TaxTMI Updates e-Newsletter
Mar 12,2026

Regulatory functions - fees received by a State Electricity Regulatory Commission (tariff petition fee and licence fee) for discharging functions under Section 86 of the Electricity Act, 2003 - Supply in the course or furtherance of business - fees received for statutory, quasi judicial functions - supply of services - Scope and interaction of the statutory definitions of "business" and "consideration".

Regulatory functions of a commission - Whether the show cause notice levying GST on tariff petition fee and licence fee received by the petitioner for discharging functions under Section 86 of the Electricity Act, 2003 is sustainable - HELD THAT:- The Court adopted the reasoning of the Delhi High Court in Central Electricity Regulatory Commission Versus The Additional Director Directorate General of GST Intelligence (DGGI) and another [2025 (1) TMI 887 - DELHI HIGH COURT]which examined the definitions of "business" and "consideration" under the CGST framework and held that regulatory functions vested in a Commission cannot be equated with activities listed in Section 2(17) as trade, commerce, profession or similar activities. The definition of "consideration" must be read with supply being in the course or furtherance of business under Section 7; fees received by a Commission for exercising statutory, quasi judicial and regulatory powers are not payments made as inducement for supply of goods or services. Schedule III expressly excludes services rendered by a court or tribunal, and the Electricity Act does not separate regulatory from adjudicatory functions of a Commission; those functions are statutory and tribunal like in character. Applying these principles, the Court found the assumption of jurisdiction in the impugned show cause notice to be arbitrary and unsustainable. The Court also noted that the Delhi High Court decision relied upon was the subject of an SLP which was dismissed by the Supreme Court and that no stay has been granted in the review proceedings, reinforcing the applicability of that precedent to the present petition. [Paras 7, 9, 11]

The show cause notice levying GST on the tariff petition fee and licence fee was set aside as impermissible; the notice is quashed.

Final Conclusion: The writ petition is allowed and Show Cause Notice No. 160/2024 is quashed on the ground that fees collected for discharge of statutory, quasi judicial and regulatory functions of the Commission do not constitute taxable supply in the course or furtherance of business under the GST law.

Substantial question of law - precedential effect of earlier High Court judgment affirmed by the Supreme Court - inordinate delay of 730 days in filing the Special Leave Petition

HELD THAT:- Having heard the learned counsel for the petitioner, we see no reason to condone the inordinate delay of 730 days in filing the Special Leave Petition as the explanation sought to be provided, does not constitute sufficient cause.

Hence, Special Leave Petition stands dismissed on the ground of delay.

Validity of reopening of assessment -Obligation to make submissions before the AO - petitioner's requests for time to reply, the filing of a delayed reply - AO to consider submissions and proceed in accordance with law

As decided by HC [2025 (11) TMI 1957 - DELHI HIGH COURT] petition was filed after a considerable lapse of time of one and half years from the order, that the petitioner had sought time to reply and had not furnished the information sought under Section 142(1).

Given these facts and the nature of the controversy, the Court declined to decide the substantive validity of the notices and order. Instead, the petitioner was directed to appear before the Assessing Officer, make full factual and legal submissions and furnish the information called for

HELD THAT:- We do not find a good ground to interfere with the impugned order/judgment in exercise of our jurisdiction under Article 136 of the Constitution of India. Accordingly, the special leave petition stands dismissed.

Rejection of Applications for settlement filed before the Interim Board for Settlement - grievance of the assessee was essentially on account of the amendments that were brought about to the I.T. Act through the Finance Act, 2021 - cut-off date prescribed in the CBDT order for satisfying the eligibility conditions for preferring applications for settlement under the I.T. Act.

HELD THAT:- In view of the order(s) passed in identical matter(s), i.e., [2026 (1) TMI 1387 - SC ORDER] no case is made out for interference in these matters also.

Special Leave Petitions are, accordingly, dismissed.

Provisional attachment orders - formation of opinion based on tangible material - consideration of assessee's history as regular taxpayer before attachment - opportunity to deposit part of disputed demand in accordance with CBDT office memoranda

HELD THAT: - We are of the view that before invoking power u/s 281B of the Act of 1961, the authorities must examine whether the assessee before it is a person who has been a regular tax payer. Merely because he may have taken loan from the Bank for his business, may not be the only sufficient ground to attach the properties.

The Court held that although Section 281B confers power to provisionally attach property, that power is draconian and must be exercised only after formation of an opinion based on tangible material showing necessity to protect government revenue. Authorities must examine whether the assessee is a regular taxpayer and not rely solely on factors such as bank loans or hypothetical future demand; indiscriminate attachment of a taxpayer's property without such objective satisfaction is impermissible. [Paras 11, 12]

The attachment was unjustified as the authority failed to demonstrate formation of opinion on tangible material and did not give proper weight to the assessee's record as a regular taxpayer; the attachment order was set aside.

Opportunity to deposit part of disputed demand in accordance with CBDT office memoranda - Requirement to afford the minimum safeguard of permitting deposit of a portion of the disputed demand before or instead of provisional attachment - HELD THAT: - The Court directed that, given the draconian nature of provisional attachment and in view of CBDT office memoranda providing for deposit of a portion of disputed demand (revised to 20%), principles of natural justice require that the assessee be afforded the minimum opportunity to make such deposit. Where a demand is only provisionally assessed or not yet raised, immediate attachment without allowing the statutory/administrative deposit mechanism is contrary to those safeguards. [Paras 12, 13, 14, 15]

The attachment was quashed but the assessee was directed to deposit 20% of the provisionally assessed demand within the stipulated time; any refundable amount would be repaid with interest if the demand is later reduced or found unjustified.

Final Conclusion: The writ petition was allowed: the provisional attachment was quashed for want of requisite formation of opinion and failure to respect the safeguard of permitting deposit of a portion of the disputed demand; the assessee was directed to deposit 20% of the provisionally assessed demand within the period ordered, subject to refund with interest if the demand is reduced or set aside.

Nature of subsidy receipt - Sales tax subsidy/exemption granted under the relevant Industrial Policy of the State Government - Characterization of subsidy as capital or revenue receipt - purpose test for classification of subsidy - relevancy of time and manner of subsidy

HELD THAT: - The Court applied the purpose test as articulated by the Supreme Court in Ponni Sugars [2008 (9) TMI 14 - SUPREME COURT] and followed in Chaphalkar Brothers [2017 (12) TMI 816 - SUPREME COURT], holding that time or manner of receipt is immaterial and the larger object of the subsidy must be examined. The sales tax exemption at issue was granted to encourage capital investment and employment in designated areas, was linked to fixed capital investment (available for ten years with a ceiling related to capital outlay), and therefore operated as an incentive for making capital investment rather than an operational recurring assistance.

In view of the concession and the authoritative ratio that subsidies granted to promote capital investment constitute capital receipts, the subsidy could not be taxed as revenue income. [Paras 11, 12, 13, 14, 15]

Final Conclusion: The appeal is allowed - Sales tax subsidy retained by the assessee, being an incentive linked to capital investment, is capital in nature and not taxable; the Revenue's appeals are dismissed.

Condonation of delay - ITAT refusing to condone the delay of 822 days in filing appeal - extension of limitation due to COVID-19 -

HELD THAT: - The Court recognised the period excluded by the Supreme Court in Re: Cognizance for Extension of Limitation [2022 (1) TMI 385 - SC ORDER] and noted the pervasive impact of the COVID-19 pandemic. Having examined the record and the explanations furnished, and in exercise of its power under Article 226, the Court found no deliberate or culpable indolence by the petitioner. The Court observed that the Appellate Authority under Section 249 has the competence to consider material and to delve into the merits when considering condonation. Taking a pragmatic and lenient view in the circumstances, the Court held that sufficient cause was made out to condone the delay and set aside the orders which had dismissed the appeal for delay. [Paras 6, 7, 8]

Delay condoned; impugned orders refusing condonation set aside and the appeal restored for adjudication on merits.

As most of the period of delay was consumed during the period of pandemic since the order of Appellate Authority has come to be passed and the order of learned Income Tax Appellate Tribunal has rendered the petitioner remediless to substantiate the claim for exemption under Section 12AA/10(23)(c) read with Section 11 of the Income Tax Act, 1961. Since the issue is relating to furnishing of evidence and establishment of claim of exemption in return, this Court is, therefore, inclined to show indulgence in the matter by taking a lenient view in order to grant an opportunity to the petitioner to substantiate its claim.

Petitioner is entitled for one opportunity before the Appellate Authority for adducing evidence in support of exemption as claimed in the returns.

Final Conclusion: The Court condoned the delay in filing the appeal, set aside the orders refusing condonation, and restored the appeal; the matter is remitted to the Appellate Authority for fresh adjudication on merits with a direction to afford the petitioner a personal hearing and opportunity to tender evidence.

Dismissal of appeal for non-payment of the admitted tax u/s 249(4)(a) - Payment of admitted tax as condition precedent to maintain appeal u/s 249(4) - jurisdiction of Commissioner (Appeals) to admit appeal - Whether the Commissioner (Appeals) has jurisdiction to admit and decide an appeal where the assessee has not paid the admitted tax declared in the return filed pursuant to a notice u/s 153C - HELD THAT: - The Court observed that the assessment impugned was completed u/s 153C and that the assessee filed a return in response thereto admitting income but did not discharge the tax payable on that admitted income. Section 249(4)(a) requires payment of the tax due on the income returned as a condition for admission of an appeal by the Commissioner (Appeals). The Court held that unless the admitted tax is paid, the CIT(A) lacks jurisdiction to admit and consider the appeal on merits.

The Court relied upon earlier decisions of this Court in D. Komalakshi [2006 (11) TMI 155 - KARNATAKA HIGH COURT] and Smt. M.R. Prabhavathy [2002 (1) TMI 8 - KARNATAKA HIGH COURT] and the Supreme Court in CIT v. Pawan Kumar Laddha [2010 (4) TMI 14 - SUPREME COURT] as reiterating the legal position that payment of the admitted tax is mandatory before an appeal is admitted.

Applying that principle, the Court concluded that no substantial question of law arose for admission of the present petition insofar as jurisdiction to admit the appeal without payment was concerned. [Paras 7, 8, 9, 12, 13]

Final Conclusion: The Court allowed the petition in part, set aside the orders of the CIT(A) and the Tribunal, and remitted the matter to the CIT(A) for fresh consideration on merits subject to proof of payment of the admitted tax; the Court did not decide the merits of the assessment.

Limitation on giving effect to Tribunal remand orders - unreasonable delay as bar to exercise of reassessment powers- Whether an order giving effect to a Tribunal remand made in 2017 can be lawfully passed after an unexplained delay of over eight years? -

HELD THAT:- The Court observed that Section 153 was amended by the Finance Act, 2016 to prescribe time limits for giving effect to orders of the Tribunal, but noted that even prior to the amendment no fixed period was prescribed.

The Court held that regardless of whether the pre-amendment or amended scheme applied, a lapse of more than eight years in passing an order giving effect to the Tribunal's remand is inordinate and cannot be treated as a reasonable period to exercise reassessment powers. The Court relied on this principle and the Division Bench precedents of the High Court applying sub-section (7) of Section 153 to conclude that proceedings to give effect to the remand are barred by limitation. [Paras 6, 7, 8]

An order giving effect to the Tribunal remand after the unexplained delay of over eight years is barred by limitation and cannot be lawfully passed.

Final Conclusion: The writ appeal is dismissed; the High Court's Single Judge order directing refund with applicable interest is upheld because further action to give effect to the Tribunal's remand is barred by unreasonable delay.

Treatment of cost of acquisition in computation of long-term capital gains- computation of LTCG u/s 112A by taxing the entire sale proceeds without allowing cost of acquisition.

HELD THAT:- Tribunal found that the CPC, while processing the return u/s 143(1), ignored the cost of acquisition and treated the entire sale consideration as capital gain. Noting that the AO in remand proceedings had not made any adverse comment on the cost of acquisition and that the claimed cost was supported by the broker statement, Tribunal concluded that the matter required fresh consideration.

Tribunal therefore directed the jurisdictional AO to consider the cost of acquisition as claimed by the assessee and to recompute the long-term capital gain in accordance with the provisions of the Income Tax Act. [Paras 4]

Final Conclusion: The appeal is allowed for statistical purposes and the matter is remitted to the AO for recomputation of long-term capital gains after considering the cost of acquisition claimed by the assessee.

Deduction u/s 80P(2)(d) - interest income earned on investments held with cooperative societies/banks -scope of "co-operative society" in section 2(19) - assessee is a registered under Maharashtra Cooperative Societies Act, 1960 and is providing credit facilities to its Members and derived interest income on investments kept with Cooperative Societies/Banks

HELD THAT: - The Tribunal held that the term co-operative society as defined in section 2(19) includes societies registered under State co-operative societies Acts, whether they carry on banking business or other activities. Section 80P(2)(d) permits deduction for income by way of interest or dividend derived by a co-operative society from its investments with any other co-operative society. Applying that definition and the statutory scope, and following consistent judicial precedents, the Tribunal concluded that interest income from investments with co-operative societies/banks qualifies for deduction u/s 80P(2)(d).

In the case of Thorapadi Urban Co-op Credit Society Ltd & Others [2023 (11) TMI 779 - MADRAS HIGH COURT] which the assessee relied upon, the Hon'ble High Court of Madras following the decision of The Salem Agricultural Producers Co-operative Marketing Society Ltd. [2016 (9) TMI 699 - MADRAS HIGH COURT] held that a cooperative society is entitled to avail the benefit u/s. 80P(2)(d) of the Act.[Paras 5, 6, 7]

Final Conclusion: The Tribunal dismissed the Revenue's appeal for A.Y. 2018-19, upholding the CIT(A)'s allowance of deduction under section 80P(2)(d) in respect of interest income from investments with co-operative societies/banks.

