TaxTMI Updates e-Newsletter
Mar 11,2026

Condonation of delay - entitlement to decision on merits despite limitation.

Condonation of delay - entitlement to decision on merits despite limitation - HELD THAT: - The Court recorded that the High Court [2025 (11) TMI 357 - ALLAHABAD HIGH COURT], while dismissing the writ petition, granted the petitioner liberty to approach the appellate authority with an appeal and provided that if such appeal was filed within three weeks limitation would not stand as a bar to consideration on merits.

The Supreme Court, after condoning the delay, declined to intervene with the High Court's approach but modified the timeline, directing that if the petitioner prefers an appeal within a fortnight the appellate authority shall proceed to decide it on merits. The direction requires the appellate authority to entertain and decide the appeal on its substantive merits notwithstanding the earlier limitation bar, provided the petitioner institutes the appeal within the extended period granted by this Court. [Paras 2, 3, 4]

Delay is condoned; petitioner may file the appeal within a fortnight and the appellate authority shall decide the appeal on merits despite limitation.

Final Conclusion: The special leave petition is dismissed.

Requirement to confine demand to amount proposed in the show cause notice under Section 75(7) - violation of statutory limitation of notice - remand for fresh adjudication where demand exceeds show cause notice.

Requirement to confine demand to amount proposed in the show cause notice under Section 75(7) - HELD THAT:- The Court noted that the impugned order for the tax period 2018-2019 confirmed a demand substantially higher than the amount proposed in the Show Cause Notice in Form GST DRC-01. That discrepancy rendered the impugned order contrary to the requirement that the final demand must be confined to the proposal in the show cause notice as mandated by Section 75(7) of the GST enactments. For that reason the Court set aside the impugned order and remitted the matter to the Respondent for fresh consideration on merits and in accordance with law. The petitioner was directed to file a proper reply to the Show Cause Notice treating the impugned order as an addendum within thirty days, and the Respondent was directed to pass a final order expeditiously, preferably within three months of such reply. The Court further recorded that if the petitioner fails to comply with the stipulations the Respondent may proceed to recover tax as if the writ petition had been dismissed, subject to giving due notice before passing any such order. [Paras 5, 6, 7, 8, 9]

Final Conclusion: Writ petition disposed of at the stage of admission by setting aside the impugned order for the tax period 2018-2019 as contrary to Section 75(7); the matter is remitted for fresh adjudication with directions for the petitioner.

Restoration of registration following withdrawal of cancellation order - preservation of parties right's against future action.

Restoration of registration following withdrawal of cancellation order - The Petitioner's GST registration was restored because the Respondents withdrew the impugned cancellation order after verifying the legal position, and the Court directed administrative steps to effect restoration. - HELD THAT: - The Respondents, through their counsel and on instructions, informed the Court that the concerned officers had verified the legal position and withdrew the impugned order cancelling the Petitioner's registration. In view of that withdrawal the Court directed that the Petitioner's registration shall stand restored and that necessary action to give effect to restoration be taken by the Respondents by the date specified. The Court also directed that the Petitioner be notified by email at the specified addresses. The order explains that the restoration is procedural following the Respondents' withdrawal and does not adjudicate the substantive rights; accordingly the Court expressly kept all other rights and contentions of the parties open, including the Respondents' entitlement to take appropriate action in accordance with law if material is found and the Petitioner's right to contest any such action. [Paras 3, 4, 5, 6]

Registration restored by reason of the Respondents' withdrawal of the cancellation order; respondents directed to take necessary steps to effect restoration and notify the petitioner, while all substantive rights of the parties remain reserved.

Final Conclusion: The petition is disposed by directing restoration of the Petitioner's registration following the Respondents' withdrawal of the cancellation order; administrative steps to effect restoration and email intimation are ordered, and all other rights and contentions are left open.

Entitlement to approach the concerned CGST authority for restoration of GST registration - payment of tax interest and late fee - compliance with the requirements of the proviso to Rule 22(4).

Cancellation of registration for non-filing of returns - HELD THAT:- The Court accepted that the petitioner's GST registration was cancelled on the ground of non-filing of returns for a continuous period of six months. Relying on the proviso to sub rule (4) of Rule 22 of the CGST Rules, 2017 and on the Coordinate Bench's decision in Pankaj Mohan [2025 (12) TMI 1452 - GAUHATI HIGH COURT] (and the cases relied upon therein), the Court held that where a person served with a show cause notice is willing to furnish all pending returns and make full payment of tax dues along with applicable interest and late fee, the proper officer may drop cancellation proceedings and pass the prescribed order for restoration in Form GST REG-20. The Court did not adjudicate the underlying merits of the cancellation but directed that the petitioner be permitted to approach the concerned authority with an application for restoration and compliance with the proviso. The authority is to consider the application in accordance with law and take necessary steps for restoration if the requirements of the proviso are met. The direction is temporal and procedural: the petitioner must approach within the period fixed by the Court and the authority must consider and act within the stipulated timeframe. [Paras 10, 11, 12]

Petitioner permitted to apply for restoration of GST registration by complying with the proviso to Rule 22(4); the concerned authority shall consider the application in accordance with law and take necessary steps for restoration if requirements are satisfied.

Final Conclusion: The writ petition is disposed of by directing the petitioner to apply for restoration of GST registration after compliance with the proviso to Rule 22(4) of the CGST Rules, 2017; the concerned authority is directed to consider and decide the application in accordance with law within the timeframe fixed by the Court.

Entitlement to regular bail - fraudulent availment of input tax credit - Offence under Section 132(1) (b) and 132(1) (c) and 132(5) of the Central GST Act, 2017 read with Section 20(xv) of the Integrated GST Act, 2017.

Regular bail - Grant of regular bail to the petitioner accused of offences under the CGST Act - HELD THAT:- Court found that the allegations relate primarily to documentary evidence which is already in the possession of the department and that further custodial interrogation would not serve any meaningful purpose. The petitioner has been in custody since 03.11.2025 and the trial is likely to be protracted due to voluminous documentary material. The offences are triable by the Magistrate and involve sentences of limited duration; precedents were noted where bail was granted in similar circumstances and the Court emphasised that personal liberty cannot be curtailed for an indefinite period. The Court therefore exercised discretion to release the petitioner on regular bail while expressly refraining from expressing any opinion on the merits, and directed the trial court to proceed expeditiously and independently on the basis of the evidence on record. [Paras 7, 8, 9]

Petitioner granted regular bail subject to furnishing bail/surety bonds to the satisfaction of the trial Court/concerned Magistrate

Final Conclusion: The petition is disposed of by directing release of the petitioner on regular bail subject to furnishing bonds; the trial court is to decide the matter on merits expeditiously and independently, and the Court has expressed no opinion on the substantive facts.

Failure to consider material submissions - breach of principles of natural justice - fresh hearing and reconsideration of show cause notice - HELD THAT:-

Failure to consider material submissions - Whether the impugned order was passed without affording a proper hearing and without considering the Petitioner's replies, requiring fresh consideration of the show cause notice. - HELD THAT: - The Court found that the show cause notice was issued after the death of the Petitioner's father and that the Petitioner had filed a detailed reply which was not taken into account in the impugned order. In view of these factual circumstances and the Petitioner's contention that he was confronted with a recovery allegedly relating to his deceased father, the Court concluded that the Petitioner must be afforded another opportunity to be heard on all contentions. The Court directed that, if the Petitioner requires documents relevant to the show cause notice, those documents shall be furnished on a specific application. Thereafter the authority is to pass a fresh order on the show cause notice after hearing the Petitioner and considering his submissions. [Paras 3, 4, 6, 7]

The Deputy Commissioner, Division-III, CGST & Central Excise Mumbai West Commissionerate, is directed to grant the Petitioner a fresh hearing, furnish requested documents on specific application, and after hearing pass a fresh order on the show cause notice within four weeks from the conclusion of the hearing; initial appearance fixed as directed by the Court.

Final Conclusion: The petition is disposed of by directing a fresh hearing and reconsideration of the show cause notice; all challenges to the statutory provisions are left open for determination by the authority or appropriate forum; no costs.

Constitutional validity of Sections 69 and 132 of the Haryana Goods and Services Tax Act, 2017 - want of legislative competence - arbitrary, unreasonable and ultra vires the Constitution of India - binding precedent; alternative remedies.

Vires of Sections 69 and 132 of the Haryana Goods and Services Tax Act, 2017 - HELD THAT: - The writ petition advanced that Sections 69 and 132 of the Haryana Goods and Services Tax Act, 2017 are arbitrary, unreasonable and beyond legislative competence. The Court found that the contention on vires is foreclosed by the binding decision of the Supreme Court in Radhika Agarwal vs. Union of India and others [2025 (2) TMI 1162 - SUPREME COURT (LB)], and accordingly negated the challenge. The petitioner's counsel conceded that the Supreme Court's decision covers this aspect, while reserving the petitioner's right to pursue other available remedies under law in respect of other prayers in the petition. [Paras 4]

The challenge to the vires of Sections 69 and 132 of the HGST Act is rejected pursuant to the Supreme Court precedent; petitioner granted liberty to pursue other remedies.

Final Conclusion: The petition was disposed of by rejecting the vires challenge to Sections 69 and 132 of the HGST Act in view of the Supreme Court's decision, with liberty to the petitioner to pursue other remedies available in law.

Constitutional validity of Sections 69 and 132 of the Haryana Goods and Services Tax Act, 2017 - want of legislative competence - arbitrary, unreasonable and ultra vires the Constitution of India - binding precedent; alternative remedies.

Vires of Sections 69 and 132 of the Haryana Goods and Services Tax Act, 2017 - HELD THAT: - The High Court held that the petitioner's challenge to the vires of Sections 69 and 132 of the HGST Act is unsustainable because the question is covered by the Supreme Court's decision in Radhika Agarwal v. Union of India [2025 (2) TMI 1162 - SUPREME COURT (LB)]. The petitioner conceded that this aspect was governed by the Supreme Court precedent but sought liberty to pursue other remedies. In view of the binding higher court precedent, the challenge to constitutional validity was negatived and the prayer for quashing proceedings under those provisions was rejected. The Court, however, granted liberty to the petitioner to pursue any other remedies available in law in respect of the remaining prayers. [Paras 2, 3, 4]

The challenge to the vires of Sections 69 and 132 of the HGST Act is rejected as covered by the Supreme Court decision; petitioner granted liberty to pursue other remedies in law.

Final Conclusion: The writ petition is disposed of with the challenge to the constitutional validity of Sections 69 and 132 of the HGST Act rejected as covered by existing Supreme Court authority; liberty is reserved to the petitioner to seek other remedies available in law in respect of the remaining reliefs.

Levy Service Tax/IGST on services by way of transportation of goods, by a vessel provided by a service provider located outside the taxable territory - ocean freight under CIF contracts - territorial nexus with the object sought to be achieved within the taxable territory and therefore being violative of Article 245 of the Constitution of India -reverse charge mechanism - unjust enrichment - valuation of service - Benefits of Notification No. 01/2017-ST dated 12th January 2017, Notification No. 14/2017-ST, Clause 1 (Explanation V) of Notification No. 15/2017-ST and clause 2 of Notification No. 16/2017-ST dated 13th April 2017.

Service tax/IGST not leviable on ocean freight under CIF contracts - reverse charge cannot be imposed on a third party who is neither service provider nor service recipient - HELD THAT: - The Court accepted that the controversy is covered by the Division Bench decision in Sanathan Textiles Pvt. Ltd. [2024 (3) TMI 241 - BOMBAY HIGH COURT], and by the decisions of the Gujarat in Sal Steel India Ltd. & Ors.[2019 (9) TMI 1315 - GUJARAT HIGH COURT]. Applying those authorities, the impugned notifications and provisions which sought to make importers liable under the reverse charge mechanism for sea transportation services that are arranged and paid for by foreign exporters in CIF contracts were held to be beyond the legislative and rule-making powers. The reasoning adopted is that the Finance Act recognises only the service provider and the recipient of service for levy and collection; importers in CIF contracts are neither the providers nor the recipients of the sea transportation service and therefore cannot be made liable as third parties under reverse charge. Further, the principle of composite supply under the GST scheme precludes a separate levy on the service component where the importer is already liable on the composite import transaction. In light of these legal conclusions, the show-cause notice and the letters issued to the petitioner under the impugned notifications lacked authority in law.

The impugned show-cause notice and departmental letters issued to the petitioner in respect of alleged liability to pay Service Tax/IGST on ocean freight in CIF contracts are quashed as issued without lawful basis.

Rule-making power under the Finance Act does not permit extra-territorial taxation - composite supply principle precludes separate levy of tax on service component - HELD THAT: - The Court held that any demand or collection made pursuant to the impugned notifications would be without authority and therefore susceptible to challenge under Article 265. The petitioner is entitled to seek a refund of any duty paid; however, the entitlement is subject to the statutory refund procedure and the usual limitation that refunds are to be examined for compliance with the law including the principle against unjust enrichment. The Court therefore directed the petitioner to file refund applications which shall be decided in accordance with law.

Petitioner entitled to seek refund by filing appropriate applications; refund claims to be decided per law including consideration of unjust enrichment.

Final Conclusion: The writ petition is allowed to the extent that the departmental letters and the show-cause notice impugning the petitioner's liability to pay Service Tax/IGST on ocean freight under CIF contracts are quashed; the petitioner may pursue refund claims which will be adjudicated in accordance with law, including the doctrine of unjust enrichment.

Retrospective cancellation of GST registration -duty to disclose supporting documents and material in show cause proceedings - requirement of reasoned and speaking order reflecting application of mind -

Retrospective cancellation of GST registration requires specific proposal in show cause notice - HELD THAT:- The Court found as an undisputed fact that the show cause notice did not propose cancellation with retrospective effect and held that Section 29 permits retrospective cancellation only upon specific contingencies and that the authority must put the person to notice of the action intended. A show cause must contain the basic grounds or premises on which retrospective action is sought and the material on which reliance is placed; absence of any proposal for retrospective cancellation in the notice vitiates exercise of that power. [Paras 8, 9, 11]

Impugned cancellation cannot be sustained insofar as it is retrospective when no such proposal appeared in the show cause notice; the order is set aside on this ground and the authority may proceed afresh after serving proper notice proposing retrospective cancellation if warranted.

Duty to disclose supporting documents and material in show cause proceedings - HELD THAT: - The Court recorded that no supporting documents or the physical verification report were supplied to the petitioner although the show cause notice referred to discrepancies and to attached material. It held that where a notice alleges reliance on supporting documents, such material should be supplied so that the person proceeded against has a fair opportunity to meet the case; failure to supply the material undermines the validity of the cancellation order. [Paras 8, 14]

Cancellation is unsustainable for want of supply of supporting documents; authority is directed to supply material and afford opportunity before taking any fresh action.

