TaxTMI Updates e-Newsletter
Mar 07,2026

Validity of a single show cause notice under Section 74 of the CGST Act that aggregates multiple financial years/tax periods - consolidation of assessment periods -fraudulent availment to permit consolidation - independent operation of year wise statutory limitation.

Consolidation of tax periods in a single show cause notice - independent operation of year wise statutory limitation - HELD THAT: - The Court held that the statutory scheme of GST assesses tax with reference to specific tax periods linked to returns for each financial year and that Sections 73(10) and 74(10) prescribe separate limitation periods running year by year. Aggregating different financial years into a single show cause notice would collapse distinct tax periods having different due dates and limitation timelines, and thereby contravene the year wise structure of the Act. The Court relied upon and followed earlier Division Bench decisions which interpreted the Act to require assessment and recovery to be carried out with reference to the relevant financial year and its specific limitation period, concluding there is no scope in Section 74 for consolidating various financial years/tax periods into one notice. [Paras 4, 12]

A show cause notice under Section 74 that clubs multiple financial years/tax periods is not permissible; the impugned consolidated notice is quashed.

Fraudulent availment to permit consolidation - consolidation of tax periods in a single show cause notice - HELD THAT:- The Court rejected the contention that fraud allegations create an exception allowing clubbing of years. While fraud affects the limitation period applicable (the show cause notice in fraud cases may be issued within five years for the particular financial year), the statutory scheme does not create any provision authorising consolidation of distinct tax periods even where fraudulent availment is alleged. The respondents therefore cannot rely on the allegation of fraud to subsume different financial years into a single notice, and must issue notices in strict conformity with the year wise provisions of Section 74. [Paras 8]

Fraudulent availment of input tax credit does not justify issuing a consolidated multi year show cause notice; such consolidation is impermissible.

Consolidation of tax periods in a single show cause notice - HELD THAT:- Having found the consolidated notice impermissible, the Court quashed the notice but granted the respondents liberty to re issue notices strictly in terms of Section 74 for the relevant financial years if there is no other legal impediment. The Court also afforded liberty to revive proceedings should higher courts subsequently overturn the controlling precedents relied upon by this Court. [Paras 17]

The impugned consolidated show cause notice is quashed; respondents may re issue notices year wise in conformity with Section 74 and may revive the petition if higher fora alter the binding law.

Final Conclusion: The consolidated show cause notice issued under Section 74 for financial years 2018-19 to 2022-23 is impermissible and is quashed; fraudulent availment allegations do not permit clubbing of years, but the revenue may re issue notices strictly in terms of Section 74 for each relevant financial year and may seek revival of the challenge if higher courts modify the controlling precedent.

Validity of a single show cause notice consolidating multiple financial years/tax periods under Section 74 of the CGST Act - fraudulent availment of input tax credit - limitation provisions in Sections 74(10) and 73(10) operate with reference to specific tax periods tied to the filing of returns.

Consolidation of tax periods in show cause notice under Section 74 - HELD THAT: - The Court held that the statutory scheme of the CGST Act treats each financial year as a distinct tax period tied to the filing of returns, with separate limitation periods for demand and recovery. Sections 73(10) and 74(10) prescribe time limits running year by year, so aggregating different financial years with different due dates and limitation timelines in a single show cause notice is impermissible. The Court further held that the allegation of fraudulent availment of input tax credit does not create an exception enabling clubbing of multiple years into one consolidated show cause notice; the only consequence of fraud is the applicability of the longer limitation period where statutorily provided, but it does not authorise collapse of distinct tax periods into one notice. The Court applied these principles to the impugned notice issued for the period stated, finding that the respondents could not rely on the allegation of fraud to justify consolidation and thus the notice was invalid to the extent it consolidated multiple years. As a consequential and limited relief, the Court quashed the impugned consolidated show cause notice but granted liberty to the respondents to re-issue notice strictly in terms of Section 74, respecting the year-wise structure and limitation regime of the Act. [Paras 10, 14, 19]

The consolidated show cause notice was quashed for impermissible clubbing of multiple financial years; respondents may re-issue notices, if appropriate, strictly in terms of Section 74 and its year-wise limitation regime.

Final Conclusion: The petition is partly allowed: the consolidated show cause notice dated 10/01/2025 (relating to September, 2020 to July, 2023 - Financial years 2020-21 to 2023-24) is quashed for impermissible aggregation of tax periods; respondents retain liberty to issue notices conforming to the statutory year-wise scheme and limitation provisions.

Blocking of Input Tax Credit under Rule 86A - competence to block input tax credit by authorised officer - right to representation and hearing before final order.

Blocking of Input Tax Credit under Rule 86A - Validity of the impugned blocking of the petitioner's Input Tax Credit for the tax period 01.10.2025 to 31.12.2025 - HELD THAT:- The Court examined the challenge to the blocking of the petitioner's Input Tax Credit in the Electronic Credit Ledger under Rule 86A and found that the blocking arose after an inspection and recorded statements of the petitioner's Managing Director suggesting availment of credit on blocked invoices. In that factual backdrop the Court held that the challenge to the blocking could not be sustained. The Court also relied upon reasoning in an earlier Madurai Bench order and its Division Bench affirmation to conclude that, on the material before it, the impugned action fell within the regulatory scheme and could not be interfered with by this writ petition. [Paras 3, 5, 6]

The challenge to the blocking of Input Tax Credit for the period 01.10.2025 to 31.12.2025 is dismissed.

Competence to block input tax credit by authorised officer - HELD THAT:- The Court considered the contention that only an Assistant Commissioner or a senior officer could block credit under Rule 86A. Relying on the Madurai Bench decision and its Division Bench affirmation, the Court observed that while Rule 86A contemplates a restriction on blocking by officers below a certain rank, the practice and prior orders indicate that blocking by a subordinate would have been done with the permission or authorisation of a senior officer. The State Tax Officer who issued the show cause notice was held to be a proper officer in the circumstances and the jurisdictional objection was rejected as untenable. [Paras 4, 5, 6]

Objection to competence on the ground that an officer below the prescribed rank effected the blocking is not countenable; the blocking is not vitiated for want of jurisdiction.

Right to representation and hearing before final order - Obligation to afford the petitioner an opportunity to make representation before final adjudication on the blocked credit - HELD THAT: - Although the writ petition was dismissed, the Court granted the petitioner liberty to submit a proper representation in light of the admissions recorded during inspection. The Court directed that upon receipt of such representation the concerned officer shall consider it and pass appropriate orders on merits as expeditiously as possible, preferably within thirty days, and expressly noted that the petitioner shall be heard before final orders are passed. [Paras 7, 8, 9]

Petitioner given liberty to represent; officer to decide on merits after hearing, preferably within thirty days.

Final Conclusion: The petition is dismissed: the Court upheld the legality of the impugned blocking of Input Tax Credit for 01.10.2025 to 31.12.2025 and rejected the competence objection, while granting the petitioner liberty to make a representation and directing the officer to decide on merits after hearing within a short time frame.

Delay and laches in invoking writ jurisdiction - requirement to exhaust statutory appellate remedy - reasonableness of delay for invocation of Article 226.

Delay and laches in invoking writ jurisdiction - requirement to exhaust statutory appellate remedy - HELD THAT: - The Court found substantial and unexplained delay in approaching the High Court against an otherwise appealable order. The petitioner did not file an appeal under the statutory remedy available under the Act within the period prescribed by Section 107, and did not explain when it came to know of the impugned order. The contention that a detailed reply to the show cause notice absolved the petitioner from vigilance or amounted to non-communication of the order was rejected since no particulars were furnished as to knowledge of the order. Relying on settled principles that writ jurisdiction under Article 226 must be invoked with promptitude and within a reasonable period, the court held that a petitioner who, by his own fault, disables himself from availing the statutory remedy cannot ordinarily invoke discretionary relief under Article 226. The existence of arguable merits did not justify interference in view of the delay and failure to pursue the statutory remedy. [Paras 4, 5, 7]

Writ petition dismissed for unreasonable delay and failure to avail the statutory appellate remedy; no interference under Article 226.

Final Conclusion: The High Court dismissed the writ petition challenging the demand order on grounds of unexplained and unreasonable delay and the petitioner's failure to pursue the available statutory appeal; the discretionary jurisdiction under Article 226 was not exercised in favour of the petitioner.

Garnishee proceedings - provisional attachment withdrawal - Garnishee notice - failure to consider submissions - opportunity to furnish documents - fresh consideration on merits.

Garnishee notice - failure to consider submissions - HELD THAT:- The court found that the petitioner had already communicated particulars and offered to furnish the requisite documents and clarifications regarding credit notes and adjustments, and that those materials had not been considered by Respondent No.2 before initiating recovery by way of garnishee. Given the petitioner's undisputed reputation and readiness to cooperate, and the absence of a finding of deliberate evasion, the court concluded that immediate recovery by freezing the petitioner's bank account was not justified. The court therefore ordered withdrawal of the garnishee notice to permit the petitioner to operate its account and to avoid prejudice pending departmental examination of the materials. [Paras 8, 9, 10]

Garnishee notice dated 3rd February 2026 issued to the petitioner's banker is to be withdrawn forthwith and shall not be acted upon.

Opportunity to furnish documents - fresh consideration on merits - HELD THAT: - The court directed the petitioner to submit the documents and material within ten days of a copy of the order being made available. Respondent No.2 was directed to examine those documents/materials, call for any clarification or hearing if required, and take an appropriate view on the recovery question. The mandate preserves the parties' contentions and confines the order to providing an opportunity for the department to verify the petitioner's submissions and decide the recovery question on merits within a stipulated timeframe. [Paras 9, 10]

Petitioner to furnish documents within ten days; Respondent No.2 to consider the submissions and decide on recovery within one month of submission.

Final Conclusion: The writ petition is disposed of by directing immediate withdrawal of the garnishee notice against the petitioner's bank account and by directing the petitioner to submit requisite documents within ten days, with Respondent No.2 to reconsider and decide the recovery issue within one month of such submission; all contentions are kept open.

Export of services -Business Auxiliary Services rendered by the assessee to an overseas group entity qualify as export of services under the Export of Services Rules, 2005 - taxable under Section 65(19) sub-clause (iv) of the Finance Act, 1994 - location of service receiver governs export status - wholly owned subsidiary of Carrier Corporation, USA, which in turn is a subsidiary of United Technologies Corporation and is engaged in manufacturing, selling and distribution of various types of Air conditioning and refrigeration equipment.

Business Auxiliary Services as export of service - location of service receiver governs export status - HELD THAT: - The High Court examined the facts that the assessee forwarded Indian customer enquiries to an overseas group entity, which contracted directly with the Indian customers and invoiced and supplied the goods, while the assessee received commission in convertible foreign exchange. The Tribunal had held that the actual recipient of the services was the overseas entity and that Rule 3(1)(iii) of the Export of Services Rules, 2005 looks to the location of the service receiver rather than the place of performance. The Court took note that the issue is authoritatively decided by the Supreme Court in Commissioner of Service Tax-III v. Vodafone India Limited [2025 (8) TMI 938 - SUPREME COURT], which affirmed that the location of the service receiver is the relevant factor for export status and rejected the Revenue's contention that services performed in India with ultimate Indian beneficiaries are taxable. Applying that precedent to the present facts, the Court concluded that the assessee's activities fall within the Export of Service Rules and are not exigible to service tax as Business Auxiliary Services. [Paras 6, 8, 11]

The services rendered by the assessee to Carrier China qualify as export of service and are not taxable as Business Auxiliary Services; the appeal is dismissed.

Final Conclusion: The High Court, applying the Supreme Court's ruling in Vodafone India Limited, held that the assessee's Business Auxiliary Services were export of services (receiver located outside India) and dismissed the Revenue's appeal challenging the Tribunal's order.

Classification of the service of semen sorting undertaken - exemption from GST - either SAC 9986 as support services or SAC 998612 as Animal Husbandry services -intermediate process in relation to rearing of animals - Specific SAC prevails over residual 'not elsewhere classified' entry.

Semen Sorting Services exempt from GST - Support services to agriculture and animal husbandry - HELD THAT: - The service of sex sorting bovine semen is a specialised component of animal husbandry and directly supports artificial insemination and the rearing of livestock. Entry No. 24, Heading 9986 of Notification No. 11/2017 CT(R) grants nil rate for intermediate production processes carried out as job work in relation to rearing of all life forms of animals. Given that the applicant processes semen belonging to semen stations and returns the processed material for subsequent packaging and distribution, the activity qualifies as an intermediate production process supporting animal rearing and therefore falls within the exemption provided under Heading 9986. The legislative intent, reinforced by other exemptions for artificial insemination services and bovine semen, demonstrates that activities related to artificial insemination are intended to be exempted from GST. [Paras 12, 13, 15]

Semen Sorting Services are exempt from GST as support services to animal husbandry under Heading 9986.

Job work as intermediate production process - Support services to agriculture and animal husbandry - HELD THAT: - The applicant performs processing on goods (raw semen) belonging to the semen stations and returns the processed semen to them, satisfying the statutory definition of job work under Section 2(68) of the CGST Act. The definition does not exclude specialised or technical processes; hence, the specialised laboratory process of semen sorting qualifies as job work. Sub item (iii) of Entry No. 24 to Notification No. 11/2017 CT(R) explicitly covers intermediate production processes as job work in relation to rearing of animals, placing semen sorting within Heading 9986. Consequently, the activity is classifiable under SAC 9986. [Paras 14, 15]

Semen Sorting Services are classifiable under SAC 9986 as job work forming an intermediate production process in relation to rearing of animals.