Denial of TDS credit - TDS was deducted and reported by the deductor against the PAN of the deceased assessee - application of Rule 37BA regarding allocation of TDS credit - TDS credit could be allowed to legal heir only if the deductor revises the TDS statement to reflect the PAN of the legal heir which was not done - TDS was reported against the PAN of the deceased whereas the return of income was filed under the PAN of legal heir, thereby using the PAN of the legal heir, there was a mismatch in the system.

Whether the legal heir is entitled to claim TDS credit where tax was deducted and reported against the PAN of the deceased but the legal heir has offered the deceased's income in her return filed under her own PAN? - HELD THAT: - The Tribunal found the factual position to be undisputed as assessee, as legal heir, offered the interest income of the deceased in her return and claimed the corresponding TDS credit.

CPC denied credit because the deductor had reported the TDS against the deceased's PAN and the credit did not appear in Form 26AS under the legal heir's PAN. While Rule 37BA operates to allocate TDS credit to the person in whose name the deductor reports the tax, the Tribunal treated the denial as a technicality which should not defeat substantive taxability already admitted by the legal heir. Requiring the legal heir to obtain revision of the historical TDS return from the deductor was held to be impractical for the relevant assessment year. In these circumstances the Tribunal directed the CPC to grant the disputed TDS credit to the assessee and to revise the tax demand accordingly. [Paras 4, 5]

Final Conclusion: The appeal was allowed - Tribunal directed grant of the claimed TDS credit to the legal heir despite the TDS being reported against the deceased's PAN, and directed CPC to amend the demand accordingly.

Reassessment u/s 147/148 initiated during pendency of scrutiny assessment u/s 143(3) - Parallel assessment proceedings - HELD THAT: - The Tribunal examined the assessment order and contemporaneous records and found that although the cause title referred to section 143(3), the assessment order itself records issuance of notice u/s 147/148 and the additions flowed from reasons recorded for reopening. Reliance was placed on the principle that two parallel assessment streams cannot co-exist and that reassessment u/s 147/148 cannot be resorted to while regular scrutiny proceedings u/s 143(3) remain pending.

The Tribunal considered precedents including the decision in KLM Royal Dutch Airlines [2007 (1) TMI 138 - DELHI HIGH COURT] and the Apex Court in Trustees of H. E. H. the Nizam's Supplemental Family Trust [2000 (2) TMI 4 - SUPREME COURT] to conclude that pending scrutiny assessment must be concluded before initiating reassessment, and that the AO's initiation of reassessment during the pendency of scrutiny assessment was therefore without jurisdiction. [Paras 8, 9, 11]

Reassessment proceedings under section 147/148 initiated during pendency of scrutiny assessment under section 143(3) were without jurisdiction and invalid

Objections to reopening must be decided before completion of reassessment - Whether the assessment could stand when objections against reopening were not decided by the Assessing Officer - HELD THAT: - The Tribunal noted that the assessee filed objections to the reopening and that the AO, in the remand report, admitted that there is no record to establish disposal of those objections. The Tribunal applied the mandate of the Apex Court in GKN Driveshafts (India) Ltd. [2002 (11) TMI 7 - SUPREME COURT] that objections to reopening must be disposed of before completing reassessment. The absence of any record showing that the objections were considered established that the reassessment was completed without complying with the requirement to decide objections, rendering the assessment procedurally defective. [Paras 7, 11]

Assessment completed without deciding the assessee's objections to reopening was in violation of law and vitiates the reassessment

Final Conclusion: The assessment for AY 2010-11 was quashed because reassessment under section 147/148 was initiated during the pendency of scrutiny assessment under section 143(3) and because the AO failed to decide the assessee's objections to reopening; consequent merits of additions were left open and the appeal is allowed.

Addition u/s 68 - unexplained cash credit - bogus share capital/share premium -non-compliance of summons u/s 131 by the directors of the share subscribers - allegation of non discharge of initial onus u/s 68 by documentary evidence of identity, creditworthiness and genuineness - prohibition of double addition where source of funds has already been brought to tax in hands of the investor

Whether the addition made by the Assessing Officer treating share capital/share premium as unexplained cash credit under section 68 could be sustained - HELD THAT: - The Tribunal examined the material placed before the Assessing Officer and the Commissioner (Appeals), noting that the assessee and the subscribing entities had furnished extensive documentary evidence including PAN details, share application and allotment records, audited financial statements, bank statements and replies to notices under section 133(6).

Applying the established three fold test under section 68, the Tribunal held that the assessee discharged the initial onus by credible documentary proof of identity, banking flow and financial position of the subscribers. The Tribunal further recorded that the Assessing Officer did not produce contrary evidence to impeach these records and, in the absence of such contrary material, could not reject the documentary trail as mere paper compliance. The Tribunal therefore affirmed the Commissioner (Appeals) in deleting the addition. [Paras 6]

The deletion of the addition under section 68 is upheld as the assessee discharged the initial onus by documentary evidence and the Assessing Officer failed to rebut that evidence.

The case of the assessee is also covered by the decision of M/S EXPRESS TRADELINK PVT. LTD [2026 (2) TMI 320 - CALCUTTA HIGH COURT] as held Court noted that the assessee had produced extensive documentary evidence including PAN details, share application forms, allotment advices, bank statements, ITR acknowledgements, and audited financial statements of all subscriber companies. The Court held that under Section 68, once the assessee provides credible documentary evidence establishing identity, banking transactions, and financial details of the investors, the initial onus stands discharged and the burden shifts to the Revenue. AO cannot dismiss such audited records as mere "paper compliance" without bringing contrary evidence on record. The Court further observed that the non-appearance of directors cannot invalidate documented transactions, especially when the AO possesses powers under Section 131 to enforce attendance or seek verification from the respective Assessing Officers of the investors. Suspicion, however strong, cannot replace evidence.

Non-compliance of summons u/s 131 by the directors of the share subscribers - AR relied on the decision of Balaka Vinimay Pvt Ltd [2025 (7) TMI 1976 - CALCUTTA HIGH COURT] In this case also, the assessee and the share subscribers had furnished all the relevant details in support of the share application monies before the AO. The AO however disbelieved the explanation since there was non-compliance of summons u/s 131 by the directors of the share subscribers. Taking note of the practical difficulty that the assessee cannot be called upon to produce the share subscribers after a gap of 10 to 12 years, and having regard to the documents placed on record, the Hon'ble High Court dismissed the Revenue's appeal and upheld the order of this Tribunal deleting the addition u/s 68.

Final Conclusion: Having found that the assessee discharged the initial onus under section 68 by cogent documentary evidence, and that in respect of certain investors the same funds had already been brought to tax in their hands (making a further addition impermissible), the Tribunal upheld the Commissioner (Appeals)'s deletion of the addition and dismissed the Revenue's appeal for AY 2012-13.

Validity of assessment issued in the name of a non-existent entity - status of the assessee as “Amalgamated” - succession to business u/s 170

Reassessment proceedings initiated by notices issued in the name of the amalgamating (now non existent) company - HELD THAT: - Section 170 applies to succession to business on amalgamation - the predecessor is assessable up to the date of succession and, where the predecessor cannot be found, the successor is to be assessed in like manner and to the same extent. The record showed that the amalgamation had been effected and the company master data on the MCA portal reflected the status as "Amalgamated" prior to issuance of notices.

Consistent decisions of coordinate benches and the Hon'ble Supreme Court in Pr. CIT v. Maruti Suzuki India Ltd. [2019 (7) TMI 1449 - SUPREME COURT] establish that issuance of jurisdictional notices and passing assessment orders in the name of an entity that has ceased to exist is a substantive illegality (not a mere procedural irregularity) and renders the proceedings void ab initio. Applying these principles, the notices issued u/s 148 in the name of the erstwhile company were invalid and the consequent reassessment orders for AY 2013-14 and AY 2014-15 could not stand.

Notices issued u/s 148 and the reassessment orders passed in the name of the non-existent (amalgamating) company are invalid - the reassessment orders for AY 2013-14 and AY 2014-15 are quashed.

Final Conclusion: The Tribunal allowed the appeals by quashing the reassessment proceedings and assessment orders that were initiated and passed in the name of the amalgamating company which had ceased to exist; other grounds were left undecided.

Adjustment made by AO by invoking section 50C while processing the return u/s 143(1) - Validity of invoking section 50C to substitute stamp-duty valuation by making an upward adjustment while processing the return u/s 143(1)(a)(ii) - HELD THAT: - The Tribunal held that section 50C is a deeming provision coupled with statutory rights of objection and a provision for reference to the Departmental Valuation Officer under section 50C(2). Consequently, substitution of stamp-duty value cannot be treated as an "incorrect claim apparent from any information in the return" within the meaning of section 143(1)(a)(ii), because deciding that question requires examination beyond the return and the opportunity to avail objection/reference under section 50C.

The co-ordinate Benches of the Tribunal in Prabha Anil Gandhi [2023 (10) TMI 1540 - ITAT MUMBAI], Inder Jeet Malik [2022 (7) TMI 1583 - ITAT DELHI] and Amit Sabharwal [2025 (3) TMI 712 - ITAT DELHI] have consistently held that substitution of stamp-duty value u/s 50C, being a deeming fiction coupled with statutory rights of objection and reference to DVO under sub-section (2) of section 50C, cannot be treated as an “incorrect claim apparent from information in the return” so as to permit adjustment u/s 143(1)(a)(ii). Such determination requires examination beyond the return and involves a debatable issue, which can be undertaken only in regular assessment proceedings and not at the stage of processing u/s 143(1). [Paras 8, 9, 10]

The impugned upward adjustment made by invoking section 50C while processing the return u/s 143(1) is unsustainable and is deleted; Ground No. 1 is allowed.

Final Conclusion: The Tribunal allowed the appeal, deleted the addition made by applying section 50C at the processing stage under section 143(1).

Appropriateness test for Immediate suspension of the Customs Broker licence and its continuation under Regulation 16 - illegal clearance of imported goods by over debiting of SIL licenses - procedure for inquiry under Regulation 17 - mis-declaration of the goods - Failure to fulfill due diligence in discharging their obligations as required - non-transferability of CB license​​​​​​​ - violations of Regulation 1(4) and sub-regulations (a), (b), (d) and (e) of Regulation 10 - non- reasoned order.

Immediate suspension under Regulation 16 - procedure for inquiry under Regulation 17 - HELD THAT: - The Tribunal held that Regulation 16 permits suspension only in appropriate cases where immediate action is necessary and requires reasons to be recorded; Regulation 17 prescribes the detailed inquiry steps that must follow. The licensing authority's order continuing suspension did not evidentially demonstrate appropriateness nor record the requisite reasons, and proceeded to conclude violations before the inquiry under Regulation 17 was conducted. The Tribunal found no material before the Commissioner justifying immediate continuation of suspension (noting the later-issued SCN that excluded the appellants), and observed that CBIC Instruction No.24/2023 requires suspension not to be exercised mechanically and mandates recording of reasons. Because the statutory preconditions for invoking and continuing suspension under Regulation 16 were not satisfied and the prescribed inquiry process under Regulation 17 was not followed, the continued suspension was unlawful; the inquiry must now be completed expeditiously under Regulation 17. [Paras 7, 8, 9]

Continued suspension under Regulation 16 set aside for failure to demonstrate appropriateness and record reasons; inquiry under Regulation 17 to be completed expeditiously and the Customs Broker permitted to resume business forthwith.

Final Conclusion: The Tribunal set aside the impugned continued suspension order as legally unsustainable for lack of recorded reasons and evidential basis under Regulation 16, directed completion of the Regulation 17 inquiry expeditiously (preferably within six months), and allowed the Customs Broker to resume business with immediate effect.

Validity of notice on the person chargeable with duty or interest - Duty chargeable on the goods imported or exported out of India - Who is that person who is chargeable with duty - concept of beneficial owner - Bill of Entry as unit of assessment - assessment of multiple Bills of Entry together - permissible customs duty planning.

Person chargeable with duty - Liability to pay duty under section 28 could be fastened only on the person chargeable with duty at the relevant time and the concept of beneficial owner was not available at the time the show cause notice was issued. - HELD THAT:- The Court examined section 28 and the statutory scheme governing who may be served with a recovery notice. Section 28(1) and (4) authorise serving a notice on the person chargeable with the duty or interest. Section 12 and the definitions in section 2 establish that duty is chargeable on imported goods and that the importer (including an owner) for purposes of customs law is the person who owns the goods between importation and clearance for home consumption. The Act was amended only from 31.3.2017 to introduce the notion of "beneficial owner"; the show cause notice in this case was issued before that amendment. Therefore, there was no statutory basis at the relevant time to treat a subsequent buyer or an alleged mastermind who did not import or clear the goods as the person chargeable with duty, and a notice under section 28 could not validly be served on such a person. [Paras 12, 15, 16, 17, 18]

Demand of duty could not be sustained against the appellant who purchased goods after clearance because he was not the person chargeable with duty and the beneficial owner concept did not apply at the relevant time.

Bill of Entry as unit of assessment - assessment of multiple Bills of Entry together - HELD THAT:- The Court held that each Bill of Entry constitutes a separate unit of assessment under sections 17, 46 and 47: the importer files the Bill of Entry, self-assesses duty, the proper officer may re-assess, and clearance is issued. Once clearance under section 47 is given, the goods cease to be imported goods. The statute contains no power to aggregate goods imported under different Bills of Entry and assess them jointly to treat them as a single article for reclassification or re-assessment, except in the special Project Imports regime. The show cause notice and the impugned order proceeded on the mistaken premise that panels and other parts imported under different Bills of Entry and by different importers could be treated together and re-assessed when sold to the appellant after clearance; that approach has no foundation in the Act. [Paras 21, 22, 23]

The impugned re-assessment treating goods imported under various Bills of Entry together is without authority of law.