Requirement of reasoned and speaking order reflecting application of mind - HELD THAT: - On perusal of the impugned order, the Court observed absence of any recorded reasons or reference to material on which the authority formed an opinion. Reliance was placed on precedent emphasising that orders under Section 29(2) must demonstrate due application of mind, particularly where retrospective cancellation with deleterious consequences is involved. A robotic or routine invocation of retrospective power without demonstrable reasoning cannot be sustained. [Paras 12]

Impugned non speaking order is set aside; the authority must record reasons and apply its mind in any fresh order passed after giving proper notice and opportunity of hearing.

Final Conclusion: The impugned cancellation order is set aside for absence of any proposal for retrospective cancellation in the show cause notice, failure to supply supporting material, and for being non speaking; respondent authorities are permitted to proceed afresh in accordance with law after serving proper notice, supplying relevant documents and affording opportunity of hearing, and may pursue recovery of any tax, penalty or interest in accordance with law.

Assignment/transfer of leasehold rights (including leasehold of land with building) - constitutes a "supply" - Interim protection against recovery - stay of adjudication of show cause notices - notice to Attorney General where constitutional validity.

Interim protection against recovery - stay of adjudication of show cause notices - Whether interim protection in the form of a stay on recovery and on adjudication of show cause notices should be granted to petitioners. - HELD THAT: - The Court considered earlier decisions of the Gujarat High Court in Gujarat in M/s. Life Sciences Chemicals and Anr. vs. Union of India [2025 (6) TMI 1334 - GUJARAT HIGH COURT] is assailed before the Supreme Court in Union of India vs. M/s. Life Sciences Chemicals and Anr. [2025 (10) TMI 1371 - SC ORDER] and coordinate Benches of this Court holding that assignment of leasehold rights did not amount to a taxable supply and noted that those decisions have been assailed before the Supreme Court but have not been stayed. In view of the conflicting proceedings and the pendency before the Supreme Court, and having regard to prior interim protection granted by a coordinate Bench, the Court held that petitioners are entitled to protection pending final disposal of these petitions. The Court directed that no recovery under the impugned orders shall be pursued against the petitioners and that adjudication of outstanding show cause notices shall remain stayed until final disposal. [Paras 9, 10]

Petitioners granted interim protection: no recovery to be undertaken and adjudication of show cause notices stayed pending hearing and final disposal.

Notice to Attorney General where constitutional validity is challenged - Whether notice should be issued to the Attorney General in petitions challenging constitutional validity of statutory provisions. - HELD THAT: - The Court observed that several petitions challenge the constitutional validity of provisions of the CGST Act and that those matters require representation on behalf of the Union. Accordingly, the Court ordered issuance of notice to the learned Attorney General in those petitions where constitutional validity is disputed, and returned the matters after eight weeks for further hearing. [Paras 9]

Notice to the Attorney General to be issued in petitions raising constitutional challenges; returnable after eight weeks.

Await Supreme Court determination on whether assignment of leasehold rights is supply - Whether the High Court should await the Supreme Court's decision on the question whether assignment of leasehold rights constitutes 'transfer of land' or a 'supply of service' liable to GST. - HELD THAT: - The Court recorded that the question whether assignment of leasehold rights amounts to a taxable supply is pending before the Supreme Court in appeals arising out of Gujarat High Court decisions. Given that the Supreme Court is seized of the determinative legal issue, the Court considered it appropriate to await the Supreme Court's decision while extending interim protection to petitioners in the meantime. [Paras 8]

Proceedings to await the Supreme Court's determination on the question; meanwhile interim protection as ordered will operate.

Final Conclusion: The High Court issued rule, directed service to be waived by respondents, ordered issuance of notice to the Attorney General where constitutional challenges are raised, granted interim protection by staying recovery and adjudication of show cause notices pending final disposal, and permitted filing of reply affidavits within six weeks with liberty to apply further when the Supreme Court decides the issue or as necessary.

Valuation of goods in transit - Jurisdiction of check post authorities​​​​​​​ under Section 129/130 - sample drawing and sealing procedure - e-way bill compliance - confiscation or penalty by transit State for evasion in another State - compliance with Rule 138C - contemporaneous inspection report (Form A) requirement.

Valuation by check-post authorities under Section 129/130 - Officials at a check post cannot adjudicate the question of valuation of goods under proceedings initiated under Section 129 or Section 130 of the G.S.T. Act. - HELD THAT: - The Court held that the power exercisable at check posts under Sections 129 and 130 is not intended for undertaking valuation and determination of tax liability; such matters fall within the jurisdiction of the Assessing Authority. The view of several High Courts supporting this principle was noted and applied. The Court observed that allowing check-post officials to determine valuation and tax payable would be an unreasonable exercise of power by a State through whose territory goods merely transit, and could lead to loss of revenue or improper exercise of authority. Consequently, valuation disputes cannot be resolved in interception/confiscation proceedings at the check post and must be referred to the appropriate assessing authority for determination. [Paras 5, 6, 7, 8]

Question of valuation cannot be undertaken by check-post authorities in proceedings under Section 129/130; valuation and tax assessment must be left to the jurisdictional Assessing Authority.

Compliance with Rule 138C - contemporaneous inspection report (Form A) requirement - Failure to record the mandated online inspection report in Part A (Form A) within 24 hours, and related non-compliance with Rule 138C, vitiates the basis for continued detention/confiscation of the goods and warrants release in the interlocutory context. - HELD THAT:- The Court examined the factual record relating to inspections and found that an earlier inspection was not recorded online as required by Rule 138C, while only a later inspection was placed on record. The respondents' assertion of an earlier inspection was not accepted in view of the absence of an online Part A record and the timeline for recording inspections prescribed by the Rule. On that basis the Court found the procedural requirement was not complied with, undermining the legality of seizure/detention in the interlocutory matters and directed release of the goods. [Paras 11, 12, 13, 14, 15]

Interlocutory applications for release are allowed because the required contemporaneous inspection report under Rule 138C/Form A was not recorded; goods (and seized or detained vehicles) shall be released to the petitioners.

Sampling in transit inspections - referral to jurisdictional assessing officer - HELD THAT: - The Court found that the manner of valuation by the Authorities was one-sided - samples had been sent for valuation without participation or presence of the petitioners. To ensure fairness and permit proper assessment by the competent authority, the Court ordered that samples be drawn afresh from the consignments, divided into three parts (one retained by the respondents, one sent to the jurisdictional Assessing Officer, and one given to the petitioners), sealed and countersigned by both officers and the petitioners or their representatives. The Court made clear that it is open to the jurisdictional Assessing Officer to take up assessment proceedings on the basis of such samples, thereby directing that valuation and tax liability be considered by the proper assessing authority rather than by check-post officials. [Paras 16, 17, 18, 19]

Respondents to draw fresh samples in triplicate, seal and countersign them with petitioners or representatives; one part to go to the jurisdictional Assessing Officer who may proceed further on that basis.

Final Conclusion: Interlocutory applications for release are allowed: seized goods and any detained vehicles are to be released because (i) valuation cannot be determined by check-post officials in proceedings under Sections 129/130, (ii) required online inspection report under Rule 138C/Form A was not recorded as mandated, and (iii) respondents must draw and divide samples in the prescribed manner so that the jurisdictional Assessing Officer may undertake any further valuation or assessment proceedings.

Valuation of taxable supply - value of goods supplied free of cost - reversal of input tax credit - Whether the value of the material i.e., cement, admixture and waterproofing material, which is supplied free of cost to the petitioner, is exigible to tax or not.

Value of goods supplied free of cost not includable in value of taxable supply - HELD THAT:- The Court applied settled law, including the reasoning in Commissioner of Service Tax v. Bhayana Builders (P) Limited [2018 (2) TMI 1325 - SUPREME COURT] and Union of India v. Intercontinental Consultants and Technocrafts Pvt. Ltd [2018 (3) TMI 357 - SUPREME COURT], and the GST Policy Wing Circular No.47/21/2018-GST, to conclude that materials supplied free of cost by the service recipient do not form part of the consideration charged by the service provider. The Circular clarified that where components required for manufacture are provided free of cost by the owner, their value is not to be added while computing the value of supply under the valuation provisions. Consistent with the cited precedents and the Circular, the Court held that the value of cement, admixture and waterproofing material supplied free of cost to the petitioner cannot be included in the value of the site mix/ready mix concrete for taxation purposes. The Joint Commissioner's levy on that value was therefore held to be legally unsustainable. [Paras 12, 13, 14]

The value of materials supplied free of cost by the service recipients is not exigible to tax; the levy made by the Joint Commissioner on that value is unsustainable and set aside.

Final Conclusion: Writ petition allowed; impugned order levying tax on materials supplied free of cost set aside. Amount deposited in terms of the interim order shall be refunded. No order as to costs.

Liability to pay GST - Supply to members of association - recovery of water charges from its members separately and strictly on an actual-cost basis, without any additional consideration or margin - pure agent exclusion - Benefit of Exemption of supply of water from GST under Entry No. 99 of Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017 - exemption threshold for maintenance charges - home owners association service classification - definition of “consideration” - application of Rule 33 and pure agent doctrine to recoveries by an RWA - Collection of corpus fund from members for the purpose of meeting future capital expenditure - “supply” under Section 7 of the CGST Act, 2017 - Exemption ceiling of Rs.7,500 per member per month for maintenance by membership organisations.

Treatment of recoveries by an association - Recovery of water charges billed separately by the Association is part of its overall maintenance service to members and not a separate supply of water goods. - HELD THAT: - The Authority found that the Association performs maintenance and related services to its members and, under Section 7(1)(a) and (aa) read with the Explanation and definition of "person", the Association and its members are distinct persons and the activities constitute a supply of services classifiable as Home Owners Association services. The recovery of water charges, even if shown separately, is integrally linked to the service of maintaining the residential complex and therefore cannot be treated as an independent supply of water (goods). Consequently, such recoveries form part of the consideration for the maintenance service and are taxable subject to the exemption ceiling under Entry No. 77 of Notification No. 12/2017-CT (Rate). [Paras 13, 19]

Recovery of water charges from members is part of the Association's maintenance services and is subject to GST subject to the Entry No. 77 exemption ceiling.

Application of Rule 33 and pure agent doctrine to recoveries by an RWA - treatment of recoveries by an association as part of composite supply of maintenance services - Electricity charges for common areas recovered on actual cost basis by the Association are part of maintenance services and not excluded under the pure agent rule; therefore they are taxable subject to the exemption ceiling. - HELD THAT: - Although electrical energy is exempt under Notification No. 02/2017 (Serial No.104), the Authority examined whether the applicant qualifies as a "pure agent" under Rule 33. The Authority held that the electricity is billed in the applicant's name, consumed as an input for providing maintenance services, and procured to fulfil the applicant's own obligations; the applicant does not satisfy key conditions of Rule 33 (such as payment on authorization as agent and non-use for its own interest). Thus the recovered electricity cost forms part of the value of the maintenance services supplied by the RWA and is liable to GST at applicable rates, subject to the ceiling prescribed by Entry No. 77 of Notification No. 12/2017-CT (Rate). [Paras 14, 19]

Recovery of electricity charges for common areas is part of the maintenance service consideration and is taxable, not excluded by Rule 33, subject to the Entry No. 77 exemption ceiling.

Collection towards corpus fund constitutes advance for supply and is taxable - time of supply for advances triggered on receipt of payment - Amounts collected as a corpus fund are advances for future supply of Home Owners Association services and therefore constitute 'supply' under Section 7; GST is payable at the time of receipt of such corpus amounts under the time-of-supply rules. - HELD THAT: - Applying Section 7 and the definition of 'consideration', the Authority observed that the Association and its members are distinct persons and that payments made to the Association ordinarily qualify as consideration. The by laws contain no provision for refund, indicating the collections are non refundable and not deposits. The corpus contributions are therefore advances for future supply of services (classifiable as Home Owners Association services under Heading 9995) rather than capital injections akin to corporate capital. Under Section 13(2)(a), the time of supply for services where payment is received in advance is the earlier of invoice date or receipt of payment; hence GST is triggered on receipt of the corpus amount. [Paras 15, 16]

Corpus fund collections are taxable supplies (advances) and GST is payable at the time of receipt of such amounts.

Exemption ceiling of Rs.7,500 per member per month for maintenance by membership organisations - Monthly charges for upkeep of the Community Centre qualify as maintenance charges by a membership organisation and are exempt up to Rs.7,500 per member per month under Entry No. 77, subject to the conditions explained. - HELD THAT: - The Community Centre is an integral part of the residential complex and its services are provided exclusively to members and their guests. Such services fall within 'Services by an unincorporated body to its own members' (Heading 9995). On a conjoint reading of Notification No. 12/2017-CT (Rate) and Circular No.109/28/2019-GST, maintenance charges collected by an RWA are exempt up to Rs.7,500 per member per month; if charges exceed that threshold the entire amount becomes taxable. The Authority therefore held that the monthly subscription charged for the Community Centre falls within this exemption subject to the stated ceiling and conditions. [Paras 17, 19]

Monthly Community Centre charges qualify as maintenance charges and are exempt up to Rs.7,500 per member per month under Entry No. 77, subject to conditions.

Final Conclusion: The Authority ruled that (i) separately billed water recoveries form part of the Association's taxable maintenance service (subject to the Rs.7,500 per member per month exemption ceiling), (ii) electricity recoveries for common areas do not qualify as reimbursements by a pure agent and are taxable as part of maintenance services (subject to the same ceiling), (iii) corpus fund collections are advances constituting supply and GST is payable on receipt, and (iv) Community Centre monthly charges qualify for the Entry No. 77 exemption up to Rs.7,500 per member per month.

Law to be applied in Income-tax matters - Section 8B of the Assam Agricultural Income Tax (Amendment) Act, 2009 intended to tax the agricultural income of the financial year 2008-2009 (assessment year 2009-2010) or the financial year 2009-2010 (assessment year 2010-2011) - Law in force in the assessment year governing tax liability

HELD THAT: - The Court applied the settled principle that in income-tax matters the law to be applied is the law in force in the assessment year unless there is express or necessarily implied retrospective operation. Reliance was placed on Karimtharuvi Tea Estate Ltd. [1965 (12) TMI 35 - SUPREME COURT] and related authorities which hold that an amendment effective from the first day of April of a financial year governs assessments of that year, whereas amendments coming into force after 1st April do not affect that assessment year.

Section 8B was held to be effective w.e.f. 01.04.2009; therefore the substantive law to determine agricultural tax liability is the law extant in the assessment year commencing 01.04.2009. Applying that principle, Section 8B was applicable to the agricultural income of the previous financial year 2008-2009 for the assessment year 2009-2010. The Court found no conflict between the Division Bench decision in M/s Kanoi Estates Private Limited [2013 (5) TMI 649 - GUWAHATI HIGH COURT] and the Supreme Court authorities [1965 (12) TMI 35 - SUPREME COURT] and upheld the Division Bench conclusion. [Paras 9, 13, 21, 22]

Section 8B, effective from 01.04.2009, applies to agricultural income of financial year 2008-2009 for assessment year 2009-2010.

