TaxTMI Updates e-Newsletter
Mar 13,2026

Validity Of Cash Seizure during search - treated as "things" under Section 67(2) - statutory requirement of "reason to believe" - failure to issue notice within six months under Section 67(7) after seizure - Statutory power to hand over seized cash to another agency.

Seizure under Section 67(2) of the CGST Act -HELD THAT:- The Court held that Section 67(2) permits seizure only where the proper officer has a reason to believe that goods, documents, books or things useful or relevant to proceedings are secreted at a place. The respondents did not record any reasons to believe that the cash seized was liable to seizure or that it was useful or relevant to proceedings under the Act. On this basis the Court found the seizure to be perverse, arbitrary and without authority of law and concluded that the impugned seizure could not be sustained under Section 67(2). [Paras 9, 10, 12]

The concept of “reason to believe” has been interpreted by the Supreme Court in the context of income tax re-opening proceedings in the leading case of ITO Vs. Lakhmani Meval Das [1976 (3) TMI 1 - SUPREME COURT]

Seizure of the cash under Section 67(2) was unlawful and without authority of law.

Effect of failure to issue notice under Section 67(7) after seizure - HELD THAT: - The Court found that Section 67(7) mandates return of goods seized under Section 67(2) if no notice in respect thereof is given within six months (subject to limited extension). The respondents had not issued the statutory notice within the prescribed period and therefore the seized cash was liable to be returned to the person from whose possession it was taken. [Paras 13]

Failure to comply with Section 67(7) required return of the seized cash to the petitioner.

Statutory power to hand over seized cash to another agency - HELD THAT: - The Court recorded that the respondents had handed over the seized cash to the Income Tax Department and issued notices under the Income-tax Act. The Court observed that respondents did not identify any power under the CGST Act authorising such transfer and expressed surprise at the practice. This act further demonstrated lack of lawful authority for the seizure and disposal of the cash by the respondents. [Paras 15]

Handing over the seized cash to the Income Tax Department was without shown statutory authority and reinforced the illegality of the seizure and consequent disposal.

Final Conclusion: The impugned seizure orders were quashed; the respondents were directed to release and pay the seized amounts to the petitioner with applicable interest. The petition is disposed of in those terms.

Scope of judicial review in certiorari of administrative orders - wrongful availment of input tax credit - invocation of Section 74 - misstatement and suppression - statutory pre-deposit requirement for filing statutory appeal.

Whether the High Court should interfere with the order passed under Section 74 of the CGST Act on the ground of insufficiency of reasons or perversity - HELD THAT:- The Court held that a bare perusal of the impugned order shows that reasons have been given and relevant factors considered; while exercising certiorari jurisdiction the Court is not required to probe the adequacy or sufficiency of reasons unless they are absolutely perverse or tainted by mala fides. No such perversity or mala fide was shown, and therefore interference with the assessment order under Section 74 was not warranted on the present record. The Court thus declined to examine the merits further in the writ petition stage. [Paras 5]

The writ petition will not be allowed to quash the order under Section 74 for lack of reasons; no interference was made on the merits at the certiorari stage.

Statutory pre-deposit requirement for filing statutory appeal - HELD THAT: - The Court recorded the petitioner's plea for direction to the appellate authority to entertain an appeal without insisting on the statutory pre-deposit or upon a reduced deposit/security. The Court observed that the pre-deposit is a statutory requirement and that no extraordinary circumstance was demonstrated in the instant case to justify waiving the statutory obligation. Accordingly, the Court refused to direct waiver or reduction of the mandatory pre-deposit. [Paras 6, 7]

No direction was issued to waive or reduce the statutory pre-deposit; the petitioner's request for such relief was refused.

Final Conclusion: The writ petition challenging the order under Section 74 was dismissed; the High Court declined to interfere on certiorari for insufficiency of reasons and refused to direct waiver of the statutory pre-deposit for filing the statutory appeal, while noting that its observations are tentative and will not prejudice adjudication of any appeal on merits.

Entitlement to regular bail in the criminal complaint under Section 132(1)(b),(c),(f) and (i) of the Central Goods and Service Tax Act, 2017 - parity with a co-accused who has already been granted regular bail.

Parity in grant of bail - HELD THAT:- The Court found that the petitioner had been in custody since 06.05.2025 and had undergone about ten months incarceration, while the co-accused, who is at parity with the petitioner, had already been granted regular bail by this Court. The petitioner had no criminal antecedents and the veracity of allegations was to be examined at trial; having regard to likely long duration of trial and the parity between the petitioner and the co-accused, the Court exercised its jurisdiction to grant regular bail. The Court refrained from expressing any opinion on the merits, and imposed the usual condition of furnishing bail/surety bonds to the satisfaction of the trial Court/Duty Magistrate, with a direction regarding computation of custody if bonds were not furnished within the stipulated time. [Paras 6, 7, 8]

Petitioner released on regular bail subject to furnishing bail/surety bonds to the satisfaction of the trial Court/Duty Magistrate within seven days; failure to furnish within seven days will result in non-counting of further custody after that period.

Final Conclusion: The petition is allowed and regular bail granted to the petitioner on parity with the co-accused and having regard to prolonged pre-trial custody, subject to furnishing bail/surety bonds within the time directed; no observation is made on the merits of the case.

Non-supply of documents relied upon (RUD's) during inquiry with the show cause notice - opportunity to test evidence - Violation of principles of natural justice - right to fair hearing -denial of opportunity to cross-examine witnesses whose statements are relied upon.

Violation of principles of natural justice by non-supply of relied-upon documents - HELD THAT:- The Court found that documents relied upon by the respondents were supplied to the petitioners only during the course of the inquiry and not along with the show cause notice, and that such failure to supply the relied-upon material before the inquiry constituted a breach of the principles of natural justice. For this reason the impugned order could not stand and the matter was remanded for fresh inquiry beginning from the stage of issuance of the show cause notice, subject to the direction that all documents relied upon shall be supplied to the petitioners along with a list of Relied Upon Documents (RUDs). [Paras 3, 5]

Impugned order quashed and matter remanded for fresh inquiry; respondents directed to supply all relied-upon documents and a list of RUDs to the petitioners.

Denial of opportunity to cross-examine witnesses whose statements are relied upon - HELD THAT:- The Court held that the respondents' failure to extend the requested opportunity for cross-examination of witnesses, statements of whom were relied upon, amounted to a denial of a fair opportunity of hearing. Consequently, the impugned order was set aside on this ground and the authority was directed, on remand, to afford the petitioners any requested opportunity to cross-examine such witnesses and thereafter pass appropriate orders in accordance with law within the period stipulated. [Paras 3, 5]

Impugned order quashed on this ground and the matter remanded with directions to permit cross-examination where requested and to complete the inquiry in accordance with law.

Final Conclusion: The writ petition was allowed: the impugned order was quashed on grounds of procedural unfairness (non-supply of relied-upon documents and denial of cross-examination), and the matter was remanded for a fresh inquiry from the stage of issuance of the show cause notice with directions to supply RUDs, permit cross-examination if requested, and complete the inquiry within three months.