Specific SAC prevails over residual 'not elsewhere classified' entry - HELD THAT: - Heading 9986 provides a specific classification covering support services to agriculture and animal husbandry, including intermediate job work processes. Prefatory guidance requires that where a service is capable of differential treatment, the most specific description is preferred over a general or residual description. Therefore, semen sorting cannot be relegated to the residual category of 'Other professional, technical and business services, not elsewhere classified' (SAC 998399) when a precise heading (9986) is applicable. [Paras 16]

Semen Sorting Services are not classifiable under SAC 998399 because the specific Heading 9986 applies and takes precedence over the residual entry.

Final Conclusion: The Authority ruled that semen sorting services undertaken as job work for semen stations are support services to animal husbandry and are classifiable under SAC 9986; such services are exempt from GST and cannot be placed under the residual SAC 998399 where a specific heading exists.

Consultancy Services & Project Management Consultancy (PMC) Services for Proposed Construction of Danapith Fire Station and Staff Quarters & Multi Level Parking for Ahmedabad Municipal Corporation - ‘Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution’ - exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate).

Whether consultancy service by Architect in relation to Construction of Building for Fire services, Staff Quarters & Multi Level Parking for Ahmedabad Municipal Corporation by Architect whether the same is liable to GST or exempted in terms of Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate).

Pure services - works contract - services provided to a local authority - functions entrusted to a Municipality under Article 243W - exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) - HELD THAT: - The Authority examined the contractual scope of services and found them to consist primarily of architectural and structural drawings, estimates, tender documents, coordination, supervision and certification functions without any transfer of property in goods. Such scope does not amount to a works contract and therefore falls within the category of Pure services. Ahmedabad Municipal Corporation qualifies as a local authority under the Act. The functions for which the services were provided - fire station and multi-level parking - are included in the Twelfth Schedule under Article 243W as fire services and public amenities including parking lots. The Authority further held that staff quarters provided for fire personnel located within the fire station premises are integrally linked to the fire services, having regard to historical norms and recommendations that such accommodation is an essential adjunct to fire services. As all three conditions for Sl. No. 3 (service being a pure service; recipient being a government/local authority; service relating to a function entrusted to a Municipality under Article 243W) are satisfied, the supply in question falls within the exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate). [Paras 11, 12, 13, 14, 15]

The consultancy and PMC services supplied to Ahmedabad Municipal Corporation for the Danapith Fire Station, staff quarters and multi-level parking are exempt from GST under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate).

Final Conclusion: The Authority ruled that the applicant's services to Ahmedabad Municipal Corporation for the Danapith Fire Station and multi-level parking (including staff quarters for fire personnel) are exempt under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate). The remaining questions on past tax collection and refund were not answered as they fall outside the matters on which an advance ruling may be given under Section 97(2).

TDS on Common Area Maintenance charges (CAM) - TDS u/s 194I or 194C - whether CAM charges are not rent? - Interference under Article 136 of the Constitution

HC [2025 (8) TMI 1780 - DELHI HIGH COURT] held that CAM charges fall within the scope of Section 194C and not Section 194I.

HELD THAT:- The Court, having considered the matter, declined to exercise its discretionary jurisdiction under Article 136 to disturb the impugned order. The petition was considered after condonation of delay and the Court expressed that it was not inclined to interfere with the impugned order in exercise of its Article 136 jurisdiction. No further reasons for interference were recorded by the Court in the order. [Paras 1, 2, 3]

Final Conclusion: Special Leave Petition was dismissed.

Denial of exemption u/s 11 - addition of unaccounted cash found during search - scope and ambit of Sections 132(4) and 132(4A) -Statutory or rebuttable presumption - reliability of corroboration of statements recorded u/s 132(4) - as alleged assessee society has used part of the income for the personal benefit of the trustee as per Section 13(3)(c)

Whether the material seized and the statements recorded during the search furnished a sufficient foundation to draw the statutory presumption and sustain the additions made by the Department? -

HELD THAT: - The statutory presumption in Sections 132(4) and 132(4A) is rebuttable and to be drawn only after the Department places material facts sufficient to lay a foundation for it. The exhibits relied upon (56 slips containing details of students and their admission categories) are informational lists of admissions and, on the material before the Court, do not constitute "books of account" maintained in the regular course of administration.

A solitary sworn statement by a Managing Trustee, which was subsequently retracted and remained uncorroborated, cannot by itself sustain the presumption that capitation fees were collected or diverted for personal use.

The Department ought to have produced corroborative evidence, such as examination of the students or other supporting material, before invoking the statutory presumption. Because the foundational fact - collection of capitation fees - was not established even on a preponderance of probabilities, the consequent contention regarding non utilisation of funds for trust purposes did not arise.

Applying these principles to the facts, the Tribunal and the first Appellate Authority correctly concluded that the material was insufficient to draw the statutory presumption or to sustain the additions assessed by the Department.

When the very foundation for the case itself remains unproved, the question whether the trust is entitled to exemption u/s 11 of the Income Tax Act, 1961, does not arise [Paras 8, 9, 10, 11, 13]

The material was inadequate to invoke the statutory presumption; the slips were not "books of account" for this purpose, the uncorroborated statement could not sustain the additions, and the orders of the Appellate Authority and Tribunal are upheld.

Final Conclusion: The appeals are dismissed; the Tribunal and the first Appellate Authority correctly found that the Department had not established collection of capitation fees or other material facts necessary to draw the statutory presumption, and the additions in the assessment are unsustainable.

Validity of certificate u/s 197 - payment to the petitioner are required to deduct tax at the rate of 10% or a nil rate certificate should be issued

HELD THAT: - The Court found that the factual matrix for AY 2026-27 was identical to the preceding years during which the Revenue had granted certificates at nil rate after due consideration of materials. In those preceding years certificates dated 26.09.2023 and 19.03.2025 were issued at nil rate. On the materials before it the Court concluded that the competent authority could not have issued a fresh certificate prescribing a 10% rate for AY 2026-27. The determinative reasoning was that there was no change in facts or law warranting departure from the prior nil-rate approach and that the record and earlier decisions which treated the relevant receipts as not taxable or absorbed by payments to Indian distributors had attained finality for the present purpose. The Court therefore directed issuance of a nil-rate certificate for AY 2026-27 and prescribed timelines and conditional directions for subsequent applications. [Paras 9, 11, 12]

Impugned 10% certificate quashed and direction issued to competent authority to grant a nil-rate certificate for AY 2026-27 within fifteen days; directions given for subsequent applications.

Relevance of subsequent demand for prior certificate - Argument of Respondent that an outstanding demand was created for the AY 2023-24 vide order dated 11.11.2025 is concerned, the same could not have formed the basis to issue the impugned certificate at the rate of 10 percent as the tax withholding certificate was issued on 22.07.2025, much prior to the issuance of demand notice dated 11.11.2025, and even if such demand had arisen the respondent department could effectively recover such demand instead of issuing the tax withholding certificate at 10 percent.

Effect of prior appellate/tribunal and Supreme Court findings - In view of the position emerging from the record, particularly the decision of Hon’ble the Supreme Court vide order dated 19.04.2023, which upheld the approach adopted by the Tribunal in attributing 15% of the total revenue to the Indian Permanent Establishment of the Petitioner, and in holding that such attribution stood fully absorbed by the remuneration paid to the Indian distributors, the said issue has attained finality.

Respondents are directed to issue a certificate for ‘Nil’ deduction of tax at source under Section 197 of the Act to the Petitioner for the AY 2026-27, in accordance with law and in terms of the observations made herein.

Final Conclusion: The writ petition is allowed: the 10% withholding certificate for AY 2026-27 is quashed and the competent authority is directed to issue a nil-rate certificate for AY 2026-27 within fifteen day.

Cancelling registration u/s 12AA - assessee trust generating surplus for assessment year 2002-03 to assessment year 2007-08 and therefore went beyond the purpose for which registration was accorded to it

HELD THAT: - The Court held that Section 12AA(3) permits cancellation only when the Commissioner is satisfied that the activities of the trust or institution are not genuine or are not being carried out in accordance with its objects; a bare finding of surplus generation is insufficient. Where surplus accrues in the course of providing education or educational activities, it is not, by itself, a bar to registration. The Commissioner must record a finding that the surplus arose from activities outside the objects or that the genuineness of activities is doubtful.

In the present case the Commissioner relied solely on continuous surplus and limited fee waivers, without any finding that activities were outside the Trust's objects or not genuine; therefore the statutory precondition for cancellation under Section 12AA(3) was not satisfied and the Tribunal rightly set aside the cancellation. [Paras 16, 17, 18, 22, 23]

Registration could not be cancelled merely because the Trust generated surplus; absence of any finding that activities were not genuine or outside objects defeats cancellation under Section 12AA(3).

Interpretation of Section 10(23C) so as to justify cancellation u/s 12AA(3) - scope of Section 10(23C) and Section 12AA in its applicability, purpose, manner in which donations are exempted, condition of exemption and registration process - HELD THAT: - The Court observed that Sections 10(23C) and 12AA have different scope and purposes: Section 10(23C) addresses exemption conditions, while Section 12AA governs registration and its cancellation. Accordingly, the detailed interpretative conclusions under Section 10(23C) cannot be imported wholesale into Section 12AA. That said, the limited principle from M/s. New Noble Educational Society [2022 (10) TMI 855 - SUPREME COURT] that surplus generated in the course of providing education does not by itself negate charitable character is applicable to the extent that it supports the proposition that surplus alone cannot trigger cancellation under Section 12AA(3). [Paras 20, 21]

Final Conclusion: The appeal is dismissed: cancellation of the Trust's registration was not justified because the Commissioner did not record any finding that activities were not genuine or were outside the Trust's objects, and mere generation of surplus for assessment years 2002-2003 to 2007-2008 cannot alone sustain cancellation under Section 12AA(3).

Validity of reassessment proceedings - notice issued by JOA or AOA - Jurisdictional challenge to Section 148 notice - faceless assessing officer jurisdiction - mandatory minimum notice period for filing return under Section 148 - alternative remedy not a bar to writ on jurisdictional questions

HELD THAT: - The Court recorded that an arguable and substantial jurisdictional challenge was raised: Hexaware Technologies Ltd. [2024 (5) TMI 302 - BOMBAY HIGH COURT] holds that after 29 March 2022 the Jurisdictional Assessing Officer lacks jurisdiction to issue notices under Section 148 and only the Faceless Assessing Officer may do so. That precedent has not been set aside by the Supreme Court and the proposed legislative amendment (Section 147A) has not been brought onto the statute book to negate that law. On these facts the challenge to the authority of the officer issuing the Section 148 notice is an arguable jurisdictional question warranting exercise of writ jurisdiction rather than relegation to alternate fora. [Paras 2, 3, 5]

Writ petition entertained on this jurisdictional ground and Rule issued for consideration of the validity of the Section 148 notice issued by the Jurisdictional Assessing Officer.

Mandatory minimum notice period for filing return u/s 148 -Alternative remedy to writ on jurisdictional questions - HELD THAT: - Second is on the issue that only 30 days time was given to the Petitioner to file his Return of Income when the law mandates that a minimum period of 3 months ought to be granted, and which according to the Petitioner, itself precludes the Assessing Officer from proceeding further in the reassessment proceedings. Once these are the issues, we find that this is not a fit case wherein we should relegate the Petitioner to avail of the alternate remedy

Final Conclusion: The High Court entertained the writ petition on two substantial jurisdictional grounds attacking the Section 148 notice (issue of issuance by the Jurisdictional Assessing Officer contrary to the Hexaware line of authority, and the contention that the notice unlawfully allowed only 30 days instead of the statutory minimum three months), declined to relegated the petitioner to alternate remedies, issued Rule and granted interim stay of the reassessment order, notice of demand and penalty show cause notice pending final disposal.

Validity of reopening pf assessement u/s 147 -Limitation for issuance of notice under Section 148 - TOLA - Scope of new tax regime -surviving period computation under Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] - invalidity of notices issued beyond Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] timeline - fourth proviso to Section 148A not extending surviving period

HELD THAT: - By issuing a notice beyond the prescribed period, the time-barring dates cannot be extended. This amounts to an artificial extension of time limits which is not permissible in law. The second notice dated 26th July 2022 is therefore, bad in law. Even assuming such notice is valid, still the limitation period has to be counted as per the decision in case of Rajeev Bansal (supra) i.e., on expiry of 30 days (time given to the Department to provide material to the assessees) and a further period of 2 weeks which was the time given to the assessees to file its reply. The second notice which is issued beyond the period for 4 weeks from the date of the decision in case of Ashish Agarwal (supra), and the due date to reply to such notice or the date of actual filing of reply to such notice, cannot be taken into account for computing the surviving period.

19. Regarding the Respondent’s reliance on the fourth proviso to Section 148A for a further extension of 7 days, we are unable to accept this submission. The Hon’ble Supreme Court in Rajeev Bansal (supra) have duly considered the proviso and statutory extensions available under the IT Act including the special extension granted by TOLA. Having considered the same, the Court derived a specific mechanism to calculate the “surviving period”. The Court has categorically held that the limitation period has to be counted on expiry of 6 weeks period (4 weeks for the Department to provide material and 2 weeks for the assessees to file reply).

As applying the law laid down by the Hon’ble Supreme Court in Rajeev Bansal (supra) the remaining days for conclusion of the procedure for passing of an order in terms of Section 148A(d) and issuance of notice under Section 148 of the Act would be 2 days. As evident from the table above, the surviving period of 2 day expired on or about 3rd June 2022 (calculating from the date of reply/last date to file reply). The impugned notice under Section 148 was issued on 30th July 2022, which is patently beyond the limitation period prescribed by the Hon’ble Supreme Court. The issuance of the second notice on 26th July 2022 and time granted in the said notice upto 28th July 2022 cannot save the proceedings.