Permissible customs duty planning - Importing parts and assembling them domestically to obtain a lower duty burden is lawful tax planning and not by itself a basis for imposing additional duty. - HELD THAT:- The Tribunal recognised that tariff design commonly imposes lower duty on raw materials and intermediate products and higher duty on finished articles to encourage local manufacture. Where importers choose to import intermediate goods and assemble them in India, that constitutes lawful commercial structuring or "smart customs duty planning." Absent a statutory provision treating such conduct as unlawful or as a basis for recovery from persons who did not import or clear the goods, taking advantage of the tariff structure cannot be equated to evasion that attracts duty beyond the statutory scheme. [Paras 24, 25, 26]

Importing components and assembling them domestically to reduce duty liability is not illegal and does not justify imposing duty on a subsequent purchaser who did not import or clear the goods.

Final Conclusion: The impugned order confirming demand of duty, interest and penalties against the appellant is without authority of law: the appellant was not the person chargeable with duty at the relevant time, the statutory unit of assessment is the Bill of Entry and multiple Bills of Entry cannot be combined for re-assessment, and importing parts for domestic assembly is lawful planning; accordingly the impugned order is set aside and the appeal is allowed.

Inconclusive expert chemical report insufficient to prove misdeclaration - insufficiency of forensic report - reclassification based on one technical parameter or tentative wording in test report - transaction value under customs valuation - benefit of doubt - denial of opportunity to examine or cross examine the chemical examiner - prejudicial to principles of natural justice - Whether the report is complete and sufficient enough to conclude that the goods are ‘base oil’ and not ‘press distillate oil’.

Inconclusive expert chemical report insufficient to prove misdeclaration - HELD THAT:- The Court held that the CRCL reports merely indicated that the samples had characteristics of base oil and did not categorically state that the impugned goods were base oil. Reliance on a single parameter (viscosity index) from the API classification while omitting other essential parameters (sulphur % and saturates %) was an incomplete approach and insufficient to establish misdeclaration. Coordinate decisions of this Bench and another bench were considered: Golden Enterprises [2016 (9) TMI 976 - CESTAT CHANDIGARH], where it was observed that the chemical examiner did not give a definitive opinion and that the reports were therefore inconclusive; and JRR Associates, which held that a suggestion that the sample 'may be' base oil cannot support reclassification or revaluation. In absence of conclusive evidence other than non categorical test reports, the authorities had no basis to disregard the importers' declarations or to redetermine value and impose penalties. The Court applied the principle that tentative or partial technical findings cannot justify reclassification and consequent duty/penalty measures. [Paras 5, 6, 7, 8, 9]

The incomplete and non categorical CRCL report cannot be relied upon to conclude misdeclaration or to sustain reclassification, revaluation and penalties.

Denial of opportunity to examine - Whether the adjudicating authority's refusal to permit examination or cross examination of the chemical examiner vitiated the adjudication. - HELD THAT:- The Tribunal found that the adjudicating authority neither examined the chemical examiner nor allowed the appellants to cross examine him. Given that the test reports were non categorical and the chemical examiner's testimony could have clarified whether the samples were PDO or base oil, denial of cross examination amounted to a serious breach of procedural fairness. The absence of such opportunity deprived the appellants of a means to obtain categorical answers, and in consequence the benefit of doubt was held in favour of the importers. [Paras 6, 7, 9]

Denial of examination/cross examination of the chemical examiner prejudiced the appellants; benefit of doubt is accorded to the importers.

Final Conclusion: The impugned adjudication was set aside: the appeals filed by M/s S.K. Petrochem and Shri Jeevan Jain were allowed with consequential relief, and the Revenue appeals were dismissed; the appellate authority's order dropping proceedings was upheld.

Classification of Goods - second-hand goods - used metal articles as waste and scrap - burden of proof for mis-declaration and confiscation - requirement of expert examination to determine serviceability of imported goods - Whether the quantity ascertained as "old and used gas cut drill pipes" by the revenue was used goods or Heavy Melting Scrap (HMS).

Classification of used metal articles as waste and scrap - Whether the portion of the imported consignment described by Revenue as "old and used gas cut drill pipes" was mis-declared, liable to confiscation and penalty, or rightly classifiable as Heavy Melting Scrap (HMS). - HELD THAT:- The Tribunal found that Revenue did not produce documentary or expert evidence to establish that the impugned articles were serviceable second-hand pipes and therefore mis-declared. Revenue's examination was conducted without engaging a chartered engineer or other expert, and no evidence was placed on record to show that the articles could be used for their original purpose. The Tribunal applied the Section Note definition of "waste and scrap" (metal goods definitely not usable as such) and followed the case of Global Ship Trade (P) Ltd.[2002 (2) TMI 182 - CEGAT, COURT NO. I, NEW DELHI], held that where, in the absence of evidence of serviceability, used metal articles have been held to be melting scrap. The authorities below failed to apply the relevant section and chapter notes and relied on conjecture rather than evidence. Contemporaneous imports or subsequent clearances cannot cure the absence of proof in the impugned transaction; each import must be judged on its own record. Because Revenue did not reject the transaction value on permissible legal grounds and adduce evidence to support mis-declaration or non-applicability of the declared classification, the confiscation, enhancement and penalties could not be sustained. [Paras 8, 9, 12, 13]

Revenue failed to prove mis-declaration; the goods as imported could not be shown to be serviceable pipes and were properly classifiable as scrap; the impugned order is set aside and the appeal is allowed with consequential relief as per law.

Final Conclusion: The Tribunal held that, in the absence of expert evidence and other material to prove serviceability, the portion of the consignment treated by Revenue as used drill pipes was not shown to be mis-declared; confiscation, enhancement and penalties were therefore unsustainable and the appeal was allowed.

Prohibited goods - import and trading of cosmetics - without required CDSCO registration - illegal import - seizure and confiscation under Section 110 and Section 111 of the Customs Act - valuation and mis-declaration - Whether the cosmetics in question, subject matter of the Bills of Entry filed by the petitioner for warehousing and alleged not to be meant for home clearance, would suffer an embargo for a re-export and proceedings for confiscation under the provisions of Section 111 of the Customs Act, 1962 (“Customs Act”).

Prohibited goods - illegal import - seizure and confiscation under Section 110 and Section 111 of the Customs Act - Legal character of the imported cosmetics where import was effected without CDSCO registration and consequence under the Customs Act. - HELD THAT: - On a conjoint reading of the Customs Act, 1962 and the Drugs and Cosmetics Act, 1940 together with the Cosmetics Rules, 2020, importation of cosmetics without the mandatory registration/license prescribed by the Drugs and Cosmetics law renders such consignments subject to the prohibition in Section 2(33) of the Customs Act. Section 10 of the Drugs and Cosmetics Act, read with Rule 12 of the Cosmetics Rules, 2020, mandates prior registration for import of cosmetics; absence of that registration means the import is in contravention of the other law and therefore falls within the statutory notion of prohibited or illegal import. Once goods are so characterised, provisions for seizure under Section 110 and confiscation under Section 111 (including clause (d)) are attracted and legitimately invoked by the authorities pending investigation and adjudication. [Paras 36, 37, 38]

The cosmetics imported without the requisite CDSCO registration are prohibited/illegal imports and liable to seizure and confiscation under Sections 110 and 111 of the Customs Act.

Exemption from regulatory licence requirement by filing warehouse bill of entry or by intent to re export - clearance for re export under Section 69 - HELD THAT:- The warehousing scheme does not permit importation of goods that are otherwise prohibited under any other law; Section 69(1) allowing re export of warehoused goods without payment of duty applies only to warehoused goods that are lawfully imported and not prohibited. The Court found no material to show a prior bona fide intention to import solely for warehousing and re export, and held that bringing goods into territorial waters without the mandatory licence cannot be legitimised by later filing of warehouse bills or by an asserted re export intent. Consequently, the plea that warehousing/re export removes the need for prior compliance with the Drugs and Cosmetics regulatory regime is rejected. [Paras 40, 41]

Filing warehouse bills of entry or claiming an intention to re export does not absolve the importer from mandatory regulatory licensing; Section 69 does not apply to prohibited/illegal imports and does not preclude seizure.

Final Conclusion: The petition is dismissed: cosmetics imported without mandatory CDSCO registration are prohibited/illegal imports under the combined statutory scheme and liable to seizure/confiscation; warehousing or asserted re export intention does not relieve the importer of the prior regulatory requirements or prevent lawful seizure and investigation.

Entitlement to provisional release of the imported boat on furnishing specified cash security and a bond for the balance differential duty pending final determination of classification - applicability of Indo Sri Lanka Free Trade Agreement (ISFTA) benefits - sufficiency of security for differential duty - referral of classification and treaty-benefit questions to designated officer.

Provisional release on security and bond - sufficiency of security for differential duty - HELD THAT: - The Court found that the petitioner had already deposited a portion of duty and had expressed willingness to deposit an additional sum in cash and to furnish a bond for the remaining differential duty. The Court held that, on the facts, the differential duty amount was sufficiently secured by the cash deposit together with the proposed bond and that any additional liability ultimately determined would be recoverable under the statute. The petitioner's request for provisional release was therefore accepted on the condition that the petitioner deposit the specified cash amount and execute a bond securing the balance. [Paras 7, 8, 9, 10]

Upon deposit of the cash amount and furnishing of a bond for the balance, the petitioner is entitled to provisional release of the boat.

Referral of classification and treaty-benefit questions to designated officer - HELD THAT: - The Court expressly left open the contentions regarding classification and entitlement under the free trade agreement, noting that those questions are under consideration by the competent/designated authority and must be finally decided by that designated officer. No substantive determination on classification or treaty entitlement was made by the Court. [Paras 7, 11]

All contentions on classification and applicability of the treaty benefit are left open for decision by the designated officer.

Final Conclusion: The petition succeeds insofar as provisional release is granted on the petitioner depositing the specified cash security and furnishing a bond for the balance; questions of classification and entitlement under the Free Trade Agreement are left to be decided by the designated officer. No costs.

Correctness of the determination of liability and sought a direction to the CESTAT not to insist upon the statutory pre-deposit for entertaining and deciding the appeal - Mandatory statutory pre-deposit under Section 129E - statutory right of appeal - judicial power to permit conditional/instalmental compliance with statutory pre-conditions.

Mandatory statutory pre-deposit under Section 129E - HELD THAT: - The Court held that the pre-deposit mandated by Section 129E is mandatory and CESTAT acquires jurisdiction to entertain an appeal only upon compliance with that condition. At the same time, the Court recognised that where an appellant pleads financial hardship, the exercise of constitutional jurisdiction may be employed to strike a balance between protecting the statutory right of appeal and safeguarding revenue interests, so that the right of appeal does not become illusory. [Paras 7]

The pre-deposit requirement is mandatory, but the High Court may, in appropriate cases, permit conditional or staged compliance to balance the appellant's access to appeal and the Revenue's interests.

Judicial power to permit conditional/instalmental compliance with statutory pre-conditions - HELD THAT:- Having considered the appellant's proposal and the competing interests, the Court exercised its jurisdiction under Article 226 to permit staged payment of the requisite pre-deposit. The Court directed specific instalments to be deposited by the appellant and ordered that CESTAT shall entertain and proceed with the appeal upon production of proof of the initial instalment, subject to the condition that the Tribunal shall pronounce the final order only after the entire directed sum has been deposited. [Paras 8, 9]

The appellant was permitted to make the pre-deposit of the directed sum in instalments and CESTAT was directed to entertain the appeal on production of the initial deposit, with final adjudication reserved until full deposit is made.

Final Conclusion: The High Court set aside the Single Judge's order and, while affirming that Section 129E's pre-deposit is mandatory, permitted the appellant to comply by depositing the directed sum in instalments and directed CESTAT to entertain the appeal on partial compliance but to pronounce final order only after full deposit; no opinion was expressed on the merits.

Existence of requisite reason to believe for attracting penalty under section 112(b) of the Customs Act - licit import - Absolute confiscation of seized gold biscuits of foreign origin - Reduction of penalty in exercise of judicial discretion.

Reason to believe for penalty under section 112(b) - HELD THAT:- The Tribunal concluded that reason to believe is an essential ingredient for imposing penalty under section 112(b). It found the appellants' account to be uncorroborated and inconsistent: the alleged intermediary could not be located, the telephone number given did not legitimately identify the purported person, and material aspects of the appellant's narrative could not be verified. The appellants also gave voluntary no-objection to seizure of the recovered foreign-marked gold, and the attendant circumstantial evidence permitted an inference of prior knowledge rather than innocent carriage. On this basis the Tribunal held that the factual matrix supports a conclusion that the appellants knew or had reason to believe the goods were liable to confiscation and that penalty under section 112(b) was sustainable. [Paras 9, 10, 11]

Penalty under section 112(b) is sustainable because the record discloses reason to believe that the appellants knew or had reason to believe the goods were liable to confiscation.

Reduction of penalty in exercise of judicial discretion - Appropriate quantum of penalty to be imposed on the appellants in view of the overall facts and circumstances. - HELD THAT: - Although the Tribunal sustained the legal basis for imposing penalties, it exercised judicial discretion to moderate the amounts on humanitarian and equitable considerations: the seized gold had been confiscated by the authorities, the appellants had undergone about two weeks' imprisonment and were facing prosecution. Taking these factors into account, the Tribunal found it just and appropriate to reduce the originally imposed penalties to lower sums. [Paras 12]

The penalties were reduced to specified lower amounts in exercise of discretion.

Final Conclusion: The Tribunal held that the facts warranted imposition of penalty under section 112(b) (reason to believe established), but in exercise of discretion reduced the penalties to the lower amounts specified by the Tribunal while leaving the confiscation and ongoing prosecution intact.