Rejection of the refund of IGST on the ground that services were intermediary services and therefore not export of services - failure to consider petitioner\'s contentions regarding export of services versus intermediary - breach of the principles of natural justice as also non application of mind.

Whether the impugned order requiring determination of whether the services qualified as export of services or intermediary services should be quashed and the matter remanded for fresh consideration - HELD THAT:- The Court found that the authority, in rejecting the refund claim, did not appropriately consider the petitioner's contentions and the contractual arrangements bearing on the question whether the services were export of services or intermediary services. Having noted relevant earlier decisions and circulars and the need for appropriate examination of the agreements and points urged by the petitioner, the Court concluded that the impugned order required reconsideration and directed remand for de novo consideration after hearing the parties. [Paras 4, 6, 8]

Final Conclusion: The High Court quashed the impugned order rejecting the refund claim and remanded the matter to the authority for de novo consideration of whether the services qualify as export of services or intermediary services, with all contentions kept open and a three month timeline for fresh determination.

Rejection of Tran-1 and TRAN 2 - quantity and value inputs are not matching with the TRAN credit availed - invoice/documents evidencing payment of tax carried forward to Electronic Credit Ledger in support of that credit availed was not produced -absence of certain documents - remand for fresh consideration.

Failure to consider material evidence - HELD THAT:- The Court recorded that the Adjudicating Authority's orders observed mismatches and rejected TRAN-1 and TRAN-2 without having considered certain documents that the petitioner produced contemporaneously or at the hearing remitted by the Court. The petitioner appeared before the Authority and filed copies of documents and minutes of proceedings; thereafter the Authority sought further certified records (CA-certified closing stock, purchase invoices and sales register for the specified period). In view of the production lacuna and the Authority's subsequent request for certified documents, the Court set aside the impugned orders and remitted the matters to respondent No.1 for reconsideration, leaving all contentions open. [Paras 10, 11]

Impugned orders set aside and matters remitted to respondent No.1 for fresh consideration with liberty to the petitioner to produce the requisite records; all contentions kept open.

Final Conclusion: The High Court set aside the Orders-in-Original rejecting TRAN-1 and TRAN-2 and remitted the matters for fresh consideration by the Adjudicating Authority, permitting the petitioner to produce relevant records and preserving all contentions.

Ex parte adjudication - Validity of the order of adjudication and consequent recovery notice of demand raise for service tax on the basis of declaration in the income tax returns - inputs received from the Central Board of Direct Taxes (CBDT) - satisfaction of demand.

Setting aside adjudication order and recovery proceedings - HELD THAT:- The High Court, having noted the petitioner's assertion that the service tax demand had been satisfied and having regard to the directions and observations recorded in the Court's earlier order in W.P. No. 11154/2023, set aside the impugned Order in Original and the recovery notice and remitted the matter to the stage of filing a reply to the show cause notice so that the authorities may reconsider the matter afresh. The Court recorded that the petitioner may file a fresh reply and is at liberty to place on record the assertion that the demand has been satisfied; the adjudicatory process is to proceed from the show cause stage. [Paras 6, 7, 9]

Impugned adjudication order and recovery notice quashed; matter remitted to the stage of reply to show cause notice for fresh consideration.

Authorities to take note of the observations made at para-10 of the order in W.P. No. 11154/2023 dated 03.07.2024 and also consider the reply to be filed by the petitioner as well as the assertion that the demands of service tax have already been satisfied.

Final Conclusion: The High Court set aside the Order in Original and the recovery notice for the period 2016 17, remitted the matter to the show cause stage for fresh consideration, and directed the authorities to consider the specific questions recorded in the earlier order while taking into account the petitioner's reply and the assertion that the demand has been satisfied.

Liability to pay tax on parking services - definition of supply - Failure to consider material documentary evidence -post-decisional hearing and opportunity to furnish documents - stay of operation of impugned order and related garnishee proceedings pending reconsideration.

Failure to consider material documentary evidence - Whether the adjudicating authority erred by rejecting the petitioner's claim for acting on behalf of the Kolkata Municipal Corporation without considering documentary material and whether the petitioner should be permitted to furnish documents and be heard. - HELD THAT: - The Court found that the petitioner had produced material suggesting it acted on behalf of the Kolkata Municipal Corporation but that the documents now relied upon were not before the proper officer. Because the impugned order recorded rejection of the claim on the ground that no Agreement or supporting document had been furnished, and the petitioner demonstrated a prima facie case, the Court granted the petitioner liberty to make an appropriate representation to the proper officer with all supporting documents. The adjudicating authority was directed to grant a post decisional hearing if such representation is filed and to pass appropriate orders thereafter, while remaining free to retain its original conclusion if the documents or submissions are unacceptable in law or fact. [Paras 12, 13, 14, 15, 16]

Petitioner granted liberty to approach the proper officer with documents within two weeks; if filed, the authority shall grant a post decisional hearing and decide within two weeks thereafter.

Stay of operation of impugned order and related garnishee proceedings pending reconsideration - HELD THAT:- The Court directed that the impugned order be kept in abeyance for a limited period to allow the petitioner to make the representation and for the authority to decide it. Consequential garnishee proceedings were stayed for a longer, specified period; however, the stay would lapse if the petitioner failed to file the representation within the prescribed time and the adjudicating authority could record supplementary reasons if it remained unconvinced. [Paras 18, 19, 21, 22, 23]

Impugned order kept in abeyance for four weeks and garnishee proceedings stayed for eight weeks; the stays will not apply if the petitioner does not file the representation within two weeks and the authority shall record its findings if unconvinced.

Final Conclusion: The writ petition was disposed of by granting the petitioner liberty to file a representation with supporting documents and by directing the adjudicating authority to grant a post decisional hearing and decide within specified short periods; the impugned order and related garnishee proceedings were temporarily stayed subject to the conditions and timelines set out by the Court.

Rejection of an appeal solely on the ground that it was not filed electronically under Rule 108 of the Central Goods and Services Tax Rules, 2017 - appeal was filed manually after payment of the mandatory pre-deposit - assessment order not uploaded on the GST portal.

Whether the appellate order dismissing the appeal for non-electronic/manual filing could be sustained after the appellate authority had accepted the pre-deposit, issued hearing notice and heard the appeal on merits -HELD THAT:- The Court noted that the appeal was filed manually with mandatory pre-deposit and that the appellate authority accepted the pre-deposit, issued notice and heard the matter on merits. The appellate authority did not raise any objection to manual filing at the initial stage and only after hearing dismissed the appeal on the ground of non-electronic filing. The Court held that raising such a procedural objection belatedly, after keeping the matter pending and after hearing on merits, was inappropriate. In those circumstances the proper course was to set aside the order and remit the matter for fresh adjudication on merits, without permitting the mode of filing to determine the fate of the appeal. [Paras 5, 6, 7]

Final Conclusion: The writ petition is allowed; the appellate order dismissing the appeal for non-electronic filing is set aside and the matter is remanded to the appellate authority to decide the appeal on merits without regard to the mode of filing, with no order as to costs.