Final Conclusion: The Writ Petition is allowed on the ground of limitation: the notice under Section 148 dated 30.07.2022, the order under Section 148A(d) dated 30.07.2022, the second Section 148A(b) notice dated 26.07.2022 and the consequential assessment order are quashed as time barred; no order as to costs.

Validity of Order passed u/s 143(3) r/w Section 144B and the notice of demand issued u/s 156 - scope of mandatory faceless assessment procedure -Failure to provide opportunity to show cause under the faceless assessment procedure - addition made in the draft Assessment Order w/o giving an opportunity to show cause

HELD THAT: - The Court proceeded on the factual basis (accepted for present purposes) that a draft assessment order under the faceless scheme was prepared. Under the faceless assessment procedure as in force for the relevant period, the National Faceless Assessment Centre was mandated to examine any draft which proposed a variation prejudicial to the assessee and, if such variation was proposed, to provide the assessee an opportunity to show cause before the final assessment was finalised.

In the present case the Revenue conceded that the draft order (if passed) was never communicated to the petitioner and no show-cause opportunity was afforded. The Court held that this omission amounted to a clear breach of the mandatory procedure prescribed by the faceless assessment provisions and, for that reason, the final assessment passed under Section 143(3) and the consequent notice of demand could not be sustained. [Paras 6, 7, 8, 9]

Final Conclusion: The writ petition is allowed; the impugned assessment order and demand notice are quashed for non-compliance with the mandatory faceless assessment procedure, and the petition is disposed of with no order as to costs.

Validity of TP order - allegation ofBreach of principles of natural justice - failure to consider material/replies - opportunity to reply to proposed comparables - Whether the Transfer Pricing Officer's order was passed in breach of natural justice by not considering the petitioner's replies and by not granting adequate time to collate material in respect of newly proposed comparables? - HELD THAT: - The Court found that the show cause notice proposed new comparables and that the petitioner sought time to collate and furnish relevant material. The petitioner filed a partial reply, thereafter filed further material on 8th September, 2025 for the ITes sector which was neither considered nor referred to by the Transfer Pricing Officer, and additional material for the IT sector was supplied after the impugned order. The Revenue did not dispute these facts.

On these findings the Court concluded there was an inadequate opportunity afforded to the petitioner and the replies and collated material were overlooked. The procedural breach of natural justice was therefore established and was decisive of the challenge to the impugned order. Consequently the impugned order could not be sustained and the matter required fresh examination after giving the petitioner an opportunity to reply to the show cause notice proposing new comparables. [Paras 5, 7, 8]

Final Conclusion: The High Court held that the Transfer Pricing Officer breached principles of natural justice by failing to grant adequate time and by not considering the petitioner's replies and collated material; the order for Assessment Year 2023-24 is set aside and remitted for fresh consideration after affording the petitioner an opportunity to reply, with specified timelines for re decision and consequent assessment.

Reopening of assessment - Addition u/s 68 - unsecured loan - petitioner is unable to prove the “source of the source” - Applicability of proviso to Section 68 (requiring explanation of the "source of the source") was introduced only by the Finance Act, 2022 - Validity of the show cause notice u/s 148A(b) and the subsequent notice u/s 148 where the assessee had disclosed the transaction in scrutiny proceedings and a final assessment u/s 143(3) had been passed

HELD THAT: - The Court examined the record and found that the petitioner had disclosed the transaction with Gitanjali Infratech Ltd., including the development agreement and payment routed through banking channels, during scrutiny and that the assessment under Section 143(3) was completed. The original Section 148A(b) notice did not refer to the lender by name and merely alleged that the payment to Gitanjali Infratech Ltd. was a bogus transaction. The AO in the Section 148A(d) order proceeded on the basis that the assessee failed to prove the "source of the source."

The Court held that where the assessee has specifically disclosed the transactions in scrutiny proceedings and documentary evidence was placed on record, the reopening cannot be sustained merely on a fresh contention that the "source of the source" was not explained; the statutory scheme requires that the AO possess information suggesting escapement of income despite such prior disclosure. Applying these principles to the facts, the Court concluded that no information justifying reopening u/s 148/148A was established. [Paras 15, 16, 18, 23, 24]

Proviso to Section 68 applicability - retrospective or prospective effect - Whether the proviso to Section 68 (imposing obligation to explain the "source of the source") applies to AY 2018-19?- HELD THAT: - The Court noted that the proviso to Section 68, expanding the assessee's obligation to require explanation of the "source of the source," was introduced by the Finance Act, 2022 and became effective from 01.04.2023. The proviso was therefore not in force for the relevant assessment year AY 2018-19.

Reliance on the decision of the Delhi High Court in Sheela Overseas [2025 (5) TMI 2158 - DELHI HIGH COURT] supported the view that the enlarged onus was a legislative change effective only prospectively. Consequently, the assessee for AY 2018-19 could not be required to explain the source of funds of the lender and could not be burdened with the amended proviso retrospectively. [Paras 19, 20, 21, 22]

Final Conclusion: Writ petition allowed - reassessment notices and the order u/s 148A(d) were quashed because the transactions had been disclosed and assessed and the proviso to Section 68 relied upon did not apply to Assessment Year 2018-19.

Applicability of DTVSV Scheme - search action was conducted in the case of third party before 01.04.2021, but the assessment in the case of petitioner was completed u/s 147 - assessment proceedings are reopened on the basis of incriminating material found during the search conducted on searched persons - scope of clarificatory circulars dated 15.10.2024 and 16.12.2024

Whether tax arrears arising from an assessment made under Section 147 of the Income Tax Act on the basis of incriminating material found during search under Section 132/132A are excluded from the DTVSV Scheme by operation of Section 96? - HELD THAT: - The Court examined the plain language of Section 96 which excludes from the Scheme tax arrears relating to assessment years in respect of which assessments have been made under specified provisions (including Section 147) on the basis of search initiated under Section 132/132A. The record in the lead petition established that additions and reassessment under Section 147 were made consequent to incriminating material found in search proceedings concerning third parties. The court held that where reassessment stems from search-related incriminating material, Section 96's exclusion applies and the petitioner is not eligible for the Scheme. The court declined to read into Section 96 any temporal cut-off or exception absent from the statute and refused to expand the Scheme by judicial construction. [Paras 8, 9, 13, 14]

Reassessment under Section 147 based on incriminating material found in search proceedings is excluded from the DTVSV Scheme under Section 96.

Clarificatory circulars overriding statutory exclusion in Section 96 or not? - Whether the clarifications in Circular No. 12 (15.10.2024) and Circular No. 19 (16.12.2024) bring petitioners whose assessments u/s 147 emanate from search material within the scope of the DTVSV Scheme? - HELD THAT:- The Court analysed the two clarificatory entries relied upon by the petitioner (Item No.6 of the October circular and Item No.40 of the December circular). Item No.6 was held to clarify which types of assessments are to be regarded as search-based but does not supply any rule excluding assessments predicated on search material from Section 96's exclusion. Item No.40 expressly confirms that cases where search action was carried out before 01.04.2021 and assessments resulted under the relevant provisions are barred by Section 96. The Court rejected the petitioners' attempt to rely on the circulars to circumvent the clear statutory bar, holding that the clarificatory circulars cannot be read to override or nullify the statutory exclusion enacted by the legislature. [Paras 10, 11, 12]

The circulars do not bring reassessments founded on search material within the Scheme and cannot displace the statutory exclusion in Section 96.

Final Conclusion: The petitioners, whose reassessments u/s 147 emanate from incriminating material found during searches u/s 132/132A, are excluded from the Direct Tax Vivad Se Vishwas Scheme by Section 96 - clarificatory circulars do not alter that statutory exclusion. The writ petitions were dismissed and the rule discharged.

Unexplained money u/s 69A - cash and other credits in bank accounts treated as unexplained money - CIT(A) admitted the additional evidence holding that the same had direct bearing on the issue and deleted the addition observing that the pattern of inflow and outflow in bank accounts supported the assessee’s explanation

HELD THAT:- Commissioner (Appeals) admitted voluminous additional material filed by the assessee, including business enrolment form, bank statements, ledger extracts and sample sub-agent details, after considering the assessee's contention that the volume, complexity and quantum of data required additional time and that the material had direct bearing on the issues.

AO had opposed admission on the ground that multiple opportunities were afforded during assessment and that the documents should have been produced earlier. The appellate authority found the assessee's explanation reasonable in the interest of natural justice and that the additional evidence bore direct and relevant connection to the controversy. The Tribunal, on review of the material and the remand report, found no error in the exercise of discretion by the Commissioner (Appeals) in admitting the evidence and recorded that no adverse view could be taken against that finding.

The admission of additional evidence under Rule 46A was upheld.

Explanation of cash credits u/s 69A as intermediary transactions - HELD THAT: - Having admitted the additional material, the Commissioner (Appeals) examined the bank statements, ledger extracts and supporting documents and concluded that the pattern of inflows and immediate corresponding outflows demonstrated the assessee's role as an intermediary commission agent for a mobile e-wallet service. The assessee's case, supported by business enrolment evidence, Form 26AS, bank statements and ledger transfers showing transfers to the e-wallet, indicated that receipts from sub-agents were routed through the assessee's accounts and passed on to the service provider, with the assessee earning commission.

AO 's contrary conclusion rested on the mismatch between declared turnover and bank credits and on non-production of certain confirmations during assessment; however, the appellate authority found the documentary material on record sufficient to explain the credits. The Tribunal, upon perusal of the admitted material and the record, found no basis to take an adverse view and affirmed the finding that the credits were explained, making the addition under section 69A unjustified.

The addition under section 69A was held to be unjustified and deleted.

Final Conclusion:Tribunal affirmed the Commissioner (Appeals)'s admission of additional evidence and its finding that the bank credits were satisfactorily explained as intermediary transactions of a commission agent; the Revenue's appeal is dismissed.

Addition u/s 68 - Genuineness of share transactions not proved - price fluctuation of shares - AO made an addition on the consideration received by the assessee on sale of the alleged penny scrip on the ground that the assessee had failed to establish the genuineness of the transaction.

HELD THAT: - The Tribunal accepted the factual findings of the Assessing Officer that the assessee purchased shares in physical form at a low price and sold them shortly thereafter at a very large markup, while the company's financials did not justify such price movement.

AO further relied on an information report from the investigation wing and on SEBI's order pointing to irregular trading in the scrip. The assessee failed to produce documentary evidence (preferential allotment documents, contract notes corroborating genuineness, demat records, bank statements) or any other corroboration to discharge the onus of proving the genuineness of the transactions. In the absence of any corroborative material or the presence of supporting witness/representative at the hearing, the Tribunal found no reason to disturb the AO's conclusion that the consideration was unexplained, and that the addition under section 68 was warranted. [Paras 7, 8]

Addition made by the AO treating the sale consideration as unexplained credit is upheld; grounds of appeal on this issue are dismissed.

Final Conclusion: Assessee appeal allowed. AO's addition under section 68 based on investigation inputs and the SEBI order are sustained.

Taxability of maturity proceeds of keyman insurance policy - Explanation 1 to section 10(10D) is clarificatory and retrospective - taxability of maturity amount received under keyman insurance policy assigned to the life of the person in whose name it was taken.

HELD THAT: - Tribunal considered that the employer originally purchased the policy on the life of the assessee and the policy was assigned to the assessee on 24.03.2011. Section 10(10D) excludes amounts received under a Keyman insurance policy from exemption, and Explanation 1 (inserted w.e.f. 01.04.2013) clarifies that a Keyman insurance policy includes a policy assigned to a person at any time during the term of the policy.

Relying on the reasoning in Allu Arvind Babu [2020 (12) TMI 232 - MADRAS HIGH COURT] Tribunal accepted that Explanation 1 is clarificatory in nature and must be read retrospectively to the parent provision.

Consequently, assignment does not change the character of a Keyman policy into an ordinary life policy for the purpose of section 10(10D). The Tribunal rejected reliance on the earlier Delhi High Court decision in Rajan Nanda [2011 (12) TMI 392 - DELHI HIGH COURT] to the extent it treats an assigned policy as converted into an ordinary policy, and held that the maturity proceeds of the assigned Keyman policy are taxable in the hands of the assessee as perquisite. Tribunal therefore upheld the view of the lower authorities that no exemption under section 10(10D) is available in respect of the maturity amount received by the assessee. [Paras 10, 11]

Maturity amount of the assigned Keyman Insurance Policy is taxable in the hands of the assessee.

Final Conclusion: The Tribunal, following the view that Explanation 1 to section 10(10D) is clarificatory and retrospective and that assignment does not convert a Keyman policy into an ordinary policy, dismissed the appeal and upheld the taxability of the maturity proceeds for AY 2017-18.