Final Conclusion: There is no infirmity in the Division Bench decision in M/s Kanoi Estates Private Limited; Section 8B, notified as effective from 01.04.2009, was intended to take the agricultural income of FY 2008-2009 for assessment year 2009-2010.

Treatment of negative/deficit cash balance as income from unexplained sources - proof required for cash gifts as identity and source of donor funds - addition made as claim that the appellant received a cash gift from her grandmother was not established - proof of cash gifts were received by her from “others”

HELD THAT: - The Tribunal's finding that the gift could not be believed was upheld because the appellant failed to place before the authorities material establishing the source of the donor's funds. At assessment the appellant merely alleged receipts from "others" and produced self signed receipts; at appeal she asserted the donor was her grandmother and relied on a declaration by the grandmother.

The income tax records showed the alleged donor's firm had not filed returns for the relevant year, and there was no independent material to verify the grandmother's capacity to make the gift. The change in the appellant's account of the donor further undermined credibility. For these reasons the Tribunal correctly rejected the gift claim. [Paras 5, 6, 8]

The alleged cash gift from the grandmother is disbelieved for want of proof of the donor's source of funds and on account of inconsistent statements; the gift is not accepted.

Final Conclusion: The High Court dismissed the appeal, upholding the Tribunal's rejection of the appellant's gift claim for want of proof and endorsing the treatment of the unexplained negative cash balance as income.

Denial of exemption u/s 11 - belated filing of the audit report in Form No. 10B - considerations for condoning delay u/s 119(2)(b) - genuine hardships which an Assessee will face if the delay is not condoned

HELD THAT:- Audit report was required to be filed one month before the due date to file the return of income. This apart, during this time, there was a lockdown announced by the Government. It should not be forgotten that we are dealing with a period when the COVID-19 pandemic was still prevalent.

It is a known fact that during such time, time limits for various compliances were extended by the CBDT from time to time.

So much so that even the Hon'ble Supreme Court had suo moto extended the time limits to file appeals/applications under various laws from time to time in Suo Motu Writ Petition (C) [2021 (3) TMI 497 - SC ORDER]. Thus, we are satisfied that the reasons given by the Petitioner for the delay in filing of Form No.10B are bona-fide.

Moreover, not condoning such delay would cause a genuine hardship to the Petitioner inasmuch as the Petitioner had been denied exemption u/s 11 and a demand has been raised for belated filing of the audit report in Form No. 10B.

One of the relevant considerations for condoning delay under Section 119(2)(b) is to consider the genuine hardships which an Assessee will face if the delay is not condoned. We derive support from the decision in case of Sitaldas K. Motwani [2009 (12) TMI 36 - BOMBAY HIGH COURT

Final Conclusion: The writ petition is allowed: the delay in acceptance/verification of Form No.10B for A.Y.2020-2021 is condoned on grounds of bona fides, COVID-related disruption, and genuine hardship; the impugned order rejecting the condonation application is quashed and the respondents are directed to reprocess the return accordingly.

Principle of Mutuality - Taxability of interest income from third parties - Right to set off claims against taxable receipts

Principle of Mutuality - Exemption of subscriptions received from members under the principle of mutuality - HELD THAT: - The Tribunal recorded that the subscriptions received from members constitute corpus/common fund and lie in the field of capital rather than commercial income. The tax authorities had effectively conceded that the subscriptions fall within the immunity afforded by the principle of mutuality, as reflected in precedent. The Tribunal applied the established mutuality doctrine to hold that such subscriptions are not taxable.

Subscriptions received from members are immune from taxation under the principle of mutuality.

Right to set off claims against taxable receipts - Whether payments made by the society to members (death claims, pension, VR, retirement benefits) can be appropriated against the taxable interest receipts? - HELD THAT: - When assessee has only subscription and interest income as part of accumulated surplus or common fund to be used for object of society, then assessee’s claim to first appropriate the payments made to members during the year, against taxable income earned during the year is justified. Right of apportionment of these payments towards interest income for the benefit of the members first and thereafter if needed the subscription received during the year, which form the corpus, can be used is quite reasonable way to attain the objective of society in long run when annual subscriptions may fall short but there is larger liability towards such payments in coming years.

As the ultimate beneficiary of common fund, corpus or accumulated interest, will be members or their families and the surplus cannot be used otherwise. Therefore, we are of the considered view that assessee had right to set off the claims made for the benefit of the members against the taxable receipts which is erroneously denied below.

Accordingly, we sustain the ground and allow the appeal of the assessee and Assessing Officer is directed to set off the claims of the assessee to its members, as application of the taxable receipts, and thereafter complete assessment.

Final Conclusion: The Tribunal held that the members' subscriptions are exempt under the principle of mutuality, interest income from bank deposits is prima facie taxable, but the society may appropriate taxable interest receipts towards bona fide payments to members (death claims, pension, VR and retirement benefits); the assessment is to be recomputed by giving effect to such set off.

Allowability of Foreign Tax Credit - CPC did not allow the FTC while processing the return/sec.143(1) on the ground that the assessee has not uploaded the proof of taxes paid in USA along with Form-67 on time -directory nature of Rule 128(9)

Whether the claim for Foreign Tax Credit can be denied solely because Form-67 was filed after the due date prescribed by Rule 128(9) when the assessee has declared the foreign income and filed supporting documents before completion of assessment? - HELD THAT:- The Tribunal examined the consistent decisions of coordinate Benches and higher courts holding that Rule 128(9) is directory and that the relief under the relevant DTAA and sections 90/91 cannot be defeated by mere procedural delay in filing Form-67. Tribunal noted precedents where DTAA provisions were held to override conflicting or procedural requirements of the Act and Rules, and observed that where substantial compliance is made and the claim and supporting evidence are available before completion of assessment, denial of FTC on the sole ground of delay is not justified.

In view of these authorities and to maintain consistency, the Tribunal directed that the AO verify the foreign tax payment evidence already filed by the assessee and decide the FTC claim in accordance with law.

Claim for Foreign Tax Credit cannot be denied merely for delay in filing Form-67; matter remitted to the AO to verify the supporting documents and allow the FTC if found due.

Final Conclusion: The appeal is allowed - impugned order refusing Foreign Tax Credit for delayed filing of Form-67 is set aside and the AO is directed to consider and allow the FTC after verification of the documents filed by the assessee.

Income from sale of Renewable Energy Certificates (RECs) - taxable at the concessional rate u/s 115BBG - deduction u/s 80IA on income from the sale of RECs- Scope of definition of “carbon credit”

Entitlement of the assessee firm for taxing the income from RECs at a concessional tax rate contemplated under section 115BBG of the Act, i.e., @ 10% - HELD THAT: - Section 115BBG confers a concessional tax treatment only for income by way of transfer of 'carbon credits', which the Explanation expressly defines as reduction of one tonne of carbon dioxide emissions (or equivalent gases) validated by the United Nations Framework on Climate Change and tradable in the market. RECs, by contrast, represent one MWh of electricity generated from renewable sources and injected into the grid, are issued under the Electricity Act, 2003 and CERC regulations, and are neither validated under the UNFCCC mechanism nor the statutory concept of reduction of one tonne of CO2 (or equivalent) as defined in the Explanation to section 115BBG. Where a concessional rate is provided, the provision must be strictly construed and cannot be extended to instruments that do not satisfy the statutory definition even if both relate broadly to environmental objectives. Accordingly, RECs do not fall within the definition of 'carbon credit' for the purpose of section 115BBG and the concessional rate is inapplicable. [Paras 9, 10, 11, 13, 14]

Income from sale of RECs cannot be taxed under the concessional scheme of section 115BBG.

Alternate contention of the Ld. AR that if the income from the sale of RECs is to be treated as business income, then the same would qualify for deduction u/s 80IA - deduction in respect of profits “derived from” the eligible business of generation of power - HELD THAT: - Section 80IA permits deduction in respect of profits 'derived from' the eligible business of generation of power, a phrase which the Supreme Court has interpreted to require a direct and first-degree nexus between the income and the business activity. Receipts from sale of RECs arise from trading of environmental attributes and, although attributable to the electricity business in a broad sense, do not satisfy the stricter test of being directly and primarily 'derived from' the generation or sale of electricity. Therefore, the REC receipts do not qualify for the section 80IA deduction. [Paras 15]

The claim for deduction under section 80IA qua REC receipts is rejected.

Final Conclusion: The Tribunal dismissed the assessee's appeal: income from sale of RECs is neither taxable at the concessional rate under section 115BBG nor eligible for deduction under section 80IA for AY 2020-21.

Addition made u/sec.56(2)(vii) read with Rule 11UA of I.T. Rules, 1962 -Disallowance of Share Premium - rejecting the valuation determined based on Discounted Cash Flow [“DCF”] method and substituted by applying the Net Asset Method [“NAV”].

HELD THAT: - The Tribunal examined sec.56(2)(viib) read with Explanation-2 and Rule 11UA(2) and held that Rule 11UA(2) affords the assessee an option to determine FMV either by the formulaic NAV route or by valuation under DCF as certified by a valuer. While the AO is entitled to scrutinise and, if satisfied, reject an assessee's valuation, the statutory scheme does not empower the AO to adopt a different valuation method than that chosen by the assessee.

AO may test and challenge the workings, assumptions and projections underpinning a DCF valuation and, if necessary, obtain an independent valuation, but any fresh valuation must be carried out using the method selected by the assessee.

Applying these principles to the facts, the AO's wholesale rejection of the DCF method and substitution of NAV to determine FMV constituted an excess of jurisdiction; the addition made by applying NAV was therefore unsustainable.

Tribunal relied on consistent appellate authorities and its own earlier decision recognising that DCF is a permissible method under Rule 11UA(2)(b) and that variations between NAV and DCF outcomes do not, by themselves, justify changing the method selected by the assessee. [Paras 2, 5]

The addition made by the AO by applying NAV in place of the DCF method chosen by the assessee is beyond the AO's jurisdiction and is deleted.

Final Conclusion: The Tribunal allowed the appeal, holding that the Assessing Officer could not substitute the NAV method for the DCF method chosen by the assessee under Rule 11UA(2); the addition based on NAV is deleted.

Treatment of salary payments as personal expenses - assessee's business had ceased after expiry of the agreement - ad-hoc disallowance of 50% of expenses on account that the agreement between the two parties expired - AO disallowed the audit fees on account that the assessee was following cash system of accounting and there were certain items in the balance sheet shown as receivable and payable which is considered to be contradictory to the cash system - basic principle of going concern assumption

Salary expenses disallowed by AO as personal expenses - HELD THAT: - The Tribunal examined the assessment record and the agreement with the going concern principal, including the amendment and the actual delivery performed in April 2022 followed by receipt of commission in May 2022.

AO treated salaries as personal expenses on the ground that the assessee's business had ceased after expiry of the agreement, without confronting the documentary material showing continuance of business activity and without considering comparative reductions in expenses. Applying the going concern principle and having regard to the assessee's maintenance of business setup and efforts to obtain further engagements, the Tribunal concluded that there was no cogent evidence of actual winding up and that the AO failed to apply his mind to these aspects. The Tribunal therefore held that the salary payments were business expenses properly claimed and not personal expenditures. [Paras 5, 9, 11]

The disallowance of salary expenses is not sustainable and is deleted.

Ad-hoc disallowance of expenses for not being wholly and exclusively for business - Whether the AO's ad-hoc disallowance of 50% of expenses on the ground that the agreement expired was justified. - HELD THAT: - The AO made a 50% ad-hoc disallowance after noting the alleged expiry of the agreement. The Tribunal found this approach to be arbitrary because the amendment extending the agreement for delivery and the actual performance (delivery and commission receipt) showed that the activities related to the agreement extended into the relevant period. The Tribunal also noted that comparable expense heads were accepted in prior years and that books were maintained on a consistent cash basis. In the absence of specific contrary evidence that particular expenses were not incurred for business, a blanket ad-hoc reduction was unjustified. [Paras 6, 9, 10, 11]

The ad-hoc 50% disallowance of expenses is untenable and is deleted.

Disallowance of audit fees on alleged contradiction with cash system of accounting - Whether the audit fees disallowed by the AO on the basis that the assessee followed cash system of accounting and showed certain receivables/payables were correctly disallowed. - HELD THAT: - The AO disallowed a portion of audit fees alleging inconsistency between the cash system of accounting and presentation of some balance-sheet items. The Tribunal observed that the AO proceeded on assumptions without addressing the invoices and explanations furnished by the assessee and without applying independent mind to whether those audit fees were for services rendered and allowable. Given the consistent accounting treatment and absence of cogent evidence showing impropriety, the Tribunal found the disallowance to be meritless. [Paras 7, 10, 11]

The disallowance of audit fees is unwarranted and is deleted.

Final Conclusion: The appeal is allowed; the Tribunal found that the AO and the CIT(A) erred in making and upholding the impugned disallowances without proper application of mind to the agreement, its amendment, the actual delivery and receipt of commission, comparative expenditure trends and the going concern stance; the impugned additions are deleted.

Denial of exemption u/s 11 and 12 - Form No. 10B was filed with a delay of 29 days beyond the stipulated due date - AR contented that during processing of the return u/sec. 143(1) the said form was duly available before the AO

HELD THAT: - The Tribunal found that Form No.10B was e filed with a 29 day delay but was lodged before the assessee filed its return and was available at the time the return was processed under section 143(1). The assessee explained the delay on account of late issuance of the revised utility and schema for the new Form No.10B and the additional compilation required; no mala fide or deliberate default was alleged by the revenue.

Hon’ble Bombay High Court in Kabeer Excellence Foundation [2025 (1) TMI 1745 - BOMBAY HIGH COURT] has held that the requirement of furnishing the audit report is procedural in nature and that substantial compliance would suffice. The Court observed that the benefit of exemption should not be denied merely on account of delay in furnishing the audit report, particularly when the same is made available before completion of assessment proceedings.

Applying the principle that the requirement to furnish the audit report is procedural and that substantial compliance suffices, and having regard to precedents where short delays were condoned when the report was available before completion of assessment, the Tribunal held that the marginal delay was reasonably explained and did not justify denial of substantive exemption. Tribunal distinguished cases involving much longer delays and directed that the audit report be considered on merits after affording the assessee a reasonable opportunity of hearing. [Paras 7]

Final Conclusion: The appeal is allowed for statistical purposes - Tribunal condoned the short delay in filing Form No.10B and directed the assessing officer to consider and allow the exemption claim under sections 11 and 12 in accordance with law after giving the assessee a reasonable hearing.

TDS u/s 194IA or 194IC - payments made to the landowners - Short deduction of TDS u/s 201 r/w section 201(1A) - AR relied upon the additional evidence filed before the Bench to demonstrate that the landowners (deductees) had already paid tax on the amount received from the assessee and had duly disclosed the same as income in their respective returns of income

HELD THAT: - We find that the issue is squarely covered by the decision of M/s. Sugee Seven Developers LLP [2025 (10) TMI 585 - ITAT MUMBAI] - In view of the same, we admit the additional evidence filed by the assessee and deem it appropriate to restore the matter to the file of the Ld. AO.