Undervaluation of "Power Bank 5200mAH" having part number VXN4062IN -Enhancement of assessable value of imported power banks by adopting value of similar goods - re-determination of assessable value by original authority based on contemporaneous import data from same supplier under Rule 5 of Customs Valuation - comparability by commercial level and quantity - undervaluation/mis-declaration - confiscation of goods and imposition of redemption fine and penalty - requirement of evidence of mis-declaration

Customs valuation - transaction value and sequential application of CVR - use of NIDB/contemporaneous imports - comparability by commercial level and quantity - HELD THAT:- The Tribunal found that the authorities below did not follow the statutory sequence under Rule 3 and then Rules 4-9 of the CVR before rejecting the transaction value. The adjudicating authorities relied solely on the price of a single contemporaneous import (10,000 pieces) by another importer and ignored numerous imports of identical goods by the appellant (1,71,400 pieces) cleared at the declared transaction value in the same Commissionerate. The decision-maker failed to consider commercial-level and quantity adjustments and the Interpretative Notes to Rules 4 and 5, and did not explain why identical goods imported by the appellant were excluded from NIDB comparators. For these reasons the re-determination under Rule 5 based on that single similar- goods transaction was contrary to law and factually incorrect and had to be set aside. [Paras 6, 7, 9]

Re-determination of assessable value on the basis of the single contemporaneous import was set aside for failure to follow CVR sequential procedure and for lack of proper comparability by commercial level and quantity.

Confiscation and penalties - requirement of evidence of mis-declaration - HELD THAT:- The Tribunal held that the authorities below concluded undervaluation on account of alleged INCO-term mismatch and mis-declaration, but the record - including the supply agreement and supplier's letter - established the transaction to be on CIP terms and did not show any evidence that additional consideration had flowed back or that invoice price failed to reflect the real transaction value. The examining officers had not reported mis-declaration during first-check appraisement, and identical goods had been cleared at the declared value. In absence of adequate investigation and evidentiary proof to displace the transaction value, confiscation, redemption fine and penalty could not be sustained. [Paras 6, 8, 9]

Confiscation, redemption fine and penalty imposed on the appellant were set aside for lack of evidential foundation to prove mis-declaration or undervaluation.

Final Conclusion: The impugned order confirming re-determined valuation and upholding confiscation, redemption fine and penalty was set aside; the appeal is allowed and the adjudged demands and punitive measures quashed for failure to follow the CVR sequence and for want of evidence to prove mis-declaration.

Appropriateness for immediate suspension of the customs broker's licence under Regulation 16 of CBLR, 2018 - until completion of pending inquiry proceedings under Regulation 17 ibid - requirement to record reasons when continuing suspension - necessity of evidential basis to implicate a Customs Broker before suspension - non-transferability of licence - violations of Regulations 1(4) and 10(a), 10(b), 10(d) and 10(e).

Appropriateness for immediate suspension under Regulation 16 of CBLR, 2018 - requirement to record reasons when continuing suspension - Continued suspension of the appellant's Customs Broker licence under Regulation 16 of CBLR, 2018 was legally unsustainable - HELD THAT: - The Tribunal held that Regulation 16 permits suspension only in appropriate cases where immediate action is necessary and where an enquiry is pending or contemplated, and that the licensing authority must give a post-decisional hearing and record reasons when continuing suspension. The impugned order failed to demonstrate the appropriateness of immediate suspension or to record reasons justifying continued suspension. The adjudicating order also lacked an evidential foundation linking the appellants to the alleged over debiting and mis declaration: the evidential materials did not establish that the appellants handled the impugned imports, and the show cause notice implicating the importer and others was issued after the suspension decision. The Tribunal further applied the Board's instruction No.24/2023 cautioning against routine or mechanical use of suspension and found that the licensing authority did not apply its mind to the statutory tests in Regulation 16 and the procedural requirements of Regulation 17.[Paras 7, 8, 9]

We are not examining the allegations of violation of various Regulations under CBLR against the appellants, as it is pre-mature inasmuch as the licensing authority i.e., Commissioner of Customs is yet to finally pass a speaking order under Sub-regulation (8) of Regulation 17 of CBLR, 2018. We are also therefore not expressing our opinion on any of the alleged violations of Regulation 10 ibid, as there is an independent inquiry proceeding that is required to be conducted by the jurisdictional Customs Commissionerate as licensing authority and on which a speaking order is required to be passed by him in terms of Regulation 17 of CBLR.

The impugned order of continued suspension was set aside for lack of recorded reasons and absence of evidential basis; the licensing authority was directed to complete the Regulation 17 inquiry expeditiously and the appellants were permitted to resume business as Customs Broker pending that inquiry.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order of continued suspension for failure to satisfy the statutory requirements of Regulation 16 and for want of evidential basis, directed the licensing authority to complete the Regulation 17 inquiry expeditiously, and permitted the appellant to resume Customs Broker business immediately.

Demand invoking the extended period of limitation under Section 28(4) - time barred - non-payment or short payment of duty - misclassification of imported plastic parts when collusion, willful misstatement or suppression of facts.

Extended period of limitation - HELD THAT:- Invocation of the extended period requires a finding that non payment or short payment of duty was due to collusion, willful mis statement or suppression of facts. The impugned order did not make or record any such established finding; instead the dispute arose from differing views on tariff classification following the assessee's self declaration. In the absence of any allegation or proof of collusion, willful misstatement or suppression, the demand fell outside the normal period of limitation and could not be sustained. Consequently the order confirming demand under the extended period was liable to be set aside. The Tribunal expressly left the substantive question of classification open for determination in an appropriate case.

Demand raised under the extended period of limitation quashed and the impugned order set aside on limitation grounds; classification issue left open.

Final Conclusion: The appeal was allowed solely on the ground that the extended period of limitation could not be invoked in the absence of established collusion, willful mis statement or suppression of facts; the impugned order is set aside and the classification question remains undetermined for future adjudication.

Classification of goods - imported flame cut used pipes - nature and character of the imported items - classifiable as waste and scrap (heavy melting scrap) or as used pipes/re rollable material -principle of eo nomine (it names the material itself) - mis declaration and under valuation - estoppel by acceptance - proportionality of redemption fine and penalty.

Classification of imported goods as waste and scrap versus second hand pipes -HELD THAT:- The Tribunal examined the nature and character of the imported material against chapter notes and the factual record including the Chartered Engineer's inspection report. It noted established authorities holding that goods must be classified according to their character and not merely by intended use, and that eo nomine or specific classification principles require attention to inherent characteristics. The principle of eo nomine (it names the material itself) has been upheld by the Tribunal in the case of Welkin Foods – [2026 (1) TMI 348 - SUPREME COURT].

While earlier precedents were discussed where visual and documentary material led to re classification of purported scrap as used rails, the Tribunal found that in the present case the appellants had accepted the department's re classification and re valuation and had not preserved any protest. On that basis the Tribunal did not permit the appellants to reopen the question of classification; accordingly the impugned findings of mis declaration and re classification were treated as not contestable by the appellants in these proceedings. [Paras 9, 11, 12]

The Tribunal affirmed that the re classification and findings of mis declaration could not be agitated by the appellants after their acceptance; the departmental classification as distinct from HMS was thereby sustained for purposes of these appeals.

Estoppel by acceptance of reclassification and payment - HELD THAT:- The Tribunal applied the principle that voluntary acceptance of departmental findings, payment of dues and taking release without protest estops an importer from later challenging the same contentions. It relied on the parties' contemporaneous conduct, their representation before the Member (Customs) to dispense with a show cause notice, payment of duty, redemption fine and penalty and absence of any record of coercion or protest. In view of these facts and precedents cited, the Tribunal held that the appellants could not now turn around and agitate the same dispute before the Tribunal. [Paras 10, 12]

The appellants are estopped from contesting classification and valuation because they accepted the departmental stance and obtained release after payment; the appeals were therefore not maintainable on that ground.

Proportionality of redemption fine and penalty - HELD THAT: - Having considered the facts, the non specific nature of the Chartered Engineer's report and the timelines in clearance, the Tribunal concluded that a further reduction of monetary punishments would meet the ends of justice. The Tribunal therefore exercised discretion to moderate the financial sanctions while leaving the other findings intact. [Paras 13, 14]

The redemption fine and penalty were reduced as a matter of appellate discretion to temper the sanctions; the balance of the impugned order was left undisturbed.

Final Conclusion: The Tribunal held that the appellants, having accepted the department's re classification and paid duty, penalty and redemption fine without protest, were estopped from challenging classification and valuation in these appeals; exercising appellate discretion the Tribunal nonetheless reduced the redemption fine and penalty to moderate the sanctions, and disposed of the appeals accordingly.

Imposition of penalty imposed under Section 112 - Misclassification versus misdeclaration - confiscation of goods declared under wrong classification - due diligence obligation of importer - bona fide wrong classification - prohibited import - Test reports revealed that the goods were indeed Areca Nuts and not Betel Nuts or Supari as claimed by the Appellant and the same were found to be unfit for human consumption.

Misclassification versus misdeclaration - confiscation of goods declared under wrong classification - Whether the goods declared as Betel Nut were wrongly classified as Areca Nuts and whether confiscation of those goods was sustainable. - HELD THAT: - Relying on established precedent in the case of A. Mahesh Raj [2006 (1) TMI 134 - KARNATAKA HIGH COURT], distinguishing innocent misclassification from deliberate misdeclaration, the Tribunal noted that mere wrong classification does not automatically attract penal consequences unless intentional misdeclaration is established. However, on the facts the Tribunal found the appellant was responsible for transacting in goods held liable for confiscation on account of misclassification and undervaluation and that import policy prohibited entry of Areca Nuts below the prescribed CIF threshold. Applying these principles, the Tribunal upheld the departmental classification and the finding of confiscability of the goods.

The classification as Areca Nuts and the confiscation of the goods were upheld.

Penalty under Section 112(a) of the Customs Act, 1962 - HELD THAT: - While the Tribunal found no justification for vacating the penalty entirely given the appellant's responsibility for the import of goods held liable for confiscation, it held that imposing a penalty equivalent to the determined value of goods that had become unfit for human consumption was excessive. Applying proportionality and having regard to the circumstances, the Tribunal exercised its discretion to reduce the penalty to a moderatesum.

The penalty imposed under Section 112(a) was reduced to Rs.1,00,000/-.

Final Conclusion: The appeal was partially allowed: the departmental classification of the goods as Areca Nuts and the confiscation were affirmed, but the penalty under Section 112(a) was held excessive and reduced to Rs.1,00,000/-.

Reduction of share capital under Section 66 of the Companies Act, 2013 - Jurisdictional defect on the composition of the NCLAT & the status-quo order - fair value versus fair market value - disclosure obligations in reduction of capital - independence of valuer and bias - discount for lack of marketability (DLOM) in valuation - procedural disclosure requirements - Oppression and mismanagement​​​​​​​ - Allegation of being arbitrarily disgorged of shareholdings and eased out of the 1st respondent company, (BTL) in a grossly unfair manner, making a sham of an evaluation fixing the share price at an unreasonably low value - Bench composition and impartiality.

Bench composition and impartiality - Constitutional challenge to the composition of the NCLAT Bench - HELD THAT:- The Court held that the statutory scheme under the Companies Act, 2013 does not require Larger Benches of the NCLAT to have a majority of Judicial Members and that the presence of a Judicial Member heading the Bench with two Technical Members did not vitiate the NCLAT's decision. The ratio in earlier precedents was examined but distinguished on facts and statute; no jurisdictional defect was found in the NCLAT's composition in this case. [Paras 22]

No interference with the NCLAT's order on the ground of Bench composition.

Disclosure obligations in reduction of capital - Allegation that the notice and related disclosures for the reduction of share capital constituted a 'tricky notice' and were procedurally infirm - HELD THAT:- The Court found that Section 66 does not mandate a valuation report as part of the statutory notice and that the company had disclosed the price offered and kept valuation/fairness reports available for inspection at the registered office. The NCLT and NCLAT examined objections and the Court, confined by its limited jurisdiction under Section 423, found no procedural infirmity amounting to a 'tricky notice' or inadequate disclosure that would vitiate the reduction. [Paras 32]

Procedural objections to the notice and non-supply of valuation/fairness reports were rejected.

Independence of valuer and bias - Claim that the valuer lacked independence because of association with the company's internal auditor - HELD THAT:- The Court held that appointment of an internal auditor and the valuer's association with that auditor did not demonstrably establish a real danger of bias. The fairness report from a different agency and confirmations by unrelated financial advisers were relied on; mere possibility or probability of bias was insufficient to vitiate the valuation under the facts of this case. [Paras 35]

The contention of valuer bias was rejected for lack of demonstrable real prejudice.

Discount for lack of marketability (DLOM) in valuation - Validity of applying DLOM and whether the valuation fixed for the reduction of capital was unreasonable - HELD THAT:- The Court held that DLOM is not universally impermissible and that Ind AS and ICAI valuation standards recognise marketability adjustments where appropriate; Section 66 does not preclude such adjustments. Considering the company's delisted status, absence of dividends, relevant market data, prior offers and the rights issue impact, the Tribunal's scrutiny did not reveal an egregiously wrong valuation. The tests applied in precedent (fairness, majority approval, absence of manifest unreasonableness) were satisfied on the record. [Paras 46, 48, 50]

Application of DLOM and the resulting valuation were held permissible and not so unreasonable as to justify upsetting the scheme.

Final Conclusion: The appeals are dismissed: the Court found no jurisdictional defect in the NCLAT's constitution, no procedural 'tricky notice' or demonstrable valuer bias, and no legal impropriety in applying DLOM or in the valuation sufficient to upset the reduction of capital; the NCLT/NCLAT findings stand.

