgage-holder into a secured financial creditor under Section 5(8). - HELD THAT: - Examining the Mortgage Deed clauses (including Clause 3 'Covenant to Pay' and Clause 25 'Liability for Deficiency') and applying recent Supreme Court authority (China Development Bank) and NCLAT precedents, the Tribunal concluded that where a security document contains an express promise by the mortgagor to repay and a right to recover any deficiency after enforcement, the arrangement assumes the character of a guarantee under Section 126 read with Section 128 of the Indian Contract Act. Such a covenant goes beyond mere security and establishes a personal liability of the mortgagor, thereby bringing the claim within Section 5(8) and qualifying the creditor as a secured financial creditor rather than an 'other secured creditor.' The Tribunal distinguished Anuj Jain to the extent that that case lacked an express covenant creating a guarantee. [Paras 67, 69, 70, 86, 87]

The 'covenant to pay' in the Mortgage Deed creates an enforceable obligation akin to a guarantee and, together with the enforcement and deficiency clauses, renders the Appellant a secured financial creditor under the Code.

English mortgage - mortgage - mortgage money - secured financial creditor - The Deed of Mortgage dated 12.05.2016 qualifies as an English mortgage under Section 58(e) of the Transfer of Property Act, and thereby entitles the mortgagee to sue the mortgagor personally for recovery of the mortgage money upon default. - HELD THAT: - The Tribunal noted the recital in the Deed expressly stating the parties' agreement that the mortgage is by way of a legal mortgage in English form and pointed to clauses (including re transfer/reassignment powers) that satisfy the essential features of an English mortgage. On that basis, and consistent with case law about the attributes required for an English mortgage, the Tribunal held that the mortgage grants the mortgagee a personal remedy against the mortgagor and supports classification of the claim as a secured financial debt. [Paras 67, 68, 88, 90, 92]

The Mortgage Deed qualifies as an English mortgage and supports the Appellant's entitlement to recover mortgage money personally from the mortgagor, reinforcing its status as a secured financial creditor.

Secured financial creditor - financial debt - The Appellant's claim arising from the Mortgage Deeds is to be treated as a secured financial debt and the Appellant is to be treated as a secured financial creditor. - HELD THAT: - Applying the conclusions that direct disbursement is not essential, that the Mortgage Deed contains an enforceable 'covenant to pay' amounting to a guarantee, and that the Deed qualifies as an English mortgage, the Tribunal concluded that the Appellant's claim falls within Sections 5(8)(f), (h) and (i) of the Code. The Tribunal also relied on facts showing the corporate debtor benefited commercially (development rights/saleable area) and on co extensive liability principles under Section 128 of the Indian Contract Act to reinforce the finding that the Appellant qualifies as a secured financial creditor. [Paras 69, 70, 71, 87, 92]

The Appellant's claim based on the Mortgage Deeds is a secured financial debt and the Appellant is a secured financial creditor.

Secured financial creditor - adjudicating authority - Remand to the Adjudicating Authority for fresh consideration in accordance with law of the claim and classification following the Tribunal's findings. - HELD THAT: - Having set aside the Impugned Order and held that the Appellant's claim qualifies as secured financial debt, the Tribunal remitted the matter to the Adjudicating Authority to decide the claim and attendant consequences in accordance with law and the conclusions reached by this Tribunal. The remand is for fresh consideration and verification by the Adjudicating Authority consistent with the legal findings articulated by the Tribunal. [Paras 93]

Matter remanded to the Adjudicating Authority to decide the claim and classification in accordance with law and the Tribunal's findings.

Final Conclusion: The Impugned Order is set aside; the Tribunal holds that direct disbursement to the corporate debtor is not a sine qua non for 'financial debt', that the Mortgage Deed contains an enforceable 'covenant to pay' rendering it equivalent to a guarantee and qualifying the Appellant as a secured financial creditor (the Deed being an English mortgage), and the matter is remanded to the Adjudicating Authority for fresh decision in accordance with law.

Financial debt - financial creditor - disbursement (requirement under Section 5(8)) - covenant to pay - contract of guarantee (Section 126, Indian Contract Act) - secured financial creditor vs other secured creditor - substance over form in security documents

Financial debt - disbursement (requirement under Section 5(8)) - Direct disbursement to the corporate debtor is not a sine qua non for classification of a debt as a "financial debt" under Section 5(8) of the Code. - HELD THAT: - The Tribunal examined the statutory language of Section 5(8) which requires a debt to be "disbursed against the consideration for the time value of money" but does not expressly require that such disbursement be made directly to the corporate debtor. The Court analysed the concept of disbursement and concluded that while actual outflow of funds is an essential element of financial debt, the statute does not mandate exclusive or direct transfer to the corporate debtor's account. Money disbursed on behalf of, for the benefit of, or in connection with the corporate debtor may satisfy the disbursement requirement depending on the contractual and factual matrix. The Tribunal reviewed precedents distinguishing pure third party security from arrangements with payment undertakings, and cited a prior unchallenged decision of this Tribunal (Rajeev Kumar Jain v. Uno Minda Ltd.) holding that indirect disbursements can qualify as financial debt where the transaction carries consideration for the time value of money. On this basis the Adjudicating Authority's conclusion that disbursement must be directly to the corporate debtor was held to be erroneous. [Paras 53, 54, 56, 57]

Direct disbursement to the corporate debtor is not an indispensable prerequisite for a debt to qualify as financial debt under Section 5(8).

Covenant to pay - contract of guarantee (Section 126, Indian Contract Act) - secured financial creditor vs other secured creditor - The "covenant to pay" in the supplemental mortgage deeds creates an enforceable guarantee (contract of guarantee) and, read with the Debenture Trust Deed and related finance documents, converts the Appellant's claim into a secured financial debt. - HELD THAT: - The Tribunal analysed the Debenture Trust Deed and the First and Second Supplemental Indentures of Mortgage, focusing on definitions of "Secured Obligations", "Security Interest", "Security Providers" and the express Clause 2 (covenant to pay) in the supplemental mortgage deeds. Clause 2.1 records the mortgagor's undertaking to discharge the Secured Obligations and Clause 2.2, read together with 2.1, provides that the mortgagor shall ensure secured obligations do not fall into arrears and shall pay default interest, without prejudice to enforcement remedies. The Tribunal held that these provisions, taken in context with the DTD (including Clause 24 imposing joint and several liability of security providers), amount to an express, unconditional undertaking to discharge the secured obligations in consideration of the debenture subscription. Applying Section 126 of the Indian Contract Act and the reasoning in China Development Bank v. Doha Bank (where similar post enforcement shortfall undertakings were held to be guarantees), the Tribunal concluded that the covenant to pay constitutes a contract of guarantee rather than a mere limited security. Consequently, the Appellant's claim is founded on a guarantee-like obligation and falls within the inclusive definition of "financial debt" under Section 5(8). The Tribunal rejected the contention that Clause 2.2 limits liability to default interest, observing that clauses 2.1 and 2.2 must be read jointly and that 2.2 does not negate the broader payment undertaking in 2.1. [Paras 86, 88, 90, 95, 96]

The covenant to pay in the mortgage deeds creates an enforceable guarantee; the Appellant's claim is a secured financial debt and the Appellant qualifies as a financial creditor qua the Corporate Debtor.

Secured financial creditor vs other secured creditor - substance over form in security documents - The classification of the Appellant's claim as an "other secured creditor" was incorrect; on the facts and document language the Appellant is a "secured financial creditor". - HELD THAT: - Given the Tribunal's findings that indirect disbursement can satisfy Section 5(8) and that the supplemental mortgage deeds contain an express covenant to discharge Secured Obligations amounting to a guarantee, the Appellant's claim could not be confined to the status of an "other secured creditor". The Tribunal emphasised that substance of the transaction (express payment undertaking and joint and several liability of security providers) governs classification under the Code rather than mere nomenclature of documents. Consequently, the Adjudicating Authority's classification was set aside. [Paras 85, 96]

The Adjudicating Authority was in error in treating the Appellant as an "other secured creditor"; the Appellant is to be treated as a secured financial creditor.

Remand for fresh consideration - The matter is remitted to the Adjudicating Authority for reconsideration and further proceedings in accordance with law. - HELD THAT: - After setting aside the Impugned Order, the Tribunal directed that the matter be remanded to the Adjudicating Authority to decide the claim and related issues in accordance with the legal principles articulated in the judgment. The Tribunal closed any interlocutory application and directed the parties to appear before the Adjudicating Authority on a specified date for further adjudication consistent with the findings recorded. [Paras 98]

The Impugned Order is set aside and the case is remanded to the Adjudicating Authority to decide the matter in accordance with law.

Final Conclusion: The appeal is allowed: direct disbursement to the corporate debtor is not a prerequisite for financial debt, the supplemental mortgage deeds' "covenant to pay" amounts to an enforceable guarantee bringing the Appellant's claim within the scope of "financial debt" and entitling the Appellant to be treated as a secured financial creditor; the Impugned Order is set aside and the matter is remitted to the Adjudicating Authority for further proceedings in accordance with this judgment.

Exclusion of time from CIRP timelines - sufficient cause for extension/exclusion - project-wise segregation from CIRP - publication of Form G and withholding pending project segregation - role of Resolution Professional's statement in pausing proceedings

Exclusion of time from CIRP timelines - sufficient cause for extension/exclusion - project-wise segregation from CIRP - publication of Form G and withholding pending project segregation - Exclusion of the period 12.06.2024 till 21.11.2025 from the CIRP timelines was rightly required and IA No.410 of 2026 seeking such exclusion is to be allowed. - HELD THAT: - The Appellate Tribunal examined the Resolution Professional's application which explained that proceedings were effectively stalled because the CoC took a project-wise approach and the RP awaited resolution/segregation of the CHD Vann project before issuing Form G. The Adjudicating Authority had rejected exclusion on the ground that orders were reserved but an order was pronounced on 21.11.2025; the Tribunal found this approach to be in error. Having regard to the insolvency of a real estate corporate debtor carrying multiple projects and to the RP's recorded statement that Form G would not be issued pending further instructions, the Tribunal concluded that the delay was attributable to factors beyond the RP's control and that segregation of the project on 21.11.2025 removed the impediment. The Tribunal therefore held that sufficient cause was made out to exclude the stated period and that the Adjudicating Authority's rejection of the exclusion application was erroneous. [Paras 8, 9]

IA No.410 of 2026 is allowed; order dated 20.02.2026 is set aside and the period 12.06.2024 till 21.11.2025 is excluded from the CIRP timelines.

Final Conclusion: The appeal is allowed; the Adjudicating Authority's order rejecting the application to exclude the period during which project-wise segregation and related withholding of Form G delayed the CIRP is set aside and exclusion is granted.

Pre-existing dispute under Section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, 2016 - plausible contention requiring further investigation - no privity of contract - rejection of Section 9 petition - Mobilox Innovation test

Pre-existing dispute under Section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, 2016 - plausible contention requiring further investigation - Mobilox Innovation test - Whether the petition under Section 9 was rightly rejected by the Adjudicating Authority on the ground of a pre-existing dispute raised prior to the demand notice. - HELD THAT: - The Tribunal upheld the NCLT's conclusion that the Corporate Debtor had, before receipt of the Section 8 demand notice, raised a substantive dispute challenging the existence and veracity of the Operational Creditor's claim. The Corporate Debtor's communication dated 06.07.2022 sought detailed particulars (names of customers, nature and quantity of goods, delivery proofs and contemporaneous evidence) and expressly denied privity of contract; those communications and the absence of supporting particulars in the invoices were held to constitute a notice of dispute. Applying the legal standard in Mobilox Innovation - namely whether a plausible contention exists that requires further investigation and is not a patently feeble or spurious defence - the Tribunal found the dispute to be genuine and not mere bluster. The Tribunal also relied on subsequent Supreme Court guidance in Rajratan and Sabarmati Gas that the Adjudicating Authority need not be satisfied that the defence will succeed, only that it is a bona fide dispute requiring enquiry. Given the invoices' lack of customer and transaction details, the timing of invoicing during an acquisition window, the Corporate Debtor's prior notice contesting the claim, and the absence of contemporaneous agreement or corroborative material before the Adjudicating Authority, the Section 9 petition was rightly rejected as barred by Section 9(5)(ii)(d). [Paras 7, 8, 9, 12]

The NCLT's rejection of the Section 9 petition on the ground of a pre-existing dispute is affirmed and the appeal is dismissed.

Final Conclusion: The Tribunal found a genuine pre-existing dispute raised by the Corporate Debtor prior to the demand notice and, applying the Mobilox standard and subsequent authorities, declined to interfere with the NCLT's order rejecting the Section 9 petition; the appeal is dismissed.

Mutual credits and set-off in liquidation proceedings - Primacy of the Insolvency and Bankruptcy Code over inconsistent laws - Exception in tax law recognising the operation of the IBC regime in liquidation

Mutual credits and set-off in liquidation proceedings - Regulation 29 of the Liquidation Process Regulations - Whether the Income Tax Department could adjust the TDS refund against an outstanding demand relating to A.Y. 2011-12 when it had not filed a claim in the liquidation proceedings. - HELD THAT: - The Tribunal accepted that set-off by mutual credits is a recognised principle in liquidation (Regulation 29), and that set-off is permissible where there are mutual dealings and a claim has been filed in the liquidation. However, on the facts the Income Tax Department had not filed any claim in the liquidation of the corporate debtor. The amount in question arose from TDS deducted by the auction purchaser and a refund claim filed by the liquidator. In the absence of a departmental claim in the liquidation process, the Department could not appropriate the refund by unilateral adjustment against an earlier demand. The Adjudicating Authority correctly held that set-off could not be effected without complying with the liquidation claims process. [Paras 7, 8, 11, 12]

Adjustment of the refund by the Income Tax Department against the outstanding demand was not permissible where the Department had not filed a claim in the liquidation; the refund could not be set off unilaterally.

Primacy of the Insolvency and Bankruptcy Code over inconsistent laws - Operation of Sections conferring liquidation estate and distribution under the IBC - Whether the Adjudicating Authority erred in directing the Income Tax Department to refund the TDS amount to the liquidation estate. - HELD THAT: - The Adjudicating Authority noted that refunds form part of the liquidation estate under the IBC and that Section 238 of the IBC gives the Code overriding effect over inconsistent laws; the Income Tax Act itself contains an exception recognising the operation of the IBC. Applying these principles, the Adjudicating Authority found the Department's adjustment to be inconsistent with the IBC scheme and therefore without merit. The Tribunal found no error in that reasoning and observed that the Department could have pursued its claim only by filing it in the liquidation process and seeking set-off in accordance with law. [Paras 8, 9, 11, 12]

The Adjudicating Authority did not err in directing refund to the liquidation estate; its order was upheld.

Final Conclusion: The appeal is dismissed; the Tribunal affirms the Adjudicating Authority's order directing refund of the TDS amount to the liquidation estate because the Income Tax Department had not filed a claim in the liquidation and could not unilaterally set off the refund against an earlier demand, and the IBC regime governs realization and distribution of liquidation assets.

Suspension of initiation of corporate insolvency resolution process under Section 10A - Date of default in insolvency proceedings - Running account and reckoning of date of default - Effect of dishonour of cheques on date of default - Existence of debt and default under section 3(12)

Suspension of initiation of corporate insolvency resolution process under Section 10A - Date of default in insolvency proceedings - Whether Section 10A bars initiation of CIRP in respect of the defaults in the present case - HELD THAT: - The Tribunal found that Section 10A provides a moratorium only for defaults arising on or after 25.03.2020 and does not affect defaults committed before that date. The invoices relied upon by the Operational Creditor dated between 20.04.2019 and 19.09.2019 became due 30 days after their respective invoice dates, and therefore the relevant defaults occurred prior to 25.03.2020. Consequently Section 10A is not attracted and does not bar filing of the Section 9 application based on those defaults. The Adjudicating Authority correctly treated the date of default as the date on which the invoice amounts fell due and payable (30 days from invoice) and not as a date falling within the Section 10A suspension period. [Paras 12, 14, 15]

Section 10A is not applicable as the defaults occurred prior to 25.03.2020 and do not bar the Section 9 application.