AO is directed to verify the additional evidence furnished by the assessee regarding payment of tax by the deductees in their respective returns of income - matter is restored to the file of the Ld. AO for fresh adjudication in accordance with law.[Paras 7]

Final Conclusion: Appeals allowed for statistical purposes; additional evidence admitted and the matter remitted to the assessing officer to verify the deductees' tax compliance and to re determine the assessee's liability under section 201 (with recomputation of interest) after affording the assessee a reasonable opportunity of being heard.

Validity of reopening of assessment for want of valid approval u/s 151 - validity of obtaining the approval of Pr.CIT - Notice after the expiry of more than three years from the end of relevant assessment year - mandation of sanction/approval of Principal Chief Commissioner of Income-tax or Principal Director General or Chief Commissioner or Director General - HELD THAT:- In the instant case, after the judgement of Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] the AO has issued notice u/s 148A(b) on 29.05.2022, which was replied by the assessee on 14.06.2022. Subsequently, order u/s 148A(d) of the Act was passed on 28.07.2022, followed by the notice u/s 148 of the Act on the same date, i.e. on 28.07.2022. This fresh notice u/s 148 of the Act dt. 28.07.2022, was issued after obtaining approval of Principal Commissioner of Income Tax-01, Delhi which is contrary to the provisions of section 151 of the Act as amended/substituted by the Finance Act, 2021. As per amended section 151 of the Act, if more than three years have lapsed from the end of the relevant assessment year, approval of Principal Chief Commissioner of Income-tax or Principal Director General or Chief Commissioner or Director General is mandatorily be obtained before the issue of notice u/s 148 of the Act. The Hon’ble Supreme Court in Union of India vs. Rajeev Bansal, [2024 (10) TMI 264 - SUPREME COURT (LB)] has made it very clear.

Final Conclusion: The reassessment initiated after three years was invalid for want of approval from the authority specified by section 151(2); the reassessment order is quashed.

Revision u/s 263 - probability of contrary view - acceptance of registered valuer's report - as per CIT assessment was erroneous and prejudicial to the interests of the revenue for having accepted the assessee's valuation (Rs.160 per sq. yard as on 01.04.1981) without appropriate inquiry or referral to the Departmental Valuation Officer -

HELD THAT: - As observed from the order sheet recorded shows that the AO had applied his mind and accepted the valuation report. Now the Ld PCIT finds that the acceptance of such report is erroneous and expressed his views that the AO should have referred the matter to the DVO, it is more like post view or taking different view which the AO had taken at that point of time. It is observed that the AO had made verification whereas the Ld PCIT is of the view that the AO had not taken the proper view. He may be right now but after application of mind, AO had taken one of the possible views going with the certified valuer.

AO had taken one of the possible views, which may not be acceptable to the PCIT. In our considered view, the assessment order is not erroneous but may be prejudicial to the interest of revenue. As per the provisions of section 263, both the twin conditions must be satisfied. As held in the case of Malabar Industrial Co. Ltd [2000 (2) TMI 10 - SUPREME COURT] Further we observed that in the case of Hindustan Marketing & Advertising Co. Ltd. [1988 (6) TMI 71 - ITAT DELHI-C] the coordinate bench held that when income tax officer collected evidences, discuss the points with the representative of the assessee, got clarification from them and thereafter drew conclusion to make the assessment, it cannot be said that the order was erroneous.

While the Pr. CIT criticised the valuer for lack of comparables and opined referral to DVO was required, the Tribunal treated that as a different (post) view rather than a demonstration that the AO failed to apply mind.

Applying the twin-condition test for exercise of section 263, the Tribunal concluded that although the assessment might be prejudicial to revenue, the order was not shown to be erroneous in the sense of having been passed without any application of mind or inquiry demanded by the circumstances.AO had engaged with the valuation and adopted a tenable view. Consequently the requirements for revision under section 263 were not satisfied. [Paras 15, 16, 17, 18, 19]

Final Conclusion: Assessee appeal allowed - Pr. CIT's order under section 263 is set aside and the assessment order passed by the AO is held not to be erroneous for the purposes of section 263.

Disallowing the claim of loan written off which was given to its wholly owned subsidiary company u/s 36(1)(vii)/36(2) and section 37(1) - application of transfer pricing to unilateral write off - “transaction” could be characterized as “international transaction” -deduction under section 35(2AB) and alternative allowance under section 37(1) - consistency principle in tax assessments - imputation of notional interest on interest free advances

Allowability of written off loans under section 36(1)(vii)/36(2) and section 37(1) - application of transfer pricing to unilateral write off - Disallowance of loan written off to wholly owned subsidiary and corresponding transfer pricing adjustment - HELD THAT: - In the instant case, the ‘apparent’ is not ‘real’ and the ‘apparent’ wears the mask of legitimacy, while the ‘real’ is a sham and a farce. According to Oxford English Dictionary, a ‘sham’ means “a thing that is not what it is purported to be”. What is ‘purported to be’ in this case is an attempt to claim written off of legitimate outstanding loan granted during the year itself and what is ‘real’ is actually a sinister design to cheat the revenue authorities and other arms of the Government, by making bogus claim, and thus, willfully evade taxes through deliberate planning and strategy.

The Tribunal considered whether the assessee could claim the loan written off as a deductible bad debt or business expenditure and whether the write off constituted an international/associated enterprise transaction attractable to transfer pricing adjustment and the assessee advanced substantial loans over years to its SPV and subsequently claimed a large write off after selling the underlying investment. The authorities found instances of inflated claim (addition of interest not offered to tax, failure to reduce repayments and sale consideration from the claimed quantum) and absence of commercial prudence (fresh large advances shortly before sale despite persistent losses). The Tribunal held that (a) section 36(1)(vii)/36(2) requires the debt to have been taken into account for tax earlier and appropriate entries in books - only a part (interest previously offered) satisfied that test; (b) section 37(1) was not attracted because the loan was a long term capital advance and the circumstances did not demonstrate that the write off was a bona fide business loss taken in the ordinary course; and (c) the RBI compounding order for delayed filing did not amount to prior approval that would validate an otherwise inadmissible income tax claim. Applying tests of human probability and surrounding circumstances, the Tribunal upheld the transfer pricing/assessment additions and sustained disallowance of the claimed write off on merits. [Paras 13, 21, 29, 31]

Disallowance of the write off of loans and the transfer pricing adjustment upheld.

Disallowance of Deduction u/s 35(2AB) and alternative allowance under section 37(1) - mandatory approval of R&D facility from the PCCIT or PDGIT - assessee submits that the assessee has not claimed weighted deduction u/s 35(2AB) - assessee had claimed normal deduction for the expenses incurred on scientific research and development u/s 37(1) - HELD THAT: - The Tribunal examined whether the assessee could claim weighted deduction under section 35(2AB) for R&D expenses and, if not, whether the expenditure was otherwise allowable under section 37(1). The assessee had a DSIR Form 3CM but failed to secure the mandatory concurrence/approval from PCCIT/PDGIT required for weighted deduction under section 35(2AB)(iv); further, the record established that DSIR approval extended only up to an earlier year. However, the Tribunal accepted that the expenditures were incurred wholly and exclusively for business purposes and therefore were allowable as ordinary business expenses under section 37(1). Consequently, weighted deduction under section 35(2AB) could not be granted for the year, but the full amount was to be allowed as business expenditure. [Paras 31, 34, 35]

Weighted deduction under section 35(2AB) denied for lack of mandatory approvals; deduction allowed as business expenditure under section 37(1)

Deduction u/s 80IA claimed on the income from Wind Mill Plants installed - Consistency principle in tax assessments - AO alleged that expenses claimed in the Profit & Loss Account were not attributed to this activity and therefore, he apportioned 0.15% of the total expenditure being attributable to such activity, thus reduced deduction - HELD THAT: - The Tribunal considered the AO's ad hoc apportionment of general expenditure (0.15%) to deny part of the assessee's section 80IA deduction. The assessee had consistently claimed and been allowed the deduction for the block period in earlier assessments, had maintained separate books for the specified activity and filed the prescribed audit report (Form 10CCB). The Tribunal applied the principle of consistency and observed that the AO had not identified specific expenses to be apportioned; relying on the assessee's unchallenged historical treatment and statutory documentation, the Tribunal deleted the ad hoc disallowance and restored the deduction for the last year of the block period. [Paras 40, 41]

Disallowance deleted and section 80IA deduction restored.

Addition of notional interest on interest free loans advanced to sister concern - AO alleged that assessee has given interest free loans to its sister concern and disallowed the interest however, ld. DRP has given directions to verify the claim of the assessee whether it had interest free funds and if so, no disallowance be made - HELD THAT: - The Tribunal reviewed whether the AO could impute interest on interest free advances. The assessee produced cash flow and related records demonstrating availability of interest free funds and reliance was placed on earlier coordinate bench for AYs 2009-10 & AY 2010-11 and High Court decisions [2018 (3) TMI 2003 - DELHI HIGH COURT] in the assessee's favour where similar additions were deleted. On the material before it the Tribunal found that the assessee had sufficient interest free funds and directed deletion of the addition under section 36(1)(iii). [Paras 46]

Addition of notional interest deleted

Final Conclusion: Appeal partly allowed: transfer pricing/loan write off disallowance sustained; R&D expenditure disallowed as weighted deduction under section 35(2AB) but allowed as business expenditure under section 37(1); section 80IA disallowance deleted and deduction restored; notional interest addition deleted.

TP Adjustment -Comparability of Unik Techno Systems Pvt. Ltd. as transfer pricing comparable - admission of fresh grounds by appellate tribunal - remand for verification of tax character of excise duty exemption

Comparability of Unik Techno Systems Pvt. Ltd. as transfer pricing comparable - Whether M/s Unik Techno Systems Pvt. Ltd. is a valid comparable for benchmarking the assessee's specified domestic transactions? - HELD THAT: - The Tribunal examined the material on record including the assessee's submissions and screenshots from the companies' websites. It was found that the company included by the TPO, M/s Unik Techno Systems Pvt. Ltd., is engaged in manufacturing machines used in battery production, whereas the company relied upon by the DRP in its reasoning, M/s Unik Batteries Pvt. Ltd., is a distinct entity engaged in manufacturing batteries. The DRP had compared the assessee's functions with those of M/s Unik Batteries Pvt. Ltd., which was not part of the final set of comparables adopted by the TPO. On that basis the Tribunal concluded that M/s Unik Techno Systems Pvt. Ltd. is functionally dissimilar to the assessee and cannot be treated as a valid comparable for transfer pricing benchmarking. The Tribunal therefore found that the inclusion of that company in the final set of comparables was erroneous and directed its exclusion. [Paras 10, 11, 12, 13]

M/s Unik Techno Systems Pvt. Ltd. is functionally dissimilar and is excluded from the final set of comparables; AO/TPO directed to remove it.

Admission of fresh grounds by appellate tribunal - tax character of excise duty exemption - Whether the Tribunal should admit additional grounds raising that excise duty exemption is a capital receipt and remit the matter for determination? - HELD THAT: - The Tribunal considered precedents on the power of appellate bodies to entertain fresh claims and the supporting CBDT guidance, and held that admission of a fresh claim at the appellate stage can be permissible. However, the instant claim that the excise duty exemption constitutes a non-taxable capital receipt requires examination of the nature and intent of the incentive scheme, eligibility conditions, and verification of the amounts claimed. Those facts and documents were not considered by the lower authorities. Accordingly, while the Tribunal admitted the additional grounds as raising matters fit for adjudication, it remitted the substantive question to the assessing officer for decision after affording the assessee a reasonable opportunity and verifying the records, including the claim's treatment under the normal provisions and the AMT regime. [Paras 15, 16, 17, 20, 21]

Additional grounds admitted; question whether the excise duty exemption is a capital receipt and non-taxable (including under AMT) is remitted to the AO for verification and fresh decision after giving the assessee opportunity to be heard.

Final Conclusion: Appeal partly allowed: the transfer pricing comparable M/s Unik Techno Systems Pvt. Ltd. is excluded and the AO/TPO is directed to recompute ALP without that comparable; the Tribunal admitted additional grounds concerning excise duty exemption but remitted the substantive issue to the AO for determination after verification and opportunity to the assessee.

Rectification order altering refund/credit and raising a demand - Verification of refund amount issued under rectification -consequences of inconsistency between intimation and rectification records - Whether the demand raised in consequence of the rectification order should be sustained or requires fresh verification by the Assessing Officer?- HELD THAT: - The Tribunal observed an inconsistency between the intimation under Section 143(1), which recorded the refund issued as Rs. 58,74,830/-, and the rectification record which mentioned a figure of Rs. 64,21,690/-. The Tribunal also noted the existence of an intervening order passed under Section 154 dated 01/11/2022 which had not been brought to the Bench's notice. Because of this discrepancy, the Tribunal did not decide the legality of the rectification or the demand on merits; instead it directed the Assessing Officer to verify whether the larger refund figure was actually issued pursuant to the earlier rectification order.

Tribunal specified the legal consequences to follow: if the larger refund was indeed issued, the excess withdrawal reflected in the demand requires no interference; if no such refund was issued, the demand raised should be reduced to nil. The matter was therefore restored to the file of the Assessing Officer for verification and fresh decision in accordance with law. [Paras 5]

The issue is remanded to the Assessing Officer to verify whether the refund of Rs. 64,21,690/- was issued as against Rs. 58,74,830/- shown in the intimation and to decide afresh; if the larger refund was issued no interference is required, otherwise the demand is to be reduced to nil.

Final Conclusion: The appeal is partly allowed for statistical purposes and the matter is restored to the Assessing Officer for verification of the refund records and fresh decision in accordance with law.

Quashing of order-in-original- classification of goods - valuation of imports - non- issuance of show cause notice - detention of imported goods - entitlement to directions for disposal of deteriorated goods and issuance of a demurrage waiver certificate.

Quashing of order-in-original - HELD THAT:- The Court recorded that the imported goods had completely deteriorated and were of no commercial utility following a joint inspection. Rather than adjudicating the rival contentions on classification and valuation, and in view of the futile nature of continuing proceedings over a small consignor, the Court exercised its supervisory jurisdiction under Article 226 to put a quietus to the matter by setting aside the order in original. The Court emphasised the need for a pragmatic approach in cases involving small entrepreneurs and negligible consignments so as to protect trade while safeguarding Revenue interest, and declined to traverse the merits of the classification or valuation dispute in the circumstances of spoilage.

Order in original dated 6.10.2022 quashed and set aside and the petition disposed of in terms of the Court's observations.

Authority to deal with seized deteriorated goods - HELD THAT:- On the petitioner's concession that the goods had completely deteriorated and had no market value, the Court permitted the Respondents to either auction or destroy the goods and to appropriate any amounts realised. The Court directed that any surplus remaining after appropriation for liabilities such as warehousing charges should be paid to the petitioner. This direction follows from the factual finding of spoilage and the practical need to conclude the matter without further futile proceedings.

Respondents permitted to auction or destroy the goods and appropriate proceeds; any surplus to be paid to the petitioner to discharge warehousing charges.