Retrospective cancellation of GST registration - requirement of supply of supporting documents in show-cause proceedings - non-speaking cryptic orders vitiate cancellation proceedings - extraordinary writ jurisdiction despite alternate statutory remedy - Whether registration of petitioner(s) under Central Goods and Services Tax Act, 2017/Haryana Goods and Services Tax Act, 2017 (for short CGST/HGST Act) could have been cancelled with retrospective effect even though it is not so proposed in show case notice(s), Form GST-REG-17, issued to petitioners.

Retrospective cancellation of GST registration - HELD THAT:- The Court held that although Section 29(2) of the CGST Act confers power to cancel registration from a retrospective date, the exercise of that power must be preceded by notice to the assessee of the proposal to cancel retrospectively and the reasons/material relied upon. A show cause notice must disclose the basic grounds or premises of the proposed action so that the person proceeded against has a fair opportunity to meet the case; absence of any proposal for retrospective cancellation in the notices issued rendered the subsequent retrospective effect unsustainable. [Paras 11, 13, 14, 16, 18]

Impugned cancellations made effective retrospectively without any proposal or reasons in the show cause notices are set aside; authorities may, if otherwise warranted, recommence proceedings and may impose retrospective cancellation only after giving specific notice and opportunity in accordance with law.

Requirement of supply of supporting documents in show-cause proceedings - HELD THAT: - The Court found that in the petitions the show cause notices referred to attached supportive documents which were not in fact uploaded or supplied to the petitioners. The absence of the material on which the authorities purportedly relied deprived petitioners of the ability to effectively contest the case, and procedural fairness required that such material be furnished prior to final adjudication. [Paras 3, 16, 18]

Proceedings in which supportive documents referred to in the show cause notice were not supplied are vitiated; the cancellation orders based on such deficient procedure were quashed with liberty to reinitiate after supplying the material and affording opportunity of hearing.

Non-speaking cryptic orders vitiate cancellation proceedings - HELD THAT: - The Court emphasised that orders imposing retrospective cancellation must reflect the authority's consideration of facts and reasons. The impugned orders merely reproduced brief grounds or cyclostyled language without articulating any reasoning or the material basis for retrospective effect. Post-hoc justifications in departmental replies cannot cure the absence of reasons in the orders themselves. [Paras 19, 20]

Non-speaking, cryptic cancellation orders are set aside as showing non-application of mind; authorities may reconsider and pass reasoned orders after affording proper notice and hearing.

Extraordinary writ jurisdiction despite alternate statutory remedy - HELD THAT: - Relying on the exception recognised in precedent, the Court held that the procedural infirmities shown - absence of specific notice for retrospective cancellation, failure to supply supportive documents, and non-speaking orders - constituted circumstances warranting exercise of writ jurisdiction despite existence of alternative remedies. The Court therefore entertained the petitions and granted relief. [Paras 21, 23]

Writ petitions were entertained and allowed in view of the established procedural defects; the Court set aside the impugned orders and permitted authorities to proceed afresh in accordance with law.

Final Conclusion: The Court quashed the impugned cancellation orders and corresponding show cause notices for procedural infirmities - absence of proposal for retrospective cancellation, non-supply of supportive documents, and non-speaking orders - and permitted the revenue to reinitiate proceedings, including retrospective cancellation if justified, only after giving specific notice, supplying material relied upon and affording a reasoned hearing in accordance with law.

Power to block the credit ledger by virtue of Rule 86A - Blocking of electronic credit ledger, without providing a pre-decisional hearing - audi alteram partem.

Pre-decisional hearing before blocking ECL - power under Rule 86A - HELD THAT:- The Court applied the principle in K-9 Enterprises that a pre-decisional hearing must be afforded before exercising the power to block an Electronic Credit Ledger under Rule 86A. The respondent admitted that no notice was issued to the petitioner before blocking the ledger. In view of that admission and the settled requirement of hearing, the impugned blocking was held to be vitiated and was ordered to be set aside; the respondent was permitted to proceed afresh in accordance with law if grounds exist. [Paras 3, 5, 6]

The order blocking the electronic credit ledger is set aside for want of a pre-decisional hearing and the ledger is to be unblocked immediately; respondent may proceed thereafter in accordance with law.

Final Conclusion: The petition succeeds: the Court set aside the blocking of the electronic credit ledger for failure to afford a pre-decisional hearing and directed immediate unblocking while leaving open the respondent's right to proceed afresh in accordance with law.

Vesting of title upon confiscation - exclusive adjudication under Section 130 - Merger of prior detention order - Validity of order passed by learned Single Judge, directing to release the detained and confiscated goods subject to payment of a specified percentage of the value of the goods - Whether, after issuance of an order under Section 130 of the Act, thereby vesting title to the goods and the conveyance in the State Government.

Vesting of title upon confiscation - HELD THAT:- The Court held that once an order of confiscation is passed under Section 130(1) and, in terms of Section 130(5), title to the goods and conveyance vests in the Government, the remedial and release mechanism under Section 129 ceases to be available. Thereafter, adjudication relating to confiscation, valuation, tax, penalty, interest and fine is governed exclusively by Section 130, and a collateral challenge confined to the earlier Section 129 order is impermissible where the Section 130 order stands unchallenged. [Paras 7]

Challenging only the Section 129 order after confiscation under Section 130 is not permissible; the Single Judge erred in entertaining the writ petition and directing release of the goods and conveyance.

Exclusive adjudication under Section 130 - HELD THAT: - The Court found that the learned Single Judge's direction effectively modified the legal effect of the Section 130 confiscation by permitting release on terms without any challenge to the confiscation order. Because the confiscation had already vested title in the Government, the Single Judge lacked jurisdiction to order release on the basis of the earlier Section 129 proceeding; the proper remedy is the statutory appellate route under Section 107 read with its sub-section (6). [Paras 7, 8]

The direction for release issued by the Single Judge is unsustainable; the writ order is set aside and the respondent must approach the appellate authority under Section 107(6). For that purpose the pre-deposit requirement is fixed as 100% of the fine under Section 130(2) and 10% of the tax.

Final Conclusion: The writ appeal is allowed; the Single Judge's order releasing the detained and confiscated goods subject to deposit and bank guarantee is set aside. The respondent may pursue the statutory appellate remedy under Section 107(6) with pre-deposit fixed at 100% of the fine and 10% of the tax.

Validity of assessment/order passed - Service by uploading on GST common portal - duty to explore alternative modes of service where portal service elicits no response - requirement of opportunity of personal hearing before confirming show-cause proposals.

Service by uploading on GST common portal - HELD THAT:- The Court held that while uploading a show-cause notice on the GST portal is a recognised mode of service, the impugned assessment order was passed without affording any opportunity of personal hearing and without effective service to the petitioner, thereby confirming the proposals in the show-cause notice ex parte. The lack of personal hearing and the absence of effective service rendered the order infirm; the Court emphasised that mere formal compliance by portal upload, without ensuring the notice was effectively brought to the taxpayer's attention, cannot substitute for affording the taxpayer an opportunity to be heard. [Paras 8]

The impugned order was found to be passed without affording the petitioner a personal hearing and without effective service, and thus was set aside.