Running account and reckoning of date of default - Date of default in insolvency proceedings - Whether the account between the parties was a running account and the date of default should be reckoned from the last payment (dishonour of cheques) instead of invoice due dates - HELD THAT: - The Tribunal examined the ledger and payment history and observed no record of any settlement that would convert the invoices into a running account shifting the due date. The invoices stipulated payment within 30 days and thus each invoice became due 30 days after its date; the last invoice dated 19.09.2019 therefore fell due on 19.10.2019. The Adjudicating Authority and the Tribunal found the pleaded running account status not established by the appellant and held that prior payments by way of cheques issued to discharge liabilities did not alter the original due dates of the invoices. [Paras 3, 11, 16]

No running account was established; the date of default is the invoice due date (19.10.2019) and not the later cheque-dishonour dates.

Effect of dishonour of cheques on date of default - Date of default in insolvency proceedings - Whether dishonour of cheques on 29.01.2021 should be treated as the date of default bringing the claim within the Section 10A suspension period - HELD THAT: - The Tribunal rejected the appellant's contention that dishonour of cheques issued earlier should be treated as creating a new default for purposes of Section 10A. It held that the parliamentary intent of Section 10A was not to disqualify applications based on defaults occurring before 25.03.2020 merely because consequential events (such as cheque dishonour) occurred during the suspension period. The insolvency application was filed on the basis of defaults that had already accrued in 2019; subsequent dishonour of cheques does not shift the date of default to a later period for invoking Section 10A. [Paras 6, 15, 18]

Dishonour of cheques on 29.01.2021 does not alter the date of default for the invoices; it does not bring the claim within Section 10A's prohibition.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the Adjudicating Authority's initiation of CIRP under Section 9, holding that the defaults arose prior to 25.03.2020 (invoice due dates), that no running account was established to shift the date of default, and that dishonour of cheques during the suspension period does not attract Section 10A.

Initiation of Corporate Insolvency Resolution Process - clarifications from one/all resolution applicants - enhancement or modification of SEML's Resolution Plan - Doctrine of commercial wisdom - material irregularity by the resolution professional not established where acting on CoC instructions -

The doctrine of commercial wisdom: a conscious legislative choice to vest decisive authority in the Committee of Creditors (“CoC”), comprising financial creditors who bear the economic consequences of failure.

The doctrine of commercial wisdom thus embodies both institutional discipline and legislative intent: insolvency resolution must be efficient, market-responsive and guided by those best placed to evaluate commercial risk.

Clarification to modification of a resolution plan - treatment of bank guarantees in a resolution plan- Whether SEML's post bid clarification regarding Bank Guarantees resulted in enhancement or modification of its Resolution Plan. - HELD THAT: - The Court examined the RP's query dated 08.05.2023 and SEML's reply of 10.05.2023 alongside clauses 6.3.13-6.3.15 and Annexure 3 of SEML's Resolution Plan. The Plan from its inception provided that margin money aggregating to Rs.180.05 crores would be returned to the Corporate Debtor for payment to secured financial creditors (cl.6.3.14). SEML's Rs.103.39 crores represented the fresh infusion required to replace margin money for BGs it proposed to continue (items 1-5); the remaining Rs.76.61 crores related to BGs proposed to be extinguished (items 6-7) whose margin money was already earmarked to flow to the CoC on cancellation. SEML's clarification only (a) reaffirmed that the Rs.76.61 crores margin money would be returned to the CoC as already provided in the Plan and (b) assured issuing banks that replacement margin would be provided until formal release of those BGs, thereby protecting interim bank exposure. The clarification therefore did not change the amount payable to the CoC or enhance SEML's offer; it merely addressed timing and operational aspects. The Court rejected the contention that SEML increased its BG commitment after the negotiation process, finding no modification of the Plan. [Paras 10]

No enhancement or modification of SEML's offer in relation to bank guarantees was demonstrated; the clarification did not alter the Plan's commitments to the CoC.

Clarification does not amount to modification of a resolution plan - deferred payment versus upfront discounted amount - Whether SEML's clarification converting or treating a deferred payment component as an upfront payment altered the commercial offer in its Resolution Plan. - HELD THAT: - The Court analysed clause 6.3.2(b) and the RP's query about the phrase "discounted amount of INR 240 Cr." SEML's Plan offered either issuance of NCDs whose aggregate nominal cashflow (with coupon) equated to a higher future sum (Rs.301.64 crores) or the CoC could opt for the present value (NPV) of that deferred stream, stated as Rs.240 crores. SEML clarified that Rs.240 crores represented the discounted/present value of the deferred payments and that if the CoC elected the upfront option it would receive Rs.240 crores (the NPV), not a further discounted or enhanced sum. The clarification therefore explained the valuation/NPV mechanics and did not substitute a new upfront consideration or otherwise enhance the financial offer; the CoC's choice between receiving the higher nominal future sum or its discounted present value remained intact. Consequently, no modification of the commercial offer ensued. [Paras 11]

SEML's clarification regarding the deferred amount did not convert or enhance the financial offer; it merely explained that Rs.240 crores was the discounted present value of the deferred payments.

Commercial wisdom of the Committee of Creditors non justiciable - material irregularity by the resolution professional not established where acting on CoC instructions - Whether the NCLT/NCLAT (and this Court) could judicially interfere with the CoC's approval of SEML's Resolution Plan, and whether a question of law under Section 62 was raised permitting this Court's intervention. - HELD THAT: - The Court observed that appeals under Section 62 lie only on questions of law and that Section 61(3) circumscribes the NCLAT's jurisdiction to specified grounds (including material irregularity by the RP). The Court found that the RP had acted on explicit instructions of the CoC in seeking clarifications and merely placed SEML's responses before the CoC; such conduct cannot constitute material irregularity under Section 61(3)(ii). Further, concurrent findings of NCLT and NCLAT that no material irregularity occurred disentitled this Court from fresh fact finding absent a showing of ignorance of mandatory statutory provisions, extraneous considerations, or manifest perversity. Even on the merits, having found no modification or enhancement of SEML's Plan, what remained was a challenge to the CoC's commercial decision-a domain the statute protects from judicial substitution. The Court reiterated settled precedents that the adjudicating authorities' review is limited to statutory compliance (Section 30(2)) and that the CoC's commercial wisdom is to be respected unless one of the narrow statutory grounds for interference is made out. [Paras 7, 8, 12, 13]

No question of law entitling this Court to intervene under Section 62 was made out; material irregularity by the RP was not established and the CoC's commercial wisdom is non justiciable in the absence of the narrow statutory grounds.

Final Conclusion: The appeals are dismissed; the concurrent findings of NCLT and NCLAT that SEML's clarifications did not modify its Resolution Plan and that no material irregularity by the RP occurred are affirmed, and there is no permissible interference with the CoC's commercial decision.

Quantification of decretal debt - relevance of income-tax proceedings to civil decree computation - entertaining Section 151 CPC application casts doubt on decree calculations - HELD THAT:- We have noted that after the judgment of learned Single Judge on 31.10.2022, an amount of Rs. 3 crores was deposited immediately on 02.11.2022 and after order of the Hon’ble Supreme Court dated 18.10.2024, the judgment debtor has deposited an amount of Rs. 60,98,847/- by Bank Draft dated 29.11.2024.

It is noticed that after the decree passed in the suit, learned Single Judge has entertained the application filed by the Company, where before the High Court the Company has undertaken to pay the entire amount and has already deposit Rs. 3 crores. Learned Single Judge has not passed any final order in the IA, which was filed by the Company in the Summary Suit. The submissions, which have been made by the learned Counsel for the Company before us regarding the quantum of amount as claimed by the Company, cannot be held to be without substance.

Quantification of decretal debt - The computation of the decretal amount claimed by the decree-holder cannot be accepted without adjustment for payments and reconciliations shown by the judgment-debtor. - HELD THAT: - The Tribunal examined rival computation charts filed by the parties and found that the decree-holder's chart did not take into account various payments and adjustments asserted by the judgment-debtor (including amounts detailed in the judgment-debtor's Chart C and amounts deposited pursuant to court directions). Having regard to the decree dated 11.01.2018 and subsequent proceedings, the Tribunal concluded that the decree-holder's continuing annual accruals in its chart (resulting in the claimed figure) ignore admitted receipts and undertakings and therefore cannot be accepted as a final quantification without consideration of those adjustments. [Paras 17]

The decree-holder's computation is prima facie unacceptable insofar as it disregards payments and adjustments asserted by the judgment-debtor; the quantified claim cannot be accepted without accounting for those matters.

Relevance of income-tax proceedings to civil decree computation - Proceedings and findings under the Income Tax Act (relating to Assessment Year 2012-13) are relevant and may be considered in assessing the quantum due under the civil decree. - HELD THAT: - The Tribunal considered the orders of the Commissioner of Income Tax and the ITAT, noting that before the ITAT the decree-holder had advanced a case and a chart which concluded that the outstanding as on 31.03.2012 was a specific lesser sum. The Tribunal held that those tax proceedings, decided after the summary-suit decree, are relevant to the question of whether certain amounts were shown or reflected by the decree-holder and therefore can be looked into while determining the correct quantification of the decretal amount. [Paras 17]

The Income Tax proceedings (Assessment Year 2012-13) are relevant to the dispute over the decretal computation and may be examined.

Entertaining Section 151 CPC application casts doubt on decree calculations - The fact that the Delhi High Court entertained IA No.17634/2022 under Section 151 CPC and directed filing of detailed computations, together with deposits and undertakings by the judgment-debtor, prima facie casts doubt on the decree-holder's claimed calculations. - HELD THAT: - The Tribunal recorded the Single Judge's order requiring the decree-holder to file a computation showing adjustments of amounts already paid, and noted subsequent deposits by the judgment-debtor. On that basis the Tribunal observed that the entertain ment of the Section 151 application and the directions given by the High Court raise a prima facie doubt about the accuracy of the decree-holder's claimed figures and preclude accepting the decree-holder's standalone computation without further verification by the appropriate forum. [Paras 17]

Entertaining of IA No.17634/2022 and the High Court's directions create a prima facie doubt on the decree-holder's calculations and require further examination.

Final Conclusion: The Tribunal concluded that the decree-holder's computation of the decretal amount is not to be accepted without accounting for payments and adjustments asserted by the judgment-debtor; the Income Tax proceedings (Assessment Year 2012-13) and the pending Section 151 CPC application before the Delhi High Court are relevant and cast prima facie doubt on the decree-holder's figures. The parties may place this order before the Supreme Court as directed.

Continuing guarantee - novation - application under Section 95 - period of limitation - debt and default - initiation of the insolvency resolution process against the personal guarantor - co-extensive liability of guarantor - contractual waiver of statutory rights.

Continuing guarantee - novation - limitation triggered by invocation notice - debt and default - no bar to initiation under Section 95 during concurrent SARFAESI proceedings (overriding effect of the Code) - HELD THAT: - The Tribunal held that the guarantee deed is a continuing guarantee by its terms, and the guarantor had agreed that variations in the loan terms would not affect his liability; the deed expressly provides for a continuing obligation extending to future transactions. The court applied established principles that a continuing guarantee may be revoked only by a notice to the creditor and that novation requires consent of the parties; mere renewals of credit facilities do not by themselves effect novation where rights under the original contract remain alive. The invocation of the guarantee by issuance of the statutory notice constituted the event triggering default for limitation purposes, and the petition was filed within the applicable limitation period measured from that triggering event. The contention that parallel proceedings under SARFAESI barred initiation under Section 95 was rejected: the Code overrides other laws and does not preclude filing under Section 95 during SARFAESI proceedings. The Resolution Professional had certified that the requirements of Section 95 were met, and the Adjudicating Authority correctly found existence of debt, default and a continuing valid guarantee and admitted the application. [Paras 6]

The NCLT's admission of the application under Section 95 of the IBC, 2016 was correct and is upheld.

Final Conclusion: The appeal is dismissed and the Adjudicating Authority's order admitting the Section 95 petition is affirmed; the insolvency resolution process against the personal guarantor stands instituted and pending applications are closed with no order as to costs.

Non-Conversion of OCDs into equity shares within stipulated time period - statutory requirement for conversions -Construction and operation of the debenture trust deed clauses governing conversion - put option and event of default under the Debenture Trust Deed - financial debt and default for the purposes of Section 7 of the IBC.

Deeming clause for conversion - Whether issuance of a conversion notice under Clause 6(b) of the Debenture Trust Deed operated to effect an automatic conversion of OCDs into equity irrespective of statutory/compliance steps. - HELD THAT: - Clause 6(b) is a clarificatory provision which states that conversion is effective 'on and from the date on which the Debenture Holder(s) issue the Conversion Notice' and that the holder shall be 'deemed and be treated' as the equity holder from the Conversion Date. However, Clause 6 must be read as a whole with Clause 6(a) and Clause 6(c). Clause 6(a) imposes a duty on the Company to convert within seven days of receipt of the Conversion Notice, and Clause 6(c) requires completion of applicable statutory actions (including filings, increase of authorised capital, amendment of constitutional documents and RoC filings) necessary to effect conversion. Therefore the deeming language in Clause 6(b) presupposes actual issuance/allotment of equity upon completion of the statutory and corporate actions; it does not operate to bypass mandatory compliance and effect automatic conversion in the absence of allotment, statutory filings, activation of ISIN and credit to demat accounts. The Company itself admitted in its reply to the Put Option Notice that conversion could not be effected because the ISIN had expired, which demonstrates that conversion was not completed. The Tribunal concurred with the Adjudicating Authority's finding that, in the absence of actual allotment and completion of corporate actions (including activation of ISIN, credit of securities, updating register of members and filing of Form PAS-3), the beneficiary remained a debenture holder and the deeming provision could not be invoked to treat conversion as having occurred. [Paras 11, 14, 19]

Clause 6(b) does not effect automatic conversion irrespective of statutory/compliance steps; conversion was not completed and the debenture holders remained debenture holders.

Put option and event of default under the Debenture Trust Deed - financial debt and default for the purposes of Section 7 of the IBC - Whether the Debenture Trustee/Holder could validly exercise the put option and whether non-redemption constituted a default giving rise to financial debt under Section 7 of the IBC. - HELD THAT: - The DTD confers a right to exercise a put option after expiry of 60 months from the date of allotment (Clause 10). Clause 11.1(xxviii) expressly treats failure of the Company to convert debentures upon receipt of notice as an Event of Default and Clause 11.2 provides remedies including the right to exercise the put option. Because conversion had not been effected and statutory/compliance steps were incomplete, there was no fetter on the Debenture Holder's right to exercise the put option after the contractual 60 month period. The Debenture Trustee issued a Put Option Notice calling for redemption; the Company failed to redeem the debentures within the prescribed period and itself admitted non-conversion due to inactive ISIN. The Adjudicating Authority found that there was debt and default when the debentures were not redeemed on issuance of the Put Option Notice, and correctly concluded that the unpaid obligation constituted a financial debt for the purpose of Section 7 of the IBC. The Tribunal agreed with these findings and found no error in admitting the Section 7 petition. [Paras 16, 18, 20]

The put option could be validly exercised after 60 months; failure to redeem on the Put Option Notice amounted to default and constituted financial debt, justifying admission of the Section 7 petition.

Final Conclusion: The Tribunal upheld the Adjudicating Authority's findings that conversion had not been completed and that the Debenture Holder validly exercised the put option; there being debt and default, admission of the Section 7 petition was correctly sustained and the appeal was dismissed.

Condonation of delay in refiling appeals - refund of amount paid under protest towards pre CIRP municipal dues

Condonation of delay in refiling appeals - Sufficiency of explanation for 102 days' delay in refiling the appeal. - HELD THAT: - The application for condonation of delay explained that the advocate's office was closed during Supreme Court summer vacation, the appeal was iteratively sent to and returned by the appellant for approvals and changes, and final documents were received only in September 2025. The Tribunal examined these factual averments in paragraphs 5 to 7 of the condonation application and found them to constitute sufficient cause for the delay, rejecting the respondent's submission that the defect could have been cured within time. [Paras 5]

Refiling delay of 102 days condoned.