Demurrage waiver certificate - HELD THAT: - Without adjudicating the competing contentions on why the goods were detained or seized, the Court applied its prior decision in Writ Petition No.13178 of 2023 which, when ordering provisional release in that matter, had directed issuance of a demurrage waiver certificate. The present petition was disposed of by directing the Respondents to follow that precedent and issue the waiver certificate for the goods in question.

Respondents to issue a demurrage waiver certificate in respect of the goods subject matter of Bill of Entry No.6184455.

Final Conclusion: The petition is disposed of: the impugned order in original is quashed and set aside; Respondents are authorised to auction or destroy the deteriorated goods and appropriate realisations with any surplus payable to the petitioner after warehousing charges; and Respondents are directed to issue a demurrage waiver certificate in respect of the goods. No costs.

Entitlement to interest on delayed refundin respect of the principal refund amounts already sanctioned to it by the Tribunal instead of the interest being credited to the Consumer Welfare Fund - presumption of unjust enrichment.

Entitlement to interest on delayed refund - HELD THAT: - The Tribunal held that interest had been denied earlier solely because the principal refund had been directed to be credited to the Consumer Welfare Fund. Having decided that the principal amounts in the four refund applications must be paid to the appellant and not credited to the Consumer Welfare Fund, the logical and legal consequence is that the appellant becomes entitled to interest on the delayed payment of those refunds. This conclusion is consistent with the view expressed by the Commissioner (Appeals) in respect of the fifth refund application, where interest was sanctioned once the principal was ordered to be paid to the appellant. The Tribunal accordingly set aside the impugned order insofar as it denied interest and directed payment of interest in accordance with law on the principal amounts already sanctioned. [Paras 11, 12, 13]

The appellant is entitled to payment of interest in accordance with law on the principal amounts already sanctioned in respect of the four refund applications.

Final Conclusion: The impugned order is set aside insofar as it denied interest; the four appeals are allowed and the appellant is entitled to interest on the sanctioned principal amounts in accordance with law.

Classification of goods - imported vide 2 (two) Bills of Entry, declared as "Polyester Roller Window Blinds Fabric ready for use and "Polyester Fabric for Ready Goods 118", and self-assessed under Customs Tariff Heading (CTH) 6303 9200 (made-up textile articles) under claim of duty exemption at Sl. No. 304 of Notification. No. 82/2017 dated 27.10.2017 and at Sl. No. 494 of Notification. No. 152/2009 dated 31.12.2009, respectively - classification specific over general - visibility test under chapter note 2(a) - objective characteristics test - confiscation for misdeclaration.

Visibility of polymer coating to the naked eye as determinative for classification under heading 5903 - Whether reclassification of the imported polyester fabric under CTH 5903.90 is sustainable in the absence of any test or report addressing visibility of polymer impregnation to the naked eye as required by Chapter Note 2(a)(1) to Chapter 59. - HELD THAT:- The Tribunal examined the Textile Committee and Customs House Laboratory reports relied upon by the Department and found that neither report contains any testing or express finding on whether the polymer impregnation/coating is visible to the naked eye. Chapter Note 2(a)(1) to Chapter 59 excludes fabrics from heading 5903 where the impregnation, coating or covering cannot be seen with the naked eye; therefore visibility is an essential classificatory criterion. In the absence of any test or report on this critical parameter, the Tribunal held that the reclassification to CTH 5903.90 could not be sustained, since it rested on reports that did not establish the determinative requirement of visible impregnation. [Paras 24, 25, 26]

Reclassification under CTH 5903.90 is not sustainable because the critical parameter of naked-eye visibility of polymer coating was not tested or reported; the reclassification is set aside on that ground.

Classification of made-up textile articles under heading 6303 - Whether the imported material is properly classifiable as made-up textile articles under CTH 6303.92.00 (interior blinds) for the consignments in question. - HELD THAT:- The Tribunal considered the commercial description, the physical condition of the consignments and comparative imports at other ports. It noted that some earlier consignments cleared at other ports were treated as CTH 6303.92.00, but in the present consignments the goods arrived in running length (roll form) without fittings and were not cut to size or ready for installation as roller blinds. The Tribunal nevertheless concluded that, given the Department's failure to establish visible impregnation and having regard to the classification practice and particulars of the imports, the impugned reclassification could not be sustained. The Tribunal therefore allowed the appeal and granted consequential relief as per law. [Paras 23, 25, 26]

For the consignments under appeal the impugned reclassification is set aside and the appeal is allowed, restoring the classification position asserted by the importer (CTH 6303.92.00) for the purposes of the present adjudication.

Final Conclusion: The Tribunal set aside the adjudicating authority's reclassification of the two consignments to CTH 5903.90 because the decisive requirement under Chapter Note 2(a)(1) - visibility of polymer coating to the naked eye - was neither tested nor reported; in consequence the appeal was allowed and the impugned reclassification was set aside with consequential relief as per law.

Failure to communicate reasons for disagreement with inquiry report - principles of natural justice - violation of the provisions of regulations 10 (a), (d), (e) and (n) of the Customs Broker License Regulation 2018 - Revocation of the Customs Broker licence - forfeiture of the security deposit and recovery of penalty - Whether it was open to the Commissioner to disagree with the findings recorded by the Inquiry Officer without providing reasons to the appellant for such disagreement and further providing an opportunity to the appellant to reply.

Failure to communicate reasons for disagreement with inquiry report -HELD THAT: - The Tribunal held that although the Commissioner is not bound to accept an inquiry report that is favorable to the customs broker, the principles of natural justice require that if the Commissioner intends to disagree with such a report he must communicate the adverse material or reasons for his disagreement to the broker so that the broker may rebut, qualify or explain the same. The Tribunal relied on the decision in Him Logistics [2015 (11) TMI 380 - DELHI HIGH COURT] which expressly held that non-communication of the reasons or adverse material, followed by taking adverse action, constitutes a failure of the principles of natural justice. In the present case the Inquiry Officer had recorded that contraventions could not be proved, the Commissioner disagreed but did not communicate any reasons or adverse material to the appellant and no opportunity to reply was given. That omission vitiated the impugned order. [Paras 7, 9, 10]

Impugned order set aside for failure to communicate reasons for disagreement with the inquiry report and for breach of the principles of natural justice.

Final Conclusion: The appeal is allowed; the order revoking the customs broker licence is set aside for breach of natural justice because the Commissioner disagreed with an exoneratory inquiry report without communicating adverse reasons or material and without giving the appellant an opportunity to reply.

Revocation of the customs broker licence - Failure to communicate reasons for disagreement with inquiry report breaches principles of natural justice - right to be informed of adverse material - opportunity to rebut - non-binding nature of inquiry report - duty to communicate reasons for disagreement - Violations of Regulation 10(d), 10(e), 10(q) and Regulation 13(12) of the Customs Broker Licence Regulations, 2018, recording specific findings of compliance and absence of proof of violations.

Whether it was open to the Commissioner to disagree with the findings recorded by the Inquiry Officer without providing reasons to the appellant for such disagreement and further providing an opportunity to the appellant to reply.

Failure to communicate reasons for disagreement -HELD THAT:- The Tribunal held that although the Commissioner is not bound to accept an inquiry report favourable to the customs broker, principles of natural justice require that where the Commissioner intends to disagree with such a report he must record and communicate the adverse material or reasons for disagreement to the broker so that the broker may rebut, qualify or explain the same. The inquiry report in this case had exonerated the broker after detailed findings on alleged breaches of Regulations 10(d), 10(e), 10(q) and 13(12). The Commissioner disagreed with that report but did not disclose the reasons or adverse material to the appellant nor afforded an opportunity to file representations on those reasons. This failure rendered the impugned order procedurally infirm. The Tribunal relied on the reasoning in the cited decision of the Delhi High Court in Him Logistics [2015 (11) TMI 380 - DELHI HIGH COURT] to conclude that non-communication of reasons for disagreement amounts to a breach of natural justice. [Paras 13, 15]

Impugned order set aside for failure to communicate reasons for disagreement with the inquiry report; appeal allowed.

Final Conclusion: The revocation of the customs broker licence was set aside because the Commissioner disagreed with an inquiry report favourable to the broker without communicating the adverse reasons/material or providing an opportunity to reply, thereby breaching principles of natural justice.

Rejection of declared transaction value -two bills of entry where declared CIF values - unsigned copies as is placed on record and do not match to the exact description and quantities -requirement of corroboration by payment evidence for value enhancement - Whether Revenue was justified in rejecting the transaction value and redetermine the value of the consumer goods imported by the appellant.

Rejection of declared transaction value - HELD THAT:- The tribunal examined the record of imports, the statements and the documents allegedly recovered from the appellant's premises and found no justification for the large upward revision of the invoice values. The adjudicating authority adopted the totals shown in the recovered documents without any comparison of product descriptions or quantities with the commercial invoices filed at the time of import, and provided no reasoning how the revised CIF values were calculated. The purported original invoices were unsigned xerox copies that did not match the quantities and descriptions of the imported consignments, and there was no evidence of payments or bank transfers to corroborate the alleged higher transaction values. Reliance on such documents, without matching quantities/descriptions or corroborative payment evidence, is inadequate to displace the declared transaction value. In line with the principle reiterated by the Supreme Court in the case of Bussa Overseas Properties Ltd. [2007 (8) TMI 31 - SC ORDER] that enhancement must be supported by corroborative evidence of payment, the exercise of redetermination by the Revenue fails for want of justification and admissible corroboration. [Paras 5]

The redetermination of assessable value is not justified; the enhancement based on the recovered documents is unsustainable.

Final Conclusion: The appeal is allowed. The impugned enhancement of assessable value and the consequential demand are set aside for lack of justification and absence of corroborative evidence; consequential relief, if any, to follow as per law.

Mis-declaration of goods - determination of transaction value - smuggling by concealment - Confiscation of imported memory cards - demand of differential customs duty and cess - Suppression of facts​​​​​​​ - Validity of imposition of penalty and redemption fines - denial of proper opportunity for personal hearing - Violation of principles of natural justice.​​​​​​​

Confiscation of goods - Whether the imported memory cards were liable to confiscation under the Customs Act. - HELD THAT: - The Tribunal found that memory cards were concealed within consignments declared as metal clips, were not mentioned in the airway bill or bill of entry, and were in excess of and did not correspond with the declared entry. These facts bring the goods within the categories of goods liable to confiscation under the Act for being not mentioned in the import report, being concealed, being in excess of the entry, and not corresponding with the entry. The impugned order's findings on these points were accepted and the confiscation was held to be justified. [Paras 23, 24]

The confiscation of the memory cards was lawful and correctly made under the provisions relied upon in the impugned order.

Customs valuation rejection - HELD THAT: - The Tribunal accepted the finding that the invoice and bill of entry described metal clips while the consignment actually contained undeclared memory cards; because the declared transaction value did not correspond to the goods found, the Commissioner was correct in rejecting the declared value and re-determining assessable value under the valuation provisions and rules. The differential duty determined on that basis was therefore confirmed as correctly assessed. [Paras 19]

Rejection of the declared transaction value and re-determination of value under the valuation rules, and confirmation of the differential duty, were proper.

Penalty under section 114A - HELD THAT: - The Tribunal agreed with the Commissioner that penalty under section 114A is attracted where duty is short paid by reason of collusion, willful misstatement or suppression of facts. The record showed that the IEC of another party was used, the nature, quantity and value of goods were misdeclared, and duty was sought to be evaded. Those findings supported imposition of the mandatory penalty under section 114A on the appellants. [Paras 20]

Imposition of penalty under section 114A on the appellants was justified.

Adequacy of opportunity of personal hearing - HELD THAT: - The Tribunal reviewed the hearing chronology and noted multiple personal hearing dates, appearance and cross-examination of relevant witnesses, and specific opportunities afforded to the appellants. The cross-examination conducted supported the Revenue's case. On this basis the Tribunal held that principles of natural justice were complied with and there was no failure of adjudication procedure. [Paras 18]

No violation of principles of natural justice; adequate opportunity for personal hearing was provided.

Redemption of confiscated goods - HELD THAT: - Having upheld the underlying confiscation and duty/penalty findings, the Tribunal considered the corrigendum by which the Commissioner allowed redemption of specified goods on payment of redemption fines. The Tribunal found no infirmity in the corrigendum and accepted that redemption on payment of the specified fines was within the Commissioner's powers and properly recorded. [Paras 25, 26]

The corrigendum permitting redemption of the confiscated goods on payment of redemption fines was valid and correctly sustained.

Final Conclusion: The impugned order and corrigendum, including confiscation, re-determination of assessable value and differential duty, imposition of penalty under section 114A, and allowance of redemption on payment of fines, were all upheld and the appeals were dismissed.

Admission of Section 7 petition upon establishment of financial debt and default - existence of financial debt and default - viability of the corporate debtor -limited scope of enquiry at admission -commercial wisdom - res judicata ineligibility where prior petition was dismissed for being founded on a quashed regulatory circular - forensic audit and fraud declaration​​​​​​​ - commercial discretion of lenders under RBI framework for resolution of stressed assets.

Admission of Section 7 petition upon establishment of financial debt and default - HELD THAT:- The Tribunal found that the Financial Creditor's application was complete and established the existence of financial debt and occurrence of default which exceeded the statutory threshold. The Corporate Debtor did not dispute the debt or default and had repeatedly acknowledged liability in letters and audited financial statements. On these grounds, admission under Section 7 was held to be in accordance with the Code and applicable precedent, and there was no basis to deny admission at the summary admission stage. [Paras 51, 59, 61]

The admission of the Section 7 petition was lawful as debt and default stood established.

Limited role of adjudicating authority at Section 7 admission stage versus Vidarbha discretion - HELD THAT:- The Tribunal analysed Vidarbha [2022 (7) TMI 581 - SUPREME COURT] and subsequent clarifications and held that Vidarbha's observations are fact-specific and do not displace the principle in Innoventive [2017 (9) TMI 58 - SUPREME COURT] that, at the admission stage, the Adjudicating Authority's scope is largely confined to existence of debt and default. The Appellant failed to place concrete, contemporaneous financial material showing unconditional, realizable assets or receivables sufficient to extinguish the debt; consequently the Vidarbha line could not be invoked to justify non-admission in this case. [Paras 44, 45, 46, 60]

Vidarbha does not assist the Appellant on these facts; the Adjudicating Authority was not required to refuse admission on viability grounds.

Res judicata ineligibility where prior petition was dismissed for being founded on a quashed regulatory circular - Whether the second Section 7 petition was barred by res judicata due to dismissal of the earlier petition. - HELD THAT: - The earlier Section 7 petition was dismissed because it was predicated on the RBI Circular dated 12.02.2018 which was subsequently held ultra vires; that dismissal was not on the merits of the claim. The present petition was filed later on the basis of the revised RBI framework of 07.06.2019 which remains in force. Therefore the principle of res judicata did not operate to bar the fresh petition. [Paras 52, 53]

Res judicata is not attracted; filing of the later Section 7 petition was permissible.