Duty to explore alternative modes of service where portal service elicits no response - HELD THAT:- The Court held that where a taxpayer does not respond to notices uploaded on the GST portal, the officer must apply mind and explore other valid modes of service prescribed under Section 169(1) of the Act (for example, RPAD), rather than relying solely on repeated portal reminders. Failing to do so may render service ineffective and lead to avoidable ex parte orders and consequent litigation. In view of these deficiencies and the petitioner's willingness to pay 25% of the disputed tax, the Court set aside the impugned order and remitted the matter for fresh consideration subject to specified conditions: payment of 25% within four weeks, filing of reply within three weeks of payment, issuance of a 14-day clear notice fixing date for personal hearing, and disposal on merits thereafter. [Paras 9, 10, 11]

The matter was remanded for fresh consideration with directions that the officer explore alternative modes of service where necessary and afford a personal hearing; remand was made subject to the petitioner depositing 25% of the disputed tax and complying with the filing and notice timetable directed by the Court.

Final Conclusion: The High Court set aside the impugned order for lack of effective service and absence of personal hearing, directed remand for fresh consideration after specified payment and compliance by the petitioner, and ordered that the respondent afford a clear 14-day personal hearing and decide the matter on merits.

Cancellation of GST registration - Validity of a show-cause notice for failure to disclose reasons - cryptic, laconic, and bereft of reasons - breach of law without specifying the particular transactions or factual basis of the allegations - right to fair hearing - time bound adjudication - fraudulent availment of input tax credit - prima facie bar on restoration of registration where serious fraud is indicated.

Invalidity of a show-cause notice for failure to disclose reasons - HELD THAT:- The Court found that the notice merely referred to statutory provisions and alleged violation without specifying the particular transactions or the factual basis for the allegations. On an overall reading the notice did not disclose reasons sufficient to enable the respondent to mount an effective reply; accordingly the learned Single Judge was justified in setting aside the show-cause notice and the consequential order of cancellation. [Paras 5]

The order setting aside the show-cause notice and the cancellation of registration is confirmed to the extent that the defective notice and consequential cancellation are set aside.

Prima facie bar on restoration of registration where serious fraud is indicated - time-bound fresh adjudication after setting aside defective notice - HELD THAT: - While the Court declined to examine the merits of the fraud allegations at the interim stage, it observed prima facie material indicating large-scale fraudulent availment of input tax credit and held that the respondent could not, in that view, be permitted to seek restoration of registration without fresh adjudication. The Court therefore authorised the appellants to issue a fresh show-cause notice and directed conclusion of proceedings in a time-bound manner, while continuing the interim stay for a limited period; if the authorities fail to conclude the proceedings within that period for reasons not attributable to the respondent, registration must be restored. [Paras 6, 7]

Appellants permitted to issue a fresh show-cause notice and conclude proceedings within six weeks; interim stay continued for six weeks, with restoration mandated if proceedings are not concluded for reasons other than the respondent's non-cooperation.

Final Conclusion: The High Court confirmed the learned Single Judge's setting aside of the defective show-cause notice and cancellation of registration, permitted the Revenue to issue a fresh notice and conclude adjudication within six weeks, continued the interim stay for that period, and directed restoration of registration if proceedings are not concluded for reasons not attributable to the respondent.

Correctness and jurisdiction relating to the issuance of the show-cause notice - Alternative and efficacious remedy available under Section 107.

Relegation to statutory appellate remedy under Section 107 - unnecessary judicial observations on validity of show-cause notice when appellate remedy is available - HELD THAT: - The Single Judge relegated the respondent to the appellate remedy under Section 107 of the CGST Act but nevertheless recorded an observation that a single show-cause notice for three financial years was erroneous. The High Court held that once the statutory remedy was afforded, such an observation touching upon the correctness and jurisdiction of the notice was unnecessary. Consequently the Court intervened only to delete that extraneous observation while leaving the remainder of the impugned order intact. [Paras 5, 6, 7]

The observation that a single show-cause notice for three financial years was erroneous is set aside; otherwise the writ appeal is dismissed.

Final Conclusion: The High Court limited its interference to deleting the Single Judge's unnecessary observation regarding the show-cause notice and dismissed the writ appeal in all other respects.

Maintainability of appeal under CBDT tax-effect threshold - Power of appellate authority to entertain additional claims or corrections during appeal

Maintainability of appeal under CBDT tax-effect threshold - Maintainability of the Revenue's appeal in view of the CBDT circular prescribing a minimum tax-effect threshold for filing appeals. - HELD THAT: - The Tribunal applied the CBDT circulars (Circular No.05/2024 and Circular No.09/2024) as binding on revenue authorities and examined the correct tax effect arising from the disputed depreciation. On the correct computation the tax effect fell below the prescribed threshold of Rs. 60 lakhs and the case did not fall within the specified exceptions in the circulars. Consequently the appeal filed by the Revenue was held not maintainable and dismissed in limine for low tax effect. [Paras 3, 6]

Appeal of the Revenue dismissed as not maintainable for being below the CBDT-prescribed tax-effect threshold.

Power of appellate authority to entertain additional claims or corrections during appeal - claims of depreciation rejected by the ld. Assessing Officer for want of revised return - HELD THAT: - The Tribunal agreed with the view expressed by the first appellate authority under the decision relied upon Goetze India Ltd.[2006 (3) TMI 75 - SUPREME COURT] that nothing impinges on the power of an appellate authority to accept fresh or additional claims brought before it. The assessee demonstrated entitlement to the correction of normal depreciation (arising from an erroneous brought-forward WDV) and to additional depreciation on new assets, supported by the record. Applying that principle, and having found the factual justification for both claims, the Tribunal allowed the claims on merit. [Paras 5, 6]

Cross objection of the assessee allowed - claims for correction of depreciation and additional depreciation are accepted.

Final Conclusion: Revenue's appeal is dismissed as not maintainable under the CBDT tax-effect threshold; the assessee's cross-objection is allowed and the claims for correction and additional depreciation (totaling the disputed amount) are accepted.

Disallowance u/s 14A - Rule 8D methodology - Assessing Officer's satisfaction having regard to the accounts - availability of interest-free funds - onus on revenue where assessee makes suo motu disallowance - inordinate delay of 710 days in filling SLP

HELD THAT: - The Court examined the merits and concluded that the view taken by the Income Tax Appellate Tribunal [2018 (6) TMI 1522 - ITAT DELHI], which was affirmed by the High Court of Delhi [2023 (12) TMI 35 - DELHI HIGH COURT], did not warrant interference by this Court as confirmed deletion of the disallowance because the AO had not recorded any dissatisfaction, after examination of the assessee's accounts, with the correctness of the assessee's claim (including its suo motu disallowance) before invoking the prescribed method under Rule 8D. The record showed that the assessee had available interest-free funds in excess of the investments in the year under consideration, and the AO did not demonstrate that he had examined the accounts to reach a contrary satisfaction.

Having considered the matter on merits, the Supreme Court declined to disturb the concurrent adjudications below and dismissed the Special Leave Petition on that basis. [Paras 2]

The Special Leave Petition is dismissed for want of merit.