Addition u/s 68 - identity genuineness and capacity - capacity of an investment/holding company assessed from balance sheet and cash flows, not profit & loss - disallowance under section 40A(2)(b) - objective material and fair market value analysis - reconciliation including capitalised components must be considered before inferring mismatch

Addition u/s 68 - identity genuineness and capacity not proved - capacity of an investment/holding company assessed from balance sheet and cash flows, not profit & loss - share subscription by a foreign investor (EFX) for A.Y. 2011-12 - HELD THAT: - The Tribunal held that the touchstone under section 68 is the explanation regarding the nature and source of credit together with identity, genuineness and capacity. Where the shareholder is an investment/holding company, capacity cannot be tested solely by reference to its profit and loss account; balance sheet disclosures, capital structure and audited cash flow statements are material. In the set-aside proceedings audited financial statements of EFX disclosed the investment in the assessee and the remittance was through banking channels supported by FIRC and RBI reporting. The Assessing Officer's emphasis on negligible or NIL income of EFX, alleged non-authentication of some annexures and absence of certain certificates did not constitute cogent material to displace the explanation. Having demonstrated identity, genuineness and capacity, the burden shifts to the Revenue to rebut with tangible material; suspicion or inference based on profit figures or jurisdictional characterisation of the remitting jurisdiction is insufficient. Accordingly the addition under section 68 was held unsustainable and deleted. [Paras 7, 10, 11, 13, 14]

Disallowance u/s 40A(2)(b) - objective material and fair market value analysis - mismatch was drawn by comparing Form 26AS gross receipts in the hands of ESS with only the revenue expenditure debited by the assessee to profit and loss account, HELD THAT: - The Tribunal found that the Assessing Officer based the disallowance on an alleged mismatch between Form 26AS of ESS and amounts charged to profit and loss by the assessee, without accounting for material capitalised invoices. The assessee produced a detailed reconciliation and related party schedules from audited financials showing capitalised intangible assets and adjustments (provisions, TDS, service tax) which reconciled total transactions with ESS to the Form 26AS figures, leaving only a nominal residual. Section 40A(2)(b) permits disallowance where expenditure is excessive or unreasonable, but such opinion must be founded on objective material (market benchmarking, comparative yardstick or demonstrable excess). The Assessing Officer failed to test the reconciliation by calling for ledger extracts, invoice mapping or fixed asset schedules before drawing the inference of unsubstantiation. In these circumstances the inference of unsubstantiated payments could not be sustained. The Tribunal therefore deleted the disallowance for A.Y. 2011-12 and applied the same conclusion mutatis mutandis to A.Y. 2012-13. [Paras 18, 19, 20, 21, 22]

Disallowance u/s 40A(2)(b) deleted.

Final Conclusion: Both appeals allowed: addition under section 68 deleted for A.Y. 2011-12 and disallowance under section 40A(2)(b) deleted for A.Y. 2011-12 and A.Y. 2012-13, the Tribunal having found that the assessee furnished adequate audited disclosures, reconciliations and regulated banking evidence which the Revenue failed to rebut with cogent material.

Validity of reopening of assessment - Requirement of prior approval u/s 148A(d) - specified authority u/s 151 - fresh approval required at the stage of order u/s 148A(d) - approval obtained from incorrect specified authority

Validity of reassessment initiated by issuance of notice under section 148 after an order under section 148A(d) where approval was obtained from the Principal Commissioner instead of the Chief Commissioner - HELD THAT: - Tribunal held that the approvals required u/s 148A(b)/(a) (at the stage of conducting enquiry/issuing the initial notice) and u/s 148A(d) (at the stage of passing the order deciding whether to issue notice under section 148) are distinct and separate.

Section 151 prescribes different "specified authority" depending on whether three years or less, or more than three years, have elapsed from the end of the relevant assessment year. In the present case a notice under Section 148A was issued before the expiry of three years and approval from the Principal Commissioner was therefore in accordance with Section 151 at that stage.

Order u/s 148A(d) by which the AO decided to issue a notice u/s 148 was passed after three years had elapsed, when Section 151 required prior approval of the Chief Commissioner. Since the AO did not obtain the required approval from the Chief Commissioner before issuing the Section 148 notice, the reopening was held to be without jurisdiction and not in accordance with law. On that basis the reassessment was quashed. [Paras 6, 7]

Reassessment is invalid because the requisite prior approval u/s 148A(d)/Section 151 was not obtained from the Chief Commissioner; reassessment quashed.

Final Conclusion: Tribunal allowed the appeal, holding that the reassessment proceedings were void for lack of the required prior approval from the correct specified authority and accordingly quashed the reassessment.

Benami Property Transaction - Review jurisdiction under order xlvii rule 1 - mistake apparent on the face of the record - validity of declaration under Income Declaration Scheme, 2016 and effect of alleged subsequent nullification by Assessing Authority - absence of foundational evidence to sustain provisional attachment as benami property - discovery of new and important evidence- corroborative evidence requirement -

Limited scope of review jurisdiction - HELD THAT:- The Tribunal applied the settled tests for review relief and held that review is permissible only for discovery of new and material evidence, an error apparent on the face of the record or any other sufficient reason analogous to those grounds. The review applicants failed to demonstrate a manifest error on the face of the record or any new evidence which could not with reasonable diligence have been produced earlier. The Tribunal therefore found no jurisdictional basis to reopen the appeal decision merely because the review applicants reiterate or reargue facts and legal contentions already considered. [Paras 11, 12, 18]

Review petitions do not satisfy the limited grounds for review and cannot be entertained.

Validity of declaration under Income Declaration Scheme, 2016 and effect of alleged subsequent nullification by Assessing Authority - Whether the Assessing Authority had competence or produced a lawful basis to treat the declaration/certificate under the Income Declaration Scheme, 2016 as null and void - HELD THAT: - The Tribunal examined the contention that the certificate issued under the Scheme of 2016 was later nullified by the Assessing Authority on a finding of forgery. The review applicant could not point to any provision of the Scheme or authority empowering the Assessing Authority to nullify the Principal Commissioner's certificate. The Tribunal noted absence of any opportunity of hearing afforded by the Assessing Authority before declaring the certificate forged, concluding that that order suffered from breach of natural justice and did not demonstrate sufficient grounds to impugn the declaration. Given that the declared valuation was by a Registered Valuer and tax under the Scheme had been paid, the review applicant failed to demolish the declaration. [Paras 13, 14, 15]

The Assessing Authority's purported nullification of the Scheme certificate cannot be relied upon; no valid basis established to set aside the declaration under the Scheme.

Requirement of corroborative evidence for reliance on retracted statement - absence of foundational evidence to sustain provisional attachment as benami property - Whether the provisional attachment as benami property was justified on the basis of the retracted statement and other material - HELD THAT: - The Tribunal found that the allegation of cash deposits and rotation to create benami assets rested principally on a statement of Yogendra Raj Singhvi which was immediately retracted. Reliance on the retracted statement by the authorities without independent corroboration was impermissible. The review applicant bore the onus to produce bank statements or other material to demonstrate cash deposits and transfers; no such foundational evidence was adduced. In absence of proof of the foundational fact (deposit/rotation of cash) the Tribunal held that the finding of benami transaction could not be sustained and provisional attachment was not justified. The Tribunal further observed that even if section 24(4) was invoked, acceptance of the review applicant's arguments would not alter the outcome because of lack of evidentiary foundation. [Paras 16, 17]

Provisional attachment could not be sustained for want of corroborative evidence; reliance on the retracted statement alone is insufficient.

Final Conclusion: All review petitions fail; the Tribunal's earlier order setting aside provisional attachments as not constituting benami transactions is upheld and the review applications are dismissed.

Seeking to quash the detention Order - Jurisdiction of the Court to entertain a challenge to a preventive detention order prior to its execution - absconding and proclaimed a proclaimed offender - judicial self-restraint in exercising Article 226 pre-execution.

Pre-execution challenge to preventive detention by absconding detenue - judicial self-restraint in exercising Article 226 pre-execution - HELD THAT: - The Court held that while the High Court has jurisdiction to judicially review preventive detention orders prior to their execution, this power is subject to well-established limitations and judicial self-restraint. The authorities in Alka Subhash Gadia [1990 (12) TMI 216 - SUPREME COURT] were followed to the extent that limited grounds exist for pre-execution interference (including wrong statute, wrong person, wrong purpose, vagueness/extraneous grounds, or lack of authority), but subsequent decisions (including Subhash Popatlal Dave [2012 (7) TMI 377 - SUPREME COURT] and the concurring views) clarify that allowing an absconding proposed detenue to challenge a detention order at the pre-execution stage on the basis of long delay or loss of live nexus would permit the detenue to take advantage of his own evasion and would undermine the statute's purpose. The Court noted that the petitioner had been declared a Proclaimed Offender, a Look Out Circular had been issued, prosecution steps under Section 7(1)(a) of the COFEPOSA Act were initiated, and the petitioner had not surrendered or cooperated. Given these facts and the settled jurisprudence, the Court exercised its discretion to refuse to intervene at the pre-execution stage, while leaving open the petitioner's right to challenge the detention order after surrender so that he can confront grounds and materials in accordance with Article 22 safeguards. [Paras 39, 40, 41, 42, 43]

The Court refused to exercise its jurisdiction under Article 226 to entertain the pre-execution challenge by the absconding petitioner, keeping open the remedy to challenge the detention order after surrender.

Final Conclusion: The writ petition challenging the detention order at the pre-execution stage was dismissed for want of exercise of discretionary jurisdiction in favour of an absconding proposed detenue; the petitioner remains free to challenge the order after surrender.

Doctrine of “estoppel by conduct” - differential customs duty collected during DRI investigation -prospective operation of amendment - requirement for show cause notice where payment voluntary - wrong availment of concessional rate of duty​​​​​​​ - closure of investigation estops refund claim - unjust enrichment burden on refund claimant.

Estoppel by conduct - differential customs duty collected during DRI investigation was not paid under protest but was paid voluntarily. -HELD THAT: - The Court found that the petitioner, by its letter of 05.03.2019, informed DRI of payment of the differential duty and requested closure of the investigation and did not indicate payment was made under protest. Between that letter and DRI's letter of 03.07.2019 accepting closure, the petitioner raised no dispute. The petitioner's subsequent attempt to characterise the payment as made under protest is inconsistent with its earlier conduct and is barred by the doctrine of estoppel by conduct. The Court treated these facts as determinative that the payment was voluntary. [Paras 15, 18, 22, 29]

Payment was voluntary and not under protest.

Prospective operation of amendment - HELD THAT:- The Court examined Notification No.25/2019-Customs and the Finance Act, 2019, and observed that the measure effected was an amendment rather than a clarificatory retrospective provision. An amendment enacted by the Finance Act and the 2019 notification was held to have prospective effect and thus does not alter the lawful incidence of duty on imports made during 2014-2017. [Paras 23, 24, 25, 29]

The notification/amendment is prospective and does not apply to the petitioner's 2014-2017 imports.

Amendment notification not retrospective - Notification No.25/2019-Customs is an amendment to an earlier notification and cannot be treated as a substitution with retrospective effect. - HELD THAT: - On textual and contextual reading the Court held the 06.07.2019 notification amends Notification No.50/2017 and thus effects a change going forward. The Finance Act did not incorporate the Finance Bill wording relied upon by the petitioner as a 'clarification'; instead the enacted law uses amendment language. Consequently, the notification cannot be read to retrospectively alter duty applicable to earlier imports. [Paras 23, 24, 25, 29]

Notification No.25/2019-Customs is an amendment and not retrospective.

No requirement for show cause notice where payment voluntary - HELD THAT: - The respondents demonstrated that the petitioner paid the differential duty and requested closure of the DRI investigation, and DRI accepted closure under Section 28(2). Since payment was voluntary and the petitioner sought conclusion of the investigation, the Court held that issuance of a show cause notice was not necessary in the circumstances presented. [Paras 8, 15, 17, 29]

No show cause notice under Section 28 was required given the voluntary payment and closure of the investigation.

Closure of investigation estops refund claim - HELD THAT:- The Court held that by requesting DRI to accept payment and close the investigation, and by remaining silent during the interregnum, the petitioner placed itself in a position inconsistent with a later refund claim. Entertaining the refund would undermine finality of investigations and invite similar reopenings, thereby defeating the purpose of DRI proceedings. [Paras 15, 19, 22, 28, 29]

Petitioner is estopped from seeking refund after requesting and obtaining closure of the investigation.

Unjust enrichment burden on refund claimant - HELD THAT:- The Court explained that refunds of customs duty under Section 27 require substantiation that the claimant did not pass the excess duty to buyers and thus would not be unjustly enriched. The petitioner filed its refund application under Section 27 but did not produce evidence to show that the excess duty was not passed on to buyers. Accordingly the statutory requirement for refund was not satisfied. [Paras 20, 21, 29]

Refund claim fails for want of evidence disproving unjust enrichment.

Final Conclusion: The writ petition is without merit and is dismissed; the refund claim is rejected as the payment was voluntary, the relied-upon amendment is prospective, there was no requirement for a show cause notice in the circumstances, and the petitioner failed to discharge the burden to avoid unjust enrichment.

Scope of discharge jurisdiction - prima facie satisfaction to proceed to trial - admissibility and probative value of statements u/s 108 of the Customs Act - extra-judicial confession - criminal breach of trust - illegal gratification - approver's evidence and its probative value - CCTV evidence as corroborative material - public servants - Commission of offences punishable under Sections 120B r/w 409 of the Indian Penal Code (`IPC’) as well as under Sections 8 and 12 of the Prevention of Corruption Act, as amended 2018 (`PC Act, 2018’).

Scope of discharge jurisdiction- prima facie satisfaction to proceed to trial - Whether the learned Special Judge erred in refusing to discharge the revision petitioner/accused No. 3 and whether prima facie materials justified proceeding to trial. - HELD THAT: - The Court applied the settled test for considering a discharge plea and held that the jurisdiction at the discharge stage is limited and does not permit a roving, mini-trial or meticulous reappraisal of prosecution evidence. The court must be satisfied only whether, prima facie, the offences are made out or a strong suspicion exists to warrant trial. On the record before it, including the statements recorded and the particulars in the final report, the Special Court had sufficient material to reach a prima facie satisfaction that trial should proceed against accused No. 3. The High Court found no error in the Special Court's approach or conclusion and declined to substitute its own evaluation of evidence which is properly to be tested in trial. [Paras 9, 10, 11]

Discharge plea rejected; sufficient prima facie material exists to proceed to trial against the petitioner.