Commercial discretion of lenders under RBI framework for resolution of stressed assets - Whether the RBI circular dated 07.06.2019 barred the Financial Creditor from initiating insolvency proceedings or required mandatory consideration of a resolution plan before filing. - HELD THAT:- The Tribunal noted the circular contemplates lenders putting in place board-approved policies and envisages a prima facie review within thirty days, but it also expressly permits lenders to initiate legal proceedings for insolvency or recovery. The decision to accept or reject a resolution plan is a commercial decision of the lenders; neither the Adjudicating Authority nor this Tribunal may substitute judicial review for the commercial judgement of lenders under the circular. [Paras 50, 58]

The RBI circular did not preclude the Financial Creditor from filing the Section 7 petition; the banks' decision-making in that regard is a commercial matter.

Allegations of creditor misconduct causing default - HELD THAT: - The Tribunal examined consortium minutes and available records and observed that alleged inter-bank adjustments and decisions were matters among lenders rather than unilateral misfeasance by the Financial Creditor. The Appellant did not produce persuasive evidence showing that other lenders were willing to revive the account or that the Financial Creditor's conduct alone caused insolvency. The claimed causal misconduct was not established to negate the debt or default. [Paras 47, 49, 56]

The contention that the Financial Creditor's conduct caused the default was not proved and does not invalidate the Section 7 admission.

Final Conclusion: The appeal was dismissed; the Tribunal found the Section 7 petition was properly admitted because debt and default were established, Vidarbha does not assist the Appellant on these facts, res judicata was inapplicable, the RBI framework did not bar the creditor from filing, and the alleged creditor misconduct was not proved.

Entitlement to liquidator fees at the rates of the first/second bucket or third bucket under Regulation 4(2) of the CIRP (Liquidation) Regulations, 2016 - calculation of fee according to time-based buckets - refund of excess fees withdrawn from liquidation estate - condonation of delay in re-filing appeal.

Condonation of delay in re-filing appeal - Application for condonation of 56 days delay in re-filing the appeal. - HELD THAT:- The Tribunal examined the application seeking condonation of delay and found sufficient cause as stated in the re-filing application. On that basis the delay in re-filing the appeal was condoned.

Delay in re-filing the appeal is condoned.

Entitlement to liquidator fee under Regulation 4(2) - Whether the erstwhile liquidator was entitled to fees at the rates claimed (first/second bucket) or only at the third-bucket rates because realisation occurred after one year, and whether excess amounts withdrawn must be refunded. - HELD THAT: - The Adjudicating Authority analysed the invoices, the period of realisation and the exemptions claimed by the applicant, and after excluding recognised exempt periods held that effective realisation fell after one year. The applicant sought additional exclusion for a 141-day period relating to resumption of auctions after a medical incident, but the Tribunal found no basis to treat that 141-day interval as an excluded period that would alter the calculation. Applying Regulation 4(2) and the time-bucket structure, the Adjudicating Authority correctly computed the fees at the third-bucket rates. The amounts withdrawn in excess of the correctly payable fee were found to have been wrongfully taken from the corporate debtor and ordered to be refunded with applicable GST and interest as determined by the Adjudicating Authority. The Tribunal found no error in that reasoning or calculation and declined to interfere.

The appellant is only entitled to fees as determined under the third bucket; the excess amounts withdrawn are liable to be refunded; the challenge to the Adjudicating Authority's exclusion of claimed periods is rejected and the appeal is dismissed.

Final Conclusion: Condonation of the re-filing delay is allowed. On the substantive dispute, the Tribunal upholds the Adjudicating Authority's finding that realisation occurred after one year, affirms calculation of fee under the third bucket, rejects the appellant's additional exclusion of 141 days, and confirms that excess fees withdrawn must be refunded; the appeal is dismissed.

Condonation of delay - 15 days delay in filing of the appeal -Presumption of security interest and deposit of excess realised value under Regulation 21A - Realisation of security interest and duties of liquidator under Regulation 37.

Condonation of delay - HELD THAT:- Sufficient cause has been shown for condonation of delay. - Delay condoned.

Realisation of security interest - Presumption of security interest - adjudicating authority has referred to time limit of 180 days which is occurring in Regulation 21A(2)(b), which period according to the liquidator expired on 23.03.2024. - HELD THAT:- It is not the case that liquidator has communicated any amount for which the secured creditor has sell the flats, however, by virtue of Regulation 37 of the Liquidation Regulation, 2016, in event the liquidator informs the secured creditors about a willing buyer at a price higher than the price intimated by the secured creditors, the secured creditor has to sell according to such information.

End of justice be served in disposing of the appeal by giving liberty to the liquidator to intimate the financial creditor that is the appellant about the amount on which willing buyer is ready to purchase the flat, in that event appellant is to sell to the said buyer as indicated by the liquidator failing which it shall be open for the appellant to sell the assets and make the deposits as per the Regulation 21A(2)(b) of the Liquidation Regulation, 2016.

Liquidator submits that appellant has intimated the proposal for sale of Rs. 1.4 crore for both the flats.

The sale of the assets shall be conducted as indicated above and financial creditor is not to surrender the flats as per the impugned order. Secured creditor shall provide access to liquidator for all purposes.

The appeal is disposed of accordingly.

Final Conclusion: The Tribunal condoned the delay and disposed of the appeal by directing that the liquidator may inform the secured creditor of a willing buyer (in which event the secured creditor must sell to that buyer), and otherwise the secured creditor may realise the assets and comply with Regulation 21A(2)(b); the secured creditor need not surrender the flats but must afford access to the liquidator.

Approval of resolution plan - Appeal rendered infructuous by subsequent liquidation - claims to be adjudicated by the liquidator - verification and collation of claim.

Seeking issue of direction to Resolution Professional to verify and collate the claim filed - Resolution Professional neither accepted nor rejected the claim - HELD THAT:- Bringing the fact on record that, the liquidation has already been ordered by an order of 16.04.2025 in IA(IBC)/34(CHE)/2025 in CP(IBC)/1423/2019. He has submitted that since the liquidation process has already been commenced, and besides that, since the Appellant has already raised a claim before the liquidator, as of today, nothing survives in the instant Company Appeal because of the subsequent development, which has been placed on record. The Comp App (AT) (CH) ((Ins) No.373/2022 would accordingly stand dismissed as infructuous.

Comp App (AT) (CH) (Ins) No.272/2022 -

Claim raised before liquidator -HELD THAT:- Since the Corporate Debtor has already been put to liquidation, and the Appellant has already raised his claim before the liquidator, nothing survives to be adjudicated on merits in the instant Company Appeal. Accordingly, the Comp App (AT) (CH) (Ins) No.272/2022 would stand dismissed as having been rendered infructuous.

Comp App (AT) (CH) (Ins) No.295/2022

Approval of resolution plan - Application preferred under Section 60(5) of the I & B Code, 2016, had approved the Resolution Plan - HELD THAT:- It has already been brought on record by the parties that, since the Corporate Debtor has already been put to liquidation, and the Appellant has admittedly thereafter raised his claim before the liquidator, nothing survives to be adjudicated on merits in the Company Appeal. Accordingly, the Comp App (AT) (CH) (Ins) No.295/2022 would stand dismissed as having been rendered infructuous.

Binding effect of appellate order on subordinate tax authorities - exemption for works contract services to Government and exemption of sub-contractor under entry No. 29(h) - Nature of the works executed by the main contractor (CPWD) and the petitioner's role as sub contractor - Res judicata in tax proceedings - subsequent reopening of assessment.

Binding effect of appellate order on subordinate tax authorities - Whether the Assistant Commissioner could re-open and re-assess turnover in subsequent years notwithstanding earlier findings recorded by the Assistant Commissioner and upheld by the Commissioner (Appeals). - HELD THAT:- The Court accepted the principle laid down by the Supreme Court in Union of India v. Kamlakshi Finance Corporation [1991 (9) TMI 72 - SUPREME COURT] that subordinate revenue officers are bound to follow the orders of higher appellate authorities and cannot bypass or refuse to give effect to such orders merely because the orders are thought to be incorrect or would lead to loss of revenue. The correct administrative remedy for the department is to seek remedy under the statutory channels provided (e.g., under Section 35-E in the cited precedent), not to relitigate the identical issue before a subordinate authority and thereby cause harassment to the assessee. Applying that principle to the present facts, where the Assistant Commissioner and the Commissioner (Appeals) had already recorded findings favourable to the petitioner in earlier proceedings, the subsequent assessment that re-opened the same issue without following those appellate findings was impermissible and required being set aside. [Paras 11, 12]

The impugned assessment was invalid insofar as it sought to re-open issues already considered and decided in earlier proceedings and must be set aside.

Exemption for works contract services to Government and exemption of sub-contractor under entry No. 29(h) - HELD THAT: - The Court examined the nature of the works undertaken by the main contractor (M/s. CPWD) as recorded in the assessment records and found that those works included construction for a Kendriya Vidyalaya (an educational establishment) and works for the Andhra Pradesh Endowments Department, which fall within the scope of services to Government or governmental authorities covered by entry No. 12 of the notification. Given that entry No. 29(h) exempts sub-contractors providing works contract services to another contractor whose services are exempt, the petitioner as a sub-contractor to CPWD was entitled to the same exemption. The Assistant Commissioner's conclusion in the impugned order that absence of fresh documents alone justified treating the turnovers as taxable was contrary to the earlier findings on the nature of the works and the applicable notification entries. [Paras 9, 10, 12]

The petitioner's services fall within the exemption under the notification (entry No. 12 applied to CPWD's works and entry No. 29(h) exempts the sub-contractor), and the assessment treating those turnovers as taxable cannot be sustained.

Final Conclusion: The impugned order of assessment is set aside: the Assistant Commissioner could not re-open and re-assess issues already determined by the appellate authority, and on the merits the petitioner's works as a sub-contractor fall within the exemption under the notification; the writ petition is disposed of.

Service tax demand relating to construction services for periods prior to 01.07.2010 - Extended period of limitation - service tax demand on landowner's share of flats - re-quantification for the post-01.07.2010 period considering retrospective amendment to Rule 2A and entitlement to 75% abatement and other statutory benefits - double taxation - occupancy certificate linkage - value determination rules - cum-tax benefit .

Demand of service tax for the period prior to 01.07.2010 is unsustainable and set aside. - HELD THAT: - The Tribunal found that the question of liability for construction of residential services prior to 01.07.2010 is no longer res integra and relied upon the case of M.s Vasantha Green Projects Vs Commissioner of Central Tax, Rangareddy [2018 (5) TMI 889 - CESTAT HYDERABAD] by the appellant and admissions on record. Consequently, demands raised for periods falling before 01.07.2010 cannot be sustained and have been set aside. [Paras 12, 15]

Demand for the period prior to 01.07.2010 is set aside.

Service tax on landowner's share of flats - HELD THAT:- The Tribunal noted admissions by the Department and the appellant's submissions that taxation of the landowner's share would amount to double taxation once service tax is levied on the gross value of construction. Having considered the authorities and the record, the Tribunal concluded that the demand relating to the landowner's share cannot be upheld. [Paras 9, 15]

The demand relating to landowner share is set aside.

Re-quantification of tax liability for post-01.07.2010 period after applying Rule 2A abatement and statutory adjustments - HELD THAT: - The Tribunal observed that retrospective amendment to Rule 2A (Service Tax (Determination of Value) Rules, 2006) and the abatement entitlements were not taken into account by the Adjudicating Authority when computing the demand for the period after 01.07.2010. Therefore, the Tribunal remanded the case to the Adjudicating Authority for re-quantification of the recoverable duty for the post-01.07.2010 period, directing that eligible abatement (including the 75% abatement) and any amounts already paid be adjusted against the re-calculated demand. [Paras 12, 15]

Matter remanded to the Adjudicating Authority for limited purposes of re-quantification for the post-01.07.2010 period after granting eligible abatement and statutory benefits, and adjusting any payments already made.

Extended period of limitation not invokable in absence of deliberate tax evasion - HELD THAT: - The Tribunal recorded that divergent views prevailed during the relevant period and the Government had enacted retrospective modifications. In these circumstances, and in the absence of cogent and strong evidence indicating deliberate intent to evade tax, the Tribunal held that invocation of the extended period of limitation was not justified in the facts of the case. [Paras 13]

Extended period of limitation is not invokable in the facts of this case.

Final Conclusion: The appeal is partly allowed: demands for periods prior to 01.07.2010 and demands relating to landowner's share are set aside; the adjudicating authority is directed to re-quantify the post-01.07.2010 liability after applying eligible abatement and adjustments, and to adjust any payments already made; extended period of limitation is held inapplicable.

Reverse Charge Mechanism (RCM) under the category of ‘Management Consultancy Service’ - Non-payment of Service Tax on the salary re-imbursements made in respect of expatriate employees - Applicability of Northern Operating System [2022 (5) TMI 967 - SUPREME COURT] precedent - employer-employee relationship - extended period of limitation.

Applicability of Northern Operating System precedent [2022 (5) TMI 967 - SUPREME COURT] - HELD THAT:- The Tribunal held that the NOS decision arose from a distinct factual matrix where employees were seconded pursuant to a service arrangement that benefited the foreign entity, with formal secondment and payroll structures evidencing that linkage. By contrast, the present case involved direct employment agreements (some predating the consultancy agreement), no secondment agreement, control and supervision vested with the appellant, employees performing functions exclusively for the appellant's Indian operations, and part salary payments and statutory contributions structured as reimbursements. Those distinguishing features meant NOS could not be mechanically applied. The Tribunal therefore declined to treat the NOS ratio as determinative on the facts before it and decided the matter on its own merits. [Paras 30, 31, 32, 33]

Northern Operating System is not applicable to the facts of this case.

Employer-employee relationship and taxability of reimbursed salary - Whether the expatriate personnel were employees of the appellant and whether amounts reimbursed to the foreign company constituted consideration for taxable services for the periods in dispute. - HELD THAT:- On the record the Tribunal found no secondment agreement and concluded that control, supervision and responsibility over the two expatriates lay with the appellant. The expatriates performed roles beyond advisory/consultancy functions and were integrated into the appellant's operations; their total remuneration was treated as salary for Indian tax purposes (including TDS filings). Although part payments and statutory contributions were channelled through the foreign company and later reimbursed, the factual understanding and payroll treatment supported an employer-employee relationship. Applying that factual conclusion, the Tribunal held that post 01.07.2012 no service tax was leviable since the activity fell within employment and not within Management or Business Consultancy Service; for the period prior to 01.07.2012 the activities likewise did not fall within Business Support/Business Auxiliary Service and were not leviable to service tax. Having decided the substantive issue on merits, the Tribunal did not decide the limitation point. [Paras 28, 32, 33]

The expatriates are employees of the appellant and the amounts reimbursed to the foreign company do not attract service tax for the periods in dispute; no service tax is leviable post 01.07.2012 and the pre-01.07.2012 period is also not leviable on the facts.