Refund of amount paid under protest towards pre CIRP municipal dues - Whether the Successful Resolution Applicant (SRA) is entitled to refund of amounts paid under protest towards pre CIRP municipal tax dues where the resolution plan provided for a payment and the amount was deposited under protest. - HELD THAT: - The Tribunal noted that the appellant (municipal corporation) had not filed a claim in the CIRP, but the approved resolution plan nevertheless proposed and paid a specified amount to the appellant; the SRA subsequently paid a larger sum under protest to remove a seal and sought refund. The adjudicating authority allowed the application for refund; on appeal the Appellate Tribunal observed that where a resolution plan makes payment and its approval is not under challenge, and the pre CIRP amount was deposited under protest by the SRA, the adjudicating authority did not err in permitting refund. The Tribunal considered relevant authorities including the Supreme Court's decision in Ghanshyam Mishra & Sons Pvt. Ltd. and distinguished the Madras High Court decision relied upon by the appellant on its facts (noting differences such as pending litigation and lack of disclosure in that case). The Tribunal concluded that the issues are covered by the Supreme Court precedent and found no grounds to interfere with the impugned order allowing refund. [Paras 11, 12, 13]

Appeal against the order allowing refund dismissed; impugned order upheld.

Final Conclusion: The Tribunal condoned the 102 day delay in refiling and dismissed the appeal against the adjudicating authority's order directing refund of the amount paid under protest towards pre CIRP municipal tax dues, upholding the impugned order.

Revival of CIRP - Seeking extension of 90 days to the corporate debtor to implement the Settlement Agreement -Withdrawal of CIRP under Section 12A - Consequences of Default - Role of the Financial Creditor in CIRP - Exercise of discretion under Rule 11 of the NCLT Rules, 2016 - Encouragement of bona fide settlements under the IBC - Facilitative/reverse CIRP - Extension of time to implement settlement

Extension of time to implement settlement - Encouragement of bona fide settlements under the IBC - Application I.A.312/ND/2026 for extension of time to implement the Settlement Agreement and to make payment of the balance amount. - HELD THAT:- The Tribunal found that the corporate debtor had demonstrated sufficient cause for a limited extension to implement a bona fide settlement which had earlier led to withdrawal of the CIRP. The adjudicating authority had earlier granted two weeks' protection by its order dated 21.01.2026, but the Tribunal accepted the appellant's submissions and the record that title documents had been sought and procured and investor due diligence was underway. Having regard to the objective of the Code to facilitate continuation and rehabilitation and the fact that substantial part of the settlement amount had already been paid, the Tribunal held that a 90-day period as prayed in I.A.312/ND/2026 should be granted for payment of the balance in terms of the Settlement Agreement. The 90-day period was directed to commence from the date of the Tribunal's order.

I.A.312/ND/2026 is allowed and the order dated 21.01.2026 is modified to grant 90 days from the date of this order for payment of the balance amount under the Settlement Agreement.

Revival of CIRP - Settlement Agreement - Consequences of Default - Role of the Financial Creditor in CIRP - Exercise of discretion under Rule 11 of the NCLT Rules, 2016 - Facilitative/reverse CIRP - Validity and effect of the adjudicating authority's orders reviving the CIRP and granting a limited period during which the RP would refrain from coercive steps. - HELD THAT: - The Tribunal noted that the financial creditor had invoked the Settlement Agreement's default consequences alleging failure to pay a tranche within the stipulated timeline, and that the adjudicating authority exercised its power to restore the CIRP by order dated 07.01.2026. The adjudicating authority also exercised discretion under Rule 11 of the NCLT Rules to direct the RP to hold back from taking coercive steps for a limited period (a 'reverse CIRP' window) to enable the suspended management to implement the settlement. The Tribunal did not set aside the restoration of CIRP; rather, it recognised the adjudicating authority's approach but modified the subsequent order dated 21.01.2026 to grant the longer period sought by the corporate debtor for implementation. The Tribunal reiterated that where payment is made within the directed period the earlier withdrawal order would become operative and the CIRP would stand terminated as contemplated by the order dated 07.01.2026.

The restoration of CIRP by the adjudicating authority stands subject to the Tribunal's grant of a 90-day implementation period; if payment is made within that period the earlier withdrawal order shall become operative and CIRP shall terminate as provided in the adjudicating authority's order.

Role of the Financial Creditor in CIRP - Facilitative assistance by the RP - Obligation of the financial creditor and the Resolution Professional (RP) to assist implementation of a bona fide settlement once a limited extension is granted. - HELD THAT: - The Tribunal observed that Orbis Trusteeship Services Pvt. Ltd. is the sole financial creditor in relation to the corporate debtor and noted authorities emphasising the financial creditor's pivotal role under the Code and the policy favouring settlements. In consequence of allowing the extension, the Tribunal directed that the financial creditor and the RP shall render all necessary assistance to the corporate debtor to implement the Settlement Agreement and facilitate payment within the granted period. This direction is attendant to the grant of time to effect the settlement and to ensure the objective of rehabilitation under the Code is not defeated.

The financial creditor and the RP are directed to render necessary assistance to the corporate debtor for implementation of the Settlement Agreement during the granted period.

Final Conclusion: All appeals are disposed of by allowing I.A.312/ND/2026; the order dated 21.01.2026 is modified to grant the corporate debtor 90 days from the date of this order to make payment under the Settlement Agreement, and if payment is made within that period the earlier withdrawal order shall become operative and the CIRP will stand terminated; the financial creditor and the RP are directed to assist implementation. Parties to bear their own costs.

Proceeds of crime - attachment of property of equivalent value - tainted and deemed-tainted property - provisional attachment and confirmation within 180 days - exclusion of Covid-19 period for computing statutory timelines - onus on person claiming interest in attached property (Section 24)

Proceeds of crime - attachment of property of equivalent value - tainted and deemed-tainted property - Whether immovable property acquired prior to the scheduled offence can be provisionally attached as 'proceeds of crime' or as property of equivalent value when the actual proceeds are not traceable. - HELD THAT: - The Tribunal applied the three limb interpretation of 'proceeds of crime' and held that the definition encompasses (a) property obtained directly or indirectly from the scheduled offence, and (b) property equivalent in value where the actual proceeds are not traceable. The Tribunal relied on the reasoning that interpreting the definition to exclude the second limb would render it redundant and would frustrate the object of the Act by enabling accused persons to siphon off proceeds immediately after committing the scheduled offence. The Tribunal therefore accepted precedents treating 'deemed tainted' or 'equivalent value' attachments as permissible subject to established safeguards, and held that a property acquired prior to the offence may be attached where proceeds are vanished or not traceable and the requisite connection or equivalence is shown. [Paras 19, 20, 21, 22, 23]

Attachment of property acquired prior to the commission of the scheduled offence is permissible as property of equivalent value when the proceeds of crime are not traceable; the appellant's contention that such prior acquisition precludes attachment is rejected.

Onus on person claiming interest in attached property (Section 24) - provisional attachment and confirmation within 180 days - Whether the appellants discharged the onus to show that the attached properties were not derived from proceeds of crime (specifically repayment/source of the friendly loan), and whether admissions in statements affect the attachment. - HELD THAT: - The Tribunal examined the evidentiary material concerning the allegedly 'friendly' loan and its repayment. It noted absence of loan documentation, failure to explain source of repayment of the large sum, and the admitted statement by one appellant that loan obligations were serviced from bill discounting receipts. The Tribunal applied the statutory burden on persons in whose favour property is attached and found that the appellants failed to prove a legitimate source or documentary basis for the loan and repayment. The admission in the statement under Section 50(2) regarding use of bill discounting proceeds to service the housing loan further supported the view that the property was indirectly acquired with proceeds of crime. [Paras 15, 16, 20]

The appellants did not discharge the onus under the Act; the provisional attachment as reflecting acquisition directly or indirectly from proceeds of crime is sustained.

Provisional attachment and confirmation within 180 days - exclusion of Covid-19 period for computing statutory timelines - Whether the Adjudicating Authority's confirmation of provisional attachment after the expiry of 180 days was invalid because the 180 day period had lapsed, or whether the Covid 19 exclusion (orders in Suo Motu Limitation matters) applies to the computation of the 180 days under Section 5(3) of the PMLA. - HELD THAT: - The Tribunal analysed the effect of the Supreme Court orders excluding the period from 15.03.2020 to 28.02.2022 for purposes of limitation and for termination of proceedings. Relying on binding guidance and subsequent High Court and Tribunal decisions, the Tribunal held that the Covid period exclusion applies for computing the 180 day window in Section 5(3) because that provision prescribes an outer limit after which the provisional attachment ceases to have effect-i.e., a statutory timeframe for termination of proceedings. The Tribunal rejected arguments distinguishing institution of proceedings from prescribed termination periods and concluded that exclusion of the Covid period brings the confirmation within 180 days. [Paras 21, 22, 23]

The Covid 19 exclusion is applicable in computing the 180 days under Section 5(3); the confirmation order does not lapse for being beyond 180 days when the excluded period is duly accounted for.

Final Conclusion: The Tribunal dismissed the appeals: the provisional attachment of the properties in question was lawfully confirmed. The appellants failed to discharge the onus to show legitimate source of funds and the Tribunal upheld (a) attachment of prior acquired property as property of equivalent value where proceeds were not traceable, and (b) applicability of the Covid period exclusion in computing the 180 day limit under Section 5(3) of the PMLA.

Provisional attachment - definition of "proceeds of crime" - "value thereof" - reasonable belief - overriding effect of statute - bona fide third party claim - offences of cheating and defrauding the OBC, as well as the farmers - definition of transfer in Section 2(1)(za) - foundational connect/nexus between the proceeds of crime and the assets/properties sought to be attached is completely missing.

Proceeds of crime includes value thereof - Whether property not directly purchased with tainted funds can be attached as the "value" or property equivalent in value under the definition of proceeds of crime. - HELD THAT:- The Tribunal applied the statutory text of Section 2(1)(u) and followed binding precedents which hold that the definition of "proceeds of crime" comprises three limbs, the middle limb enabling attachment of property equivalent in value when the actual tainted property is not available. The reasoning explained that read literally and purposively, the phrase "or the value of any such property" is not redundant and permits attachment of alternative or deemed-tainted property to secure illicit gains where proceeds have been dissipated or cannot be traced. The Tribunal accepted the axis of authority that safeguards exist for bona fide third parties and secured creditors, but rejected the argument that pre existing properties are categorically immune from attachment under the second limb. [Paras 11, 12, 13]

Attachment of property as the "value thereof" is permissible under Section 2(1)(u) when proceeds are dissipated or unavailable, subject to the statutory safeguards for bona fide third parties and secured creditors.

Reasonable belief for provisional attachment - Whether the Deputy Director had recorded a reasonable belief, based on material, to lawfully pass the Provisional Attachment Order. - HELD THAT: - The Tribunal reviewed the PAO and the material cited therein, noting specific documentary and testimonial material (statements and documents recorded under Section 50 and listed in the PAO) and factual findings about diversion of funds, failed restructuring and risk of liquidation. It held that the Deputy Director had independently applied mind to the material, formed a subjective satisfaction grounded in a rational connection between material and belief, and did not act on conjecture. While courts may not re weigh sufficiency of evidence, they may test whether material existed and bore nexus to the belief; on that test, the PAO's reasons were adequate. [Paras 9, 10]

The formation of reasonable belief by the Deputy Director for provisional attachment was based on material and is sustainable.

Coexistence of PMLA and SARFAESI with protection for bona fide secured creditors - How the PMLA attachment interacts with the rights of secured creditors under SARFAESI and related recovery laws. - HELD THAT: - The Tribunal applied the harmony principle endorsed in Axis Bank, observing that PMLA has overriding effect but must operate compatibly with other statutes so as to secure proceeds of crime while not destroying legitimate third party rights. The law permits an order of attachment under PMLA to be valid and operative notwithstanding prior charges, but a bona fide secured creditor may assert and enforce its claim; where such claim is established, attachment will be subject to satisfaction of that charge and limited to excess value. The Impugned Order had expressly left the Appellant Bank free to stake its claim under Section 8(8) of PMLA before the Special Court, thereby preserving the statutory remedies available to the secured creditor. [Paras 16, 17, 18]

PMLA attachments and secured creditor remedies under SARFAESI/RDBA/insolvency must co exist; attachment does not ipso facto defeat bona fide secured interests, which may be protected subject to statutory safeguards and adjudication.

Final Conclusion: The Appeal is dismissed. The Tribunal upheld the provisional attachment as founded on reasonable belief and consistent with the statutory definition of proceeds of crime (including "value thereof"); secured creditor rights remain enforceable and the Appellant Bank may pursue its claim under Section 8(8) of PMLA before the Special Court.

Provisional attachment - Conversion of demonetized currency into bank entries -PMLA proceedings independent of scheduled offence proceedings - Proceeds of crime - Attachment of property of equivalent value - Reason to believe - Preventive nature of attachment - Voluntary declaration and payment under the Pradhan Mantri Garib Kalyan Yojna (PMGKY) or deposit in government bonds disentitles attachment or absolves.

PMLA proceedings independent of scheduled offence proceedings - Reason to believe - Whether initiation of action under the PMLA and provisional attachment can be valid against a person not named in the FIR or ECIR. - HELD THAT: - The Tribunal held that proceedings under the PMLA are independent of criminal proceedings relating to the scheduled offence and are not confined to those named in the FIR or ECIR. Section 5(1) permits action where the authorised officer has material indicative of any person being in possession of proceeds of crime; hence absence of the appellant's name in the FIR or ECIR does not preclude attachment if the investigation discloses involvement in activities connected with proceeds of crime. The Tribunal relied on the reasoning in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] to confirm that the sweep of Section 5(1) extends to any person involved in processes connected with proceeds of crime. Accordingly, the contention that non-naming in the FIR or ECIR renders the attachment arbitrary was rejected. [Paras 11, 12]

Proceedings and provisional attachment under the PMLA are maintainable against the appellant despite his not being named in the FIR/ECIR.

Provisional attachment under PMLA - Preventive nature of attachment - Proceeds of crime - Whether provisional attachment of the appellant's bank accounts was justified on the material showing routing of demonetized currency and involvement in layering and integration. - HELD THAT: - The Tribunal found prima facie material that post-demonetisation the appellant handed over demonetised currency which, after commissions, resulted in RTGS credits into accounts linked to his firm and companies. These transactions indicated placement, layering and integration into the banking system and thus prima facie involvement in processes connected with proceeds of crime as envisaged by Section 3 of the PMLA. Given the preventive purpose of provisional attachment, the Respondent need only have 'reason to believe' that the property is involved in money laundering and that non-attachment may frustrate proceedings; the nature and manner of the transactions and the appellant's proximity to the laundering mechanism satisfied that threshold. The Tribunal held that the attachment was not arbitrary, illegal or perverse. [Paras 13, 14, 15, 19]

The provisional attachment of the appellant's bank accounts was lawful on the prima facie material of routing demonetised currency and could be sustained.

No immunity by voluntary tax declaration - Attachment of property of equivalent value - Proceeds of crime - Whether the appellant's voluntary declaration and payment under the Pradhan Mantri Garib Kalyan Yojna (PMGKY) or deposit in government bonds disentitles attachment or absolves him under the PMLA, and whether attachment of equivalent value is permissible. - HELD THAT: - The Tribunal rejected the submission that declaration under PMGKY or payment of taxes/penalty confers immunity from PMLA proceedings; there is no statutory bar in the PMLA granting such immunity and tax compliance does not negate money laundering if otherwise made out. Further, the Tribunal reiterated the wide definition of 'proceeds of crime' which includes the value of such property, entitling authorities to attach property of equivalent value where original proceeds are not traceable. The appellate decision in a related matter was invoked to explain the three limbs of the definition and to affirm that attachment of equivalent value is legally permissible and applicable where proceeds have vanished or been converted. [Paras 7, 16, 17, 18]

Voluntary tax declaration under PMGKY does not preclude PMLA proceedings or attachment; attachment of property of equivalent value is permissible under the definition of 'proceeds of crime'.