Sale carried out during the pendency of Company Appeal - Disposal of the Property - non-compliance of Section 180(1)(a) read with Explanation to the section - "Undertaking" within the meaning of Section 180(1)(a) of the Companies Act, 2013 - requirement of a special resolution for its sale -good faith purchaser - distress sale under SARFAESI - lack of good faith of the purchaser or undervaluation - Judicial discretion in interlocutory relief.

Undertaking - Whether the sale of the Saakar Bungalow Property constituted disposal of an "undertaking" within the meaning of Section 180(1)(a) read with the Explanation, thereby requiring consent by special resolution. - HELD THAT:- The Tribunal upheld the NCLT's conclusion that 'undertaking' denotes a business as a going concern - an organised profit making activity integrated with its assets - and is not synonymous with an individual asset. The 20% quantitative threshold in the Explanation to Section 180(1)(a) applies only after the subject matter is first qualitatively found to be an 'undertaking.' A comparative reading of the 1956 and 2013 Acts and Section 2(16) (which uses the disjunctive 'assets or undertaking') supports a legislative distinction between assets and undertakings. Saakar Bungalow was held to be a passive, non revenue generating mortgaged property acquired in 2017, not part of the operational business; its sale was therefore disposal of an isolated asset and not of an undertaking, so the requirement of a special resolution under Section 180(1)(a) did not arise. [Paras 12, 13, 14, 15, 16]

Sale of the Saakar Bungalow Property was disposal of an individual asset, not an undertaking, and Section 180(1)(a) did not require a special resolution.

Good faith purchaser - Whether the purchaser of the property was a bona fide purchaser whose title is protected under Section 180(3)(a). - HELD THAT:- The Tribunal agreed with the NCLT that the transaction was essentially a distress sale arising from SARFAESI proceedings initiated by Axis Bank after the company's loan account was declared NPA. The appellants had themselves participated in related litigation and had not pleaded mala fide conduct by the purchaser; the sale consideration was applied to the bank dues. The sale deed disclosed the existence and vacation of interim orders and the purchaser was not a related party. On these facts, the purchaser's good faith could not be impugned. [Paras 16, 17, 19, 21, 23]

The purchaser was a bona fide purchaser in good faith; Section 180(3)(a) protection applied and the purchaser's title could not be set aside on the grounds urged.

Sale at undervalue - judicial discretion in interlocutory relief - HELD THAT: - The Tribunal endorsed the NCLT's findings that valuation considerations (including exclusion of contingent potential FSI/TDR) were adequately explained and that the sale was conducted on an 'as is where is' basis following valuation by independent valuers. The Tribunal reiterated the settled principle that appellate courts may not ordinarily substitute their own discretion for that of the trial court unless the discretion was exercised perversely, arbitrarily or in disregard of settled legal principles. The appellants failed to demonstrate such perversity or arbitrariness in the NCLT's decision to vacate interim status and to uphold the sale. [Paras 25, 26, 58, 59, 60]

Alleged undervaluation did not vitiate the sale and there was no ground for appellate interference with the NCLT's discretionary orders.

Final Conclusion: The Tribunal dismissed the appeals: the sale was of an individual asset (not an 'undertaking') and did not require a special resolution; the purchaser was in good faith; the valuation did not warrant interference and there was no perversity in the NCLT's exercise of discretion.

Look Out Circular and Article 21 - right to travel -Necessity and proportionality of LOC - Burden on originating agency to justify LOC - Judicial review of LOC - integral part of personal liberty under Article 21 of the Constitution of India.

Look Out Circular and Article 21 - Necessity and proportionality of LOC - Continuation of the Look Out Circular against the petitioner in the absence of an FIR and where the petitioner has cooperated with the investigation. - HELD THAT: - The Court applied the principle that an LOC is a coercive executive measure affecting the fundamental right to travel under Article 21 and must satisfy tests of necessity, proportionality, fairness and due process. Having regard to the facts - no FIR on record, the petitioner's cooperation, his family ties in India, prior court-granted permissions to travel on multiple occasions, and the withdrawal of the initial complainant's complaint - the Court found no demonstrable requirement for continued restraint by way of an LOC. Reliance was placed on the guiding principles reiterated in Vineet Gupta [2026 (3) TMI 345 - DELHI HIGH COURT] which require strict scrutiny of issuance and continuance of LOCs and place the burden on originating agencies to justify such restraint. In the circumstances, continuation of the LOC was held to be arbitrary and unjustified.

The Look Out Circular issued against the petitioner is set aside subject to liberty to the respondent to reopen it if circumstances warrant.

Judicial review of LOC - Burden on originating agency to justify LOC - Conditions on which the Court would lift the LOC and the obligations imposed on the petitioner when the LOC is vacated. - HELD THAT: - While quashing the LOC the Court imposed conditions to ensure continued cooperation and to balance investigatory interests with personal liberty. The petitioner was directed to file an undertaking to cooperate and appear when required, to produce material documents in his power, to furnish travel itinerary and local contact details in advance, and to accept advance notice for appearances. The Court also recognised the authority of the Investigating Officer or Court to restrain travel or direct reissuance of an LOC if reservations arise, thereby preserving the originating agency's ability to act if fresh exigencies emerge.

The LOC is vacated on the petitioner complying with specified conditions (undertaking to cooperate, production of documents, advance furnishing of itinerary and contact details), and the Investigating Officer/Court may restrain travel or reissue an LOC if justified.

Final Conclusion: The writ petition is disposed of by quashing the Look Out Circular against the petitioner on the grounds that its continuance was not justified; the vacation of the LOC is subject to specified conditions of cooperation and advance notice, and the respondents retain the liberty to revive the LOC if circumstances so warrant.

Seeking initiation of Corporate Insolvency Resolution Process - Pre-existing dispute under Section 5(6) of the Insolvency and Bankruptcy Code - liability for the license/rent - principles of estoppel​​​​​​​ -suppression of facts​​​​​​​ -rejection under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Pre-existing dispute under Section 5(6) of the Insolvency and Bankruptcy Code - Section 9(5)(ii) rejection for existence of dispute - Whether the Section 9 petition was correctly rejected on the ground of a bona fide pre-existing dispute relating to the claimed operational debt. - HELD THAT: - The Tribunal upheld the Adjudicating Authority's finding that disputes arising from the Memorandum of Settlement, Memorandum of Understanding and Letter of Understanding - which relate to allocation of liability (80:20) and settlement of past dues - are embedded in the contractual matrix and antecedent to the demand notice. Those disputes require interpretation of competing contractual instruments and quantification of liabilities, and are therefore not amenable to determination in Section 9 proceedings. The Tribunal found the dispute to be genuine and not a spurious or moonshine defence, noting the linkage between the prior settlement documents and the registered leave and license agreement, and observed that the Adjudicating Authority properly declined to fasten undisputed liability on the Corporate Debtor in those circumstances. Consequently, the Section 9 petition was rightly rejected under the provision that pre-existing disputes bar admission of CIRP by an operational creditor. [Paras 69, 70, 71, 72, 73]

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

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's refusal to admit the Section 9 petition for CIRP was affirmed because a genuine, pre existing contractual dispute - involving prior settlement documents and questions of liability and quantum - existed prior to the demand notice, and the operational creditor may pursue its claim before appropriate forums.

Provisional attachment - quantification of proceeds -Interim relief granting final relief impermissible - risk of dissipation as ground to refuse interim release of attached proceeds - consolidation and expedited hearing of related appeals.

Interim relief granting final relief impermissible - HELD THAT: - The Tribunal held that the appellant's prayer sought relief of a final character at the interlocutory stage and could not be granted by an interim order. Allowing immediate return of the re-quantified amount would risk dissipation of proceeds and could frustrate the Directorate's cross-appeal against the re-quantification, rendering that appeal infructuous. The Tribunal distinguished the Madras High Court in Nithesh Chaudhari [2024 (1) TMI 1541 - MADRAS HIGH COURT] decision relied upon by the appellant on the facts that in that case specific properties were identifiable and their attachments were not confirmed, whereas here the reduced quantification does not correspond to identifiable, discrete properties in bank accounts. Balancing the equities, the Tribunal found a prima facie apprehension of irreparable loss to the Directorate if the funds were released and therefore declined the interim relief while preserving the appellant's right to raise the same issues in the main appeal. [Paras 13, 14, 16, 18, 19]

Interim application for return/release of the disputed sum is dismissed; appellant may press the reliefs in the main appeal.

Consolidation and expedited hearing of related appeals - HELD THAT:- To balance competing equities and avoid multiplicity of proceedings, the Tribunal ordered that all pending matters relating to the appellant and arising out of the Adjudicating Authority's order be heard and disposed of together on an expedited basis. The parties were directed to complete pleadings promptly and the appellant was given a timeline to file its reply in the related appeal; an initial listing date was fixed for case management and conveyance of final hearing date. [Paras 16, 17]

All related appeals shall be listed and heard together expeditiously; parties to complete pleadings and cooperate for early final hearing.

Final Conclusion: The interim application seeking return/release of the disputed sum is dismissed for being premature and likely to cause irreparable prejudice to the Directorate; the Tribunal ordered consolidation and expedited disposal of all appeals arising from the Adjudicating Authority's order, preserving the appellant's right to pursue reliefs in the main appeal.

Violation of principles of natural justice for non-service of notice due to change of address - Order passed without affording the appellant an opportunity to be heard - conditional remand requiring deposit for fresh adjudication - non-payment of the mandatory pre-deposit.

Violation of principles of natural justice for non-service of notice due to change of address - HELD THAT: - The Court found that the address to which notice was issued in the impugned order and the address mentioned in Writ Petition No.6856/2025 were the same, and accepted the appellant's contention that he had shifted residence such that the notice was not served. The Court declined to examine merits of the tax liability at this stage and concluded that the adjudicatory order was vitiated by lack of opportunity to be heard, warranting setting aside and fresh adjudication after affording the appellant a hearing. [Paras 5, 7, 8]

The order dated 24.04.2024 is set aside and the matter is remanded to the respondent for fresh adjudication after affording the appellant an opportunity of hearing.

Conditional remand requiring deposit for fresh adjudication - HELD THAT: - While noting that the appellant had notice of the earlier remand and had a duty to update his address, the Court nonetheless found a breach of natural justice and exercised discretion to order a conditional remand. The Court directed the appellant to comply with the specified deposit condition and personal appearance before the respondent as prerequisites to the fresh adjudication. [Paras 11]

The remand is subject to the appellant depositing the specified sum within the prescribed period in installments and appearing before the respondent as directed.

Final Conclusion: The intra-court appeal is partly allowed: the impugned adjudication order is set aside for breach of natural justice and the matter is remanded for fresh adjudication, subject to the appellant complying with the deposit and appearance conditions directed by the Court.

Levy of Service Tax under "Business Auxiliary Services” - Export of services - Advertising and Sales Promotion Agreement -promoting the goods of its client - reimbursement of shared advertisement expenses by PEWAP - taxable service under section 65(105)(zzb) of the Finance Act, 1994 - Existence of provider-recipient relationship - taxable value gross consideration - Whether the advertisement costs recovered from PEWAP qualify as export of service and are therefore not liable to service tax.

Existence of provider-recipient relationship - Business Auxiliary Service requires rendition of service to a client - PEWAP is not the appellant's client and the appellant did not render any taxable service to PEWAP. - HELD THAT:- The Tribunal found that the appellant and the foreign group company are distinct legal entities but the Agreement evidences a cost sharing arrangement rather than a contract under which the appellant would provide promotional services to PEWAP as its client. The Agreement obliges the appellant to incur advertising and promotional expenditure and to submit claim documents to PEWAP for remittance of PEWAP's share; it does not require rendition of services by the appellant to PEWAP for consideration. In the absence of a provider-recipient relationship and of any service rendered to the alleged client, the charging provision for service tax cannot be attracted and the concept of self service is inapplicable. The Tribunal therefore concluded there was no taxable service rendered to PEWAP under Business Auxiliary Services. [Paras 8, 11]

No taxable Business Auxiliary Service was rendered to PEWAP because PEWAP was not the appellant's client.

Reimbursement under cost sharing not taxable consideration - HELD THAT:- Examining the Agreement and the manner of payment, the Tribunal held that the sums recovered represented PEWAP's agreed share of jointly incurred advertising and promotion costs payable to third party vendors. The appellant paid vendors for administrative convenience and recovered PEWAP's portion on production of claim documents. There was no element of markup, profit or separate consideration payable to the appellant for providing a service to PEWAP. Consequently, in the absence of consideration for a taxable service, the recovered amounts are not exigible to service tax. [Paras 11, 12]

The recovered advertisement costs are reimbursements under a cost sharing arrangement and do not form part of taxable value.

Business Auxiliary Service requires rendition of service to a client - HELD THAT:- The Tribunal noted Rule 3(2) of the Export of Services Rules prescribes delivery and use outside India and receipt of payment in convertible foreign exchange as conditions for export treatment. However, having determined that no taxable service was rendered and no consideration was received by the appellant from PEWAP, the question whether any part of the receipts could qualify as export of service did not arise. The Tribunal therefore declined to treat the recoveries as exportable services. [Paras 11, 12]

Export of service provisions are inapplicable because there is no taxable service or consideration to classify as export.

Final Conclusion: The impugned order confirming service tax and penalties is set aside: the amounts recovered from the foreign group company were reimbursements under a cost sharing arrangement and not consideration for any Business Auxiliary Service, hence not exigible to service tax; the appellant is entitled to consequential relief.

Review/Rectification (ROM) application seeking correction of an alleged mistake apparent on record - clerical error - export of services - advance deposit of tax - classification of services as Business Auxiliary Services - rectification of tribunal order.