Final Conclusion: The Tribunal allowed the appeal, holding that the Northern Operating System precedent is not applicable on the facts, that an employer-employee relationship existed with the appellant, and that the amounts reimbursed do not constitute taxable services for the period December 2010 to June 2013; the substantive demand was therefore not sustainable on merit and the limitation issue was not decided.

Entitlement for refund - Compensation received for failure to perform under a contract - constitutes a declared service under Section 66 (e) of the Finance Act, 1994 - money received in the form of “notice pay” and “bond money” by the appellants from their employees - non-performance of contract - liquidated damages characterization - value of service - refund claim under central excise - HELD THAT:-

Notice pay and bond money - HELD THAT: - The Tribunal held that amounts recovered from employees on premature termination or failure to serve the agreed period do not constitute the rendition of a service by the employer and therefore do not fall within the scope of a 'declared service' under Section 66E(e). The reasoning, following the view of the Madras High Court in GE T & D [2020 (1) TMI 1096 - MADRAS HIGH COURT] and tribunal precedents, is that such recoveries merely facilitate an employee's exit by imposing a cost and operate as penalties or deterrents rather than consideration received in return for agreeing to refrain from, tolerate, or do an act. The Tribunal also noted departmental clarifications under GST and service tax which excluded forfeiture of salary or bond payments from taxable supply, and observed that the issue has been decided in favour of the appellant in related proceedings of the jurisdictional officer. In view of settled precedents and the categorical distinction between liquidated damages/service and penal recoveries on premature exit, the impugned orders affirming taxability were found unsustainable. [Paras 7, 8, 9]

Amounts recovered as notice pay and bond money are not taxable as a declared service; the appeals are allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeals, holding that notice pay and bond money recovered from employees for premature exit are not taxable as a declared service, and granted consequential relief including entitlement to refunds as per law.

Export of services - Used outside India - call centre services provided to British Airways UK - convertible foreign exchange -Entitlement to rebate under Rule 5 and Notification No.11/2005-ST dated 19.04.2005 for the relevant period -Whether the services provided by the respondent to BA UK falls under the definition of Export of Service ?

Export of services - Used outside India - Recipient of service -HELD THAT:- The issue is no longer res integra as the Tribunal in the respondent’s own case for the previous [2016 (8) TMI 589 - CESTAT NEW DELHI] and subsequent period [2017 (4) TMI 1178 - CESTAT CHANDIGARH] in view of the agreement has held or after considering the agreement between the parties has held that the services provided by the respondent to BA UK fall in the definition of “Export of Services.

The Tribunal examined the two conditions in Rule 3(2): (a) service provided from India and used outside India; and (b) payment received in convertible foreign exchange. The Court relied on departmental circulars clarifying that "used outside India" is to be interpreted with reference to where effective use and enjoyment accrues, and on prior Tribunal in Paul Merchants Ltd.[2012 (12) TMI 424 - CESTAT, DELHI (LB)], Vodafone Essar Cellular Ltd. [2013 (7) TMI 178 - CESTAT MUMBAI] & Microsoft Corporation (I) Pvt. Ltd.[2014 (10) TMI 200 - CESTAT NEW DELHI (LB)] and Supreme Court in the case of Commissioner of Service Tax-III, Mumbai Vs Vodafone India Ltd. [2025 (8) TMI 938 - SUPREME COURT] decisions treating the place of accrual/benefit as determinative. The Larger Bench in the case of Arcelor Mittal Stainless (I) Pvt. Ltd. [2023 (8) TMI 107 - CESTAT MUMBAI-LB] pronouncement that the recipient of service is the person at whose instance and expense the service is provided was applied to the contractual facts which show that BA UK was the recipient and payer under the agreement. Given that the services were provided to and for the benefit of BA UK (a person outside India) and consideration was paid by BA UK, the Tribunal concluded that the services were used outside India and thus fall within the definition of export of services under Rule 3(2). The Tribunal further noted that the issue had been decided in the respondent's favour for adjacent periods and those decisions were not stayed or successfully challenged by the Department. [Paras 10, 11, 12]

The call center services qualify as export of services under Rule 3(2) and the rebate claim for the specified periods is allowable.

Final Conclusion: The appeal is dismissed; the impugned order of the Commissioner (Appeals) upholding the respondent's entitlement to rebate on the call center services (on the ground that they qualify as export of services) is upheld for the specified periods.

Contractual agreement for promoting/marketing logos/brands/marks of the franchisee and sponsors and has received remuneration from the same - taxable under “business support services” as per Section 65 (104c) of the Finance Act, 1994 - Demand along with interest and imposing equal penalty - Circular cannot create tax liability beyond statute.

Remuneration received by IPL players - taxable as business support services -HELD THAT: - The Tribunal applied precedents, notably the Calcutta High Court and Tribunal decisions in the Sourav Ganguly [2016 (7) TMI 237 - CALCUTTA HIGH COURT] and Shriya Saran [2014 (7) TMI 78 - CESTAT NEW DELHI] line of cases, holding that an IPL player engaged under a franchise contract functions as a purchased team member subject to the franchise's control and is not rendering an independent business support service. The tribunal accepted the reasoning that fees for playing matches fall outside taxable service and that a departmental circular which purports to tax a composite payment (where segregation of playing and promotional components is not possible) cannot expand statutory liability. The Board's instruction was held to be administrative guidance that cannot override or create tax liability absent statutory provision, and therefore could not be applied to impose service tax on the appellant's remuneration.

Demand for service tax on the appellant's remuneration as business support services is unsustainable; the departmental instruction cannot create such liability.

Final Conclusion: The appeal is allowed; the demand for service tax on the appellant's remuneration for the periods 2008-09 and 2009-10 founded on classification as business support services and on the Board's instruction is not sustainable.

Limitation period for recovery - wrongly availed CENVAT credit on input supplies - pre-notice payment protection - denial of statutory protection - Entitlement to protection​​​​​​​ under sub-section (3) of Section 73 for tax paid prior to service of show cause notice - Exception under sub-section (4) of Section 73 requires specific pleading and proof - Extension of limitation and denial of protection under sub-section (4).

Protection under sub-section (3) of Section 73 - HELD THAT: - The court held that sub-section (3) of Section 73 bars service of a notice in respect of amounts voluntarily paid prior to service of notice, and that sub-section (4) operates as an exception which both extends limitation and denies the protection of sub-section (3) only where circumstances of fraud, collusion, wilful misstatement, suppression of facts or contravention of Chapter V are specifically pleaded and established. Invocation of sub-section (4) requires strict compliance with statutory requirements; the existence of any of the enumerated circumstances must be clearly demonstrated in the show cause notice and on the record. In the present case the show cause notice did not contain specific allegations referable to clauses (a)-(e) of sub-section (4), and the Revenue failed to establish those circumstances. Consequently the benefit of sub-section (3) could not be denied and the Tribunal rightly followed the view that protection applied where tax and interest were paid before issuance of notice. [Paras 8]

Benefit under sub-section (3) of Section 73 applies as tax and interest were paid before issuance of notice; sub-section (4) could not be invoked in the absence of specific pleaded and proved allegations.

Final Conclusion: The appeal is dismissed; no substantial question of law arises as the Tribunal correctly upheld the protection under sub-section (3) of Section 73 in the absence of specific allegations or proof to invoke sub-section (4).

Transaction value - price determination for demo goods - discount offered by the appellant on demo vehicles sold to dealers​​​​​​​ - inclusion of discount in assessable value.

Valuation of demo vehicles - inclusion of discount in assessable value - HELD THAT:- The Tribunal considered whether special discounts allowed on demo cars sold to dealers could be excluded from assessable value. Reliance was placed on earlier Division Bench decisions of this Tribunal in Ford India Pvt. Ltd. [2011 (7) TMI 1044 - CESTAT CHENNAI] and Hyundai Motor India Ltd. [2015 (12) TMI 940 - CESTAT CHENNAI], which held that at the time of clearance from the factory gate there is no difference between normal cars and demo cars and that transaction value for demo cars cannot be accepted where comparable normal car prices are available. The Tribunal noted that the Supreme Court had dismissed the civil appeal against those decisions, and held that the ratio is squarely applicable. Following those precedents, the Tribunal accepted the view that discounts given as special concessions for demo cars do not constitute deductible additional consideration and therefore the discounts must be included in the assessable value; transaction value was accordingly rejected insofar as it sought to exclude such discounts. [Paras 5, 6, 7]

Appeals dismissed; discounts on demo vehicles to be included in assessable value and earlier precedent followed.

Final Conclusion: The Tribunal dismissed the appeals, holding that the discounts granted on demo vehicles are not deductible and must be included in the assessable value, following the Division Bench precedents and the Supreme Court's dismissal of appeals against those decisions.

Classification of Goods - manufacture “Minute maid Nimbu Fresh” - beverage containing minimum 5% fruit juice as fruit juice based drink - compliance with environmental laws - definition of input services - Availability of CENVAT credit on services utilized for disposal of industrial waste and compliance with pollution control directions - mistakes in the quantification of the duty and that the Show Cause Notice invoked extended period without any valid reason.

Classification of beverage containing minimum 5% fruit juice as fruit juice based drink - Classification of Minute Maid Nimbu Fresh containing more than five percent fruit juice - HELD THAT:- The Tribunal applied both the common parlance test and the supporting regulations and followed the larger bench decision in Brindavan Beverages [2019 (10) TMI 762 - CESTAT ALLAHABAD (LB)], which held that products with lime or lemon juice content of not less than 5% and requisite total soluble solids satisfy the definition of fruit juice based drinks and therefore fall under Tariff Item No. 2202 90 20. The Tribunal rejected the narrow approach that treats such products as lemonade where regulatory thresholds are met, noting that the Regulations determine classification. [Paras 6]

Minute Maid Nimbu Fresh with more than 5% fruit juice is classifiable as a fruit juice based drink and cannot be subjected to the duty demand on the alternate classification.

Input service for compliance with pollution control laws includes services for disposal of industrial waste - Availability of CENVAT credit on services utilized for disposal of industrial waste and compliance with pollution control directions - HELD THAT:- Relying on the principal bench decision in Hindustan Zinc Ltd.[2017 (7) TMI 387 - CESTAT NEW DELHI], the Tribunal held that compliance with directions of the State Pollution Control Board is necessary for operation of a manufacturing facility and that services used for disposal of industrial waste and polluted water in compliance with environmental laws are input services within the meaning of the Cenvat Credit Rules, 2004. Such services are used indirectly in or in relation to the manufacture of final products and therefore credit is allowable. [Paras 7]

CENVAT credit on services for disposal of industrial waste relied upon by the appellants is allowable.

Input service includes survey of surroundings used directly or indirectly in relation to manufacture - Availability of CENVAT credit for services procured to conduct survey of area around the factory for checking air pollution - HELD THAT: - The Tribunal observed that the definition of input services, before and after the 01.04.2011 amendment, is broad and covers services used directly or indirectly in relation to the manufacture of final products. The survey of surroundings for air pollution was a requirement of the appellants' principal and was integrally connected to maintaining product quality and enabling plant establishment and production. Consequently the survey services were held to be input services and eligible for credit. As the demands and credits did not survive, penalties were not tenable. [Paras 8]

CENVAT credit for the survey services is allowable and consequent demands and penalties do not survive.

Final Conclusion: All issues in the impugned orders were decided in favour of the appellants and the appeals were allowed.

Denial of the CENVAT Credit availed - explosives removed by the appellant to the contractors as such without issuance of invoices - invoking Rule 3(5) of the Cenvat Credit Rules, 2004 - reversal of credit - extended period of limitation​​​​​​​ - Whether the appellant is required to reverse the CENVAT Credit availed on explosives, which have been used in the mines owned by the appellant, by contractors, for explosion / extraction of coal from the mines, or not.

CENVAT credit on inputs supplied to contractors for use in assessee's own manufacturing - HELD THAT:- The explosives were deployed in the appellant's own mines for extraction of coal through contractors engaged under contract. Under these facts there was no removal of inputs 'as such' by the appellant; the explosives were consumed in the manufacture/extraction activity of the appellant. The Tribunal's earlier decision in M/s. Hindustan Zinc Ltd.[2024 (7) TMI 184 - CESTAT NEW DELHI] was applied to hold that supplying inputs and capital goods to contractors for use within the assessee's captive mines does not amount to removal attracting Rule 3(5) of the CENVAT Credit Rules. The court further noted that subsequent dismissal of departmental appeals by higher fora on the ground of low tax effect did not decide the merits, and therefore did not negate the Tribunal's binding effect in this context. Consequently, the appellant was correctly allowed to retain the CENVAT credit and the impugned demand, interest and penalty based on reversal under Rule 3(5) did not survive. [Paras 7, 8, 9]

The appellant was not required to reverse the CENVAT credit availed on the explosives; Rule 3(5) is not attracted on these facts.

Final Conclusion: The appeal is allowed; the impugned order demanding reversal of CENVAT credit on explosives is set aside and the appellant is entitled to consequential relief as per law.

Denial of distribution of cenvat credit by input service distributor (ISDs) - Nature of Rule 7 of the Cenvat Credit Rules for period May, 2013 to October, 2015 - discretionary versus mandatory statutory obligation - manufacturing of batteries for automobiles and other products falling under Chapter 86 of the First Schedule to the Central Excise Tariff Act, 1985 - demand, interest and penalty confirmed under Rule 14 read with Section 11A(1) - binding judicial precedents.

Nature of Rule 7 of the Cenvat Credit Rules for period May, 2013 to October, 2015 - Validity of denial of Cenvat credit on the ground that credit distributed by ISDs was not proportionate during May, 2013 to October, 2015. - HELD THAT: - The Court held that for the period May, 2013 to October, 2015 Rule 7 used the word 'may' and therefore the conditions for distribution of credit by an ISD were discretionary and not mandatory. The appellant produced CA certificates certifying distribution of credit to its manufacturing unit on the basis of turnover. The Tribunal accepted those certificates and observed that the amended mandatory regime (use of 'shall') applied only w.e.f. 01.04.2016 and was not applicable to the period in dispute. Applying these conclusions, the demand founded on non-proportionate distribution during the relevant period was unsustainable. [Paras 6, 8]

Credit distributed to the appellant during May, 2013 to October, 2015 is valid; the denial based on Rule 7 non-compliance is not sustainable.

Distribution of Cenvat credit by Input Service Distributor (ISD) may be questioned only at ISD's end and not at recipient's end - Whether the distribution of credit could be contested at the recipient unit's end. - HELD THAT: - The Tribunal reaffirmed the settled principle that challenge to the correctness of distribution of Cenvat credit by an ISD must be addressed at the ISD's end. The show cause notice and impugned order did not dispute eligibility of the credit or impugn the ISD's distribution; therefore, questioning the distribution at the recipient's end was held to be legally untenable. [Paras 7]

Questioning distribution of credit at the recipient's end is not sustainable in law.