Final Conclusion: The Tribunal found sufficient prima facie material linking the appellant to activities connected with proceeds of crime, held that provisional attachment was legally justified and not vitiated by his absence from the FIR/ECIR or by his PMGKY declaration, and accordingly dismissed the appeal, upholding the Adjudicating Authority's orders subject to final adjudication.

Effect of quashing of FIR on parallel criminal and PMLA proceedings - classification of entities as shell or paper companies - proceeds of crime - burden of proof to disclose and establish source of proceeds - requirement to produce loan documentation for claimed loans - misappropriation and criminal breach of trust after manipulation of the books of accounts - defraud the banks by obtaining the loan - dummy companies and diverted the funds to acquire the properties in the name of other dummy companies.

Effect of quashing of FIR on parallel criminal and PMLA proceedings - Whether quashing of the FIR against one accused vitiates the ECIR, investigation and provisional attachment under the Act of 2002 in respect of other accused and ongoing proceedings. - HELD THAT: - The Tribunal examined the orders of the High Court quashing the FIR qua one accused and held that mere quashing of the FIR against that individual does not nullify the entire proceedings where predicate offences remain disclosed and trials are pending against other persons. The finding emphasises that the continuation of the investigation, recording of ECIR and provisional attachment under the Act of 2002 is not automatically defeated by the High Court's order in favour of one accused, particularly where multiple FIRs and allegations involving a consortium of banks and other accused persist. [Paras 16, 17]

Quashing of the FIR against the individual accused does not vitiate the ongoing PMLA-related proceedings or the provisional attachment where predicate offences remain and proceedings are pending.

Classification of entities as shell or paper companies - requirement to produce loan documentation for claimed loans - HELD THAT: - The Tribunal accepted the respondents' finding that the transfers were routed through a web of companies which, on the material before it, were paper/shell entities. The appellants conceded absence of loan documentation for the alleged Rs. 50 Crore advance and failed to produce balance-sheet entries or supporting books to show genuine loans. Statements and contemporaneous material traced a money trail from the Surana group through these entities to the properties in issue. In that factual matrix the Tribunal concluded there was sufficient basis to treat the transactions as paper transactions and to sustain the provisional attachment. [Paras 18, 19]

In absence of loan documents and supporting books, the transactions were rightly treated as paper/shell transactions and provide a sufficient basis for the provisional attachment.

Burden of proof to disclose and establish source of proceeds - HELD THAT: - The Tribunal applied the statutory allocation of burden under the Act of 2002, noting the notice obligations under Section 8(1) and the onus under Section 24. The appellants were held to have failed to establish the source of earnings relied upon for repayment of the alleged loan; they also did not file applications or produce the additional evidence during the pendency of the appeal despite a long delay. Given the appellants' inability to produce balance-sheets, loan documents or other material to substantiate their pleaded source, the Tribunal found no merit in their contention and upheld the confirmation of provisional attachment. [Paras 20]

The appellants failed to discharge the statutory burden to disclose and prove lawful source of funds; consequently the confirmation of provisional attachment was justified.

Final Conclusion: The appeals were dismissed: the Tribunal held that quashing of the FIR against one accused did not invalidate the ongoing PMLA proceedings; the transactions were correctly characterised as routed through paper/shell entities in absence of loan documentation; and the appellants failed to discharge the statutory burden to prove lawful source of funds, justifying confirmation of the provisional attachment.

Provisional attachment of property - proceeds of crime - burden of proof to disclose source of acquisition - fake indents for requisition of goods - fake supply orders - validity of confirmation in absence of person served with notice - ex parte order of the Adjudicating Authority - compulsion to pass an order within statuary date from the date of Provisional Attachment Order.

Provisional attachment of property as proceeds of crime - burden of proof to disclose source of acquisition - HELD THAT: - The Tribunal examined the material relied upon by the respondents, including statements recorded under Section 50(2) and (3) of the Act and the investigation which showed channelising of funds through various bank accounts. The appellant asserted purchase from personal savings, stridhan and a friendly loan, but produced no documentary evidence (such as bank statements or loan agreements) to corroborate the alleged friendly loan or savings. Witnesses originally recorded under Section 50(2) and (3) denied having extended the loan and later filed affidavits contrary to their earlier statements; the Tribunal treated the original recorded statements as more reliable and noted the risk and impropriety of filing false affidavits. Given the absence of documentary proof and the investigative material indicating transfer of funds into and through other accounts controlled by the main accused, the Tribunal held that the appellant failed to discharge the onus to establish a legitimate source for the acquisition. On that basis, the provisional attachment was found to be justified. [Paras 14, 15, 16]

Provisional attachment was properly confirmed because the appellant did not satisfactorily disclose or prove a legitimate source for the property, which was plausibly linked to proceeds of crime.

Validity of confirmation in absence of person served with notice - Whether the Adjudicating Authority's confirmation of the provisional attachment was vitiated by being passed ex parte after the death of the appellant's husband. - HELD THAT: - The Tribunal found that the appellant had been served with the show cause notice but did not appear or get represented before the Adjudicating Authority. The Adjudicating Authority was required to decide within the statutory period and recorded the appellant's absence before passing the final order. The death of the appellant's husband prior to the confirmation did not excuse the appellant's non appearance, nor did it render the proceedings a nullity where notice had been validly served and the appellant remained unrepresented. Consequently, there was no procedural infirmity in passing the order in the appellant's absence. [Paras 17]

Confirmation of the provisional attachment in the appellant's absence was valid because notice had been served and the Adjudicating Authority acted within the statutory timeframe.

Final Conclusion: The Tribunal dismissed the appeal, upholding the Adjudicating Authority's confirmation of the provisional attachment on grounds that the appellant failed to prove a legitimate source for the property and that the confirmation was validly rendered in her absence after service of notice.

Strict construction of exemption notification - substantive compliance versus procedural conditions - appellate remand for documentary verification - scope of appeal under Section 35G - substantial question of law

Appellate remand for documentary verification - substantive compliance versus procedural conditions - Validity and scope of the CESTAT's remand to the adjudicating authority to verify certificates produced by the respondent and to grant exemption to the extent found admissible. - HELD THAT: - The Tribunal recorded that the respondent had rendered services to diplomatic missions and that certificates contemplated by the Notification had been obtained in most cases, though some were produced after adjudication. The CESTAT did not grant exemption outright; it directed limited factual scrutiny - verification of the certificates and consequential extension of exemption only to the extent conditions are satisfied. Such a remand confined to documentary verification and conditional relief is a legitimate exercise of appellate discretion, particularly where the controversy turns on documentary compliance. If certificates are found non-compliant on verification, the adjudicating authority remains free to deny the benefit. The remand therefore neither dispenses with certification nor dilutes the mandatory character of the Notification; it merely entrusts the adjudicating authority to examine compliance with the Notification's conditions before granting relief. [Paras 19, 20, 21, 22, 23]

The remand by the CESTAT for verification of certificates and grant of exemption only to the extent admissible is valid, limited and within the Tribunal's appellate powers.

Strict construction of exemption notification - substantive compliance versus procedural conditions - Whether the principle of strict construction of exemption notifications precluded the relief ordered by the CESTAT where substantive compliance with the Notification was shown. - HELD THAT: - While exemption notifications are to be strictly construed at the stage of determining eligibility, strictness operates to determine whether an assessee falls within the ambit of the notification. Once substantive compliance is demonstrated, the remaining conditions must be applied according to their tenor. The Court accepted the CESTAT's finding that substantive compliance (rendering of services to diplomatic missions) was not in dispute and concluded that factual verification of documentary conditions was an appropriate next step rather than summary denial of relief. Thus, strict construction does not automatically preclude a factual remand where documentary compliance remains to be verified. [Paras 18, 19, 20, 21]

Strict construction governs eligibility but does not preclude remand for verification where substantive compliance is established and documentary conditions require factual scrutiny.

Scope of appeal under Section 35G - substantial question of law - Whether the impugned CESTAT order raised a substantial question of law permitting interference under Section 35G of the Central Excise Act. - HELD THAT: - An appeal under Section 35G lies only on a substantial question of law. The impugned order predominantly directed factual verification of documents and conditional grant of relief based on that verification. The Court found that the order did not present a substantial question of law warranting interference under Section 35G, as the Tribunal's direction related to factual adjudication and documentary scrutiny rather than pure legal determination. [Paras 24]

The impugned order does not give rise to a substantial question of law under Section 35G; the appeal is not maintainable on that ground.

Final Conclusion: The appeal is dismissed. The CESTAT's limited remand to the adjudicating authority to verify the certificates and grant exemption only to the extent admissible is upheld as a proper exercise of appellate discretion; strict construction remains applicable at the eligibility stage but does not preclude documentary verification, and the impugned order does not raise a substantial question of law under Section 35G.

Maintainability of High Court appeal under Section 35G

Maintainability of High Court appeal under Section 35G - The appeal before the High Court under Section 35G was not maintainable where the question of service tax liability had been judicially decided and the statutory remedy lies to the Supreme Court. - HELD THAT: - The Court considered rival contentions and relied on authoritative precedents holding that once the question of taxability is judicially determined, an appeal under Section 35G to the High Court is not maintainable and the appropriate statutory remedy is an appeal to the Supreme Court under Section 35L. The Court noted that the impugned CESTAT order recorded that the respondent was not liable to pay service tax for the period in question and that earlier Tribunal decisions on related periods supported that view. Applying the cited decisions, the Court sustained the preliminary objection on maintainability and declined to entertain the appeal on merits. The Court expressly refrained from deciding the substantive taxability issue and granted liberty to the Revenue to approach the Supreme Court under the appropriate provision, including to seek condonation of delay or raise any limitation issues there. [Paras 10, 11]

Appeal not maintainable before the High Court; liberty granted to prefer an appeal to the Supreme Court under Section 35L and merits not considered.

Final Conclusion: The High Court dismissed the appeal as not maintainable under Section 35G, leaving open the substantive taxability issue and granting liberty to the Revenue to approach the Supreme Court under Section 35L (including for condonation of delay); the Court did not decide the merits.

No service tax on advances received prior to the effective date - nomination agreement-taxable value limited to amounts payable to the original seller - penalty for suppression not imposable without substantive evidence of intent to evade

No service tax on advances received prior to the effective date - nomination agreement-taxable value limited to amounts payable to the original seller - Whether service tax could be demanded on the entire consideration stated in Nomination Agreements where part of the consideration had been paid to the appellant prior to 01.07.2010 - HELD THAT: - The Tribunal applied the Board's clarification (D.O.F. No. 334/3/2010-TRU dated 01.07.2010) that amounts received by a service provider prior to the effective date of additions/modifications (01.07.2010) are not taxable even if the service is rendered thereafter. Examination of the Nomination Agreement showed the transferee agreed to pay an aggregate consideration which included (a) reimbursement of an amount already paid by the transferor to the appellant prior to 01.07.2010, (b) an amount payable under the original sale agreement, and (c) separate nomination profit. The Tribunal held that the pre-01.07.2010 payment of the transferor (reimbursed via the Nomination Agreement) could not be treated as a fresh receipt by the appellant after the effective date. Only the balance expressly payable to the appellant under the original sale agreement (paid by the transferee after 01.07.2010) constituted the taxable value for construction services; the portion characterized as nomination profit did not form part of the appellant's taxable receipt under the sale agreement. The Department's methodology of treating the entire consideration in the Nomination Agreements as received after 01.07.2010 and thus fully taxable was held legally unsustainable. [Paras 11, 12, 13]

Demand of service tax to the extent of the amounts attributable to advances received prior to 01.07.2010 and wrongly included in the transaction value under Nomination Agreements is set aside.

No service tax on advances received prior to the effective date - Whether amounts already paid by the appellant, which were admitted and reflected by challans, should be treated as discharged despite not being declared in statutory ST-3 returns - HELD THAT: - The adjudicating authority recorded that the appellant had made payments evidenced by challans but found those payments were not declared in ST-3 returns and therefore treated them as undeclared, invoking extended limitation on the basis of alleged suppression. The Tribunal, however, accepted that the appellant had in fact paid the admitted portion of the demand and that those payments were acknowledged in the impugned order. The Tribunal accordingly upheld the portion of the demand which has already been paid by the appellant, together with interest, as discharged to that extent. [Paras 14]

The balance portion of the confirmed demand corresponding to payments already made by the appellant is upheld as discharged (i.e., treated as paid) along with interest.

Penalty for suppression not imposable without substantive evidence of intent to evade - Whether penalty under Section 78 could be imposed where suppression or intent to evade tax was not established by substantive evidence - HELD THAT: - The Tribunal examined the record and the impugned order and found that the Department did not produce cogent evidence to establish suppression of facts with the intention to evade tax. The adjudicating authority's conclusion of suppression rested on the audit detection and non-declaration in returns, but substantive proof of deliberate evasion was not found. In the absence of such evidence, the statutory requirement for imposing penalty under the relevant provision was not satisfied. [Paras 15]

Imposition of penalty under Section 78 is set aside; no penalty is imposable in the facts and circumstances of the case.

Final Conclusion: The Tribunal set aside service-tax demand to the extent founded on amounts paid before 01.07.2010 and incorrectly included in Nomination Agreements, upheld as discharged the portion of the confirmed demand already paid by the appellant with interest, and quashed the penalty for lack of evidence of suppression or intent to evade.

Tour operator service - airport service (pre-amendment)

Tour operator service - abatement eligibility - Whether the appellant's promotional "tour packages" fall within the taxable category of Tour Operator Service and whether abatement claimed thereon was correctly disallowed. - HELD THAT: - The Tribunal examined the statutory definition of "tour operator" and its component of planning, scheduling, organising or arranging tours and applied the Tribunal's earlier decision in the appellant's own case and the decision in Jet Airways. The packages offered by the appellant comprised airfare and ancillary accommodations/transfers but did not involve the appellant planning, scheduling or organising tours on behalf of passengers; passengers organised travel dates and the airline did not act as a tour organiser. On that basis the activity falls outside the ambit of Tour Operator Service and the appellant is not liable to pay service tax under that category. However, the appellant had collected service tax from customers and availed abatement in payment; since tax was collected and paid by claiming abatement, that amount is not refundable to the appellant. [Paras 9]

The tour packages do not constitute Tour Operator Service; no service tax is payable under that category, but amounts already collected and paid claiming abatement are not refundable.

Airport service (pre-amendment) - authorization by airport authority - Whether services provided by the appellant to its subsidiary in airport premises prior to the amendment effective 01.07.2010 fall within the definition of Airport Service. - HELD THAT: - The Tribunal applied the pre-amendment definition of "Airport Service," which required services to be provided by the airport authority or by a person authorized by it. The appellant was not a person authorized by the airport authority to provide services on behalf of the authority and the services were provided directly to the subsidiary, not on behalf of the airport authority. Reliance was placed on the Tribunal's decision in Soft Touch Aviation and the TRU clarification showing that prior to the 2010 amendment an authorization by the airport authority was a pre-condition for classification as Airport Service. On these findings, the appellant's activities do not qualify as Airport Service for the relevant period and no service tax is payable under that head. [Paras 10]

The charges collected do not qualify as Airport Service for the pre-amendment period; no service tax is payable under that category.

Final Conclusion: Both demands - under "Tour Operator Service" and under "Airport Service" for the specified periods - were held unsustainable; the impugned demand including interest and penalties is set aside and the appeal is allowed with consequential relief.