Condonation of delay - The Court noted an inordinate delay of 710 days in filing the petition but stated that it was inclined to condone the delay. The condonation was therefore granted, and the petition was dealt with on its merits notwithstanding the delay. [Paras 2]

Final Conclusion: The Court condoned the inordinate delay and, on merits, found no basis to interfere with the concurrent findings of the Income Tax Appellate Tribunal and the High Court of Delhi; the Special Leave Petition is dismissed and pending applications stand closed.

Substantial Question of Law - Scope of appeal u/s 260 A - concurrent findings of fact not to be disturbed in absence of perversity - onus shifting where revenue discharges initial burden - Procedural fairness and opportunity for cross examination

Whether an appeal u/s 260 A permits re appreciation of concurrent findings of fact? - HELD THAT: - The Court held that appeals under Section 260 A are confined to substantial questions of law and do not permit re appreciation of evidence or concurrent findings of fact by the tax authorities. The impugned orders record concurrent factual findings on the veracity of transactions, and no perversity or legal error was demonstrated that would convert those findings into a substantial question of law. Consequently, the appellant's invitation to re examine evidence could not be entertained in this statutory appeal. [Paras 14, 15]

The appeal could not be entertained insofar as it sought re appreciation of evidence and concurrent findings of fact under Section 260 A.

Onus shifting where revenue discharges initial burden - findings not based on no evidence - Whether the finding of bogus transactions was unsupported by evidence, thereby amounting to a finding based on no evidence? - HELD THAT: - The Court found that the Revenue had issued notices to the counterparties and received written denials or encountered non service/non traceability; these materials amounted to substantial evidence discharging the initial burden of proof. In view of that, the onus shifted to the appellant to produce creditworthy documents or witnesses, which the appellant failed to do. The authorities therefore did not record a finding of bogus transactions on mere conjecture or in absence of evidence. [Paras 8, 9, 10, 11, 12]

The finding of bogus transactions was supported by evidence on record and did not amount to a finding made in the absence of any evidence.

Procedural fairness and opportunity for cross examination - Whether the appellant was denied the opportunity to cross examine the counterparties, rendering the proceedings invalid? - HELD THAT: - The Court observed there is no record that the appellant requested and was refused an opportunity to cross examine the counterparties. Moreover, since the appellant claimed the transactions were genuine, it could readily have produced the parties or other supporting evidence; the appellant did not do so. Thus, no procedural prejudice was established that would vitiate the authorities' concurrent findings. [Paras 4, 13]

Absence of a recorded request for cross examination and the appellant's failure to produce the parties or supporting evidence did not render the proceedings improper.

Final Conclusion: The High Court dismissed the appeal under Section 260 A, holding that the matter involved concurrent findings of fact supported by evidence and did not raise any substantial question of law warranting interference.

Proceedings in the name of a non-existent entity - Validity of notices, assessment order and consequential notices issued in the name of the amalgamating (transferor) company after its amalgamation - HELD THAT:- The Court held that where the amalgamation of the transferor company into the resultant company had been duly intimated to the tax authorities before and during the assessment proceedings, issuance of notices and framing of assessment in the name of the amalgamating company which had ceased to exist constituted a jurisdictional error.

The Court applied the principle that an amalgamating company loses its corporate existence on an approved scheme of amalgamation and relied on settled authorities to conclude that continuing proceedings in the name of a non-existent entity is void.

Court distinguished the decision in Mahagun Realtors [2022 (4) TMI 347 - SUPREME COURT] on its facts (absence of prior intimation and participation by the resultant company) and found decisions relied on by the Revenue inapplicable where the PAN and legal identity of the entity no longer subsisted; accordingly the notices u/s 142(1), the show cause and the assessment under Section 143(3) read with Section 144B, and the consequential notices under Section 156 and penalty notices under Section 274 read with Section 270A issued in the name of the non-existent transferor company were invalid. The Court clarified that its conclusion was confined to the procedural defect of proceedings being taken in the name of a non-existent entity and did not preclude the Revenue from initiating fresh proceedings against the amalgamated company if legally entitled to do so. [Paras 13, 15, 17, 18, 20]

Final Conclusion: The Writ Petition was allowed: the assessment order the notice of demand and the penalty notice issued in the name of the amalgamating company were quashed as void for being made in the name of a non-existent entity; the Revenue remains free to initiate fresh proceedings against the amalgamated company if legally permissible.

Denial of exemption u/s 11 - belated filing of Form 10B -Condonation of delay in filing statutory form - rejecting the application for condonation of delay is primarily on the ground that the Petitioner’s application has been filed long after impugned Section 143(1) Intimation Notice was made only on 30.11.2021.

HELD THAT: - The Court quashed the impugned Order rejecting the condonation application. Having considered the facts and following its consistent view in similar matters, the Court concluded that the rejection of the condonation application could not stand and accordingly set aside the order rejecting the application for condonation of delay. [Paras 11]

The Order dated 06.03.2025 rejecting the condonation application is quashed and relief consequentially granted to the petitioner.

Denial of charitable exemption for procedural non-compliance - Whether the benefit of deduction u/s 11 can be denied solely on the ground of procedural delay in filing Form 10B - HELD THAT: - The Court held that the benefit of deduction under Section 11 cannot be denied merely for procedural delay in filing Form 10B. The Section 143(1) intimation denying the exemption on that ground was set aside. The matter was remitted to the assessing authority to pass a fresh assessment on merits after giving the petitioner an opportunity to be heard. The Court imposed a token cost on the petitioner to reflect that the delay should not be taken casually and directed compliance before the authority proceeds. [Paras 11, 12, 13, 14, 15]

The Section 143(1) intimation is set aside; the assessing authority shall pass a fresh assessment on merits after hearing the petitioner, subject to payment and proof of the directed token cost.

Final Conclusion: The impugned order rejecting condonation and the Section 143(1) intimation denying Section 11 benefit were set aside; the petitioner was directed to pay a token cost and, upon proof of payment, the assessing authority shall proceed to pass a fresh assessment on merits after hearing the petitioner.

Limitation operating u/s 153(3), 153(4) or 153(5) - Limitation applicable where Tribunal remits matters to the TPO and whether the period is governed by Section 153(3)/(5) or by Section 153(4) - timeline for passing a fresh order u/s 92CA or fresh assessment, as the case would be - whether there has been a reference under Section 92CA(1) to the TPO or the matter being remitted to the Transfer Pricing Officer by the Tribunal to decide the issue under Section 92CA(3)? - right of the petitioner to receive refund under Section 244A(1A)

Time-limit for giving effect to appellate remand under section 153 - HELD THAT: - The Court held that a remand by the Tribunal to the Transfer Pricing Officer is not the same as a reference initiated by the Assessing Officer under Section 92CA(1). A Tribunal remand calling for a fresh order under Section 92CA falls within the scope of Section 153(3) (and the proviso to it) and the related provisions governing orders giving effect under Section 153(5), rather than the extension mechanism in Section 153(4) which applies only to references made in the course of assessment/reassessment by the Assessing Officer. The Court relied on the reasoning in the coordinate decisions which distinguish references made by the AO from remands made by the Tribunal and concluded that the period for giving effect to the Tribunal's remand must be computed under Section 153(3)/(5). [Paras 6, 9, 10]

Remand by the Tribunal to the TPO is distinct from an AO reference; limitation is governed by Section 153(3)/(5) and not by Section 153(4).