Admissibility and probative value of statements under Section 108 of the Customs Act - approver's evidence and its probative value - HELD THAT: - The Court recognised that voluntary statements under Section 108 are admissible and constitute substantive evidence, but their evidentiary weight and need for corroboration are matters for trial. The Special Court correctly declined to rule on voluntariness or fully test credibility at the discharge stage. Further, certain declarants were made approvers during investigation, and approver evidence carries probative value which must be assessed in trial; the High Court held that how much weight to attach to approver statements and co-accused confessions is a trial question and not a basis for discharge on the present record. [Paras 9]

Section 108 statements and approver/confession evidence are admissible but their probative value and requirement of corroboration are to be examined at trial; they do not mandate discharge at this stage.

CCTV evidence as corroborative material - HELD THAT: - The Court noted the prosecution's position that the customs room may not have been covered by CCTV and that footage, where available, may only establish presence. The learned Special Judge correctly treated CCTV material as corroborative evidence whose relevance and weight must be determined during trial. Prior orders quashing proceedings against certain travellers because only presence on CCTV was shown do not automatically entitle the petitioner to discharge where other materials (including approver statements) exist. Evaluation of CCTV evidence is therefore a matter for trial. [Paras 9, 10]

CCTV visuals are corroborative and their evidentiary value must be assessed at trial; absence of incriminating footage does not, on the present record, require discharge.

Prima facie satisfaction to proceed to trial - HELD THAT: - The Court examined Annexure II where proceedings against certain travellers were quashed for lack of prima facie material, while similar pleas were rejected for others where recoveries existed. The High Court held that the different outcomes in Annexure II turn on the distinct materials available against each accused and do not automatically confer benefit to accused No. 3. The Special Court's common order taking cognisance of the materials against accused Nos. 1-13 and others was not vitiated merely because some other accused had succeeded on separate facts. [Paras 10]

Annexure II quashment of other accused does not entitle the petitioner to discharge; differing factual materials justify separate outcomes.

Final Conclusion: The High Court found no error in the Special Court's refusal to discharge accused No. 3: there are prima facie materials, including admissible statements and approver evidence, which justify trial; questions of voluntariness, corroboration, weight of confessions, approver testimony and CCTV evidence are factual matters for trial. The revision petition is dismissed.

Validity of issuance of Show cause notice u/s 124 of the Customs Act - Waiver of rights - confiscation of goods -reasonable opportunity of hearing - distinction between Section 28 and Section 124 - principles of natural justice.

Show cause notice under Section 124 of the Customs Act - HELD THAT:- The Court held that show cause notices issued under Section 28 and Section 124 serve distinct purposes: Section 28 concerns recovery of duties, whereas Section 124 contemplates confiscation and penalties, with serious civil consequences for the importer. A waiver of show cause notice must be voluntary, conscious and informed; pre-printed or standard waiver forms and waivers given without full particulars are invalid for purposes of enabling confiscation. The right to a written show cause notice and a reasonable opportunity of hearing under Section 124 is mandatory and is required to protect the importer from grave civil consequences; therefore, the principle that a personal right may be waived (as held in cases concerned with Section 28) does not extend to permitting confiscation without compliance with Section 124. Where no valid show cause notice under Section 124 is issued and no personal hearing is afforded in accordance with departmental procedure, the resulting confiscation and penalty order is vitiated for breach of natural justice and prejudice to the importer. [Paras 27, 29, 31, 32, 33]

The Court quashed the impugned confiscation and penalty order for failure to issue the mandatory Section 124 show cause notice and for violation of principles of natural justice, and granted liberty to the respondent to initiate fresh proceedings by issuing a show cause notice under Section 124 and deciding the matter afresh after affording due opportunity of hearing.

Final Conclusion: The impugned confiscation and penalty order was quashed for non-compliance with the mandatory show cause and hearing requirements of Section 124 of the Customs Act; the respondent is permitted to reopen proceedings by issuing a Section 124 notice and following due procedure.

Limitation and condonation of delay - condonation beyond 90 plus 90 days for filing revision under Section 129DD - forum conveniens - proper forum where the statutory remedy is revision - failure to establish medical incapacity.

Proper forum where the statutory remedy is revision under Section 129DD - HELD THAT: - The appellate order of the Commissioner of Customs was appealable by way of statutory revision to the Central Government under the statutory scheme. The Tribunal (Cestat) correctly treated the appeal as defective because the prescribed remedy was revision under Section 129DD, and the appellant had no proper statutory basis to proceed before the Tribunal. The Court observed that the Tribunal's order returning the appeal was not challenged and that the Tribunal was not a proper forum for the grievance asserted by the appellant. [Paras 3]

The Cestat was not the appropriate forum and its return of the appeal as defective was proper.

Condonation beyond 90 plus 90 days for filing revision under Section 129DD - HELD THAT: - The Court examined the timeline of the original adjudication and the first appellate order and noted the statutory limitation for filing revision. The first appellate order dated 01.04.2024 required revision to be filed within ninety days with a further condonable period of ninety days; the Court held that condonation beyond that combined period is not permissible. The appellant's belated approach to the Tribunal and subsequent delay in instituting proceedings indicated noncompliance with the statutory time limits. [Paras 4, 5, 7]

The statutory time limits for revision had been exceeded and no further condonation was available.

Insufficiency of asserted medical incapacity to justify delay in instituting statutory remedy - HELD THAT: - The Court scrutinised the medical records and the affidavits relied upon by the appellant. The appellant had asserted treatment for cervical cancer but the records showed treatment for cervicitis and a laparoscopic surgery; the writ pleadings did not disclose the claimed diagnosis. Given the absence of credible medical justification and the further delay in filing the writ petition after the Tribunal's order, the Court found the reasons inadequate to warrant intervention or to condone the delay. [Paras 6, 8]

The medical grounds advanced were factually erroneous and insufficient to justify the delay; they did not entitle the appellant to relief.

Final Conclusion: The High Court found no error in the writ court's conclusion: the Tribunal was not the proper forum, the statutory time limits for revision had been exceeded with no further condonation available, and the medical justification for delay was inadequate; the writ appeal was dismissed and the impugned order affirmed.

Rejection of order for condonation of delay in filing Transportation and Marketing Assistance (TMA) claims for the quarters - principles of natural justice -Failure to record reasons in administrative order - breach of principles of natural justice - remand for reconsideration with directions to pass a well reasoned order.

Failure to record reasons in administrative order - breach of principles of natural justice - HELD THAT:- The Court examined the minutes of the Competent Committee and the Review Committee and found that, beyond recording the petitioner's submissions, neither decision contains any discernible reasons addressing why those submissions were unacceptable or why parity with other cases was not available to the petitioner. Relying on the settled principle that administrative orders must be supported by the reasons stated in the order and cannot be supplemented later, the Court referred to authoritative precedent emphasizing that public orders must be construed objectively from the language used and must disclose the grounds of decision (paras 8-9). In view of the absence of adequate reasoning and apparent non application of mind to the petitioner's grievance, the Court concluded that the matter required fresh consideration by the Review Committee so that a reasoned decision addressing the petitioner's contentions, including any parity claims, is recorded. [Paras 6, 8, 9, 10]

The matter is remitted to the Review Committee for fresh consideration in accordance with law and for passing a well reasoned order within a reasonable period.

Final Conclusion: The petition is disposed of by remitting the case to the Review Committee to reconsider the petitioner's claims and to pass a reasoned decision addressing the contentions and parity issues within a reasonable time.

Refund of excess duty - time limitation for refund - error in computation of duty - valuation for export treated as cum-duty price -applicability of Circular No. 18/2008- Cus. dated 10.11.2008 - requirement of rectification before claiming refund.

Timeliness of refund claim under Section 27 - HELD THAT: - The Tribunal found that the Original Authority had not disputed that the refund application was filed in time and there was no contest by the Revenue on the date of filing. The First Appellate Authority's direction to re-examine the claim solely on the ground of timeliness under Section 27 therefore went beyond the scope of the appeal, particularly where the Revenue had not filed a counter or challenged the filing date. That portion of the impugned order, which directed fresh verification of the timeliness of the refund, was held to be unsustainable and was set aside. The remainder of the impugned order remains intact and is to be executed by the Original Authority. [Paras 5]

Direction to re-examine timeliness under Section 27 set aside; Original Authority shall not revisit the date-of-filing issue.

Error in computation of duty - treatment of FOB as cum-duty price for valuation - HELD THAT: - The Tribunal noted that both parties relied on Circular No.18/2008 which requires treating the FOB price as a cum-duty price for valuation of export goods. Although the Original Authority did not apply that principle, the First Appellate Authority accepted it. Consequently, the Tribunal observed that the determinative fact remaining undisputed was an error in computation of duty leading to excess payment at the insistence of the Revenue. The Tribunal preserved the other directions in the impugned order relating to that error and directed the Original Authority to act on those directions without delving into the timeliness issue. [Paras 4, 5]

Error in computation of duty (due to valuation treatment) accepted as undisputed fact; Original Authority to proceed on other directions of the impugned order.

Final Conclusion: Appeal allowed in part: the impugned order is modified by setting aside the direction to re-examine the timeliness of the refund claim under Section 27; other aspects of the impugned order accepting an error in computation of duty and directing appropriate action remain intact and shall be executed by the Original Authority.

Transaction value - contemporaneous import price - Voluntariness of statement recorded in a language unknown to the deponent - admissibility of electronic documents recovered from proprietor's laptop where the statement admitting them has been retracted - rejection of declared transaction value on the basis of contemporaneous imports - relevance of local resale invoices in customs valuation enquiries - re-determination of transaction value requires consideration of commercial factors and contemporaneity - confiscation for mis-declaration of value at the time of import.

Voluntariness of statement recorded in a language unknown to the deponent - The voluntary nature of the statement recorded from the appellant when recorded in English while the deponent claimed to know only Urdu up to 3rd standard. - HELD THAT: - The Tribunal held that a statement recorded in a language not known to the deponent cannot be treated as voluntary merely because the deponent appended an English sentence asserting he had read the statement. The adjudicating authority's reliance on that solitary sentence was insufficient; the statement must be recorded in a language known to the deponent for it to be considered voluntary. Consequently, the statement recorded on 18.12.2013 was not legally treatable as a voluntary statement. [Paras 10]

The statement recorded from the appellant is not a voluntary statement and cannot be relied upon.

Admissibility of electronic documents recovered from proprietor's laptop where the statement admitting them has been retracted - Whether the soft copies of two invoices downloaded from the appellant's laptop are admissible evidence when the appellant retracted his earlier statement admitting those documents. - HELD THAT: - The Tribunal distinguished precedents where electronic documents were relied on because admissions in statements were not retracted. Relying on the Supreme Court precedent in the case of Additional Director General Adjudication, Directorate of Revenue Intelligence Versus Suresh Kumar And Co. Impex Pvt. Ltd. & Others [2025 (9) TMI 76 - SUPREME COURT], the bench held that retraction of a statement made under Section 108 (recorded statement) at the stage of replying to the show cause notice undermines compliance with Section 138C and renders the documents inadmissible. Further, the two recovered invoices were dated after the import dates, weakening any linkage to the imports in question. On these factual and legal bases the soft copies could not be treated as parallel invoices or admissible evidence to sustain valuation adjustments. [Paras 11, 12]

The soft copies of invoices downloaded from the appellant's laptop are not admissible evidence in this case and cannot be used to reject the declared values.

Relevance of local resale invoices in customs valuation enquiries - Whether the local sale invoices produced by the appellant could be ignored and contemporaneous higher import prices alone relied upon to reject the declared value. - HELD THAT: - The Tribunal held that contemporaneous higher import prices may give reason to doubt declared values, but they cannot override evidence produced by the importer without appropriate examination. The adjudicating authority and first appellate authority rejected the local sale invoices by assuming local sales may be at a loss, without testing or rebuttal by Revenue. The authorities failed to examine whether the local sale invoices supported the declared transaction value; having accepted those invoices as genuine, the authorities should have assessed their probative value rather than dismissing them by conjecture. As a result, there was no proper evidence of undervaluation. [Paras 13, 14, 15, 16]

Local resale invoices submitted by the appellant were improperly disregarded; they could not be ignored in favour of contemporaneous imports without proper inquiry.

Re-determination of transaction value requires consideration of commercial factors and contemporaneity - HELD THAT: - The Tribunal emphasised Rule 12 of the Customs Valuation Rules and held that rejection of declared value and re-determination must proceed only after giving the importer particulars and a fair opportunity, and by considering commercial factors (quantity ordered, model/grade differences, contractual terms, discounts, relationship between parties etc.). Except for two items where specific details were furnished, the worksheets relied upon by DRI lacked description and therefore did not establish contemporaneity or identity of goods. Enhancement of transaction value was therefore unjustified in the absence of verification of these commercial factors and adequate notice to the importer. [Paras 17, 18]

Re-determination of transaction value on the basis of the contemporaneous imports was not justified without consideration of commercial factors and adequate particulars; except for two items, the proposed unit prices could not be treated as contemporaneous values.

Rejection of declared transaction value on the basis of contemporaneous imports - HELD THAT: - Because the statement relied upon was not voluntary and the electronic invoices were inadmissible or not linkable to the imports, and because contemporaneous import data (except for two items) were not shown to be of identical goods or properly particularised, the foundational bases for rejecting the declared values failed. Consequential measures-differential duty, confiscation and penalties-rested on that flawed valuation exercise. In view of the defects in evidence and procedure, the Tribunal found no sustainable basis for the demand and punitive measures. [Paras 12, 17, 19]

The demand for differential duty, confiscation, fine and penalties could not be sustained and therefore were not correct.