Incentives and trade discounts not consideration for taxable service - principal-to-principal dealership transactions exclude BAS/service character - contract cannot be vivisected to treat conditions as separate services - activities in nature of self-service outside scope of service

Incentives and trade discounts not consideration for taxable service - principal-to-principal dealership transactions exclude BAS/service character - contract cannot be vivisected to treat conditions as separate services - activities in nature of self-service outside scope of service - Whether amounts received by the dealer from the manufacturer as target-based and other incentives/discounts are taxable consideration for services under section 65B(44) / section 67 of the Finance Act, 1994 for the period April, 2013 to June, 2017 - HELD THAT: - The Tribunal examined the dealership agreement as a whole and found the purchase by the dealer was on a principal-to-principal basis and the vehicles were acquired for resale. Clauses of the agreement obliging the dealer to promote sales and follow company procedures were held to be conditions of the contract, often serving the dealer's own commercial interest, and not express separate contracts for services with agreed consideration. Target-based incentives and other discounts were governed by manufacturer circulars, linked to offtake or retail targets, and operate as trade discounts or performance-linked reductions in sale price rather than payments for distinct services. Reliance on earlier Tribunal and Larger Bench decisions established that where the manufacturer-dealer relationship is principal-to-principal, such incentives are related to the sale transaction and not leviable as Business Auxiliary Services or as consideration for any other taxable service. The Tribunal rejected the Department's submission that the contract could be vivisected to treat specified obligations as separate service transactions, noting absence of any explicit provision fixing consideration for such activities and the prevalence of self serving promotional activity which cannot be characterised as a service provided to the manufacturer. [Paras 23, 24, 33, 34, 35]

The impugned order dropping the demand was upheld: the incentives/discounts are attributable to sale of vehicles and are not consideration for any taxable service for the period April, 2013 to June, 2017.

Final Conclusion: The Tribunal dismissed the departmental appeal and upheld the adjudicating authority's conclusion that the incentives and discounts paid by the manufacturer to the dealer formed part of the sale transaction and were not taxable consideration for services under the Finance Act in respect of April, 2013 to June, 2017.

Unjust enrichment - CA certificate not conclusive proof - re-computation of refund on remand - re-assessment of self-assessed returns

Unjust enrichment - CA certificate not conclusive proof - re-computation of refund on remand - Entitlement to consequential refund for amounts paid in respect of space selling activity for the period July, 2004 to February, 2006 - HELD THAT: - The Tribunal's earlier order held that amounts attributable to space selling activity were not leviable during the period and that refund was payable subject to quantification and the hurdle of unjust enrichment. The RSA declined refund because the appellant did not furnish invoices or documentary breakup to quantify the portion of consolidated BAS payments relating to space selling, and treated a lone CA certificate and credit note as insufficient to rebut the statutory presumption that the incidence of tax was passed on. The Bench applied the principles in Addison (supra) and Mafatlal that refund is admissible only if the claimant establishes that the incidence of duty was not passed on; consequently a CA certificate alone, without supporting documents showing the immediate recipient did not pass on the burden, cannot be treated as conclusive. In the interest of justice the matter is remitted to the original Refund Sanctioning Authority to re-examine the appellant's submitted breakup and supporting documents (including invoices/bills for the two services), to re-compute the refundable amount on merit and to determine, with supporting evidence, whether the incidence of service tax was passed on to the ultimate customer. [Paras 14, 15, 17, 18]

Remand to the RSA to re-compute the consequential refund and to re-determine whether the bar of unjust enrichment is crossed, noting that mere CA certificate without supporting documents may not be conclusive.

Re-assessment of self-assessed returns - unjust enrichment - CA certificate not conclusive proof - Admissibility and quantification of refund for the period July, 2006 to March, 2010 and the feasibility of revising/re-assessing ST3 self-assessed returns for that period - HELD THAT: - The Bench observed that the period is not strictly consequential to the earlier Tribunal order and that classification and liability for the two activities during this later period required separate examination. The RSA must consider whether the appellant may lawfully seek revision or re assessment of self assessed ST3 returns in accordance with statutory provisions in light of the classification decision (sale of space or time for advertisement versus BAS). The Tribunal emphasised the settled principle that refund proceedings do not themselves alter self assessment; where reassessment or revision of returns is permissible under the statute, the RSA should examine that route. For quantification and unjust enrichment, the same evidentiary standards apply: the appellant may rely on invoices, bills, CA certificate and other supporting documents but a CA certificate alone, without corroboration, is not necessarily conclusive of non passing of incidence. [Paras 19, 20, 21, 22]

Remand to the RSA to examine feasibility of reassessment/revision of ST3 returns and thereafter to quantify any eligible refund, subject to crossing the bar of unjust enrichment and compliance with statutory provisions.

Final Conclusion: Both appeals are allowed by way of remand: Appeal No. ST/3478/2012 remitted to the Refund Sanctioning Authority for re computation of the consequential refund and determination on unjust enrichment; Appeal No. ST/3479/2012 remitted to examine feasibility of reassessment/revision of ST3 returns and to quantify any refund, subject to the same unjust enrichment principles and evidentiary requirements.

Double taxation - invocation of extended period despite revenue neutrality under RCM

Double taxation - reverse charge mechanism - Appellant failed to establish that the service providers had discharged the entire service tax liability payable under reverse charge; remand directed for verification of payment and reimbursement. - HELD THAT: - The Tribunal accepted the legal principle that if the service provider has already discharged the entire service tax liability (including the portion statutorily payable by the recipient under the notification), a fresh demand on the recipient would amount to double taxation and would not be sustainable. Applying that principle to the facts, the Tribunal found that the appellants had not conclusively proved that the service providers had in fact paid 100% of the service tax or that the appellants had reimbursed the service-tax component to the providers. Because the factual question of payment on behalf of the appellant remains unresolved on the record, the Tribunal directed remand to the Original Adjudicating Authority to examine the evidence of actual payment by the service providers and of reimbursement by the appellant; if it is established that the providers paid the entire liability suo motu or on behalf of the appellant, the demand against the appellant shall not sustain to that extent.

Remand to the Original Adjudicating Authority to verify whether the service providers discharged 100% of the service tax and whether the appellant reimbursed the tax component; demand will not sustain to the extent payment is proved, and will sustain for the remaining amount.

Invocation of extended period despite revenue neutrality under RCM - penalty under Section 78 - Invocation of the extended period of limitation was proper and penalty under Section 78 is justified to the extent the demand is sustained. - HELD THAT: - The Tribunal held that the appellants were aware of their statutory obligation to pay a specified portion of tax under the reverse charge mechanism and failed to produce evidence proving discharge of the tax liability by the service providers. Revenue neutrality (i.e., that the provider may have paid the tax) does not preclude invocation of the extended period of limitation; the Tribunal relied on the principle in the cited Supreme Court authority that revenue neutrality is not a bar to invoking extended limitation. In view of the absence of conclusive proof by the appellants, the extended period was rightly invoked and the penalty under Section 78 is maintainable to the extent the demand is confirmed after recalculation.

Extended period rightly invoked; penalty under Section 78 is justifiable to the extent of the demand that survives after verification and recalculation.

Final Conclusion: The appeal is partly allowed in form: the Tribunal recognised that double taxation must be avoided if the service providers can be shown to have discharged 100% of the service tax, but because the appellants failed to prove such payment the matter is remanded to the Original Adjudicating Authority to verify payment and reimbursement; the remaining demand, invocation of extended period, and penalty under Section 78 are upheld to the extent the demand is sustained.

Taxability of cross-border services under 'Banking and other Financial Services' - effect of approved resolution plan - abatement of appeal and CESTAT becoming functus officio

Taxability of cross-border services under 'Banking and other Financial Services' - Services rendered by overseas merchant bankers/lead managers in relation to GDR/FCCB/ECB issues are taxable as 'Banking and other Financial Services'. - HELD THAT: - The Tribunal observed that the appellant received services from overseas service providers in relation to raising foreign currency through GDR/ECB/FCCB and acquisition-related advisory services. Having regard to the statutory definitions and the CBIC guidance quoted, the services in issue fall within the ambit of 'Banking and other Financial Services' and thereby satisfy the conditions for taxation of services provided from outside India and received in India. The Tribunal expressly recorded its appreciation that such services are taxable under Section 65(12) read with Section 65(105)(zm) of the Finance Act, 1994 and are caught by the relevant categories of Rule 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. [Paras 3, 11, 12]

The services received from overseas service providers in relation to GDR/FCCB/ECB issues are taxable under 'Banking and other Financial Services'.

Effect of approved resolution plan - abatement of appeal and CESTAT becoming functus officio - Whether the appeal survives after approval of a resolution plan by the NCLT. - HELD THAT: - Relying on the Apex Court's pronouncement and the Tribunal's earlier decisions, the Bench held that once a resolution plan is approved by the adjudicating authority under the I&B Code, claims not part of the approved plan stand extinguished and proceedings in respect of such claims cannot be continued. Rule 22 of the CESTAT Procedure Rules was applied to conclude that approval of the resolution plan results in abatement of the appeal and renders the Tribunal functus officio in respect of the appeal. The Tribunal noted CBEC instruction and precedents where appeals were treated as abated upon approval of resolution plans and applied the same principle to the present case. [Paras 6, 9, 13]

The appeal abates from the date of approval of the resolution plan; the Tribunal is functus officio and the appeal cannot be continued.

Final Conclusion: Although the Tribunal recorded that the services received from overseas providers in connection with GDR/FCCB/ECB issues are taxable under 'Banking and other Financial Services', the appeal is nevertheless abated because a resolution plan for the corporate debtor was approved by the NCLT; accordingly the appeal stands abated and the Tribunal is functus officio.

Declared service under Section 66E(e) - consideration requirement for declared services - place of provision of services - location of service recipient (export of services)

Declared service under Section 66E(e) - consideration requirement for declared services - Whether the compensation for underutilisation of installed production capacity constituted a declared service and satisfied the consideration requirement - HELD THAT: - On construction of the service definition and the declared service entry, the Tribunal held that a declared service remains subject to the foundational requirement of a consideration flowing for the activity. Applying the definition of 'consideration' in Section 2(d) of the Indian Contract Act, 1872, the Bench distinguished post breach damages (which arise as a legal consequence of breach and do not ordinarily constitute consideration) from pre agreed remuneration components that are part of the contractually agreed price. The manufacturing agreement between the parties expressly obliged the Indian entity to maintain, hold available and use specified capacity for the foreign principal and provided remuneration comprising a Manufacturing Fee and an Idle Cost Compensation; the contractual scheme treated the Idle Cost Compensation as part of the agreed remuneration (a factor to ensure fair compensation for functions performed, assets employed and risks assumed). Because the capacity was created and held at the promisor's desire and the contract envisaged payment for unutilised capacity as part of the agreed consideration (not as a subsequent remedy for breach), the payment was a contractual consideration for an agreed obligation and therefore fell within the scope of the declared service entry. The Tribunal therefore concluded that, on the facts, the impugned receipts were not mere post breach damages but formed part of the contractually agreed consideration and constituted a declared service under clause (e) of Section 66E(e). [Paras 14]

Compensation for idle capacity is a part of the agreed contractual remuneration and, on the facts, constitutes a declared service under Section 66E(e).

Place of provision of services - location of service recipient (export of services) - Whether the declared service so identified was provided in India or at the location of the foreign recipient (i.e., whether it qualified as export of services) - HELD THAT: - Having found that a declared service existed, the Tribunal examined the Place of Provision of Services Rules. The POPS Rules adopt the general destination principle that, in the absence of a specific rule taking precedence, the place of provision is the location of the service recipient (Rule 3). The Bench analysed Rule 5 (services directly related to immovable property) and the applicable guidance and concluded that the idle capacity receipts were not a grant of a right to use immovable property situated in India nor services directly in relation to an identifiable immovable site; rather, the contractual arrangement concerned manufacture and agreed remuneration for capacity held for the foreign principal. Consequently the general rule (location of service recipient) applied. The recipient was located outside the taxable territory (Germany) and the other export conditions were satisfied. For these reasons the declared service was held to be provided outside India and to qualify as export of services under the Rules. [Paras 15, 16]

The place of provision is the location of the foreign recipient; the declared service was provided outside India and thus qualifies as export of services.

Final Conclusion: The Tribunal held that the under utilisation receipts were a declared service (they formed part of the contractually agreed consideration) but, applying the Place of Provision Rules, the service was provided at the location of the foreign recipient and therefore constituted an export of services; the departmental demand was not sustainable and the appeal is dismissed.

Service in terms of Section 37C of the Central Excise Act - condonation of delay

Service in terms of Section 37C of the Central Excise Act - Validity of service of the impugned order on the appellant - HELD THAT: - The Department proved dispatch by speed post and subsequent personal delivery through the CGST Division-I, Kota with a dated acknowledgement. The Tribunal accepted the documentary evidence of postal dispatch, return with postal remark, onward transmission to the local office and in person delivery, and held that service was effected in accordance with Section 37C of the Central Excise Act as made applicable. The appellant's denial-based on alleged nonreceipt, contention that the recipient was a minor, and challenge to signature authenticity-was examined and rejected in light of the proved chain of delivery and the appellant's prior conduct and address consistency. The Tribunal found no breach of the statutory service requirements and no reason to disbelieve the Department's evidence. [Paras 4, 11, 12]

Service of the order was validly effected in terms of Section 37C and the Department's proof of service is accepted.

Condonation of delay - Whether the delay in filing the appeal should be condoned - HELD THAT: - The appellant's application for condonation was founded on asserted nonreceipt of the order and on events following a bank communication; however, the Tribunal noted repeated failures by the appellant to engage with earlier proceedings (failure to reply to show cause notice and nonappearance at multiple personal hearings). The Tribunal treated the various explanations for delay as afterthoughts and held that the appellant failed to establish bona fide conduct or sufficient cause. Given the accepted service of the impugned order and the appellant's negligence in pursuing remedies, the Tribunal concluded that condonation was not warranted. [Paras 5, 6, 7, 8, 13]

The application for condonation of delay is rejected and the appeal is dismissed for want of timely filing.

Final Conclusion: The Tribunal upheld the Department's proof of service under Section 37C and, finding no sufficient cause or bona fide explanation for the delay, refused to condone the 318 day delay; the condonation application was rejected and the appeal dismissed.

Invocation of extended period of limitation for service tax - non-invocation of extended limitation in absence of suppression, fraud or collusion - retrospective amendment creating genuine legal ambiguity on levy

Invocation of extended period of limitation for service tax - non-invocation of extended limitation in absence of suppression, fraud or collusion - Extended period under subsection (1) of Section 73 could not be invoked to recover service tax for the disputed period. - HELD THAT: - The Tribunal found that the demand related to renting of immovable property for commercial purposes arose during a period when the scope of levy was the subject of genuine doubt owing to judicial divergence and a subsequent retrospective amendment. The appellant had maintained books of account from which the department issued the show cause notice; there was no material establishing suppression, willful misstatement, fraud or collusion as contemplated in the proviso to subsection (1) of Section 73. In these circumstances, and having regard to the retrospective amendment which created confusion in trade (and consistent with this Bench's earlier reasoning in Commissioner of Service Tax, Mumbai-II vs. Upnagar Shikshan Mandan ), the extended period for confirmation of service tax could not be invoked and the demand confirmed beyond the normal period was unsustainable.

The adjudication beyond the normal period of limitation is not maintainable and the demand confirmed beyond the normal period is set aside.

Final Conclusion: The appeal is allowed on the ground of limitation and the impugned order confirming demands beyond the normal period is set aside in favour of the appellant.

Taxability of statutory regulatory/affiliation fees - activity carried out for consideration - statutory function versus commercial activity - absence of quid pro quo/consideration for service tax - reliance on precedent - HELD THAT:- Since both the sides agree that the issue is decided in favour of the respondent, we would like to refer to the decision of this Tribunal in the case of Registrar M/s University of Kota [2025 (8) TMI 97 - CESTAT NEW DELHI] held that- "..the act of granting, renewing or withdrawing is done in discharge of public duties enjoined by law. Therefore, such acts do not fit into the expression ‘activities carried on for consideration’, more particularly, when they do not have commercial elements, as rightly contended by Mr.Raghuraman. Added, the idea of ‘activities carried on for consideration’ as employed in the definition of service u/s 65B(44) of the Finance Act ordinarily obtains in the realm of freedom of contract and not in the field of public law. Of course, the concept of sovereign function being impertinent, does not factor in the discussion. The function related to affiliation cannot be treated as a ‘bundled service’ under clause (3) of section 66F of the Finance Act, 1994, either. The interests/fines/penalties leviable on account of default also have a thick connect with the fees regularly leviable and therefore, they would partake the character of fees only. In view of all this, the Revenue is not justified in levying Service Tax on the income accruing to the University on account of affiliation during the academic year between 2012-13 and 2016-17. The periodicity of collection of affiliation related fees pales into insignificance. "

Following the decision, we affirm the impugned order. The appeal filed by the Revenue is, accordingly, dismissed.