Entitlement to refund and interest where order giving effect is barred by limitation - Whether the revenue is time-barred from giving effect to the Tribunal's remand and whether the assessee is entitled to refund with interest. - HELD THAT: - Applying the principle that limitation is jurisdictional, the Court found that the Tribunal's orders were received in the relevant financial year 2022-23 and that the statutory period to give effect expired on 31-03-2024. Since no order giving effect was passed by that date, the respondents were de hors jurisdiction to act thereafter. The Court therefore directed that the impugned communication rejecting refund be quashed and ordered the respondents to process and pay the refund due (tax paid in excess of returned income) with applicable interest, fixing procedural timelines and stipulating enhanced interest for non-compliance. [Paras 10, 13, 14]

Final Conclusion: The writ petitions are allowed: the Court held that Tribunal remand to the TPO is distinct from an AO reference and limitation to give effect to the remand expired on 31-03-2024; the impugned communication is quashed and the respondents are directed to process and pay the refund with applicable interest within the time fixed, with enhanced interest for failure to comply.

Reopening of assessment of a completed scrutiny assessment - scope of change of opinion - reasons recorded for issuance of notice u/s 148 indicate that the assessee was not entitled to deduction u/s 54F on the ground that the unutilised consideration was not deposited in the Capital Gains Account Scheme as required under sub-section (4) of Section 54F -

HELD THAT: - The Court held when a scrutiny notice had already been issued and the regular assessment completed, it cannot be said that the aspect of non-deposit in the Capital Gains Account Scheme was not examined.

Notice under Section 143(2) was issued during regular assessment to consider the claim for deduction/exemption for capital gains and investment in immovable property. The reasons recorded for re-opening of assessment is for the same purpose and on the same issue. In view of the acceptance of the claim in the regular return, it is to be held that the AO has by necessary implication expressed opinion on the matter and the present proceeding to re-open the assessment is a change of opinion by the Assessing Officer.

A completed scrutiny assessment cannot be reopened in the absence of any new or tangible material indicating escapement of income [Paras 8, 9, 10]

Final Conclusion: The appeal is dismissed; the reassessment under Section 148 is quashed as a prohibited change of opinion in the absence of new or tangible material.

Appeal before the Tribunal arose out of the order passed by the Additional / JCIT(A) under section 250 - appellate authority recorded that the assessee had opted for settlement of the dispute under the Direct Tax Vivad se Vishwas Act, 2020 and accordingly dismissed the appeal as withdrawn - appeal before the Tribunal is rendered infructuous by the rectification order passed by the appellate authority correcting an inadvertent reference - Whether the appeal before the Tribunal survives after the appellate authority rectified its order to dispose of the correct appeal?

HELD THAT: - The Tribunal found that the impugned appellate order contained an inadvertent reference to a different proceeding and that the assessee sought rectification. The appellate authority, after hearing, passed a rectification order disposing of the appeal against the correct order, thereby granting the relief sought by the assessee. As the grievance originally raised in the Tribunal appeal was addressed by the rectification, there remained no live controversy for adjudication. [Paras 4, 5, 6]

The appeal has become infructuous and is dismissed as such.

Final Conclusion: The Tribunal dismissed the appeal as infructuous because the appellate authority's rectification order had corrected the error and disposed of the appeal against the correct order, leaving no live issue for determination.

Addition u/s 68 - Genuineness of transactions andcreditworthiness and identity of lender not proved - reliance on investigation report versus independent inquiry - addition u/s 69C - allegation of non independent application of mind by AO

HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the assessee had produced contemporaneous documentary evidence - bank statements, ledger confirmations, audited financial statements and income-tax returns of the lender - and demonstrated repayment of the unsecured loan before departmental information was shared.

The Assessing Officer had primarily relied on the Investigation Wing's report and statements without conducting any independent inquiry to displace the documentary proof of identity, creditworthiness and genuineness; that approach was held to be unsustainable. Having regard to the lender's demonstrated net worth and the repayment of the loan, the CIT(A)'s conclusion that the addition under section 68 (and the consequential addition under section 69C in respect of interest) was not warranted was affirmed. [Paras 4, 7, 8]

Final Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s deletion of the addition under section 68 and the consequential deletion under section 69C, on the basis that documentary evidence and repayment established identity, creditworthiness and genuineness while the AO's reliance on the Investigation Wing's report without independent inquiry was misplaced.

Provision for warranty as ascertained liability - Add-back under Explanation 1(c) to section 115JB - Whether the provision for warranty expenses is exigible to addition while computing book profit u/s 115JB as an amount set aside for unascertained liabilities, and whether the disallowance under normal provisions stood justified? - HELD THAT: - The Tribunal held that a provision for warranty created in respect of products sold and computed on the basis of past experience and a scientific method represents a present obligation arising from past events and is therefore an ascertained liability. Accordingly, such provision does not fall within the mischief of clause (c) of Explanation 1 to section 115JB which requires addition of amounts set aside as provision for unascertained liabilities. The CIT(A)'s concurrent deletion of the addition under the normal provisions was not controverted by the Revenue and was sustained. [Paras 5, 8]

The Hon’ble Supreme Court in Rotork Controls India (P) Ltd.[2009 (5) TMI 16 - SUPREME COURT] has held that a provision for warranty made on the basis of a scientific method and past experience represents a present obligation arising from past events and therefore constitutes an ascertained liability. Similar principle has also been laid down in Bharat Earth Movers [2000 (8) TMI 4 - SUPREME COURT] wherein it was held that a liability which has arisen in the accounting year and can be reasonably estimated is allowable notwithstanding the fact that it may have to be discharged in future.

The addition of the provision for warranty expenses to book profit u/s 115JB is unsustainable and is deleted; the deletion of the addition under the normal provisions is upheld and the Revenue's appeal in that regard is dismissed.

Final Conclusion: The assessee's appeal is allowed insofar as the addition to book profit u/s 115JB is deleted because the warranty provision is an ascertained liability - Revenue's appeal against deletion under the normal provisions is dismissed.

Addition u/s 69A - Treatment of bank deposits under unexplained credits provision - allowance of purchase set-off against bank deposits - estimation of income by applying deemed profit percentage - quantification of taxable income from those deposits.

Whether the addition of entire bank deposits as unexplained credit was justified and the correct manner of determining taxable income from unaccounted trading transactions? - HELD THAT:- The Tribunal found that the assessee produced invoice copies, party confirmations and bank-routed payment details establishing sales and purchases relevant to the deposits, and noted that the AO had not given set-off for purchases when taxing entire deposits as unexplained credits.

Tribunal also took into account that in related proceedings (the assessee's mother) no addition was made on similar materials and that the Assessing Officer had earlier estimated profit at 9% in the original assessment.