Final Conclusion: All contested issues were decided in favour of the appellant: the statement relied upon was not voluntary, the electronic invoices from the proprietor's laptop were inadmissible or not linkable to the imports, contemporaneous import data (except for two items) did not justify rejection of declared values without consideration of commercial factors and adequate particulars, and the consequential demand, confiscation and penalties were unsustainable. The appeal was allowed and the impugned order set aside.

Entitlement to enforce the Foreign Arbitral Awardand the Corrective Award - lifting corporate veil - post dated cheques - security an undated cheque - security cheque as voluntary guaranty - Whether the appellant is entitled to seek enforcement of the Foreign Arbitral Award dated 26.03.2021 and the Corrective Award dated 17.05.2021 against the 1st and 2nd respondents jointly and severally since they were Group Companies, irrespective of the fact that the 2nd respondent was not a signatory to the agreement relating to which arbitration proceedings were initiated and also not a party during the arbitral proceedings but solely on the basis of a cheque issued by the 2nd respondent as security for the liabilities of the 1st respondent?

Enforcement of foreign arbitral award against a non party who provided security -security cheque as voluntary guaranty - no necessity to lift corporate veil where party has voluntarily undertaken security - HELD THAT: - The Court found that the 2nd respondent voluntarily and with full knowledge issued an undated cheque specifically as security for the disputed discharge port demurrage which was the subject matter of the arbitral proceedings. That cheque corresponded to the exact sum claimed before the tribunal and was accepted and acted upon in earlier court proceedings where the 2nd respondent was recorded as a group company and the cheque was treated as security. Having thus undertaken to provide security for the claim, the 2nd respondent effectively stood as a guarantor for enforcement of any award in favour of the appellant. The technical objection that the 2nd respondent was not a party to the charterparty or to the arbitration and was not heard during the arbitral process was rejected because the 2nd respondent's voluntary act in issuing security exposed it to enforcement once an award was rendered. The Court emphasised that this conclusion did not rest upon piercing the corporate veil; rather, the 2nd respondent's own conduct - issuing the cheque as security for the specific disputed amount - was sufficient to render it liable to enforcement of the award. The 1st respondent's insolvency and liquidation reinforced the practical necessity of permitting enforcement against the security provider to avoid a miscarriage of justice. [Paras 64, 65, 66, 67, 68]

The appellant is entitled to enforce the foreign arbitral award and corrective award against the 2nd respondent jointly and severally with the 1st respondent on the basis of the cheque issued by the 2nd respondent as security; there is no need to lift the corporate veil.

Final Conclusion: The Single Judge's order is set aside; the appellate court allows the appeal and holds that the award may be enforced against the 2nd respondent jointly and severally with the 1st respondent on the basis of the cheque issued as security; no costs.

Payment to operational creditors under Section 30(2)(b) - compliance with court-recorded undertaking regarding employees' twelve months' entitlement - fair and equitable distribution.

Compliance with court-recorded undertaking regarding employees' twelve months' entitlement - HELD THAT:- The Adjudicating Authority's order of 05.12.2025 recorded that the Resolution Plan provides for payment to employees to the extent of the higher of (i) twelve months' entitlement or (ii) the percentage payable to unsecured financial creditors. The Tribunal examined the admitted position in the pleadings that unsecured financial creditors are to receive 0.96% of their admitted claims and noted the Resolution Plan earmarks an overall amount for employees which, on the parties' own figures, yields a pay-out to the employees that exceeds the percentage payable to unsecured financial creditors. On that basis the Tribunal concluded that the pay-out under the Resolution Plan conforms with the undertaking recorded on 05.12.2025 and that there was no breach of the recorded statement. [Paras 7, 11]

The pay-out under the Resolution Plan does not violate the undertaking recorded on 05.12.2025 and requires no interference.

Payment to operational creditors under Section 30(2)(b) - HELD THAT: - The Tribunal considered the financial structure of the Resolution Plan against Section 30(2)(b), noting that the total realisable amount in the plan and the admitted claims of secured financial creditors result in a liquidation value for operational creditors that is nil. Section 30(2)(b) entitles operational creditors to receive at least what they would obtain on liquidation or under the alternative distribution; the Resolution Plan earmarks an aggregate sum for employees and, given the admitted liquidation scenario and the comparative percentages before the Tribunal, the proposed distribution to employees is held to meet the statutory floor. Accordingly, there was no legal infirmity in the Adjudicating Authority's approval of the plan under Section 30(2)(b). [Paras 10, 11]

The Resolution Plan complies with the requirements of Section 30(2)(b) as regards operational creditors and no interference is warranted.

Final Conclusion: The Tribunal finds no merit in the challenge: the pay-out to employees under the approved Resolution Plan conforms with the court-recorded undertaking and with Section 30(2)(b); the impugned order approving the Resolution Plan is therefore upheld and the appeal is dismissed.

Impleadment application - suspended director seeking to be made a party to the appeal - test for impleadment - Necessary party under Order 1 Rule 10 CPC - commencement of corporate insolvency resolution process - inability to show that lis cannot be effectively decided in absence - competence of resolution professional to represent the corporate debtor.

Necessary party under Order 1 Rule 10 CPC - inability to show that lis cannot be effectively decided in absence - competence of resolution professional to represent the corporate debtor - HELD THAT: - The applicant failed to establish that the lis cannot be effectively decided in his absence as required by Order 1 Rule 10 CPC. The grounds advanced were unsubstantiated by supporting documents and did not demonstrate any distinct interest or right of the applicant that would be directly affected by the limited controversy before the Tribunal, which concerns alleged non-consideration of Section 65 by the NCLT in admitting the Section 10 petition. The Resolution Professional had entered appearance and filed a response, and is competent to represent the corporate debtor and to obtain information from the suspended director under the Code, thereby negating the necessity of impleadment. The application appeared to be aimed at obstructing enforcement of the decree obtained by the operational creditor rather than showing any legitimate procedural or substantive need for the applicant's presence in the appeal.

Impleadment application rejected; applicant is not a necessary party and the appeal can be effectively decided without him.

Final Conclusion: The application for impleadment by the suspended director is dismissed for failure to satisfy the test for necessary parties under Order 1 Rule 10 CPC; the Resolution Professional is competent to represent the corporate debtor and the appeal will proceed without the applicant.

Limitation and acknowledgment under Section 18 of the Limitation Act - compliance with principles of natural justice in ex parte proceedings - establishment of debt and default for admission under Section 7 - initiating the Corporate Insolvency Resolution Process (CIRP).

Limitation and acknowledgment under Section 18 of the Limitation Act - Whether the Section 7 application was barred by limitation. - HELD THAT: - The Tribunal examined Part IV of the Section 7 application and the contemporaneous correspondence filed therewith, including the Corporate Debtor's letters dated 02.11.2015 and 18.11.2015 (acknowledging the irregularity and seeking restructuring) and subsequent OTS proposals (05.01.2018, 28.09.2020, 23.07.2024, 23.08.2024). These documents, pleaded and annexed to Part IV, constituted acknowledgements within the meaning of Section 18 of the Limitation Act and thereby extended the limitation. Further, the Financial Creditor's own CIRP period and the effect of the Supreme Court's order in Suo Moto Writ Petition No.3 of 2020 were held to enure to its benefit. On these bases the Adjudicating Authority's conclusion that the application was filed within limitation was upheld. [Paras 6, 7, 8, 9]

The Section 7 application was not time-barred; limitation was extended by acknowledgments/OTS proposals and related events.

Compliance with principles of natural justice in ex parte proceedings - Whether the Adjudicating Authority violated principles of natural justice by proceeding ex parte against the Corporate Debtor. - HELD THAT: - The Tribunal reviewed the chronology of substituted service (publication in the local newspaper), the Corporate Debtor's counsel entering appearance on 22.08.2025 and seeking time to file Vakalatnama and reply, and the subsequent adjournment granted when the Managing Director was recently released from custody. Despite opportunities and specific directions, no reply was filed and there was no appearance on 07.10.2025, leading to the ex parte order dated 06.11.2025. Given the counsel's initial appearance after substituted service and repeated opportunities granted by the Adjudicating Authority, the Tribunal found no breach of natural justice in proceeding ex parte. [Paras 11, 12, 13]

No violation of principles of natural justice; ample opportunity was afforded before proceeding ex parte.

Establishment of debt and default for admission under Section 7 - Whether the Financial Creditor had established debt and default sufficient for admission of the Section 7 application. - HELD THAT: - The Tribunal noted that disbursement was not disputed and that multiple restructuring requests and OTS proposals from the Corporate Debtor amounted to clear acknowledgements of debt. The documentary material in Part IV supported the Adjudicating Authority's findings that debt and default existed. On the record before it, the Tribunal found no error in the Adjudicating Authority's conclusion to admit the Section 7 application and appoint an Interim Resolution Professional. [Paras 12, 13]

Debt and default were established on the record; admission under Section 7 was justified.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's admission of the Section 7 application and related findings on limitation, natural justice and debt/default are upheld.

Company Petition under Section 9 - Pre-existing dispute between the parties - date of default - initiation of the corporate insolvency resolution process - Whether the Appeal is maintainable on the grounds of pre-existing disputes.

Pre-existing dispute - plausible contention requiring further investigation - reconciliation indicating pre-existing dispute - HELD THAT:- The Tribunal examined the correspondence and contemporaneous communications exchanged prior to the demand notice and concluded that substantial disputes existed on multiple counts including discrepancies in invoices, tax issues and pending reconciliations. Emails dated 17.08.2018, 13.11.2018, 22.11.2018 and 05.12.2018 and other material on record indicated requests for reconciliation and specific comments on quantities, LD, generation loss and related adjustments. Applying the test in Mobilox and the later guidance in Sabarmati, the Tribunal held that it was sufficient that a plausible, non-spurious dispute existed which required further investigation; the adjudicating authority was therefore correct in rejecting the Section 9 petition on the ground of a pre-existing dispute. [Paras 42, 43]

There existed a pre-existing dispute manifest from prior communications and requests for reconciliation; the Section 9 petition was not maintainable on that ground.

Date of default - payment terms and default timing - Whether the demand notice was premature because default had not occurred as per the payment/default clause in the work order. - HELD THAT: - The Tribunal considered the terms of the work order (Clause 38) which provided that default would accrue only after 365 days from the date the amount fell due, and noted that the invoices spanned from 20.07.2018 to 14.05.2019. On that basis it was found that the earliest date of default (if reckoned under the clause) would fall after issuance of the demand notice dated 02.07.2019; accordingly there was merit in the contention that the demand notice was premature and that no default had occurred on the date the notice was issued. Although the Tribunal ultimately rested its dismissal on the existence of pre-existing disputes, it recorded that the argument on premature demand/default had force. [Paras 46, 47]

The demand notice was prima facie premature as default, by the terms of the contract, would occur only after the 365 day period; therefore no default had occurred at the time of the notice.

Final Conclusion: The Tribunal found on the materials that substantial pre-existing disputes (including pending reconciliation) existed and that the demand notice was prima facie premature; the Adjudicating Authority's rejection of the Section 9 petition was upheld and the appeal dismissed.

Validity of lease deed executed by authorised signatory - leasehold interest - burden of proof for consideration - proof of consideration for transfer of leasehold rights - inclusion of disputed asset in information memorandum - scope of adjudicating authority to determine fraud or forgery in IBC proceedings.

Validity of lease deed executed by authorised signatory - Whether the Lease Deed dated 24.09.2007 was executed by persons authorised to bind BSIDC and Magadh such that it could vest leasehold rights in the Corporate Debtor. - HELD THAT: - The Tribunal found that the Lease Deed itself recorded that specific officers (A.K. Srivastava and B.B. Lal in respect of BSIDC; J.S. Misra and B.B. Lal in respect of Magadh) were authorised to execute the deed, but the deed was in fact executed on behalf of BSIDC by one Dashrath Prasad (a typist) and on behalf of Magadh by a person not shown to be a director. On this basis the Adjudicating Authority was justified in concluding that the Lease Deed was not executed by authorised persons and therefore could not confer any right on the Corporate Debtor. The Tribunal accepted that conclusion and held that the deed was unenforceable for want of execution by authorised signatories. [Paras 16, 28, 29, 30, 31]

Lease Deed dated 24.09.2007 was not executed by authorised persons on behalf of BSIDC and Magadh and therefore did not vest leasehold rights in the Corporate Debtor.

Proof of consideration for transfer of leasehold rights - Whether the Corporate Debtor proved payment of the upfront consideration and lease rent recorded in the Lease Deed so as to make the deed enforceable. - HELD THAT: - The Adjudicating Authority noted the Memorandum of Consideration in the Lease Deed alleging payments by various cheques, but the bank statement produced showed no debits corresponding to those cheques and no other reliable documentary evidence of payment was placed on record by the Corporate Debtor or the Resolution Professional. In the absence of proof of the alleged upfront payment and lease rent, the transaction could not be treated as having transferred leasehold rights. The Tribunal upheld this conclusion that the required proof of consideration was not produced and made the deed unenforceable on this ground as well. [Paras 16, 31, 33, 34]

No admissible evidence was produced to prove the upfront payment or lease rent alleged in the Lease Deed; absence of such proof renders the Lease Deed unenforceable.