Relevant date for filing rebate claim is date of payment of service tax - procedural infractions cannot deprive substantive benefits - verification of documentary evidence and correlation lies with Adjudicating Authority

Relevant date for filing rebate claim is date of payment of service tax - The correct temporal point for computing limitation for rebate claims under the Export of Service Rules, 2005 read with Section 11B is the date of payment of service tax and not the date of invoice. - HELD THAT: - The Tribunal applied settled law, relying on the cited decision of the CESTAT Bangalore, to hold that limitation must be reckoned from the date of payment of service tax. While that legal position is finally determined in favour of the appellant, whether the individual rebate claims fall within the prescribed period when computed from the date of payment is a question of fact requiring factual verification and computation by the Adjudicating Authority. [Paras 4, 6]

Limitation is to be computed from the date of payment of service tax; the question whether the claims are within time when so computed is remanded to the Adjudicating Authority for verification.

Procedural infractions cannot deprive substantive benefits - verification of documentary evidence and correlation lies with Adjudicating Authority - The documentary evidence, including correlation between export invoices and FIRCs and the correctness of computation, was not finally adjudicated and must be examined afresh by the Adjudicating Authority; procedural or curable defects cannot be the sole basis for denying the rebate. - HELD THAT: - The Tribunal noted that additional documentary material, including a Chartered Accountant's certificate produced with the written submissions, was not considered by the authorities below. It reiterated the principle that substantive benefits should not be denied for procedural lapses and that examination and verification of documentary evidence, correlation of invoices with FIRCs, and computation methodology fall within the adjudicatory functions of the Adjudicating Authority. In the interest of justice the appellant must be granted an opportunity to place all relevant materials before the Adjudicating Authority for fresh consideration. [Paras 5, 6, 7]

The issues of documentary proof, invoice-FIRC correlation and computation are remanded to the Adjudicating Authority for fresh adjudication after granting the appellant a reasonable opportunity of hearing.

Final Conclusion: The impugned order is set aside to the extent challenged and the matters are remanded to the Adjudicating Authority for fresh adjudication - (i) limitation to be computed from the date of payment of service tax and (ii) documentary evidence, invoice-FIRC correlation and computation to be verified after granting the appellant a reasonable opportunity to be heard; appeals disposed of accordingly.

Overriding effect of Section 26 of the SEZ Act over other tax laws - procedural non compliance cannot defeat SEZ exemption

Procedural non compliance cannot defeat SEZ exemption - overriding effect of Section 26 of the SEZ Act over other tax laws - Whether denial of exemption and confirmation of service tax demand on account of non submission of Form A 2 is sustainable where services were supplied for authorised operations of an SEZ unit - HELD THAT: - The Tribunal held that exemption afforded by Section 26 of the Special Economic Zones Act, 2005 has overriding effect over charging provisions and notification conditions under other tax laws, and therefore failure to comply with procedural formalities under the Finance Act notifications (such as non submission of Form A 2) cannot defeat the substantive entitlement to exemption. The Tribunal relied upon its earlier decisions and the reasoning of higher courts which recognise that Section 26 and the SEZ Rules occupy the field for grant of exemptions to SEZ developers and units and that procedural conditions in general exemption notifications under the Finance Act are redundant insofar as supplies for authorised operations are concerned. The Tribunal further recorded that the appellant had produced Form A 1 and that issuance of Form A 2 was a function of the tax authorities (not within the appellant's control), so that denial of benefit on this procedural ground was not justified. Applying these principles to the facts, the Tribunal concluded that the adjudicating authority erred in denying the notification benefit and confirming the demand. [Paras 9, 12, 13]

Impugned demand set aside in respect of supplies to SEZ unit; exemption benefit upheld notwithstanding non production of Form A 2 and appeal allowed.

Final Conclusion: The Tribunal set aside the adjudicating order confirming service tax demand for the period October, 2013 to March, 2014, holding that the SEZ exemption under Section 26 cannot be denied for procedural non compliance (non submission of Form A 2) and allowed the appeal with consequential relief.

Procedural defect in returning rebate application without pointing out specific deficiencies - non-production of original/duplicate ARE 1 is procedural and not ipso facto fatal if export is otherwise established - limitation for rebate claim relates back to original filing when application was returned for defects

Procedural defect in returning rebate application without pointing out specific deficiencies - Whether the Assistant Commissioner erred in returning the rebate application on the same day without specifying the exact deficiencies in the claim - HELD THAT: - The Court held that the assistant commissioner, upon returning the application dated 29.12.2017, merely referred generally to paragraph 3(b)(i) of Notification No.19/2004 without specifying the particular defects. Part IV of Chapter 8 of the CBEC Manual (Old) required that deficiencies be pointed out collectively so the exporter could cure them within the prescribed time. Returning the application without indicating specific deficiencies amounted to an irregularity because the officer failed to perform the statutory duty to consider the claim and to afford the claimant an opportunity to rectify defects. [Paras 15, 26, 29, 30]

The returning of the claim without pointing out specific deficiencies was irregular and constituted a procedural defect.

Non-production of original/duplicate ARE 1 is procedural and not ipso facto fatal if export is otherwise established - Whether sanctioning of rebate by the Assistant Commissioner despite submission of quadruplicate/duplicate ARE 1 and an indemnity bond was impermissible under Paragraph 3(b)(i) of Notification No.19/2004 - HELD THAT: - Relying on the Division Bench precedent, the Court reiterated that production of original and duplicate ARE 1 forms falls within 'procedure' and is directory rather than an absolute condition for entitlement. If other contemporaneous and supporting documents (shipping bills, mate's receipts, bills of lading, certified triplicate copies, verification by range officer and CENVAT records) establish that the substantive conditions for rebate under Rule 18/Notification are satisfied, the claim cannot be rejected solely on the ground of non production of originals. The Assistant Commissioner examined the documentary matrix (ARE 1 copies, invoices, shipping bills, duty particulars) and the findings that export and duty payment conditions were satisfied were not disturbed on their facts; hence sanctioning the rebate was not illegal. [Paras 20, 21, 23, 24, 25]

The Appellate and Revisional Authorities erred in treating non production of original/duplicate ARE 1 as fatal; the Assistant Commissioner's sanction was sustainable because other documents established the export and payment conditions.

Limitation for rebate claim relates back to original filing when application was returned for defects - Whether the rebate claim was barred by limitation when the appellate/revisional authorities counted limitation from the date of re filing instead of the original lodge date - HELD THAT: - The Court applied its earlier coordinate bench decisions holding that where an original application is filed within the prescribed period but is returned for technical defects (not rejected), a subsequent corrected or re presented application should be treated as a continuous attempt and relate back to the original filing. Given that the initial application dated 29.12.2017 was within time and merely returned for defects, the later re filing did not commence a new limitation period. The Assistant Commissioner correctly held the claim to be within time; the Appellate Authority erred in starting limitation from 26.06.2018. [Paras 10, 31, 32]

The claim was not barred by limitation; the limitation period relates back to the original filing which had been returned for defects.

Final Conclusion: The writ petition succeeds. The court found procedural irregularity in returning the rebate claim without specifying deficiencies, held that non production of original/duplicate ARE 1 is not fatal where other documents establish entitlement, and that the limitation period relates back to the original filing; consequently the Order in Original is revived to the extent of the sanctioned rebate and the impugned appellate and revisional orders are quashed.

Produced or manufactured wholly from the raw materials produced or manufactured in India - technological necessity and scrap as waste - extended period of limitation under section 11A(4) requiring fraud, collusion, wilful mis-statement or suppression of facts with intent to evade - mere audit discovery does not establish suppression or intent to evade

Produced or manufactured wholly from the raw materials produced or manufactured in India - technological necessity and scrap as waste - Availability of benefit of Notification No. 23/2003 to DTA clearances of automotive cylinder heads manufactured from castings and processed ingots made in India despite scrap arising from both imported and indigenous ingots. - HELD THAT: - The Tribunal accepted that the immediate raw material for automotive cylinder heads was castings manufactured in the Foundry Division in India and that processed ingots were also manufactured in India. Following precedents which treat intermediate waste or by products used as distinct raw materials (illustratively Gujarat Ambuja Exports) and authorities holding that scrap arising as a technological necessity is not attributable to specific inputs (illustratively JSW Steel relying on Hindustan Zinc), the Court held that no portion of inputs can be treated as consumed in generation of scrap so as to deny that the finished goods were manufactured wholly from raw materials produced or manufactured in India. Consequently the appellant was entitled to the benefit of the Exemption Notification and was not required to segregate records to trace scrap to imported or indigenous ingots for the purpose of Condition No. 3. [Paras 18, 19, 20, 21, 22]

Benefit of Notification No. 23/2003 is available for the DTA clearances of the automotive cylinder heads manufactured from castings and processed ingots produced in India; denial of exemption on the ground of mixed-origin scrap was unsustainable.

Extended period of limitation under section 11A(4) requiring fraud, collusion, wilful mis-statement or suppression of facts with intent to evade - mere audit discovery does not establish suppression or intent to evade - Whether the extended five year limitation under section 11A(4) was correctly invoked by the Commissioner for the show cause notice covering April, 2012 to April, 2015. - HELD THAT: - The Court analysed section 11A(1) and (4) and the required elements for invoking the extended period (fraud, collusion, wilful mis statement, suppression of facts or contravention with intent to evade). Relying on authorities recognising bona fide disputes of interpretation and the principle that mere operation under self assessment or discovery during audit does not by itself establish suppression or intent, the Court found that the appellant genuinely believed in entitlement to exemption, filed returns and was subject to monitoring by authorities. In that context the Commissioner's reliance on audit discovery and the department's post facto detection did not satisfy the statutory threshold for extended limitation. Therefore invocation of section 11A(4) was not sustainable. [Paras 33, 34, 35, 36, 37]

Invocation of the extended period under section 11A(4) was unjustified and is set aside; the extended period demand cannot be sustained.

Final Conclusion: The impugned orders denying the exemption and invoking extended limitation were set aside: the appellant was entitled to the Notification benefit for the DTA clearances of the automotive cylinder heads manufactured from materials processed in India, and the extended five year limitation under section 11A(4) was not invocable on the facts; both appeals are allowed.

Classification of impugned products as Ayurvedic medicaments - onus on the Revenue to prove products are cosmetics or toiletry preparations - failure to disclose material evidence in show cause notice amounts to mala fides

Classification of impugned products as Ayurvedic medicaments - onus on the Revenue to prove products are cosmetics or toiletry preparations - Whether the goods manufactured by the appellants are dutiable as cosmetics/toiletry preparations or are Ayurvedic medicines falling under Chapter 30 - HELD THAT: - The Tribunal examined the licences, Certificate of GMP and the opinion of the Directorate of ISM Drugs Control produced by the appellants and recorded that these documents showed manufacture of Ayurvedic medicines. The Tribunal applied the settled principle that the burden lies on the Revenue to show that a product falls within a particular Tariff Item, and noted absence of any test reports or other documentary evidence produced by the Revenue to demonstrate that the impugned products are cosmetics or toiletry preparations. Reliance was placed on the legal approach in Sharma Chemical Works that classification depends on the nature and use of the product and that registration/licence and dosage/label information are material. On the facts, the Tribunal concluded that the Revenue did not discharge its burden and that the products are Ayurvedic medicines falling under Chapter 30. [Paras 17, 20]

Products are Ayurvedic medicines under Chapter 30; demands of duty, interest, penalties and confiscation premised on classification as cosmetics/toiletry preparations are unsustainable and set aside.

Failure to disclose material evidence in show cause notice amounts to mala fides - Whether the Show Cause Notice(s) were issued after properly disclosing and relying upon material evidence including the Directorate's opinion - HELD THAT: - The Tribunal found that the Directorate of ISM Drugs Control's opinion and the licences relied upon by the appellants had been obtained by the appellants but were not disclosed or relied on by the Show Cause Notice issuing authority. That non-disclosure was held to demonstrate mala fides in issuance of the Show Cause Notice(s). This procedural defect was taken into account in concluding that the adjudication confirming demands and penalties could not be sustained. [Paras 16, 20]

Non-disclosure of the Directorate's opinion in proceedings showed mala fides; the impugned adjudications based on the defective show cause process are unsustainable.

Final Conclusion: The appeals are allowed; the adjudication confirming duty, interest, penalties and confiscation was set aside after holding the products to be Ayurvedic medicines and finding that the Revenue failed to prove otherwise and that material evidence was not disclosed in the show cause proceedings.

Penalty under Rule 26 contingent on confiscation - personal penalty requires allegation of financial enrichment

Penalty under Rule 26 contingent on confiscation - personal penalty requires allegation of financial enrichment - Penalty under Rule 26 of the Central Excise Rules, 2002 imposed on the individual respondents is unsustainable. - HELD THAT: - The show cause notice did not propose confiscation of the goods. Rule 26 permits imposition of penalty only where the goods are held liable for confiscation; absent any confiscation proposal, the statutory precondition for imposing penalty under Rule 26 is not satisfied. Further, the allegations against the individual respondents are confined to their official positions (Assistant General Manager and Director) and do not include any pleading or finding of personal financial enrichment arising from the alleged evasion. In those circumstances, personal penalty cannot be sustained. The Tribunal noted that the adjudication on classification and limitation as regards the manufacturer was remanded earlier, but that remand does not supply the missing statutory basis for penalising the individuals named in the show cause notice. [Paras 6, 7]

The penalty imposed on the individual respondents is unsustainable and the Revenue's appeals are dismissed insofar as they seek imposition of penalty on those individuals.

Final Conclusion: The Tribunal dismissed the Revenue's appeals insofar as they concerned imposition of penalty on the individual respondents, holding that absence of a confiscation proposal and absence of any allegation of personal financial enrichment precluded penalty under Rule 26.

Procedural rather than substantive nature of time-bound filing condition in exemption notifications - failure to file intimation within prescribed time not fatal to grant of exemption where substantive conditions are fulfilled

Procedural rather than substantive nature of time-bound filing condition in exemption notifications - failure to file intimation within prescribed time not fatal to grant of exemption where substantive conditions are fulfilled - Whether a three day delay in exercising the option/intimation under Para 2D(c) of Notification No.20/2007 CE (for FY 2017 18) is a procedural lapse which disentitles the manufacturer from the exemption and re credit taken. - HELD THAT: - The Tribunal examined Para 2D(c) of Notification No.20/2007 CE and held that the requirement to exercise the option in writing before first clearance is a time bound procedural stipulation. Applying settled precedents (including this Tribunal's decisions on similar notifications and the guidance in Mangalore Chemicals & Fertilizers Ltd.), the Tribunal distinguished substantive eligibility conditions from procedural formalities and concluded that a short delay in filing the intimation is a procedural lapse which, by itself, cannot defeat the substantive benefit of the exemption where the substantive conditions are otherwise satisfied. The Tribunal relied on prior decisions holding that late filing of prescribed statements or intimation (when payment/eligibility is otherwise on record) does not justify denial of the exemption, and applied those principles to the three day delay in this case. Consequently the self credit taken could not be treated as irregular solely for the delayed intimation. [Paras 10, 11, 12]

The three day delay in intimation was held to be a procedural lapse and not fatal to the appellant's entitlement; the self credit could not be denied on that ground.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and allowed the appellant's appeal, holding that the brief delay in filing the intimation under the notification was procedural and did not disentitle the appellant from the exemption and re credit claimed.

Determination of the assessable value - provisional assessment for clearance of Naphtha without payment of duty - raw naphtha converted into duty-paid stock and lost in transit - meaning of ‘place of removal’ - Place of refinery Or Intermediate storage location - assessable value which the Department claimed to be the provisional price at which it was cleared from the refinery i.e. Rs.53,360/- PMT; whereas the appellant claims the transaction value of Raw Naphtha sold to NTPC on the date of its removal i.e. 31.10.2008 from the intermediate storage location and transaction value of the quantity of 1.822 MT lost in transit is Rs.45,470/- PMT being the transaction value at which 2251.860 MT sold to the fertiliser unit.