Considering the material produced and the totality of circumstances, the Tribunal concluded that taxing the entire deposits was not justified and that a reasonable estimate of profit should be applied to the sales/deposits instead of treating the whole amount as unexplained income. [Paras 18, 19]

Addition of entire deposits under the unexplained-credits provision set aside; Assessing Officer directed to adopt profit at 10% of the relevant sales/deposits (addition accordingly restricted) and appeal partly allowed

Final Conclusion: The Tribunal partly allowed the appeal by directing that the addition under the unexplained-credits provision be restricted to a deemed profit of 10% of the relevant sales/deposits, instead of taxing the entire bank deposits, and remitted the matter for assessment in accordance with this direction.

Unexplained cash credits u/s 68 - unexplained unsecured loansidentity, genuineness and creditworthiness of creditors not proved - assessee submitted that the alleged unsecured loans taken from 07 persons who are female family members of Promoters, Directors and Shareholders of the assessee company and they have given loans out of their accumulated savings.

HELD THAT: - The Tribunal found that PANs and confirmations were furnished for all seven lenders who were female relatives of the promoters, directors and shareholders, and that the loans were routed through banking channels. On these facts the Tribunal held that the identity of the cash creditors and the genuineness of the transactions were proved. [Paras 7, 8]

Identity of the creditors and genuineness of the loans accepted.

Genuineness of the transactions - We note that the alleged loans have been received through banking channel and the cash creditors are not unknown parties and they have given the unsecured loans for the purpose of earning interest and also to help the assessee company for arrangement of funds. Therefore, in our considered view, genuineness of the transactions is also proved.

Creditworthiness of creditors - acceptance of past savings up to basic exemption limit - Whether the creditworthiness of the cash creditors was established and to what extent the amounts could be accepted - The Tribunal examined bank statements, confirmations and affidavits, and observed cash deposits in each creditor's account immediately prior to issuance of cheques. Noting that the basic exemption limit for AY 2016-17 was Rs. 2,50,000 and that the creditors had accumulated past savings, the Tribunal held that creditworthiness could be accepted up to Rs. 2,50,000 for each creditor. Applying that principle, the Tribunal deleted the additions in respect of two creditors whose entire loans were within that limit and sustained the balance amount as unexplained. [Paras 9, 10]

Creditworthiness accepted up to Rs. 2,50,000 per creditor; deletions and partial sustainment applied accordingly

Final Conclusion: The appeal is partly allowed: the Tribunal deleted the addition under Section 68 in respect of two lenders whose loans were within the accepted limit and sustained the remaining addition after allowing Rs. 2,50,000 benefit to each creditor; the appeal is therefore partly allowed.

Deduction u/s 80P(2)(a)(i) for commission income akin to banking activity - Whether the assessee is entitled to deduction under section 80P(2)(a)(i) for commission income received from MSEDCL? - HELD THAT: - The Tribunal examined prior Tribunal authority dealing with commission income from MSEDCL and the legal proposition that activities of collecting bills, dues and charges for and on behalf of public utilities are akin to banking activity. Finding that the precedents were squarely applicable, the Tribunal held that the commission income received from MSEDCL is incidental to the society's main objects and eligible for deduction u/s 80P(2)(a)(i). [Paras 6]

Final Conclusion: The Tribunal allowed the assessee's claim for deduction u/s 80P(2)(a)(i) in respect of the commission income received from MSEDCL, allowing the appeal.

Bogus LTCG -Treatment of long term capital gains as unexplained cash credit u/s 68 - entitlement to exemption u/s 10(38) for sale on a recognised stock exchange through a SEBI registered broker denied - reliance on investigation wing report

Whether the addition of the long term capital gains on sale of SRK Industries Ltd. shares could be sustained as unexplained income u/s 68 and whether the assessee was entitled to exemption under section 10(38) - HELD THAT: - The Tribunal found that the AO made the addition by relying on an investigation wing report and conjecture without controverting or pointing out any defect in the documentary and transactional evidence produced by the assessee. The share transactions were executed on the BSE platform through a SEBI registered broker, STT was paid, consideration was routed through banking channels and deliveries reflected in the demat account; these documents were neither rejected nor disproved by the AO. In such circumstances, once the assessee produced credible documentary evidence establishing the genuineness of purchase and sale, the burden shifted to the Revenue to bring cogent material to show the transactions were sham or part of price rigging.

The Tribunal followed coordinate decisions and the jurisdictional High Court precedents which held that reliance on investigation reports alone, without corroborative material specific to the assessee, does not justify treating bona fide stock exchange transactions as unexplained cash credits. Applying these principles to the facts, the Tribunal concluded that the addition under section 68 could not be sustained and that the assessee was entitled to the exemption claimed under section 10(38). [Paras 6, 10, 11, 12]

Final Conclusion: The appeal is allowed; the addition treating the long term capital gains as unexplained income is deleted and the exemption under section 10(38) is directed to be granted to the assessee for the impugned transactions.

Assessment u/s 153A - Presumption as to contents of seized documents - When no valid search u/s 132 was initiated in assessee’s case - requirement of independent corroboration for additions founded on loose papers

Unexplained investment and consequential interest income - Presumption as to contents of seized documents - inadmissibility of additions based on speculative alteration of seized entries - Validity of additions under section 69 and consequential interest which were founded on entries in the seized Neelgagan Diary where the Assessing Officer treated figures as deficient by two zeros - HELD THAT: - The Tribunal accepted that the Neelgagan Diary belonged to the assessee and that the statutory presumption in respect of seized material applied to its ownership; however, the Assessing Officer's hypothesis that numeric entries were to be read after adding two zeros was an arbitrary speculative reconstruction of the seized entries. The assessee produced contemporaneous confirmations and statements from persons named in the diary and a cash-flow statement quantifying unexplained investment at a substantially lower amount. Reliance was placed on prevailing precedents that suspicion cannot substitute proof and that an assessing officer cannot modify the contents of seized documents by conjecture. In the absence of concrete, corroborative material to support the AO's two-zero assumption, the additions based solely on that speculative alteration could not be sustained; the statutory deeming of the document's ownership did not license altering its recorded figures without independent evidence. [Paras 6, 7, 8, 9]

Addition under section 69 and consequential interest based on the two-zero assumption are deleted.

Additions based on entries found noted on loose sheets - During assessment proceeding, the assessee stated that the seized material was merely estimation of land development projects - HELD THAT:- The corroboration of entries is completely missing in the present case. Therefore, the documents as found are to be considered as dumb documents only, which, on standalone basis, could not sustain the additions as made by Ld. AO. We also concur that the statement made by the assessee u/s 132(4) stood retracted subsequently by way of elaborate explanation and accordingly, unless corroborative evidences were brought on record to support the allegation, the retracted statement could not be the sole basis of addition.

The confession would need corroboration as per the decision in Pullangode Rubber Produce Co. Ltd. [1971 (9) TMI 64 - SUPREME COURT] holding that though admission is an important piece of evidence but it could not be said to be conclusive one and the maker thereof could show that it was incorrect. Further, a retracted statement would have no evidentiary value and the same could not be used in the assessment. The case laws of Hon’ble Delhi High Court in the case of Sunil Aggarwal [2015 (11) TMI 286 - DELHI HIGH COURT] as well as the decision of Krishan Lal Shiv Chand Rai [1972 (12) TMI 6 - PUNJAB AND HARYANA HIGH COURT] support this proposition. In these decisions, it has been held that the party was entitled to show and prove that the admission made by him previously was not correct and true. By considering that facts and circumstances io the case as well as the ratio of all these decisions, we would hold that twin additions of unexplained investment is not sustainable in law. We order so. The assessee succeeds in its corresponding grounds of appeal. [Paras 10, 11]

Additions of unexplained investment based on the loose sheets (aggregate in issue for AY 2013-14 and corresponding years) are deleted.