Finality of earlier orders precludes Revenue from taking a contrary stand for same assessee - Effect of earlier appellate orders in favour of the appellant on the present demand. - HELD THAT:- The Tribunal noted that appellate orders in the appellant's own case for earlier and subsequent periods had allowed similar Cenvat credit distributions and those orders had attained finality as Revenue had not preferred further appeals. Consistent application of law and preclusion of contradictory departmental positions for the same assessee were applied to hold that Revenue could not take a contrary stand in the present period. This factual and legal position reinforced allowing the credit. [Paras 6]

Earlier final orders in favour of the appellant bar Revenue from taking a contrary position; those precedents support allowing the credit in the present period.

Consequential relief where primary demand is unsustainable - HELD THAT: - The Tribunal observed that the impugned demand (including demand under Rule 14 read with Section 11A(1) and penalties under Rule 15 and Rule 25) stood on the foundation that credit distribution was improper. Having held the primary demand unsustainable, the Tribunal concluded that interest and penalty founded on that demand could not survive. The appeal was allowed with consequential relief as per law. [Paras 6, 8]

Interest and penalty premised on the unsustainable denial of credit do not survive; appeal allowed with consequential relief.

Final Conclusion: The impugned order denying Cenvat credit for May, 2013 to October, 2015 and imposing interest and penalty is set aside: the Tribunal found Rule 7 discretionary for the period, accepted the CA certificates and earlier final orders in the appellant's favour, held that distribution may be questioned only at the ISD's end, and allowed the appeal with consequential relief.

Eligibility for cenvat credit of inputs used in maintenance and repair of plant and machinery - interpretation of 'used in or in relation to manufacture' - chartered engineer certificate as verification - demand along with interest and an equivalent amount of penalty - Whether the steel item used by the appellant in their central engineering maintenance shop for use of maintenance and repair of plants and machineries, is entitled for cenvat credit or not ?

Eligibility for cenvat credit of inputs used in maintenance and repair of plant and machinery - HELD THAT:- The Tribunal considered the appellant's documentary submissions, including departmental letters and a Chartered Engineer's certificate describing item-wise use of the goods as inputs for manufacture of spares and for repair and upkeep of existing plant and machinery. The Tribunal applied the binding decision of the Hon'ble Supreme Court in Kisan Co-operative Sugar Factory Ltd. [2023 (12) TMI 1303 - SUPREME COURT] which held that the expression 'used in or in relation to manufacture' has a wide meaning and includes items used for maintenance, repair, upkeep or fabrication of plant and machinery. Applying that principle, the Tribunal found that items used in the manufacture of spares and for maintenance and repair of machinery are integrally related to the manufacture of finished goods and thus qualify as inputs under Rule 2(k) of the Cenvat Credit Rules for the relevant period. The Tribunal concluded that the Commissioner erred in disallowing the cenvat credit and in ignoring the certified user-details furnished by the appellant. [Paras 6, 7, 8]

Cenvat credit on the steel items used for manufacture of spares and for maintenance and repair of plant and machinery during June 2006 to March 2011 is admissible; the impugned demand and penalty are not sustainable on this ground.

Final Conclusion: The appeal is allowed; the Tribunal upheld the appellant's entitlement to cenvat credit on the impugned items for the period June 2006 to March 2011 in view of the Supreme Court's ruling, with consequential reliefs.

Payment of service tax on GTA services procured for transportation of iron ore fines from mines to the port - Scope of term "Place of removal" - Activity ofmining as production or manufacture - Benefit of Notification No. 41/2007-ST (as amended) so as to permit refund of service tax paid on GTA services used for export - refund of service tax on specified services - proof of payment of service tax - non-availment of cenvat credit - self-certification by chartered accountant​​​​​​​ - liberal linking of export consignments - Enhancement of refund claim.

Place of removal - Whether the iron ore mines qualify as 'place of removal' for the purpose of refund under the Notification and Section 4 of the Central Excise Act. - HELD THAT: - The Tribunal held that the term 'place of removal' must be read with Explanation VI to Section 4 of the Central Excise Act, which includes a factory or any other place or premises of production. The activity of mining amounts to production/manufacture of excisable goods and therefore the mine areas constitute the place of production from where excisable goods are removed to the port. Reliance was placed on the CESTAT, Kolkata decision in Avian Overseas [2009 (3) TMI 141 - CESTAT, KOLKATA] On the facts, the iron ore was removed from the mines to the port for export and the condition in the Notification was satisfied; rejection solely because mines were not a 'place of removal' was unsustainable. [Paras 7]

The mine areas qualify as 'place of removal' and the refund rejection on this ground is not sustainable.

CA certificate - admissible evidence of payment of service tax - Whether the Appellant had established payment of service tax on GTA services and non-availing of Cenvat credit. - HELD THAT: - The Tribunal found that the impugned order did not identify any specific document which the Appellant failed to furnish. The Appellant had produced GAR-7 challans, agreements, shipping documents and a Chartered Accountant's certificate certifying that Cenvat credit was not availed and that service tax was paid under RCM. A CA certificate is a relevant evidentiary document and cannot be disregarded without justification. Applying this principle, the Tribunal accepted the CA certificate as proof of payment of service tax on GTA services and held that rejection on this ground was not supported by evidence. [Paras 8]

Proof of payment of service tax and non-availment of Cenvat credit was established by the Appellant; the rejection on these grounds is unsustainable.

Liberal approach to correlation requirement between lorry receipts and export invoices - Whether non-mention of exporter invoice details on lorry receipts and shipping bills disentitles the Appellant to refund. - HELD THAT: - The Tribunal noted the commercial reality of bulk continuous movement of iron ore to port where aggregation and later export occur, making pre printing of export invoice details on daily lorry receipts impractical. The Board Circular No. 120/01/2010-ST advocates a liberal approach to linkage/correlation. Given that there was no dispute on factum of export and that goods had to be brought to the port for export, the strict compliance contention could not be sustained. The Tribunal therefore held that rejection for non compliance with condition (iii) of entry no.11 was not tenable. [Paras 8]

Rejection of the refund claim on account of non mentioning of exporter invoice details on lorry receipts/shipping bills is not sustainable; a liberalized correlation approach applies.

Enhancement of refund claim in a denovo remand is restricted to the original claim; fresh claim required for new invoices - Whether the Appellant could enhance the refund claim years later in the denovo proceedings remanded by the Commissioner (Appeals). - HELD THAT: - The Tribunal observed that the original refund claim for a specified amount had been remanded for reconsideration and the adjudicating authority was bound to decide within the scope of directions given by the Commissioner (Appeals). The alleged enhancement by letter after more than six years sought refund in respect of additional invoices not part of the original claim. That enhancement did not arise from a mere clerical correction of the original claim but related to new invoices; therefore it could not be allowed in the denovo remand. The proper course for the Appellant was to file a fresh refund claim supported by documentary evidence for the additional invoices. [Paras 9, 10]

The enhanced refund claim was rightly rejected; the Appellant must file a fresh claim for amounts arising from invoices not included in the original claim.

Final Conclusion: The Tribunal allowed the refund claim as originally filed for the period January 2008 to March 2008 in the amount claimed, with interest under section 11BB of the Central Excise Act, 1944, but refused the enhanced claim made later; the appeal was disposed accordingly.

Imposition Of Penalty under Rule 26(1) of the Central Excise Rules, 2002 on a body corporate - lifting the corporate veil - Scope of term "person" in Rule 26(1) in penal provision.

Penalty under Rule 26(1) of the Central Excise Rules, 2002 on a body corporate - HELD THAT: - The Tribunal examined whether an artificial/juristic person such as a company falls within the class of persons liable to be punished under Rule 26(1). Relying on the case of M/s Rashmi Metaliks Limited & Others Vs. Commissioner of Central Excise [2025 (6) TMI 1353 - CESTAT KOLKATA], the Tribunal reasoned that Rule 26 penalties are directed at natural persons who can have the requisite personal knowledge and culpability. A company, being an artificial entity, does not itself possess the 'mind' or personal knowledge required to attract personal punitive liability; liability for misconduct by individuals acting for the company may require lifting the corporate veil and proceeding against those individuals. Applying that legal principle to the facts, the respondent is a company incorporated under the Companies Act, 2013, and therefore cannot be subjected to penalty under Rule 26(1) of the Central Excise Rules, 2002. [Paras 6, 7, 8]

Penalty under Rule 26(1) cannot be imposed on the respondent company; the impugned order upholding the dropping of penalty is affirmed.

Final Conclusion: The Revenue's appeal is dismissed: the Tribunal held that penalty under Rule 26(1) of the Central Excise Rules, 2002 is not imposable on the respondent company, and the appellate authority's order dropping the penalty is upheld.

Deeming fiction of manufacture -process of crushing and screening in order to reduce the size of the ores -Conversion of ores into concentrates - manufacture Or not - exemption from payment of excise duty under Notification No. 4/2006-CE dated 01.03.2006 -penalty and interest - Whether process of crushing and screening of iron ore will amount to manufacture or not in terms of Chapter Note 4 under Chapter 26 of Central Excise Tariff Act w.e.f. 01.03.2011 or not.

Conversion of ores into concentrates - manufacture - HELD THAT: - The Tribunal examined the definitional scope of 'concentrates' as reflected in HSN Explanatory Notes and relevant technical literature, and considered clarificatory communications from the Ministry of Mines and the CBIC (TRU Circular). It accepted the position that 'concentrates' require removal of part or all foreign matter by special treatments (beneficiation), and that mere mechanical size reduction and segregation (crushing and screening) do not constitute such special treatment or effect enrichment of grade. The Tribunal applied its earlier decisions in M/s Khatau Narbheram & Co. [2025 (11) TMI 1956 - CESTAT KOLKATA] and M/s Odisha Mining Corporation Ltd [2025 (8) TMI 1138 - CESTAT KOLKATA] and found that the Department failed to discharge the burden of proving that crushing and screening effected conversion of ores into concentrates or involved special metallurgical treatment. On these grounds the activity was held not to amount to manufacture attracting excise duty under Chapter 26. [Paras 11, 12, 15, 46, 47]

Crushing and screening of iron ore do not amount to conversion of ores into concentrates and do not constitute manufacture under Chapter Note 4; hence duty demands founded on that premise are unsustainable.

Penalty and interest - HELD THAT: - The Tribunal applied the principle that when the duty demand itself is unsustainable, consequential demands for interest and penalties cannot be sustained. Having held that crushing and screening do not amount to manufacture and that the duty demand therefore fails, the Tribunal concluded that interest and equivalent penalties premised on that demand are also not exigible. The reasoning notes reliance on precedents holding that penalties and interest cannot survive where there is no liability to excise duty. [Paras 41, 42, 47]

No interest or penalty is payable where the duty demand is unsustainable; the penalties and interest confirmed with the demand are not maintainable.

Final Conclusion: The appeal is allowed. The Tribunal held that crushing and screening of iron ore do not constitute conversion into concentrates or manufacture under Chapter Note 4 and accordingly set aside the excise duty demands confirmed against the appellant; consequential interest and penalties were also held unsustainable.

Seeking suspension of the LOC(s) - legal explication of the regulatory framework governing the issuance of LOCs - Right to travel abroad - freedom of movement - requirement of cognizable offence and tangible material to issue LOC - narrow construction of exceptional power under Clause 6(L) of OM dated 22.02.2021 - inability of public sector bank principals to seek LOCs - Violation of right to life and personal liberty under Article 21 of the Constitution - constitutional validity of amendments which enabled the Chairmen, Managing Directors, and Chief Executive Officers of public sector banks to seek issuance of LOCs against defaulting borrowers, thereby restraining their right to travel abroad.

Sole basis for issuance and continuation of the LOC(s) is their alleged association as Promoters/Directors of M/s Parabolic Drugs Ltd. ('PDL'), - availed credit facilities from a consortium of banks, including Respondent Nos. 2 and 3 - accounts of PDL were declared as "fraud" by the said respondents on 03.05.2016 and 18.05.2018, pursuant to which complaints were filed before the Central Bureau of Investigation ('CBI').

Look-out circular as a coercive executive measure - Lawfulness and limits of issuance and continuance of Look-Out Circulars (LOCs) - HELD THAT: - The right to travel and freedom of movement has been recognised as an intrinsic facet of the fundamental right to life and "personal liberty" under Article 21 of the Constitution of India. [Maneka Gandhi v. Union of India, 1978 (1) TMI 161 - SUPREME COURT]. The Supreme Court has held that while this freedom is not expressly enumerated under any articles, it nonetheless commands constitutional protection and may be restricted only by a procedure established by law that is just, fair, and reasonable.

The Court held that an LOC is a coercive executive measure which substantially impacts the fundamental right to travel guaranteed by Article 21 and therefore must be exercised sparingly and strictly in accordance with law. Ordinarily an LOC may be issued only in cases involving a cognizable offence where specific, tangible material shows deliberate evasion of arrest or a proximate likelihood of absconding. The exceptional power under Clause 6(L) of the Office Memorandum dated 22.02.2021 must be narrowly construed and reserved for rare and compelling cases where departure poses a clear and grave threat to sovereignty, security, integrity, or national/systemic economic or strategic interests, or the larger public interest. Mere commercial defaults, civil remedies or routine revenue consequences do not justify an LOC; continuance must be periodically reviewed and justified by the originating agency.

The Court articulated that LOCs are exceptional restraints on personal liberty and can be issued or continued only upon satisfaction of the stringent criteria stated above.

Inability of public sector bank principals to seek LOCs - Validity of LOCs issued at the instance of public sector bank principals in the present context - HELD THAT: - Relying on and applying the reasoning in recent precedents, the Court observed that LOCs issued at the behest of Chairmen/Managing Directors/Chief Executive Officers of public sector banks would not withstand judicial scrutiny because their inclusion under the Office Memoranda amounts to an arbitrary and unguided conferment of power. The Court treated requests by public sector bank principals to open LOCs as impermissible in the absence of statutory guidance and procedural safeguards, and noted the binding effect of co-ordinate decisions quashing that competence.

LOCs sought at the instance of public sector bank principals are vulnerable to being quashed and cannot be sustained in the present factual matrix.

Look-out circular as a coercive executive measure - Application of law to the petitioners' LOCs and consequent relief - HELD THAT:- The Court found no justification for continuing the LOCs against the petitioners, who were associated with the company under investigation but were not shown to have been charged with or established as involved in cognizable offences or to have evaded the process of law. The Court noted prior orders permitting travel and orders of Special Judges which had closed or not sustained certain LOCs, and concluded that continuation of the LOCs here amounted to arbitrary and disproportionate restriction of personal liberty.

The LOCs issued against the petitioners were quashed, subject to conditions that the petitioners execute undertakings to cooperate with investigation and obtain prior permission of the competent trial Courts for future foreign travel.

Final Conclusion: The writ petitions were disposed by quashing the impugned LOCs: the Court restated and applied strict legal limits on issuance and continuance of LOCs (requiring cognizable offence/tangible material or narrow exceptional circumstances), held LOCs at the instance of public sector bank principals to be unsustainable, and granted relief to the petitioners on terms of undertakings to cooperate and obtain prior trial-court permission for future travel.