Assessable value - transaction value - provisional assessment - HELD THAT: - Since the value of the Raw Naphtha could not be determined, the appellant resorted to provisional assessment by execution of bond for the quantity of 2400 MT of Raw Naphtha meant to be transferred to their intermediate storage location at Irimpanam. The consignment was meant to be cleared / sold to one M/s. Indo gulf Fertilisers. But out of the total stock cleared on provisional basis, a quantity of 145.705 MT sold to NTPC at a transaction value of Rs.34,134.03 PMT on 31.10.2008 from the intermediate storage location and balance quantity was cleared to the fertiliser unit of which 1.822 MT was lost during the course of transit. The appellant discharged duty on 145.705 MT of Raw Naphtha adopting the transaction value at which it was sold and for the lost quantity of 1.822 MT, they adopted the price of Rs.45,470/- PMT at which it was cleared to fertiliser unit.

Both the authorities below have committed the error of insisting to adopt the provisional price of Rs.53,360/- PMT at which initially the goods were cleared from their refinery resorting to provisional assessment. The appellant has requested for the provisional assessment making a specific submission that the actual price could be ascertained only when it would be cleared / sold from their intermediate storage location at Irimpanam to their customers.

Therefore, the price at which the goods are sold at Rs.34,134/- PMT & Rs.45,470/- to be considered as the transaction value in determining the assessable value of the goods cleared to M/s. NTPC and M/s. Indo Gulf Fertilisers respectively from their intermediate storage location at Irimpanam, the provisional price of Rs.53,360/- PMT cannot be adopted. In the result, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.

Final Conclusion: The impugned demand based on the provisional refinery price is set aside; the transaction values at the time of removal from the intermediate storage location are to be adopted for the sold and lost quantities, and the appeal is allowed with consequential relief as per law.

Taxability of goods involved in works contract - transformation and marketability tests - measure of tax on goods at time of incorporation in works - scope of reassessment under Section 31 BVAT

Taxability of goods involved in works contract - transformation and marketability tests - measure of tax on goods at time of incorporation in works - Whether the fabricated steel superstructure/triangulated girders transferred in the execution of the works contract are taxable as unspecified goods (and not as specified 'iron and steel') and whether the cost of fabrication, transportation, launching and erection forms part of the taxable value. - HELD THAT: - The Court held that the assessing authority rightly treated the fabricated steel superstructure/triangulated girders as a commodity distinct from the raw structural steel for the purposes of tax. Applying the established law (including the principles in Gannon Dunkerley and Builders' Association of India), the taxable event is the transfer of property in goods involved in a works contract and the value to be taxed is the value of the goods at the time of incorporation in the works. The court found on the record that the petitioner had the fabrication, assembly, transportation and erection performed (including through a sub-contractor), and admitted those expenses were incurred in conversion of structural steel into steel structure. The Court applied the transformation and marketability tests and concluded that fabrication produced a commercially distinct and marketable commodity (steel superstructure/triangulated girder) whose value (including embedded fabrication/transport/launching costs) could be the measure for levy. Consequentially the assessing officer's rejection of the bulk of the claimed deduction for fabrication/related work was upheld and taxation at the rate applicable to unspecified goods as determined in the assessment was sustained. [Paras 71, 72, 87, 88, 89]

The impugned assessment treating the fabricated steel superstructure/triangulated girders as a distinct taxable commodity and rejecting the major part of the claimed deduction for fabrication and related costs is sustained.

Scope of reassessment under Section 31 BVAT - Whether the reassessment proceedings initiated under Section 31 of the BVAT Act were invalid for want of recorded satisfaction or were otherwise beyond jurisdiction because the petitioner had filed returns and disclosed particulars. - HELD THAT: - The Court considered the petitioner's contention that Section 31 cannot be invoked merely to call for verification of deductions and that the notice did not record the prescribed satisfaction. Examining the material in the impugned order and the history of earlier assessments, the Court found that the assessing authority had sufficient basis to proceed under Section 31 and that the exercise was not shown to be a mere change of opinion. The Court also observed that principles of alternative remedy did not warrant dismissal given the stay and pendency. On these facts the challenge to the Section 31 proceedings failed. [Paras 27, 49, 50, 61, 87]

The reassessment under Section 31 BVAT was not vitiated for want of jurisdiction or recorded satisfaction; the procedural challenge is rejected.

Final Conclusion: Writ petitions challenging the assessment and demand (including classification of fabricated steel superstructure as unspecified goods and the reassessment under Section 31 BVAT) are without merit; the impugned order and demand are upheld and the writs are dismissed.

Limitation for reassessment u/s 40 of the Jharkhand Value Added Tax Act, 2005 - Reassessment initiated pursuant to audit/Comptroller & Auditor General objection - Strict construction of taxing statutes - Record-retention period under Rule 38(3) of the JVAT Rules, 2005 - Question of limitation as a jurisdictional issue permitting writ remedy - HELD THAT:- . It has been contended by learned counsel for the respective petitioners that the issue involved in all these writ applications has been decided by this Court in Jharkhand Ispat Pvt. Ltd. Versus State of Jharkhand & Anr. [2019 (12) TMI 1700 - JHARKHAND HIGH COURT] In the said case, the issue was as to whether the proceeding for re-assessment initiated beyond the period prescribed under the Act, is barred by limitation or not and thus, consequently the impugned notice initiating the proceeding, is void ab-initio or not and this court quashed and set aside the impugned notices of re-assessment holding therein that the same was barred by limitation.

Respondents could not dispute the fact and submits that the issue involved in these writ applications is covered by the judgment passed by this court in the above referred case and the same has attained finality.

Having heard learned counsel for the parties and after going through the impugned orders and also the judgment passed by this Court in Jharkhand Ispat Pvt. Ltd., it appears that the issue involved in this writ application is squarely covered by the aforesaid judgment.

Having regards to the settled proposition of law as laid down in the referred case, we see that in W.P.(T); Tata Chemicals Limited, relates to the year 2006-07, the reassessment order could have been passed latest by 31.03.2012 but the same was passed on 17.06.2014, therefore, the same is barred by limitation u/s 40(4) of the Act.

Limitation for taking cognizance under Sections 468 and 469 read with Section 473 of the Code of Criminal Procedure - Territorial jurisdiction - postponement of issue of process under Section 202 of the Code of Criminal Procedure and its interplay with Section 200 - status of complaints filed by public servants and the proviso to Section 200 CrPC - cognizance by an Inspector under Section 32 of the Drugs & Cosmetics Act - vicarious liability of companies and persons in charge under Section 34 of the Drugs & Cosmetics Act

Limitation for taking cognizance under Sections 468 and 469 read with Section 473 of the Code of Criminal Procedure - Whether the complaint was barred by limitation or was filed within the period prescribed by Sections 468 and 469 read with Section 473 CrPC - HELD THAT: - The Court held that the period of limitation commences under Section 469(1)(c) when the identity of the offender becomes known to the competent authority or investigating officer. The sequence of verification/investigation by the Drugs Inspector, commenced after the private complaint, resulted in the identity of the accused being established on 18.04.2006; hence the limitation period for the offence punishable under Section 27(d) of the Act (attracting three years under Section 468(2)(c)) ran from that date. Although the formal complaint was filed on 20.01.2009, the Court found that the exercise culminating in identification was completed within three years and therefore the bar of limitation did not apply; the High Court erred in treating limitation as having commenced from 21.10.2005. [Paras 31, 33, 36, 37]

Limitation did not bar cognizance; the appeal is allowed on this point and the High Court's computation of limitation from 21.10.2005 is set aside.

Postponement of issue of process under Section 202 of the Code of Criminal Procedure and its interplay with Section 200 - status of complaints filed by public servants and the proviso to Section 200 CrPC (as applied in Cheminova) - cognizance by an Inspector under Section 32 of the Drugs & Cosmetics Act - Whether the Magistrate was bound to postpone issuance of process under Section 202(1) CrPC and conduct the statutory inquiry where the complaint was filed by a public servant Inspector - HELD THAT: - The Court construed Section 202(1) harmoniously with Section 200 which exempts examination of complainant and witnesses when a public servant acting in official duty has made the complaint. Relying on the principle recognised in Cheminova [2021 (8) TMI 1402 - SUPREME COURT], the Court held that complaints filed by authorised public servants (here, the Drugs Inspector acting under Section 32 of the Act) stand on a different footing and do not mandatorily attract an inquiry under Section 202(1) in the manner contended by the respondents. The facts showed that the complainant was an Inspector authorised to institute prosecution under the Act and that the accused who sold the medicine to the private purchaser resided within the Magistrate's local limits; having regard to these circumstances and the established precedent, the High Court's quashing for non-compliance with Section 202 was incorrect. [Paras 38, 39, 40, 41, 43]

The High Court was wrong to quash the complaint on the ground of non-compliance with Section 202(1); the order taking cognizance and issuing summons is held to be valid.

Vicarious liability of companies and persons in charge under Section 34 of the Drugs & Cosmetics Act - Whether the Directors alleged to be in charge of the company could be charged as persons liable under Section 34 of the Act at the stage of quashing proceedings - HELD THAT: - The Court observed that whether the Directors were 'in charge of' and 'responsible to the company for the conduct of the business of the company' are questions of fact. It held that the High Court's conclusion on Section 34 was premature at the quashing stage. Such factual determinations must be left to the trial court for evidence and appropriate adjudication. [Paras 54, 57, 59]

The High Court's quashing on the ground of insufficient compliance with Section 34 was set aside; questions of vicarious liability are to be decided by the trial court.

Final Conclusion: The appeals are allowed; the High Court's order quashing the complaint is set aside. The Order taking cognizance and issuing summons is upheld as valid; fresh summons shall be issued and, where necessary, the person(s) in charge of the respondents' companies at the relevant time shall be arrayed as accused in place of the deceased Managing Director. The trial court shall proceed to decide the factual issues, including those under Section 34 of the Act, in accordance with law.

Sale confirmation nullity for non-deposit of purchase money - mandatory auction condition under Rule 107(11)(g) and (h) of the Maharashtra Co-operative Societies Rules, 1961 - revisionary power under Section 154 of the Maharashtra Co-operative Societies Act, 1960 - remedies under Rule 107(13) and (14) of the 1961 Rules - waiver of procedural requirement - re-sale pursuant to Rule 107(11)(j) - execution of a Co-operative Court award as a decree

Execution of a Co-operative Court award as a decree - Legal representatives of the judgment debtor could not challenge the executory effect of the Co operative Court award which had attained finality insofar as the award rendered the judgment debtor's property liable to attachment and sale. - HELD THAT: - The Co operative Court passed an ex parte award which, under Section 98 of the 1960 Act, operates as a decree of a Civil Court and is executable in the same manner. The award made the partners, including Panditrao Borse, jointly and severally liable and thus the property of the judgment debtor could be attached and sold to realize the decretal amount. The prior existence of a condition in the original allotment (claimed bar on mortgage without government permission) did not prevent the property's attachment and sale in execution of a money decree against the judgment debtor. Accordingly, validity of the award or its executory effect was not open to collateral challenge once the order rejecting the belated application to set aside the award had attained finality. [Paras 21, 22, 23]

The award operated as a money decree making the property of the judgment debtor liable to sale; the objection to mortgage/allotment conditions was irrelevant to execution of the decree.

Revisionary power under Section 154 of the Maharashtra Co-operative Societies Act, 1960 - remedies under Rule 107(13) and (14) of the 1961 Rules - Revision under Section 154 was maintainable against the confirmation of sale notwithstanding availability of remedies under Rule 107, and the Revisional Authority was not deprived of power merely because the aggrieved party had other rule based remedies. - HELD THAT: - Section 154 confers broad power on the State Government or Registrar to call for and examine records of proceedings where a subordinate officer has passed an order and no appeal lies, to satisfy itself as to legality, propriety and regularity, and to modify, annul or reverse such orders. Remedies under sub rules (13) and (14) of Rule 107 are applications to set aside sale within 30 days subject to deposits and do not curtail the statutory revisional power. Sub section (2A) requiring deposit applies to revisions against recovery certificates under Section 101/105 and does not automatically apply to a revision directed at sale confirmation. Hence the revisional forum could entertain revision against confirmation of sale; whether the particular revisional authority to which revision lies depends on the subordinate officer is a separate question which was left open as immaterial if the sale confirmation is void. [Paras 36, 37, 38, 39, 40]

Revision under Section 154 was maintainable to examine and annul the confirmation of sale; absence of recourse to Rule 107 remedies did not strip revisional jurisdiction.

Mandatory auction condition under Rule 107(11)(g) and (h) of the Maharashtra Co-operative Societies Rules, 1961 - sale confirmation nullity for non-deposit of purchase money - waiver of procedural requirement - Failure to deposit the balance purchase money within the period stipulated by Rule 107(11)(h) rendered the sale confirmation a nullity; the requirement is mandatory, serves public purpose beyond creditor's benefit, and was not shown to have been waived by the judgment debtor or heirs. - HELD THAT: - Clauses (g) and (h) of sub rule (11) of Rule 107 mandate deposit of 15% at auction and payment of the remainder within fifteen days (as applicable at the relevant time), with clause (i) prescribing forfeiture and clause (j) providing for resale. The Recovery Officer has discretion only to extend time for payment of stamp duty, not to extend time for payment of the balance purchase money. This Court's precedent in Shilpa Shares & Securities establishes that non payment of full purchase money within the prescribed period vitiates the sale as a nullity. Unlike Rule 9(4) of the Enforcement Rules considered in Sri Siddheshwara, Rule 107 contains no pari materia provision for written extension by the parties. The mandatory nature of these provisions is reinforced by their public purpose objective to preserve integrity of auctions and prevent manipulation by non serious bidders. No evidence of waiver by the debtor or heirs was shown; therefore the High Court correctly held the confirmation void. [Paras 51, 52, 53, 54, 55]

Clauses (g) and (h) of Rule 107(11) are mandatory; non deposit of the balance within the stipulated period rendered the confirmation of sale void and the High Court's finding to that effect is upheld.

Condition of original allotment and its effect on auction - Whether the violation of the original allotment condition proscribing mortgage without government permission rendered the auction void was left open for adjudication in an appropriate forum and was not decided. - HELD THAT: - The Court expressly held that having declared the sale confirmation void for breach of Rule 107(11)(g) and (h), any question whether the property could have been validly mortgaged or sold because of a condition in the allotment was rendered academic for the purposes of this judgment. The Court declined to examine that issue and kept it open for determination in appropriate proceedings later. [Paras 56]

The question was not decided and is left open for consideration in appropriate proceedings.

Re-sale pursuant to Rule 107(11)(j) - Appropriate relief on finding the sale void is to set aside the auction sale and confirmation and to direct a fresh auction under Rule 107(11)(j) with refund of amounts deposited to the auction purchaser with interest; the High Court's order was modified accordingly. - HELD THAT: - The auction purchaser had deposited the total consideration in terms permitted by the Recovery Officer and should not be penalized for the Recovery Officer's fault. Rule 107(11)(j) contemplates resale after default and fresh proclamation. Balancing interests, the Court set aside the auction sale and the confirmation dated 18.03.2005, directed a fresh auction in terms of Rule 107(11)(j) for realization of the award, and ordered the Bank to refund the amount deposited by the auction purchaser with interest at 6% per annum from date of deposit until repayment. The order preserved rights of the Bank and judgment debtor to arrive at a compromise and to present it to the Recovery Officer. [Paras 57, 58, 59]

Auction sale and confirmation set aside; property to be put to fresh auction under Rule 107(11)(j); deposit by purchaser to be refunded with interest; High Court order modified and appeals disposed of accordingly.

Final Conclusion: The Court upheld that the Co operative Court award was executable as a decree and that revision under Section 154 was maintainable to examine confirmation of sale. It affirmed that non payment of the balance purchase money within the period prescribed by Rule 107(11)(g) & (h) renders the sale confirmation void. The sale and its confirmation were set aside and the property directed to be put to fresh auction under Rule 107(11)(j); the auction purchaser's deposited amount is to be refunded with interest, and other rights (including compromise between parties) are preserved.