Mistake apparent on record - classification of services as Business Auxiliary Services - Whether paragraph 8 of the Tribunal's Final Order contained a mistake apparent on record regarding classification and payment of service tax - HELD THAT: - The Tribunal found no mistake apparent on record. It relied on a letter from the appellant addressed to the Jurisdictional Superintendent admitting that the tax liability for May 2010 under Business Auxiliary Service, as reflected in ST-3 returns for April-Sept'2010, had been inadvertently shown as 'NIL' for export of services, and that the service tax had been deposited by way of the stated challan. The Tribunal treated the discrepancy as clerical and inadvertent and held that the materials did not support rectification of the order; authorities relied upon by the appellant were held distinguishable and inapplicable. [Paras 5, 6]

The allegation of a mistake apparent on record in paragraph 8 is rejected and the ROM application is dismissed.

Final Conclusion: The Review Application is dismissed; the Tribunal upheld its finding that the appellant had treated the relevant receipts as taxable under Business Auxiliary Services and that the claimed discrepancy was clerical and inadvertent, not a curable mistake apparent on the record.

Invocation of the extended period of limitation - time barred demand - wrongful availment of inward services received prior to July 1, 2012 - audit, or operation under self-assessment - threshold in the absence of specific factual allegations of fraud, collusion, wilful misstatement or suppression with intent to evade tax - burden of proof for credit admissibility - best judgment assessment​​​​​​​ - self-assessment and officer's duty to scrutinise returns.

Extended period of limitation - Invocation of the extended period of limitation under the proviso to Section 73(1) was not justified and the demand is time-barred. - HELD THAT:- The show cause notice and the impugned order relied solely on the fact that the irregularity was detected during audit and did not allege or establish fraud, collusion or deliberate suppression by the appellant. The appellant, a state instrumentality, had obtained registration and filed ST-3 returns for the relevant period and availed CENVAT credit as reflected in those returns. The Tribunal applied the settled principle that the extended period cannot be invoked absent positive evidence of wilful suppression with intent to evade tax; mere detection during audit or operation under self-assessment does not, by itself, establish such intent. The decision of the adjudicating authority showed non-application of mind to the statutory prerequisites for invoking the proviso to Section 73(1).

Following the decision in G.D. Goenka [2023 (8) TMI 995 - CESTAT NEW DELHI] the Tribunal in the case of Delhi Airport Metro Express Pvt Ltd. [2024 (1) TMI 777 - CESTAT NEW DELHI] examined the facts of the said case and held that the appellant had not suppressed any information from the Department in the ST-3 Returns nor is there any allegation in the show cause notice or finding in the impugned order that a particular fact had not been disclosed. Since all that has been stated is that the appellant was not entitled to take CENVAT Credit, but as it had taken, it suppressed material facts from the Department. Referring to the cardinal principles of law in examining the invocation of the extended period, the Bench held that mere suppression of fact is not enough and there must be a deliberate and wilful attempt on the part of the assessee to evade payment of service tax and in the absence thereof, the extended period of limitation cannot be invoked.

Relying on precedents that place the onus of scrutiny on the assessing officer and reject the inference of suppression merely because an irregularity surfaced in audit, the Tribunal concluded that Revenue failed to prove the necessary ingredients for the extended period. [Paras 9, 11, 15, 16, 17]

The demand is rejected as barred by limitation and the appeal is allowed.

Final Conclusion: The Tribunal held that Revenue did not establish suppression with intent to evade and therefore could not invoke the extended period; the demand confirmed by the lower authority is time-barred and the appeal is allowed.

Separately identifiable services - gamut of multimodal logistics activities -essential character of service - naturally bundled service / bundled services - applicability of Cargo Handling Service vis-a -vis transportation services - invocation of extended period of limitation for tax demand.

Separately identifiable services - essential character of service - applicability of Cargo Handling Service vis-a -vis transportation services - Whether the gamut of activities performed by the respondent is taxable as separate services (transport by road/rail, GTA, CHS) or is to be treated as a single service under Cargo Handling Service for the disputed periods. - HELD THAT:- The Tribunal examined the contracts and invoices and found that the respondents provided a range of services which were itemised and charged separately in contracts and invoices; customers were free to pick services as per requirement. The adjudicating authority correctly held that transportation (road/rail) constituted the predominant activity and that cargo handling charges formed a minimal portion of the consideration. The court applied the statutory classification approach (most specific description and, where necessary, essential character) and relevant Board guidance and precedents, holding that when services are separately identifiable and charged, they cannot be treated as naturally bundled merely because some contracts contained composite elements. Post-introduction of the negative list regime, the Tribunal applied the Explanation to Section 66F and concluded that the services here were not naturally bundled in ordinary course of business since each element could be provided independently and was voluntary for the customer. Revenue failed to discharge the onus of proving that the essential character of the composite was cargo handling rather than transportation. [Paras 28, 29, 30, 33, 36]

Services are separately identifiable and the essential character is transportation; the activities do not qualify as Cargo Handling Service or as a naturally bundled service for the periods in dispute.

Naturally bundled service / bundled services - applicability of Cargo Handling Service vis-a -vis transportation services - Whether, for the post-1.7.2012 (negative list) period, the respondent's activities constitute a bundled service attracting classification as a single taxable entry. - HELD THAT:- Applying the Explanation to the bundled-service provisions, the Tribunal held that bundled service requires services that are combined in ordinary course so they cannot practically be provided separately. The contracts and invoices showed that each service could be and was provided separately and customers had discretion to avail them; therefore the condition for natural bundling was not satisfied. The adjudicating authority's finding that even if treated as composite the transportation part gave the essential character (yielding lower or reverse-charge implications) was affirmed. Precedents and the Board's explanatory circulars were held supportive of treating separately billed and verifiable transport charges as outside the taxable base for CHS. [Paras 35, 36]

Post-1.7.2012 bundled-service provisions do not apply; the services are not a naturally bundled single service.

Invocation of extended period of limitation for tax demand - Whether Revenue was justified in invoking the extended limitation period to issue the show cause notice for the period 01.04.2009 to 30.09.2013. - HELD THAT:- The Tribunal noted that the show cause notice dated 10.10.2014 covered the period 01.04.2009 to 30.09.2013. Revenue did not produce cogent evidence of suppression, collusion, omission or intent to evade tax; the respondents had filed returns, paid tax under appropriate heads, and relevant assessments had been subject to scrutiny. Given that the dispute was interpretational and that tax was discharged on the constituent services, the conditions for invoking the extended period were not satisfied. [Paras 37]

Extended period cannot be invoked; the demand for the specified earlier period is time-barred in absence of evidence of deliberate suppression or intent to evade.

Separately identifiable services - Whether revenue can reclassify and demand tax on amounts already subjected to tax under other heads (risk of double taxation). - HELD THAT:- The Tribunal observed that tax on rail transportation and GTA had been paid or accepted by jurisdictional authorities and those assessments had attained finality. Revenue did not establish that reclassification was warranted; re-taxation under CHS of amounts already taxed under other heads would amount to double taxation. The adjudicating authority's conclusion that amounts properly taxed under transport/GTA could not be recharacterised without displacing settled assessments was endorsed. [Paras 21, 36]

Revenue cannot demand tax again on amounts already taxed under Transportation/GTA; reclassification would amount to impermissible double taxation absent cogent evidence.

Final Conclusion: The appeal by Revenue is dismissed. The adjudicating authority's findings that the services were separately identifiable, that transportation constituted the essential character (not Cargo Handling Service or a naturally bundled service), that extended limitation cannot be invoked for the earlier period, and that re-taxation would amount to double taxation were upheld; the impugned order is maintained.

Classification of services to banks (as direct marketing associates/DSAs) - Business Auxiliary Service - demand of service tax - determination of service nature by contract terms - demand beyond the normal period of limitation - extended period of limitation.

Classification of services as Business Auxiliary Service - Whether the services rendered by the appellant as Direct Marketing Associate/DSA fall within the definition of Business Auxiliary Service. - HELD THAT:- The Tribunal examined the agreements between the appellant and the banks and the statement recorded under Section 14, finding that the appellant's activities were not limited to mere verification of documents but included development of customers and facilitation of bank products. On that factual matrix the Tribunal held that the nature of services is to be ascertained from the contractual terms and the actual activities performed; applying that test here it concluded that the services fall within the definition of Business Auxiliary Service. Earlier decisions cited by the appellant were held inapplicable because those assessees were engaged only in document verification, unlike the present case where the appellants actively developed customers and acted as facilitators for prospective customers. [Paras 6, 7, 8, 9]

The appellants' services are Business Auxiliary Service and the demand is sustainable on merits.

Effect of rejection of extended period of limitation on demand for normal period - HELD THAT:- The Tribunal noted that the Commissioner (Appeals) had disallowed invocation of the extended period by finding absence of fraud, suppression or willful misstatement and that this relief was not appealed by the department. Relying on the Calcutta High Court decision in Infinity Infotech Parks Ltd. [2014 (12) TMI 36 - CALCUTTA HIGH COURT] and the Principal Bench decision in Shyam Spectra Pvt. Ltd.[2024 (8) TMI 95 - CESTAT NEW DELHI], the Tribunal held that where the extended period is set aside on such findings and that order attains finality, the demand for the normal period cannot be sustained. Applying those authorities and the undisputed factual finding on limitation, the Tribunal set aside the demand for the normal period. [Paras 10, 11]

Because the extended period was disallowed by the Commissioner (Appeals) and that finding is final, the demand for the normal period is not sustainable and is set aside.

Final Conclusion: The Tribunal upheld the classification of the appellant's activities as Business Auxiliary Service (demand sustainable on merits) but, following the appellate finding that the extended period of limitation was not invokable (a finding not appealed by the revenue), set aside the demand for the normal period; the appeal is disposed accordingly.

Classification of Goods - Contract as manpower supply versus job work - control, integration and multifactor tests for employer-employee relationship - binding effect of a final order-in-appeal on the department - Activities as Manpower Recruitment and Supply Service, attracting liability to pay 75% of the service tax under the partial reverse charge mechanism (RCM), in terms of notification 30/2012 ST - Whether the contracts entered into by the appellants, under which specific works are executed on an output or piece-rate basis, with raw materials and equipment supplied by the appellants and work carried out under their supervision, constitute “manpower supply services” liable to service tax under the partial reverse charge mechanism.

Whether the contractors are independent job workers rather than mere suppliers of contract labour.

Classification -HELD THAT:- The Tribunal applied the legal tests summarised by the Supreme Court in Achchey Lal [2025 (9) TMI 1712 - SUPREME COURT] and the statutory definition in Rule 2(g) to determine whether an employer-employee relationship existed. The determinative inquiry is factual and contractual: whether the hirer had the requisite degree of control and whether the workers were integrated into the hirer's business. Here the contracts provided for payment linked to quantum of work, imposed no restriction on number of workers, and required the workmen to be on the contractor's rolls with supervision and safety responsibility resting on the contractor. Those features satisfy the Board's Circular No. 190/9/2015-ST distinction between manpower supply and job work and show the contractors were independent job-workers. Given that the workmen were under the contractor's supervision and not integrated into the appellant's organisation, the control test was not satisfied and the multiple-factor considerations were not needed to alter that conclusion. The Tribunal further noted the absence in the show cause notices of reliance on the actual contracts or work orders - the best evidence of the nature of the arrangement - and found no allegation of sham or contrary material on the record. Applying these principles to the facts, the Tribunal concluded the activities were job work and not manpower supply liable to reverse charge. [Paras 5, 7, 8, 9, 11]

The demands treating the contracts as manpower supply services are unsustainable and are set aside.

Binding effect of a final order-in-appeal on the department - An earlier order-in-appeal in identical contractual circumstances which has attained finality is binding on the department and its ratio is applicable to the present demands. - HELD THAT: - The appellant produced an earlier Order in Appeal (No. 64/2018) in which identical contractual clauses were held to constitute job work and not manpower supply; the Revenue did not dispute that that order had not been appealed. The Tribunal held that where the department has not appealed an adverse appellate order and that order attains finality, its ratio is binding on the department in subsequent proceedings involving identical facts. In the absence of any distinguishing facts, contrary material, or allegation of sham, the final appellate decision was held to be determinative and required setting aside of the impugned demands. [Paras 8, 10, 11]

The earlier final order-in-appeal binds the department and mandates setting aside of the impugned demands in the present appeals.

Final Conclusion: The impugned demands for the periods July 2012 to March 2014 and April 2014 to March 2015, treating the contractor's work as manpower supply subject to partial reverse charge, are set aside; consequential relief shall follow as per law.

Consideration for taxable services - Rent-free accommodation, electricity and other facilities - additional consideration under Section 67 of the Finance Act, 1994 -Includibility of recipient-provided facilities - suppression mens rea - invocation of extended period of limitation requires suppression.

Includibility of recipient-provided facilities in taxable value - Rent-free accommodation, electricity and other facilities provided directly by the service recipient are not includible in the taxable value of security agency services where no amount is payable to the service provider in respect thereof. - HELD THAT: - The Tribunal applied its earlier decisions in the appellant's own cases in Central Industrial Security Force Vs. Commissioner of Central Tax, Visakhapatnam [2024 (5) TMI 565 - CESTAT HYDERABAD] and other Benches which held that facilities provided by the service recipient (such as accommodation, electricity, medical, vehicle, telephone, stationery and similar services) do not constitute consideration received by the service provider and therefore cannot be included in the assessable value under Section 67. The reasoning emphasises that Rule 5(1) of the Service Tax (Determination of Value) Rules cannot operate beyond the scope of Section 67 and that notional valuation of recipient-provided facilities, in absence of any contractual or monetary flow to the service provider, is impermissible. Applying those precedents to the facts of the present case, where the appellant had discharged service tax on actual cost of deployment (salary, allowances, clothing, arms and ammunition) and there was no evidence of any amount payable or contractual stipulation treating recipient-provided facilities as consideration, the impugned demand based on including such facilities in taxable value was held unsustainable. [Paras 6, 7]

Impugned inclusion of recipient-provided facilities in the taxable value is set aside and the appeal allowed on this ground.