Scope of adjudicating authority to determine fraud or forgery in IBC proceedings - inclusion of disputed asset in information memorandum - HELD THAT: - It is well settled that fraud and forgery are issues, which require evidence to be taken for returning any finding of fraud and forgery. The Adjudicating Authority conducts the IBC proceedings in accordance with the IBC and CIRP Regulations and it cannot act as a Civil Court to enter into issues of fraud and forgery, take evidence and return any findings. However, whether an asset, which is claimed by the CD is asset of the CD, is a question, which needs to be considered and answered by the Adjudicating Authority and Adjudicating Authority has ample jurisdiction to decide the issue whether the particular asset, which is claimed by the CD as its asset can be treated to be asset of the CD or not. However, above is with a caveat that while deciding such question, the Adjudicating Authority cannot embark upon the issues pertaining to fraud and forgery. Any document, which is alleged to have been obtained by fraud or manipulation, becomes a voidable document, which requires a declaration to lose its enforceability. However, when a document can be established as void or unenforceable, it does not require any declaration. Thus, the limited jurisdiction, which can be exercised by the Adjudicating Authority is as to whether any document claimed in the proceedings is void or unenforceable. We have to consider the submissions of the parties in the light of the above principles, which are well established.

As noted, the bone of contention between the parties are on the Lease Deed dated 24.09.2007, which is claimed to have been executed in favour of the CD, on the basis of which the CD claims leasehold rights, which was shown by the RP in the Information Memorandum. On the other hand, both BSIDC and Magadh have denied to have executed the said Deed and further denied to have received any consideration as was claimed in the document. [Paras 23, 24, 35]

Given the unenforceability of the Lease Deed, the Adjudicating Authority rightly excluded the disputed land and plant from the Corporate Debtor's assets and declined plan approval; this conclusion was within its limited IBC jurisdiction and did not amount to an impermissible adjudication of fraud or forgery.

Final Conclusion: The impugned decision of the Adjudicating Authority is upheld: the Lease Deed dated 24.09.2007 was found unenforceable for want of execution by authorised signatories and for failure to prove consideration, the disputed land and plant cannot be treated as assets of the Corporate Debtor for inclusion in the Information Memorandum, and the appeals are dismissed; the order does not preclude the financial creditor from pursuing other lawful remedies to recover its dues.

Round-tripping-Establishment and use of two wholly owned overseas subsidiaries and their borrowings, followed by reinvestment into Indian group companies -bona fide business activity - contravention of Section 6(3)(a) of the Foreign Exchange Management Act, 1999 - application of Regulations 6(2)(ii) and 7 of the FEMA (Transfer or Issue of Any Foreign Security) Regulations, 2004 - reliance on Reserve Bank of India observations and independent application of mind by the adjudicating authority.

Round-tripping - bona fide business activity - Whether investments made through two wholly owned overseas subsidiaries amounted to round tripping and thereby contravened Section 6(3)(a) of FEMA, 1999 and Regulations 6(2)(ii) and 7 of the 2004 Regulations. - HELD THAT: - The Tribunal examined the formation of two wholly owned subsidiaries in Mauritius, their minimal initial equity, subsequent large borrowings from overseas banks and reinvestment into group companies in India. Relying on the Supreme Court's discussion of 'round tripping' and the IMF definition, the Tribunal accepted that channeling of local funds abroad and their return as direct investment can constitute round tripping. The Tribunal found the subsidiaries were not carrying on bona fide overseas business operations but were used to obtain foreign borrowings which were reinvested into related Indian group entities. Having regard to the statutory scheme permitting outward direct investment only where the overseas JV/WOS is engaged in bona fide activity and the safeguards in Regulation 7 for entities engaged in financial services, the Tribunal held the transactions circumvented the relevant regulatory framework and amounted to contravention of Section 6(3)(a) read with Regulations 6(2)(ii) and 7. The Tribunal rejected the appellants' submissions that inward FDI/investment via authorised dealers or absence of a statutory definition of 'round tripping' absolved them, treating the overall facts as establishing impermissible round tripping and regulatory breach. [Paras 21, 22, 23, 24, 25]

The Tribunal upheld the finding that the overseas investments constituted round tripping and were not bona fide business activity, and that the transactions contravened Section 6(3)(a) of FEMA, 1999 and Regulations 6(2)(ii) and 7 of the 2004 Regulations.

Reliance on Reserve Bank of India observations and independent application of mind by the adjudicating authority - Whether the Special Director acted mechanically by merely reproducing RBI observations without independent analysis so as to vitiate the penalty order. - HELD THAT: - Appellants contended the order was a mechanical adoption of RBI's letter without application of mind. The Tribunal reviewed the impugned order and the material considered by the Special Director, including the replies of the appellants and the RBI communication. The Tribunal concluded that the Special Director did more than reproduce RBI observations: he analysed the factual matrix, referred to the nature and use of the overseas subsidiaries, and applied relevant legal concepts (including the concept of round tripping) in reaching the conclusion. Consequently, the Tribunal found no procedural infirmity of blind adoption of RBI's view that would require interference. [Paras 23, 24]

The Tribunal rejected the submission of mechanical reliance on RBI and held that the Special Director applied his own analysis and mind in recording the finding and imposing penalty.

Final Conclusion: The appeals were dismissed. The Tribunal upheld the Special Director's conclusion that the two overseas wholly owned subsidiaries were used for round tripping and not bona fide business activity, and that the transactions contravened Section 6(3)(a) of FEMA, 1999 and Regulations 6(2)(ii) and 7 of the 2004 Regulations; it also held that the adjudicating authority had applied independent mind in arriving at the penalty.

Provisional attachment - definition of 'proceeds of crime' - value of property equivalent - sufficient reason to believe for issuance of show cause notice - presumption of tainted deposits - disproportionate assets - huge proceeds of crime in cash through cheques and from ATM and also issued cheques in the name of others and used the embezzled amount for his own purposes - Whether the property can be attached, even if the appellant were not the accused persons for commission of any predicate offence?

Provisional attachment irrespective of whether the holder is accused of the predicate offence - Property can be attached even if the person in whose name it stands is not accused in the predicate offence. - HELD THAT: - The Tribunal held that Section 5(1) and the scheme of the PMLA permit attachment of property linked to proceeds of crime regardless of whether the person holding the property is an accused in the scheduled offence. Reliance was placed on the Supreme Court's decision in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] which recognises that the Act reaches proceeds of crime 'in whosoever's name they are kept'. The investigation disclosed cash deposits, transfers and transactional patterns connecting the Mangal family to embezzled funds and the CBI charge sheet included the appellant's husband for offences under the IPC; on this basis the appellant's contention that attachment is impermissible in absence of predicate accusation was rejected. [Paras 6]

Attachment in the hands of a non accused is permissible; issue answered against the appellant.

Proceeds of crime - sufficient reason to believe for issuance of show cause notice may be formed from confessional statements and corroborative seizures - Deposits made by the accused and statements, together with seizures, furnished sufficient basis to treat such deposits as proceeds of crime and to issue the show cause notice; the appellant's explanation that deposits were genuine family transactions was not accepted. - HELD THAT: - The Tribunal examined the statement of the principal accused under Section 50 of PMLA admitting transfer of embezzled funds to the Mangal family, corroborative bank deposits into accounts of the appellant and her husband, seizing of cash and gold from lockers, unexplained cash deposits and expenditure (including partially burnt notes), and inconsistencies in income expenditure calculations. It applied the legal interpretation of 'proceeds of crime' (including the 'value of any such property' limb) as expounded in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] and Prakash Industries [2025 (11) TMI 257 - DELHI HIGH COURT] and concluded that ED had sufficient material to form the requisite 'reason to believe' and to treat the impugned assets as derived from proceeds of crime. The appellant's plea that deposits were legitimate family assistance and that no disproportionate assets were shown was found unpersuasive in view of the cumulative evidence. [Paras 7, 8]

The show cause notice and attachment were justified; issues decided against the appellant.

Proceeds of crime includes the value of such property and property equivalent in value - The appellant failed to satisfactorily explain sources for acquiring the impugned property and ED's computation of unexplained income, expenditure and investments supported attachment. - HELD THAT:- The appellant produced documents concerning sale proceeds of a plot and instalment payments for a flat and claimed an exchange of flats without monetary consideration. The Tribunal found that ED had properly scrutinised bank records, salary receipts, provident fund and other documentary material, adjusted previously undervalued components, and taken into account seized items and unexplained expenses. Applying the statutory definition of 'proceeds of crime' and the authorities which allow attachment of property or its value where tainted property cannot be traced, the Tribunal concluded that the appellant's explanations did not satisfactorily account for the differential between declared income and the assessed expenditure/investments. [Paras 8]

Explanation of source was inadequate; attachment confirmed.

Final Conclusion: The appeal is dismissed for lack of merit; the Adjudicating Authority's confirmation of the provisional attachment order is sustained.

Reconsideration of service tax demands raised on income-tax return inputs - application of observations recorded in earlier remand order - negative list doctrine - Withdrawal of bank attachment - Validity of the Orders-in-Original at Annexures-A, B and C, contending that the orders are passed raising demand of service tax solely on the basis of inputs received from the Central Board of Direct Taxes, whereby the records relating to income tax returns are stated to have indicated sales/gross receipts from services.

Reconsideration of service tax demands raised on income-tax return inputs - application of observations recorded in earlier remand order - HELD THAT: - The Court found that the impugned Orders in Original had raised demand of service tax solely relying upon inputs from income tax return declarations (noted in the adjudication orders). Having regard to the order passed in W.P. No. 11154/2023 and connected petitions, the Court directed that the matters be reconsidered from the stage of reply to the show cause notice and that the designated officers take into account the observations extracted from that earlier order (including the specific queries recorded at para 10 concerning qualification under the statutory definition, applicability of the negative list and exemptions, applicability of notifications and rules, and limitation). All contentions on the merits and on jurisdiction are kept open and petitioners are at liberty to file fresh replies within a reasonable time fixed by the authorities. The note that some appeals were dismissed for non compliance with pre deposit requirements does not preclude reconsideration; the adjudication itself requires fresh consideration in light of the directions. [Paras 5, 6, 7, 9]

Orders in Original set aside and remitted to the stage of reply to the show cause notice for fresh consideration, with instructions to apply the observations recorded in the earlier remand order; all substantive contentions left open.

Withdrawal of bank attachment - HELD THAT: - The Court took cognisance that the Orders in Original were set aside and remitted for fresh consideration, and accordingly held that any bank attachment effected pursuant to those orders must cease to have effect. The respondent authorities were directed, upon receipt of certified copies of this order, to immediately issue instructions withdrawing the debit freeze/attachment with respect to the specified bank accounts. [Paras 11]

Bank attachment to cease; respondent authorities to issue immediate instructions withdrawing the debit freeze upon receipt of certified copies.

Final Conclusion: The Orders in Original are set aside and the matters remitted to the adjudicating authorities for reconsideration from the stage of reply to the show cause notices, with directions to apply the observations in the earlier remand order; petitioners may file fresh replies and the bank attachments effected pursuant to the impugned orders are to be withdrawn.

Taxability of activities of blending, packing and related handling - Business Auxiliary Service under Section 65(105zzb) of the Finance Act, 1994 - essential character test -exemption as "agricultural produce" under Notification No.14/2004-ST dated 10.09.2004 (and Notification No.9/2003-ST dated 20.06.2003) for the relevant period - collection of manufactured tea from auction centre, storing, blending and repacking of tea for their clients.

Production or processing of goods for, or on behalf of, the client - HELD THAT: - The contract between the appellant and the client required collection, transport, unloading, grading, opening of bags, removal of foreign material, blending, filling, weighing, sealing, stitching, sealing of pouches and cartons, and related stacking and dispatch. Those tasks, undertaken on behalf of the client and effected to prepare tea for packaging and marketability, constitute processing/packing activities performed for the client and do not amount to manufacture. On that basis such activities fall within the definition of 'Business Auxiliary Service' as production or processing of goods for, or on behalf of, the client, and therefore were correctly characterised as taxable services by the authorities. [Paras 6]

The appellant's blending, packing and related operations fall within the scope of Business Auxiliary Service as production/processing carried out for the client.

Agricultural produce exemption for blended and packed tea - Whether tea, after the blending, packing and repacking activities undertaken by the appellant, retained its character as 'agricultural produce' and thereby qualified for exemption under Notification No.14/2004-ST. - HELD THAT: - Having held that the appellant performed processing/packing on behalf of the client, the Court examined whether those processes altered the essential character of tea. Reliance on judicial authority establishes that processes such as roasting, blending and packing do not change the essential character of tea as an agricultural produce; such processing may be necessary to make tea marketable but does not convert it into a non-agricultural product. The exemption under Notification No.14/2004-ST (as invoked) applies to agricultural produce, and the authorities below failed to address this exemption despite its specific plea by the appellant. In consequence, the activities, though falling within Business Auxiliary Service, relate to an agricultural produce that is exempt under the notification. [Paras 7, 8]

Blending, packing and repacking did not change tea's essential character as agricultural produce; the activities are covered by the exemption in Notification No.14/2004-ST.

Final Conclusion: The appeal is allowed: although the appellant's operations constitute production/processing for the client under Business Auxiliary Service, the blended and packed tea retains its character as agricultural produce and is therefore covered by the exemption under Notification No.14/2004-ST; the impugned order is set aside with consequential relief as per law.

Demand of service tax on commission paid to brokers for canvassing voyages - business auxiliary services - failure to specify applicable sub clause of Business Auxiliary Service - mutuality doctrine - protection and indemnity fee paid to the P&I Clubs under general insurance services - short payment by non-inclusion of all the expenses incurred while paying service tax on freight charges related to ships sailing on national waterways -extended period of limitation not invokable absent fraud, collusion or wilful suppression.