Power of review of quasi judicial authorities - statutory conferment of review jurisdiction - limits of executive authority to vest judicial powers - finality of vesting orders under land reform statutes - scope of review under Order XLVII Rule 1 CPC - prohibition on reopening matters once finally decided under the WBEA scheme - separation of powers and independence of the judiciary

Power of review of quasi judicial authorities - statutory conferment of review jurisdiction - limits of executive authority to vest judicial powers - separation of powers and independence of the judiciary - Whether the B.L. & L.R.O. (Revenue Officer) had jurisdiction to review and set aside the vesting order dated 07.10.1971 by the review order dated 07.05.2008. - HELD THAT: - The Court held that the power of review is not inherent and must be expressly or necessarily impliedly conferred by statute. Section 57A's grant that authorities may be invested with the powers of a Civil Court does not, without a clear statutory provision, operate as a blanket conferment of the power of review on executive quasi judicial officers. The proviso to Section 57B(3) which bars a Revenue Officer from re opening matters already enquired into or decided by the State or any authority under the Act indicates that the legislative scheme does not contemplate reopening concluded vesting determinations. Allowing executive authorities to exercise an unrestricted review power would impermissibly blur the constitutional separation between executive and judicial functions and undermine the finality of adjudications under the WBEA Act. Consequently, the 2008 review order purporting to set aside the 1971 vesting order was without jurisdiction and void ab initio; the Tribunal correctly quashed it and restored the 1971 vesting order. [Paras 56, 57, 91, 92, 93]

The Revenue Officer lacked jurisdiction to review the 1971 vesting order; the 07.05.2008 review order is void and the Tribunal's quashing of that order is restored.

Scope of review under Order XLVII Rule 1 CPC - finality of vesting orders under land reform statutes - prohibition on reopening matters once finally decided under the WBEA scheme - Whether, even if the Revenue Officer had jurisdiction, the review of the 1971 vesting order satisfied the limited grounds for review (discovery of new evidence, mistake apparent on the face of the record, or any other sufficient reason). - HELD THAT: - The Court applied the narrow legal tests for review: discovery of new and important matter not within party's knowledge despite due diligence; mistake apparent on face of record; or other sufficient reason analogous to these grounds. The record shows the respondent had multiple opportunities in 1971 to produce documents and expressly said it had nothing further to produce; the material relied upon in 2008 either post dated the vesting proceedings or was in the respondent's custody and not shown to be newly discovered despite due diligence. There was no patent error on the face of the 1971 record; the findings were based on the respondent's failure to prove the statutory precondition in Section 6(1)(j). The State's later consideration of policy or economic advantages (amicable settlement, employment generation) are extraneous to the strictly circumscribed legal grounds for review and do not constitute 'any other sufficient reason.' Accordingly, even on merits the review could not be sustained. [Paras 64, 66, 71, 73, 81]

The 2008 review did not satisfy the limited legal grounds for review and therefore fails on merits; the vesting order of 07.10.1971 remains valid.

Final Conclusion: The appeal is allowed. The High Court's judgment of 17.05.2012 is set aside; the Tribunal's order of 31.03.2010 quashing the 07.05.2008 review order is restored and the 1971 vesting order continues to operate in accordance with law.

Discharge of surety by variance in terms of contract - Discharge of surety by creditor's act or omission impairing surety's remedy - Whether, respondents are entitled to the benefit under Section 139 of the Act or they are liable as sureties in terms of Section 133 of the Act?

Discharge of surety by variance in terms of contract - Discharge of surety by creditor's act or omission impairing surety's remedy - Extent of sureties' liability where principal debtor overdrew beyond sanctioned cash credit limit and whether discharge arises under Section 133 or Section 139 of the Indian Contract Act, 1872. - HELD THAT: - The Court examined Sections 133 and 139 of the Act and the authorities applying them. Section 133 discharges a surety as to transactions subsequent to any variance in the principal contract made without the surety's consent; it does not operate to discharge the surety retrospectively for transactions prior to the variance. Section 139 discharges a surety only where the creditor's act or omission is inconsistent with the surety's rights and such act or omission impairs the surety's eventual remedy against the principal debtor. Applying these principles to the undisputed facts - the sureties had guaranteed liability to the extent of the originally sanctioned sum and the principal debtor later overdrew amounts in excess without the sureties' knowledge - the Court held that the variation (overdrawal) discharged the sureties only in respect of transactions subsequent to that variance under Section 133. There was no finding that the creditor's conduct had impaired the sureties' eventual remedy against the principal debtor, so Section 139 did not apply. Accordingly, the sureties remain liable to the extent of the original sanctioned amount with applicable interest but are not liable for the excess withdrawals made thereafter. [Paras 3, 4, 7]

Sureties are liable up to the original sanctioned cash credit amount and are discharged only in respect of transactions subsequent to the variance; Section 133 governs the present case and Section 139 is inapplicable.

Final Conclusion: The appeal is allowed: the High Court's conclusion that guarantors are either liable for the entire debt or not at all is incorrect; guarantors remain liable to the extent of the original sanctioned amount and are discharged only as to excess withdrawals made thereafter. Parties to bear their own costs.

Pre-award interest barred by contract - principles applicable to pre-award or pendente lite interest - principle of ejusdem generis - modification of post-award interest rate - judicial interference under Sections 34 and 37

Pre-award interest barred by contract - The arbitral tribunal was not justified in awarding pre-award/pendente lite interest (or amounts in the nature of interest) in respect of Claim Nos. 1, 3 and 6 in view of the contractual bar contained in Clause 16(3) read with Clause 64(5) of the GCC and Section 31(7)(a) of the Act. - HELD THAT: - The Court analysed Clause 16(3) (which states that no interest shall be payable upon earnest money, security deposit or amounts payable to the contractor under the contract) and Clause 64(5) (which bars interest on money payable till the date the award is made) in light of Section 28(3) and Section 31(7)(a) of the Arbitration and Conciliation Act, 1996. Applying precedent, including Bright Power Projects [2015 (7) TMI 256 - SUPREME COURT] and Manraj Enterprises [2021 (11) TMI 728 - SUPREME COURT], the Court held that the statutory scheme subordinated the arbitrator's power to the contract and that the expression "amounts payable to the contractor under the contract" is wide and unambiguous and cannot be read down by ejusdem generis. The tribunal therefore erred in awarding pre-award/pendente lite interest even if styled as 'compensation', and such awards are contrary to the agreement and liable to be set aside. The Court further noted that the tribunal itself had in parts treated interest as inadmissible under Section 31(7)(a) and Clause 64(5), but nonetheless awarded pendente lite interest in respect of the specified claims, which attracts interference under Sections 34 and 37 of the Act. [Paras 45, 46, 52, 53, 61]

Pre-award/pendente lite interest awarded by the Arbitral Tribunal in respect of Claim Nos. 1, 3 and 6 is set aside as being contrary to the contractual bar.

Post-award interest entitlement under Section 31(7)(b) - modification of post-award interest rate - The tribunal was justified in awarding post-award interest, but the rate fixed by the tribunal (12% per annum) was modified to 8% per annum from the date of the award till realization. - HELD THAT: - The Court distinguished pre-award interest from post-award interest: Section 31(7)(b) entitles a successful party to post-award interest from the date of the award until payment unless the award otherwise directs, and this entitlement is not contractually waivable by implication. Clause 64(5) bars interest only till the date of the award and does not operate to exclude post-award interest. The tribunal's conditional grant of post-award interest as a deterrent to delay was therefore within the statutory framework. However, the tribunal assigned a 12% post-award rate without reasons; having regard to the statutory benchmark and the Court's power to moderate post-award interest (as recognised in recent authority), the Court considered 12% excessive and reduced the rate to 8% per annum from the date of award until realization. [Paras 57, 58, 59, 60, 61]

Post-award interest is payable but the rate is reduced from 12% to 8% per annum from the date of the award until realization.

Judicial interference under Sections 34 and 37 - The Commercial Court and the High Court erred in upholding the arbitral award insofar as they failed to interfere with the tribunal's award of pre-award interest and in not modifying the post-award interest rate; appellate interference under Sections 34 and 37 was warranted on these points. - HELD THAT: - The Court held that the lower courts did not adequately appreciate that the tribunal's grant of pre-award/pendente lite interest violated an express contractual bar, which warranted interference even within the limited scope of Sections 34 and 37. Similarly, the lower courts failed to address the absence of reasons for the 12% post-award rate, a matter the Court found justifies modification under the statutory power to adjust post-award interest in appropriate cases. Consequently, both courts' orders were set aside to the extent indicated. [Paras 53, 61, 62, 63]

The orders of the Commercial Court and the High Court are set aside insofar as they upheld the grant of pre-award interest and the unreasoned 12% post-award rate; appropriate relief is granted as detailed above.

Final Conclusion: The appeal is partly allowed: the arbitral award is set aside insofar as it grants pre-award/pendente lite interest for Claim Nos. 1, 3 and 6; the award is affirmed insofar as it orders post-award interest, subject to a reduction of the post-award rate from 12% to 8% per annum from the date of the award until realization; the impugned High Court and Commercial Court orders are set aside to that extent.

Transferee pendente lite - protections against transferees pendente lite under Order XXI Rule 102 of the Code of Civil Procedure - enforcement of an arbitral award as a decree - doctrine of lis pendens - burden on a post-decree purchaser to prove purchase for value without notice - SARFAESI Act proceedings do not extinguish other claims against the judgment-debtor - HELD THAT:- The arbitral proceeding was instituted in 1999, and the award is dated 11.06.2001. Under Section 36 of the Arbitration and Conciliation Act, 1996, an arbitral award is enforceable in the same manner as if it were a decree of a court, essentially, a deemed decree. Order XXI Rule 102 of the CPC explicitly states that the protections available to bona fide claimants under Rules 98 and 100 do not apply to a transferee pendente lite. A transferee pendente lite is defined as someone to whom the property is transferred after the institution of the suit in which the decree was passed. The suit, i.e., the arbitration proceeding, was instituted in 1999, and the Appellant purchased the property on account of a sale deed dated 23.04.2015. Since the transfer occurred after the institution of the proceedings and the passing of the award, the Appellant is a transferee pendente lite/post arbitral award purchaser, and is barred by Order XXI Rule 102 from resisting the execution.

The EP has been filed before the Court of Principal District Judge, Coimbatore, and was transferred to Tirupur. The transferee court, within whose jurisdiction the properties are situated ordered attachment for realisation of the arbitral award dated 11.06.2001. The Appellant presents the case as a third-party stranger. We may not hasten to conclude that there is fraud between the Appellant and Respondent No. 2 in the transfer of the EP Schedule Properties by sale deed dated 23.04.2015. But the non-production of tripartite agreement, which is the genesis for discharging the claim of ICICI Bank, as has been rightly held by the Executing Court, enables this Court to safely conclude that the sale in favour of Appellant, even if for consideration cannot be without notice of the existing liability of the Company/Respondent No. 2. The recovery proceedings under SARFAESI Act are independent and does not give any shield of protection to other claims against the Judgment Debtor/Borrower in default. In the circumstances of the case, we reject the argument that the sale in favour of the Appellant is without notice.

Whether the sale in favour of the Appellant can be brought within the purview of pendente lite, given that the arbitral award is for the recovery of money. - HELD THAT:- It is a well-worn proverb in litigation, echoing the Privy Council’s century-old observation, that the true difficulties of a litigant begin only after they have obtained a decree. It is generally stated that a suit may take 5 years to conclude, but its execution takes 10 years. Order XXI of the CPC was comprehensively amended in 1976 specifically to cure this mischief, operating as a self-contained code that strictly bars separate suits (under Section 47, Rule 92(3), and Rule 101) and imposes rigid limitation periods for raising objections. If the argument of the appellant is accepted allowing pendente lite purchasers or third parties to bypass these strict procedural safeguards and institute separate suits or raise belated objections long after the execution processes (like attachment and sale) have advanced, it would completely derail the statutory machinery. Judgment-debtors would be incentivized to systematically defeat decrees by transferring properties or planting surrogate objectors to initiate endless collateral litigation. Consequently, execution proceedings would not merely take 10 years, but would get trapped in an infinite loop and practically never get completed, reducing the hard-won decrees of competent courts to mere “paper tigers.”

This Court emphasized in Jini Dhanrajgir v. Shibu Mathew [2023 (5) TMI 1484 - SUPREME COURT],that winning a case is meaningless unless the winner actually gets the relief they sought. We need a shift in mindset: the goal of the legal system should not just be to dispose of cases, but to ensure that the litigant enjoys the reliefs. The provisions in the CPC must be employed to secure actual relief, not just a formal decree. We must ensure that the legal process results in justice not just appearing to be done, but justice actually being done.

To sum up, we note that the Appellant is a purchaser post-arbitral award for recovery of the amount. The execution proceeding was pending when the sale deed was entered into between Respondent No. 2 and the Appellant. Moreover, the Appellant failed to discharge the onus on the sale being without notice of the existing claim. The arbitral award remains unrealised till date. Therefore, in the circumstances of this case, and by following the ratio in Danesh [2025 (12) TMI 1794 - SUPREME COURT], we hold that the claim petition of the Appellant is rightly dismissed by the courts below.

Thus, we agree with the order impugned, and the Civil Appeal fails and is dismissed. The executing court disposes of Execution Proceedings within two months from today.

Negotiable Instruments Act - Dishonour of cheque - Application of mind by Magistrate at summoning stage - sufficient ground for proceeding by considering the complaint - lack of reasons or mechanical issuance against a non drawer - vicarious liability arising under section 141 - liability under section 138 of the Negotiable Instruments Act arising before CIRP/liquidation.

Application of mind by Magistrate at summoning stage - prima-facie satisfaction for issuance of process - Validity of the impugned summoning order dated 23.08.2018 under section 138 NI Act challenged as non-speaking and mechanical - HELD THAT: - The court examined whether the learned Magistrate's summoning order sufficiently reflected application of mind and prima-facie satisfaction. While recognising the settled law that a Magistrate must apply his mind and that the order need not contain detailed reasons, the Court noted that the impugned order omits explicit narration of how a prima-facie case against the petitioner-company was made out. Having perused the complaint, the affidavit, the original cheque, the cheque dishonour memo and the statutory notice, the Court concluded that, despite the absence of detailed reasoning in the summoning order, interference was not warranted in the facts of this case. The Court therefore refrained from setting aside the summoning order and held that the material on record supports continuation of proceedings at the trial stage. [Paras 20, 21, 22]

Summoning order not interfered with; petition dismissed insofar as challenge to summoning order is concerned.

Liability under section 138 of the Negotiable Instruments Act arising before CIRP/liquidation - Effect of CIRP and subsequent liquidation on alleged criminal liability under section 138 NI Act - HELD THAT: - The Court recorded that the cheque was issued and dishonoured well before initiation of CIRP and liquidation. The liability under section 138, as may be determined at trial, arose prior to the CIRP and liquidation; whether such liability is affected by subsequent insolvency or liquidation proceedings must be considered in the trial in light of the IBC provisions including sections 33(5) and 35(1)(k). Consequently, the fact that CIRP and liquidation occurred after issuance and dishonour of the cheque does not, at this stage, preclude criminal proceedings. [Paras 20]

Question of impact of CIRP/liquidation on alleged s.138 liability to be considered in trial; CIRP/liquidation did not warrant quashing of proceedings at this stage.

Prima-facie satisfaction for issuance of process - Continuation or vacatur of interim stay of proceedings granted by this Court on 15.07.2024 - HELD THAT: - The Court found no basis to continue the interim protection previously granted, having concluded that the summoning order should not be interfered with on the present record. In view of the foregoing conclusions that materials prima facie supported issuance of process and that issues arising from insolvency/liquidation require trial consideration, the Court vacated the stay that had been directed by its earlier order. [Paras 21, 23]

Stay of proceedings qua the petitioner-company vacated.

Final Conclusion: The petition under Section 482 Cr.P.C. is dismissed; the High Court refrained from interfering with the Magistrate's summoning order and vacated the interim stay of proceedings previously granted.