Invocation of extended period of limitation requires suppression - HELD THAT:- Relying on precedent cited in the appellant's earlier decisions, the Tribunal reiterated that invocation of the extended period under Section 73(1) requires a finding of suppression or deliberate misrepresentation. Where the service provider is a government undertaking and the service recipient is a public sector undertaking, and there is no material to show mens rea or positive act amounting to suppression, the extended limitation period is not invokable. The Tribunal found no evidence of suppression in the present case and therefore the demand could not be sustained on the footing of extended limitation. [Paras 6]

Invocation of the extended period of limitation is not sustainable in the absence of suppression; consequent demand on that basis is unsustainable.

Final Conclusion: The Tribunal, following its prior decisions, held that recipient provided facilities do not form part of the taxable value of security services and that the extended period of limitation could not be invoked without suppression; accordingly the impugned order is set aside and the appellant's appeal is allowed with consequential relief as per law.

Default on account of the appellant's repeated non-appearance - failure to maintain or update address/representation, and non-existence of the unit at the notified address - sufficient cause - right to be heard​​​​​​​ -limits on adjournments - restoration of dismissed appeal on sufficient cause.

Dismissal for default - discretion to dismiss appeals for appellant's non-appearance - HELD THAT: - The Tribunal recorded repeated non-appearance of the appellant across multiple listed dates and evidence from the jurisdictional officer that the appellant's establishment did not exist at the notified address, corroborated by a Mahazar. Reliance was placed on Rule 20 of the CESTAT (Procedure) Rules, 1982 which vests the Tribunal with discretion to dismiss an appeal for default where the appellant does not appear. In view of the appellant's failure to take steps to ensure representation, to update contact details or to prosecute the appeal, and having regard to the need to curb mechanical adjournments, the Tribunal concluded that the appeal was not being pursued and that dismissal for default was appropriate. [Paras 2, 3, 8, 9]

Appeal dismissed for default.

Limits on adjournments - restoration of dismissed appeal on sufficient cause - HELD THAT:- The Tribunal noted Section 35C (as reproduced) and the Apex Court in ISHWARLAL MALI RATHOD VERSUS GOPAL AND ORS [2021 (9) TMI 1301 - SUPREME COURT], condemning routine or mechanical grant of adjournments, observing that adjournments cannot be allowed without serious reasons supported by proof. The Bench explained that deciding the appeal on merits in the absence of the appellant would risk depriving the appellant of an effective opportunity to be heard and render the Tribunal functus officio, potentially forcing the appellant to seek remedies in a higher forum. The Tribunal therefore proceeded to dismiss under its discretion but explicitly recognised Rule 20's proviso permitting setting aside a dismissal where sufficient cause for non-appearance is shown, and granted liberty to apply for restoration with justifications. [Paras 4, 5, 7, 8, 9]

Refused to decide ex parte on merits; dismissal recorded with liberty to seek restoration on showing sufficient cause.

Final Conclusion: The appeals were dismissed for default under Rule 20 of the CESTAT (Procedure) Rules, 1982; however, the appellant is granted liberty to apply for restoration of the appeals by demonstrating sufficient cause for the non-appearance.

Entitlement to Cenvat credit on input services received from a job worker - negative list doctrine - territorial jurisdiction of assessment​​​​​​​ - reassessment limitation at recipient end - reverse charge mechanism.

Entitlement to Cenvat credit where supplier has paid service tax - recipient cannot challenge supplier's tax determination - Denial of Cenvat credit to the recipient on grounds that the service was in the negative list and/or invoices lacked service tax registration number - HELD THAT:- The Tribunal held that where the service provider (job worker) had charged and paid service tax which was appropriated by the Department and not disputed by the supplier's jurisdictional authority, the recipient unit cannot be directed to reverse Cenvat credit. The court found the services in question to be input services used in manufacturing and observed that any error in classification or assessment by the supplier lies with the supplier's jurisdiction. Re assessment or challenge to the supplier's tax determination by the recipient's officer is not permissible; consequently the recipient remains entitled to take Cenvat credit. The conclusion was reached by applying settled precedent recognizing that payment of service tax by the provider, acceptance by the provider's authority, and use of the service as input preclude denial of credit at the recipient's end. [Paras 6, 7]

Denial of Cenvat credit was set aside and the recipient is entitled to the claimed credit

Final Conclusion: The appeal was allowed: the denial of Cenvat credit was set aside because the supplier had paid service tax and the recipient, having used the services as inputs, could not be denied credit nor could the recipient's officer re-open the supplier's tax determination.

Demand for service tax under the category of “Site Formation and Clearance, Excavation, Earthmoving and Demolition Services” - Correct classification of services - activity of Work Contract Service - partial reverse charge mechanism - composition scheme - period of limitation.

Works Contract Service - HELD THAT:- The Tribunal examined the detailed work orders and scope of work, which show that the contracts involved supply of services together with materials in execution of composite contracts including civil construction, erection, commissioning, installation and allied works. On that factual and legal basis the activity was held to be more akin to Works Contract Service because the supply of materials and services are integrally linked and form a composite transaction taxable as works contract. [Paras 6]

The activity is correctly classified as Works Contract Service and the demand framed under the category of Site Formation and Clearance, Excavation, Earthmoving and Demolition Services is unsustainable.

Partial reverse charge mechanism - For the period after 01.07.2012 the appellant's activity did not fall within the cited provision and the appellant had correctly discharged service tax liability under the composite scheme/partial reverse charge mechanism (Sl. No. 9 of Notification No.30/2012 ST). - HELD THAT:- Having considered the statutory scheme and the payments made under the composite scheme/partial reverse charge mechanism, the Tribunal concluded that the appellant had discharged the tax liability in accordance with the applicable mechanism for the period in question. [Paras 7]

The appellant rightly paid service tax under the composite scheme/partial reverse charge mechanism for the period after 01.07.2012 and the demand is not sustainable on that ground.

Final Conclusion: The impugned demand was set aside: the contracts were held to be works contract transactions and service tax paid under the composite/partial reverse charge mechanism was held to be appropriate for the period April, 2011 to March, 2015, allowing the appeal with consequential relief, if any.

Demand of duty on goods found shortage found during stock taking (MS ingots and billets) and on clearances recorded in a slip pad recovered from the premises - demand based on the notebook recovered from the broker - Validity of stock-taking by sample/averaging method in industrial goods - probative value of documents recovered from assessee's premises - requirement of section 9D procedure for admission of statements recorded during investigation - penalty under Rule 26 contingent on goods being liable to confiscation

Validity of stock-taking by sample/averaging method in industrial goods - inference of clandestine removal from unexplained shortage - mandatory penalty under section 11AC linked to sustained demand - HELD THAT: - The Tribunal held that the method of taking stock by ascertaining weight of standard-sized pieces and multiplying by number of pieces is an acceptable and established method in the iron and steel industry; the appellants, having been present at the Panchnama and expressed satisfaction at the time, cannot belatedly challenge the method. The recorded shortage of 415.700 MT of billets and the undisputed admission of shortage by the director supported the inference that those manufactured goods were neither in stock nor cleared on invoices, and therefore were clandestinely removed. Accordingly the demand arising from the shortage was upheld and the mandatory penalty under section 11AC was adjusted to correspond to the duty sustained. [Paras 10, 11, 12, 24, 27]

Demand of duty on goods found short during stock taking is upheld and the mandatory penalty under section 11AC reduced correspondingly.

Probative value of documents recovered from assessee's premises - inference of clandestine removal from assessee-maintained internal records - HELD THAT:- The slip pad, undisputedly recovered from and maintained at the assessee's premises, recorded consolidated daily loading/clearance figures that exceeded the quantities for which excise invoices were issued on the corresponding dates. In the absence of any contrary evidence or assertion that the entries pertained to another year, the Tribunal accepted that the slip pad pertained to the relevant period and affirmed the demand based on the excess clearances shown therein. [Paras 15, 16, 17, 24, 27]

Demand of duty based on the slip pad recovered from JD Ispat is upheld.

Requirement of section 9D procedure for admission of statements recorded during investigation - Demand of duty based on the notebook recovered from the broker and accompanying statements - HELD THAT: - Although the notebook recovered from the broker contained entries of clearances, the statement of the broker explaining the notebook was not admitted in evidence after following the procedure under section 9D of the Act; the Tribunal therefore found that the notebook, without the procedural admission of the associated statement, did not carry sufficient evidentiary weight. For that reason the demand premised on the broker's notebook and the related entries was set aside. [Paras 18, 19, 20, 24]

Demand of duty based on the notebook recovered from the broker is set aside.

Penalty under Rule 26 contingent on goods being liable to confiscation - Validity of penalty imposed on the director under Rule 26 of the Central Excise Rules, 2002 - HELD THAT: - The Tribunal observed that penalty under Rule 26 is imposed for acts rendering goods liable to confiscation and, in the absence of any confiscation of goods in the present case, held that Rule 26 could not be invoked to impose penalty on the director. Consequently, the penalty imposed on the director under Rule 26 was set aside. [Paras 25, 26, 27]

Penalty imposed on the director under Rule 26 is set aside.

Final Conclusion: The Tribunal partly allowed the appeals: demands sustained for duty on goods short in stock and on clearances shown in the assessee's slip pad were upheld; the demand based on the broker's notebook was set aside; the mandatory penalty under section 11AC was reduced to correspond to the upheld demand, and the penalty imposed on the director under Rule 26 was set aside.

Manufacturer liability for excise duty - Contractor engaged to supply, manage and maintain a batching plant and to manufacture and supply Ready of Mix Concrete (RMC) - Job work / principal to principal supply principle - definition of manufacture - concessional rate of duty under notification.

Manufacturer liability for excise duty - Job work / principal to principal supply principle - Appellant is not the manufacturer liable to pay central excise duty on Ready Mix Concrete supplied by the contractor. - HELD THAT: - The Tribunal examined the contract between the appellant and the contractor and found that the contractor was responsible to supply Ready Mix Concrete using its own machinery, labour and management; the transaction was on a principal to principal basis. The Court applied the principle that excise liability lies on the manufacturer who undertakes the manufacturing activity and that liability cannot be shifted to the supplier of raw materials or principal unless statutory conditions (such as an undertaking) for shifting liability are satisfied. The Tribunal relied on the decision in CC, Udaipur v. Sonex Marmo Grani Pvt Ltd. [2023 (5) TMI 802 - CESTAT NEW DELHI] to hold that where manufacturing is performed by the contractor/job worker, the principal who supplied raw materials cannot be treated as manufacturer and fastened with excise duty in the absence of the prescribed condition for shifting liability. [Paras 11, 12]

The demand, interest and penalty confirmed on the basis that the appellant was the manufacturer were set aside because the appellant was not the manufacturer of the Ready Mix Concrete supplied by the contractor.

Final Conclusion: The Tribunal allowed the appeal, holding that the appellant was not the manufacturer of Ready Mix Concrete supplied by the contractor and therefore could not be held liable for the central excise demand, interest and penalty; the impugned order was set aside with consequential reliefs in accordance with law.

Method of valuation - clearance of rubber compound - interconnected undertaking - lifting the corporate veil - valuation based on cost of production - applicability of Rule 9 and Rule 10 of the Central Excise Valuation Rules, 2000 in light of relationships under Section 4(3)(b) of the Central Excise Act, 1944 - proof required to show invoice price was influenced by relationship - definition of "relative" under Section 2(41) - invocation of extended period for suppression.

Valuation -applicability of Rule 9 without relationships under sub-clauses (ii),(iii),(iv) of Section 4(3)(b) - Whether Rule 9 of the Central Excise Valuation Rules applied to the assessee's clearances to buyers characterised only as interconnected undertakings - HELD THAT:- The Tribunal upheld the adjudicating authority's finding that Rule 9 is applicable only where the manufacturer and buyer are related in the manner specified under sub-clauses (ii), (iii) or (iv) of Section 4(3)(b). The Court accepted that mere classification as inter-connected undertakings does not import the specific relationships (relatives, distributor/sub-distributor, or proved mutual interest in each other's business) required for Rule 9 to apply, and that in the present case those specific relationships were not established. The adjudicating authority also considered transaction value against cost data and found no substantial variance requiring application of the alternative valuation under Rule 9. [Paras 7, 15]

Rule 9 was not applicable and the adjudicating authority's valuation conclusion was upheld

Proof required to show invoice price was influenced by relationship - reliance on transaction value in absence of such proof - HELD THAT: - Following the ratio in Acorn Engg. [2005 (2) TMI 121 - SUPREME COURT] (as applied by the Tribunal), mere relatedness does not, without more, demonstrate that invoice prices were influenced; there must be material or proof showing influence on price. The record contained no data to rebut the finding that the declared prices were not substantially at variance with cost of production and that duty paid by the assessee placed the transactions in a revenue-neutral posture because buyers availed credit on consumption. In the absence of evidence that the invoice price was influenced, the method of valuation adopted by the assessee could not be dislodged. [Paras 11, 15]

In the absence of material showing price influence, the transaction value as declared was acceptable and the valuation adopted by the assessee was sustainable

Invocation of extended period for suppression - HELD THAT:- The Tribunal accepted the adjudicating authority's observation that the subsequent show cause notice repeating the demand for 2009-2010 with identical figures and later adding other periods did not constitute a sustainable allegation of suppression warranting extended limitation. The material did not support a finding of intentional suppression to justify invoking extended limitation. [Paras 12]

Allegation of suppression for invocation of extended period was not sustained

Final Conclusion: The Tribunal upheld the adjudicating authority's order dismissing the demands: Rule 9 was not attracted in the absence of prescribed relationships, there was no material to show invoice prices were influenced by relationship, and the invocation of extended limitation was unsustainable; accordingly the Revenue's appeals were dismissed.