Defective show cause notice for failure to specify applicable sub clause of Business Auxiliary Service - HELD THAT:- The SCN did not identify which of the seven sub clauses of Section 65(19) covered the activity, nor explain how the services satisfied Section 65(105)(zzb). The adjudicating authority likewise failed to state the precise sub clause or the statutory provision constituting the taxable BAS and relied on the Rule 3(iii) invocation without putting the appellant on notice of the precise category. A show cause notice lacking such fundamental particulars denies the assessee an opportunity to meet the charge and vitiates the proceedings; authorities and precedents were applied to hold the demand unsustainable. [Paras 20, 21, 22, 23]

The demand on broker commission under Business Auxiliary Service is set aside for defective SCN and absence of evidence establishing the specific BAS sub clause.

Mutuality of P & I clubs and classification as club or association - HELD THAT: - The record and SCN concede that P & I clubs operate as mutual insurance associations providing cover to member shipowners on the basis of contribution/pool and mutuality. The authorities failed to examine whether a service provider/recipient relationship existed distinct from mutual contributions. Applying the principle that the most specific description prevails and following the reasoning in State of West Bengal v. Calcutta Club Ltd.[2019 (10) TMI 160 - SUPREME COURT (LB)], the tribunal held that the P & I clubs fall within the more specific classification of club/association rather than the generic definition of insurer, and that mutuality precludes exigibility of service tax in the circumstances shown. [Paras 30, 31, 32, 33, 34]

The demand treating payments to P & I clubs as taxable General Insurance Services is set aside because the clubs are governed by mutuality and are more appropriately classifiable as clubs/associations.

Invalidity of Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 - HELD THAT: - The Supreme Court in UOI v. Intercontinental Consultants [2018 (3) TMI 357 - SUPREME COURT] has held that Rule 5(1), which sought to include reimbursed expenses in the taxable value, is ultra vires Sections 66 and 67 and cannot be applied to determine value. Accordingly, any demand premised on Rule 5(1) for adding such expenditures to the taxable value must be set aside. [Paras 35, 36]

The contested demand invoking Rule 5(1) for addition of address commission/expenditures is quashed as unsustainable.

Extended period of limitation not invokable absent fraud, collusion or wilful suppression - HELD THAT: - The SCN did not adduce any evidence of fraud, collusion or wilful mis statement or suppression with intent to evade duty. Mere non declaration and the appellant's bona fide belief about non taxability, supported by account records, negate the requisite mens rea for invocation of extended limitation. Precedents require specific allegation of deliberate suppression for extended period; in their absence the extended period is not maintainable. [Paras 37, 38]

Invocation of the extended period is not tenable and the findings based on extended limitation are set aside.

Final Conclusion: The appeals are allowed: the impugned demands and penalties confirmed in respect of broker commission, payments to P & I clubs, additions made under Rule 5(1), and the invocation of the extended period, are set aside for the reasons stated, with consequential reliefs as may follow in law.

Building leased out for use as a hotel - Renting of Immovable Property Service for furtherance of business or commerce - Explanation 2 to Section 65(105)(zzzz) deeming partial business use - Whether the building leased out for use as a hotel with other facilities like a restaurant, banquet hall, conference hall, bar and health club, qualifies for the specific exclusion/exemption provided under Section 65(105)(zzzz) in respect of buildings used as hotels.

Renting of immovable property exclusion for buildings used for accommodation - Explanation 2 to Section 65(105)(zzzz) deeming partial business use - HELD THAT: - The Tribunal held that the leased premises, although containing facilities such as restaurant, banquet hall, conference hall, bar and health club, constitute a hotel where such facilities are integral and incidental to the activity of running the hotel rather than separate, independent commercial deployments. There is no material showing of bifurcation of use of the premises or that those facilities operated so as to convert portions of the property into distinct commercial establishments; consequently Explanation 2 (which deems an immovable property partly used for business to be used for business) is not attracted. The Tribunal applied the plain-text exclusion for buildings used for accommodation under the definition in Section 65(105)(zzzz) and followed the reasoning of the Coordinate Bench in GRAND ROYALE ENTERPRISES [2018 (10) TMI 656 - CESTAT CHENNAI], which addressed the same question and was affirmed by the Supreme Court [2022 (9) TMI 273 - SC ORDER]. On these grounds the impugned demand and consequential findings were held unsustainable. [Paras 6, 7, 8, 9]

The premises qualify as a building used for accommodation (hotel) and are excluded from the taxable service; Explanation 2 is not attracted and the impugned orders are set aside with consequential relief as per law.

Final Conclusion: The Tribunal set aside the impugned orders holding that the leased premises qualify for the exclusion as buildings used for accommodation and that Explanation 2 does not render the property taxable; consequential relief is granted to the appellant.

Eligibility for cum tax benefit under Section 67(2) of the Finance Act, 1994 when invoices show service tax separately but the tenant did not pay the service tax - extended period of limitation - suppression of facts - Imposition of penalty - invoice showing tax separately - payment with interest prior to show cause.

Cum-tax valuation under Section 67(2) - Whether the appellant could claim cum-tax benefit when invoices separately showed service tax but the tenant did not pay the tax. - HELD THAT: - The Tribunal found that the invoices issued by the appellant expressly showed service tax separately and, therefore, non-payment of the tax by the tenant did not absolve the appellant of liability to discharge service tax. The appellant could have resorted to debit/credit note or other lawful recovery mechanisms but could not treat the separately shown tax as not payable. The Tribunal distinguished the precedents relied upon by the appellant on facts, noting those cases did not involve invoices showing separate tax components. Consequently the demand for tax on the gross amount as reflected in the invoices was held to be sustainable and the duty along with interest was upheld. [Paras 2, 3, 8]

Demand of service tax on the gross amount shown in the invoices is upheld.

Penalty under Section 78 and relief under Section 80 - HELD THAT: - The Tribunal recorded that the appellant had paid the differential duty with interest before issuance of the show-cause notice and that the appellant's conduct, including payment before adjudication and financial difficulties arising from non-receipt from service recipients, established bonafide. Taking these facts into account and the appellant's plea under the relevant provisions, the Tribunal exercised its discretion under the statutory scheme to grant relief: the adjudicated demand of duty with interest was maintained, but the balance penalty under the relevant provision was set aside by applying the benefit envisaged by Section 80. [Paras 9, 10]

Duty and interest upheld; balance of penalty set aside and relief granted under Section 80.

Final Conclusion: The appeal is partly allowed: the demand of service tax for the period 01.10.2012 to 31.03.2014 is sustained (tax and interest payable), but having regard to payment of duty and interest prior to the show-cause notice and the appellant's bonafide, the balance penalty is set aside under the statutory provision; consequential relief, if any, to follow in accordance with law.

Extended period of limitation - Demand duty for the extended period of 5 years - recovery of short-paid duty amount on the goods cleared on inter-unit transfer basis - Expenses pertaining to manufacturing of other items - Cost of production - administrative overheads - suppression of facts with intent to evade duty - research and development expenses - imposition of equal penalty under Section 11AC - Whether invocation of extended period as per proviso to Section 11A (1) [upto 07.04.2011] and Section 11 (4) [w.e.f 08.04.2011) is justified or not ?

Cost of production - Exclusion of expenses pertaining to manufacture of other items from CAS-4 value for inter unit transfers - HELD THAT: - This Tribunal had earlier decided in the appellant's own case that certain machine shop and notional power costs (expenses pertaining to manufacture of other items) are not to be included in the cost of production for the periods concerned. The same reasoning applies to the demands in the present appeals. The Adjudicating Authority's confirmation of the addition under this head is therefore inconsistent with the earlier Tribunal findings and cannot be sustained. [Paras 15]

Demand under this head set aside.

Administrative overheads - Inclusion of administrative overheads in CAS-4 value for inter unit transfers - HELD THAT: - At Para 5.7 of CAS 4 distinguishes administrative overheads relating to production (includible) from those relating to non manufacturing activities (to be excluded). Similar grievances in the appellant's earlier appeals were allowed by this Tribunal which held that corporate/marketing/admin expenses (printing, stationery, travel, legal, etc.) not directly in relation to manufacturing should be excluded even though CENVAT credit was availed. Following that decision, the inclusion of administrative overheads in assessable value in the impugned order is unsustainable. [Paras 16]

Demand raised by including administrative overheads set aside.

Research and development expenses - Whether R&D expenses incurred by the appellant relate to the products stock transferred (Rings & Spindles) or to development of a distinct new product (HL insert assembly) - HELD THAT: - The Adjudicating Authority assumed without adducing evidence that R&D expenditures were aimed at improving the existing finished products and hence includible in cost of production. The appellant asserts the R&D expenses related to development of a new product (HL insert assembly) and not to Rings & Spindles. The impugned order contains no discussion or basis to reject the appellant's specific claim. Given the absence of findings on merits and the factual nature of the claim, the matter requires fresh adjudication de novo. [Paras 17]

Issue remanded for de novo adjudication on merits.

Extended period of limitation - Invocation of extended period for recovery under the proviso to Section 11A(1) and Section 11A(4) - HELD THAT: - The Department was aware of the appellant's valuation method for inter unit transfers as evidenced by the Range Authority's letter which sought CAS 4 and noted cross checks, and there was only a departmental doubt about correctness rather than proof of suppression. Mere knowledge by the Department or suspicion does not constitute suppression with intent to evade duty. Thus, invocation of the extended period is unjustified where there is no established suppression or fraud. The letter from the Range Officer supports that the Department knew of the method; hence the extended limitation cannot be validly invoked. [Paras 18, 19]

Invocation of extended period held unjustified; extended period cannot be invoked.

Final Conclusion: Impugned Order in Original set aside and the appeal allowed on limitation grounds; specific additions under 'expenses pertaining to other items' and 'administrative overheads' are quashed, the R&D claim is remanded for fresh adjudication, and invocation of the extended period is held unjustified.

Transaction value under customs valuation - Minimum import price - concessional duty benefit - differential duty bond - Applicability of Notification No.23/2003-CE concessional benefit to advance DTA sales under FTP para 6.8(k) - Whether value of granite slabs and tiles cleared by the appellant (a 100% EOU) in DTA sales will be governed by DGFT notification fixing Minimum Import Price (MIP) or under Section 14 of the Customs Act, 1962?

Value of goods cleared by 100% EOU in DTA to be determined under Section 14 of the Customs Act, 1962 - HELD THAT:- The Tribunal held that the proviso to Section 3(1) of the Central Excise Act makes the value of goods brought into DTA by a 100% EOU subject to determination under Section 14 of the Customs Act and the Customs Valuation Rules. The adjudicating authority had enhanced transaction value solely by applying the DGFT notification fixing a Minimum Import Price (MIP) without any independent evidence of manipulation of the transaction value. Reliance on the CESTAT Mumbai decision in Crystal Granite and Marble Pvt. Ltd. [2017 (3) TMI 1144 - CESTAT MUMBAI] supported the conclusion that MIP fixed for imports cannot automatically be treated as the cost of imported raw material or used to reject the declared transaction value where the sale was to unrelated buyers and price was the sole consideration. In absence of cogent evidence to reject the transaction value, enhancement based only on the DGFT MIP was unsustainable. [Paras 5]

The demand founded on enhancement by applying DGFT MIP is set aside and the differential duty of Rs.3,33,83,762/- founded on that enhancement is deleted.

Applicability of Notification No.23/2003-CE concessional benefit to advance DTA sales under FTP para 6.8(k) - HELD THAT:- Notification No.23/2003-CE conditions the concessional benefit to clearances made in accordance with sub-paragraphs (a), (d), (e) and (g) of FTP para 6.8. Advance DTA sales permitted under para 6.8(k) therefore do not fall within the benefit. Further, the Development Commissioner's permission was subject to specific conditions including execution of a differential duty bond and monitoring; the appellant did not execute the bond and did not disclose the correct FTP sub paragraph in ER-2 returns. The Tribunal relied on the CESTAT Delhi precedent in Bony Polymers that non-fulfillment of conditions disentitles the assessee to the Notification benefit and permits invocation of the extended period. Although the demand for the relevant period is confirmed, the Tribunal found no mens rea to sustain equal penalty and accordingly declined to impose penalty under Section 11AC. [Paras 5]

Benefit of Notification No.23/2003-CE is not available for the advance DTA sales; demand of Rs.28,59,386/- for 2014-15 is confirmed with applicable interest, but penalty under Section 11AC is not imposed.

Final Conclusion: The appeal is partly allowed: the large valuation-based duty demand founded on DGFT's MIP is set aside, while the smaller duty demand relating to advance DTA sales for 2014-15 is upheld with interest; penalty is not imposed.

Valuation of excisable goods - determine the valuation of car-carrier bodies and to re-examine the issue of invocation of extended period​​​​​​​ -duty on car couriers as per the provision of Rule 8 of Central Excise Valuation Rules 2004 as the basis of CAS-4 prepared by Chartered Accountant - exemption contained in notification no. 6/2006-CE dated 01.03.2006.

Valuation of excisable goods​​​​​​​l - HELD THAT: - The Bench recorded that identical issues had been considered and finally decided in favour of the appellant by earlier CESTAT orders in the appellant's own matters. Those tribunal orders were not appealed by the Revenue. The authorities below nevertheless proceeded to resurrect the same controversy; the Bench held that such conduct by revenue officers - allowing adjudication to be repeatedly reopened despite an adverse tribunal decision which was not challenged - was contrary to judicial discipline and impermissible. In these circumstances the impugned order could not be sustained and had to be set aside, with consequential reliefs as per law. [Paras 5, 6]

Impugned order set aside and appeal allowed on the ground that the issue had been earlier finally decided by CESTAT in the appellant's favour and Revenue did not appeal those orders.

Final Conclusion: The appeal is allowed: the impugned order is set aside because the matter had been previously and finally decided by the CESTAT in favour of the appellant and the Revenue did not challenge those tribunal orders, rendering the re litigation impermissible; consequential reliefs to follow as per law.