Disallowance of input tax credit claimed on purchases - de-registered dealers, unregistered dealers, short filers, and also ‘NIL’ filers - failed to disclose and discharge their tax liability on sales - burden of proof as required under Section 70 on purchaser claiming input tax credit - genuineness of transaction and actual physical movement of goods as prerequisite for claiming ITC - proof of physical movement of goods - departmental portal entries.

Burden of proof on purchaser claiming input tax credit - Remand to the Assessing Authority to re-examine the claim for input tax credit in light of the law laid down by the Hon'ble Supreme Court in Ecom Gill Coffee Trading Private Limited[2023 (3) TMI 533 - SUPREME COURT]. - HELD THAT: - The Court noted that the KAT had remitted the matters after recording that invoices bore valid TINs, departmental portal reflected the suppliers as registered and e UPass had been generated, but observed that the KAT's conclusions must be read subject to the Supreme Court's exposition of Section 70 of the KVAT Act. The Supreme Court has held that the burden to prove correctness of an ITC claim lies on the purchasing dealer and that mere production of tax invoices and bank payments is not, by itself, sufficient; the purchaser must establish genuineness by proving, inter alia, name and address of the selling dealer, details evidencing actual physical movement of goods (such as vehicle details, freight/payment of freight, acknowledgements of delivery), and other corroborative particulars. In view of that binding guidance, the High Court directed that the Assessing Authority complete the remand proceedings applying the criteria and approach set out in Ecom Gill, while affording the parties opportunity to produce additional material; the Court expressly refrained from expressing any opinion on the merits. [Paras 11, 12, 13, 14, 15]

The KAT orders are modified insofar as the matters are remitted to the Assessing Authority to conclude the remand proceedings in accordance with the law laid down in Ecom Gill Coffee Trading Private Limited; parties may produce further material and the Assessing Authority shall afford opportunity and decide afresh.

Final Conclusion: The Sales Tax Revision Petitions are allowed in part: the KAT orders are modified to the extent that the Assessing Authority is directed to conclude the remand proceedings in accordance with the Supreme Court's decision in Ecom Gill Coffee Trading Private Limited; parties are permitted to place additional material and no opinion is expressed on the merits; no order as to costs.

Violation of principles of natural justice - inadmissibility of evidence first produced before appellate forum - failed to cooperate and remained ex-parte, resulting in the reassessment orders.

Violation of principles of natural justice - Whether the Tribunal was entitled to admit and decide on material produced for the first time before it and adjudicate the merits despite the Prescribed Authority having proceeded ex parte without that material being available to it. -HELD THAT:- The Tribunal recorded a finding that the respondent raised a plea of violation of the principles of natural justice and sought to rely upon material which had not been placed before the Prescribed Authority. Where new material is sought to be relied upon for the first time before an appellate forum, the proper course is to remit the matter to the original authority so that that authority may consider the material after giving the affected party an opportunity to be heard and to produce evidence. The initial evaluation and recording of foundational facts vest with the Prescribed Authority; the Tribunal, although a final fact-finding authority, should not assume the jurisdiction of the Prescribed Authority by accepting and deciding issues on evidence which was not made available to the Prescribed Authority. In the circumstances, the Tribunal erred in adjudicating the dispute on merits without remitting the matter for fresh consideration by the Prescribed Authority after affording the respondent an opportunity to produce and substantiate the material relied upon. [Paras 10, 11, 12, 13, 14]

The Tribunal's adjudication on merits in respect of the disputed turnovers is not sustainable; the matter is remitted to the Prescribed Authority to pass fresh reassessment orders in accordance with law after granting the respondent an opportunity to produce and substantiate the material relied upon.

Final Conclusion: The revision petition is allowed; the Tribunal's order, the appellate order, and the reassessment orders are set aside and the matter is remitted to the Prescribed Authority for fresh reassessment in accordance with law after affording the respondent an opportunity to be heard; the Prescribed Authority shall not be influenced by the findings recorded by the Tribunal.

Condonation of delay - delay of 847 days - inordinate and unexplained delayin filing the Sales Tax Revision Petition - routine movement of files not sufficient explanation.

Condonation of delay - inordinate and unexplained delay - HELD THAT: - The petition was filed with a delay of 847 days and an application for condonation was supported by affidavits which described the chronology of communications, receipt of a Government Order approving filing, and a change of Law Officers. The Court examined the timeline and found substantial periods unaccounted for: no explanation was provided for the interval from 25.07.2022 to August 2023 (over one year), and no explanation for the further interregnum up to December 2024 (over sixteen months). The only additional ground advanced was routine movement of files. The Court held that such routine file movements cannot constitute a satisfactory or acceptable explanation for an inordinate delay of this magnitude. On this basis the affidavit did not furnish minimally acceptable reasons to justify condonation. [Paras 4, 5, 6, 7, 8]

I.A. for condonation of delay rejected; delay held to be inordinate and unexplained.

In view of the rejection of seeking condonation of the delay of 847 days in filing the present petition, the petition itself is liable to be dismissed and is accordingly dismissed.

The petition dismissed for being barred by inordinate and unexplained delay.

Final Conclusion: The application for condonation of delay was rejected as the explanations for the 847-day delay were inadequate; consequently the revision petition was dismissed as time barred.

Parity in bail adjudication - gravity of offence - non-speaking order -requirement of application of mind and reasoned order for grant of bail - remand for fresh consideration where order is non speaking - Whether, as done by the High Court in the impugned order, parity with the co-accused persons can be the sole reason for granting bail.

Parity in bail adjudication - role of accused in the offence - HELD THAT:- The Court held that parity cannot be invoked as the sole basis for granting bail; parity must focus on the accused's position and role in the crime, not merely participation in the same offence. The High Court erred in granting bail to Rajveer solely on parity with his father without assessing the respective roles. On analysis of the facts recorded in the FIR, Rajveer's role as the instigator who asked another accused to shoot the deceased differed from the role of the co-accused who was a member of the mob; accordingly parity was misplaced and not applicable. [Paras 12, 13, 14, 15, 16]

The High Court's bail order insofar as it released Rajveer on the sole ground of parity was set aside and Rajveer was directed to surrender to the trial court within two weeks.

Requirement of application of mind and reasoned order for grant of bail - remand for fresh consideration where order is non speaking - HELD THAT: - Relying on the principle that while elaborate reasons may not always be necessary, an order granting bail cannot be bereft of relevant reasons, the Court found the impugned order to be non-speaking. Because the High Court did not disclose any reasons or explain how precedents applied to the facts, the matter could not be left undisturbed. The Court therefore set aside the impugned order and remanded the matter to the High Court to consider bail afresh, taking into account the gravity of the offence, the role of the accused and other established factors governing bail. [Paras 18, 19, 20]

The High Court's order granting bail to Prince was set aside and the question of bail was remanded to the High Court for fresh consideration in accordance with law.

Final Conclusion: The grant of bail to Rajveer was set aside because parity, without assessment of the accused's role, cannot be the sole basis for bail; Rajveer was directed to surrender. The bail granted to Prince was also set aside and remanded to the High Court for reconsideration because the order was non speaking and failed to apply relevant factors.

Arbitration agreement and separability of arbitration clause - termination of the underlying contract and the approval of the Resolution Plan under Section 31(1) - doctrine of separability - Scope of jurisdiction of this Court under Section 11 of the Arbitration and Conciliation Act, 1996 - threshold jurisdiction - CIRP and approved Resolution Plan without reservation - specific operational claims and conduct during moratorium - Interplay between competence-competence under Section 16 A&C Act and finality of an approved Resolution Plan under Section 31 IBC-whether statutory finality is a threshold jurisdictional bar at Section 11.

Valid arbitration agreement and separability of arbitration clause - HELD THAT: - On a prima facie examination Clause 19.13 satisfies the formal requirements of Section 7 - it is in writing, forms part of the contract, provides for submission of disputes to arbitration and designates the seat. The arbitration clause is separate and independent from the substantive contract; termination of the contract or its statutory treatment under the IBC does not, prima facie, ipso facto extinguish the arbitration agreement. No binding authority was shown that Section 31 expressly or impliedly annihilates an arbitration agreement as a dispute resolution mechanism; extinguishment under Section 31 concerns claims rather than the arbitration clause itself. The court therefore found, on a prima facie basis, that the arbitration agreement exists and survives for referral to tribunal. [Paras 20]

Clause 19.13 constitutes a prima facie valid arbitration agreement and, under the doctrine of separability, continues to subsist notwithstanding termination of the contract and approval of the Resolution Plan.

Scope of enquiry under Section 11(6-A) - The High Court's jurisdiction under Section 11(6 A) is confined to a prima facie examination of the existence of an arbitration agreement and does not extend to resolving contested questions about the substantive effect of an approved Resolution Plan. - HELD THAT:- Section 11(6 A) restricts the Referral Court to inspecting whether an arbitration agreement exists (formal/prima facie scrutiny under Section 7). Recent Supreme Court precedents limit the Section 11 enquiry to existence and formal validity, leaving substantive and contested issues - including those requiring factual appreciation - to the Arbitral Tribunal under Section 16. Accordingly, legal consequences flowing from Section 31 IBC (the Clean Slate doctrine) involve contested questions of law and fact that are not within the limited Section 11 enquiry and should ordinarily be left for the tribunal to decide. [Paras 21]

Enquiry under Section 11(6 A) is restricted to prima facie existence of an arbitration agreement; the Court will not determine contested consequences of the Resolution Plan at this stage.

Effect of approved resolution plan under Section 31 IBC on claims - On a prima facie basis, approval of a Resolution Plan under Section 31 IBC operates primarily to extinguish claims against the corporate debtor; it does not automatically extinguish independent remedies of the corporate debtor (or its successor) against third parties. - HELD THAT:- Authoritative decisions emphasise that Section 31 makes a resolution plan binding and freezes claims addressed by the plan to protect a successful resolution applicant. However, recent pronouncements also recognise that the resolution applicant (or RP) may pursue civil remedies against third parties for recovery of dues payable to the corporate debtor. Applying these principles, the Court held that extinguishment under Section 31 does not, prima facie, ipso facto eliminate the corporate debtor's independent claims against counterparties; the precise scope and effect of the Resolution Plan on particular claims is a substantive matter for the Arbitral Tribunal to determine after evidence and argument. [Paras 22]

Section 31 extinguishment principally applies to claims against the corporate debtor; claims of the corporate debtor against third parties are not automatically extinguished and require tribunal adjudication.

Existence of live and arbitrable dispute - The disputes asserted by the petitioner, including claims arising from alleged delays, defaults, variations and invocation of bank guarantee, prima facie constitute live and arbitrable disputes capable of reference to arbitration. - HELD THAT:- Taking the pleadings and documents at face value for the limited Section 11 purpose, the petitioner has shown the existence of disputes falling within the scope of the arbitration clause. Questions whether those disputes were finally dealt with in the CIRP, or whether they amount to accord and satisfaction, waiver, estoppel or are extinguished by operation of law, are contested matters of fact and law reserved for the Arbitral Tribunal. On a prima facie basis the Court found the disputes to be arbitrable and not extinguished for the purpose of denying a reference. [Paras 23]

Prima facie, live and arbitrable disputes survive between the parties and are referable to arbitration.

Competence competence of arbitral tribunal under Section 16 - Objections touching the substantive effect of the approved Resolution Plan (including extinction of claims) fall to be decided by the Arbitral Tribunal under the doctrine of competence competence and do not constitute a threshold bar mandating refusal of a Section 11 reference. - HELD THAT:- Section 16 empowers the tribunal to rule on its own jurisdiction, including existence and validity of the arbitration agreement; the negative dimension of competence competence restrains Referral Courts from resolving matters that require contested factual enquiry. The statutory finality of a Resolution Plan does not convert every substantive defence into a jurisdictional bar at the Section 11 stage. Therefore, upon a prima facie arbitration agreement being shown, substantive objections about the Resolution Plan's effect should be left to the tribunal to adjudicate on merits. [Paras 24]

Questions about the Resolution Plan's statutory consequences are substantive defences for the Arbitral Tribunal under Section 16 and do not preclude appointment of an arbitrator at the Section 11 stage.

Existence of live and arbitrable dispute - valid arbitration agreement and separability of arbitration clause - HELD THAT:- Synthesising the foregoing findings: (a) Clause 19.13 prima facie exists and is separable; (b) the Court's Section 11 enquiry is limited to prima facie existence; (c) the Petitioner's claims prima facie survive the CIRP for purposes of reference; and (d) substantive objections (Clean Slate, accord and satisfaction, waiver, estoppel, extinguishment) are for the tribunal. Accordingly, the Court concluded that live arbitrable disputes exist and that the appropriate relief is appointment of a Sole Arbitrator while preserving the respondent's rights to raise all defences before the tribunal. [Paras 25, 26]

The petition is allowed and a Sole Arbitrator is appointed to adjudicate the disputes; the Arbitral Tribunal shall determine all substantive issues, with the respondent at liberty to raise all available defences.

Final Conclusion: The Court allowed the petition on prima facie findings: Clause 19.13 is a valid and separable arbitration agreement and live arbitrable disputes prima facie survive; the limited enquiry under Section 11(6 A) was satisfied and a Sole Arbitrator was appointed to adjudicate all substantive issues (including the effect of the approved Resolution Plan and defences raised by the respondent), with the tribunal free to decide those matters and the parties at liberty to pursue mediation first.