Final Conclusion: The appeals are partly allowed: additions founded on speculative alteration of seized diary entries and on uncorroborated loose sheets are deleted for the stated assessment years; the Tribunal upheld ownership of the diary by the assessee but held that ownership does not justify modifying recorded figures without independent evidence; other legal pleas rendered academic by these findings were not adjudicated.

Seeking to withdraw the petition and pursue alternative remedy - entertainment of appeal despite bar of limitation - adjudication of appeal on merits.

Liberty to withdraw petition and pursue alternative remedy - HELD THAT:- The Court, having noted the Supreme Court a remittal of the matter in Union of India and others Vs. ASPAM Petrochem Pvt. Ltd. [2026 (2) TMI 139 - SC ORDER]. The petition was therefore allowed to be withdrawn subject to a temporal liberty: if an appeal is filed within eight weeks it must be heard and decided on its merits and in accordance with law without objection as to limitation. All contentions of the parties were expressly left open for consideration by the Tribunal. [Paras 5]

Final Conclusion: The writ petition is permitted to be withdrawn; petitioners may file an appeal to the Tribunal within eight weeks, which must be adjudicated on merits without objection as to limitation, and all issues are left open for determination by the Tribunal.

Directions granted by the Court - Provisional release of goods- issuance of demurrage waiver certificate. - HELD THAT:- The interim directions granted by the Court were complied with (goods released and demurrage waiver certificate issued); the petition is disposed as not calling for further adjudication while leaving open all contentions of the petitioner to assail the Order in Original; no costs.

Effect of the appellant's death on the pending appeal - no application for continuance by the successor-in-interest or legal representative has been filed under Rule 22 - Abatement of proceedings - non-prosecution against deceased violates natural justice.

Continuance under Rule 22 of CESTAT Procedure Rules - HELD THAT:- The Tribunal applied Rule 22 which provides that an appeal shall abate on the death of an appellant unless an application for continuance is made by the legal representative within sixty days (subject to extension for sufficient cause). The record showed no application for continuance had been filed. Therefore the statutory mechanism for continuation was not invoked and the appeal could not be maintained in the absence of such an application. [Paras 4, 5]

The appeal abated for want of an application for continuance under Rule 22.

Non-prosecution against deceased violates natural justice - HELD THAT:- The Tribunal relied on the Supreme Court decision in Shabina Abraham & Ors. v. Collector of Central Excise & Customs [2015 (7) TMI 1036 - SUPREME COURT], which holds that proceedings cannot be continued against a dead person as that would violate natural justice because the deceased cannot defend himself; accordingly, absent statutory provision properly invoked for taxing the estate, continuation against the deceased is impermissible. Applying that precedent, the Tribunal found continuation of the appeal against the deceased appellant impermissible. [Paras 6, 7]

Proceedings cannot be continued against the deceased appellant and the appeal stands abated.

Final Conclusion: The Tribunal held that the appeal abated on the death of the appellant because no application for continuance under Rule 22 was made and continuation against a deceased person is impermissible; the appeal was disposed of accordingly.

Levy of Anti-dumping Duty (ADD) - imports of PVC flex banner entered for home consumption during the interregnum (gap) period between expiry of a provisional ADD notification and issuance of a final ADD notification - provisional assessment and finalisation - absence of contemporaneous statutory time bar - Whether ADD could be levied on imports of PVC Flex Banner made during the interregnum or the gap period i.e. from 30.01.2011 – (a date after the lapse of the provisional ADD) to 24.08.2011 (a date prior to the issuance of Notification, retrospectively levying definitive ADD for a period of five years on the subject goods).

Prohibition on levy of anti dumping duty during interregnum - HELD THAT:- The Tribunal applied and followed the ratio of the Supreme Court in Commissioner of Customs, Bangalore v. G.M. Exports [2015 (9) TMI 1162 - SUPREME COURT] and related authorities to hold that a final anti dumping notification cannot operate to levy duty for the interregnum beyond the period for which provisional measures lawfully operated. Rule 20(2)(a) cannot be read so as to extend the period of provisional duty beyond the mandatory limits in Rule 13 and Section 9A, and retrospective levy for the gap period would amount to an impermissible retrospective imposition except in circumstances expressly provided by Section 9A(3) and the Rules. Consequently, imports made on 04.06.2011 during the identified gap (30.01.2011-24.08.2011) were not liable to the anti dumping duty imposed by Notification No.82/2011 CUS dated 25.08.2011 for that interregnum period.

The Larger Bench of this Tribunal in the case of Sunrise Enterprise v. Commissioner of Central Excise, Jalandhar[2015 (10) TMI 93 - CESTAT NEW DELHI (LB)] had expressly stated that the date of presentation of Bill of Entry is relevant date for determining applicable rate of duty and given the mandate of law in the case of G.M. Exports - there being no anti-dumping duty leviable on the said date, we are of the considered view that the assessee importer is not liable for payment of any ADD in the matter.

No anti dumping duty is leviable for the interregnum period; the ADD levy on the subject imports was unsustainable.

Finalisation of provisional assessment - absence of contemporaneous statutory time bar - Whether delay in finalisation of the provisional assessment (and final charging of ADD after many years) rendered the ADD levy invalid or disentitled the Revenue from recovery - HELD THAT:- The Tribunal noted that the Customs (Finalisation of Provisional Assessment) Regulations, 2018 were notified only in 2018 and therefore, at the material time of these imports and their provisional assessment, there was no statutory two month timeline or specified consequences for delayed finalisation. The adjudicating authority had recorded that the importer responded to revenue communications only in 2021 and the finalisation followed; on the materials before it the Tribunal found the appellant's complaint of inordinate delay unsubstantiated as a legal ground to vitiate assessment under the law in force at the relevant time.

Delay in finalisation did not, on the legal position prevailing at the material time, invalidate the process and did not provide a basis to sustain the ADD levy in the circumstances of this case.

Appellate Tribunal bench jurisdiction in anti dumping appeals limited to statutory scope of section 9C - HELD THAT:- The Tribunal interpreted section 9C and held that the special bench requirement in sub section (5) is confined to appeals against the designated authority's determination on existence, degree and effect of dumping (matters within section 9C(1)). The statutory scheme does not oust regular Tribunal Benches from adjudicating other legal and assessment issues arising from anti dumping levy and its recovery. Accordingly, the plea that only a Special Bench could hear the present appeal was rejected.

The Bench had jurisdiction to entertain and decide the appeal.

Final Conclusion: Following the authority of the Supreme Court in G.M. Exports and subsequent consistent decisions, the Tribunal held that anti dumping duty could not be levied for the interregnum period and, on that basis, set aside the impugned order; peripheral objections about delay in finalisation and incompetence of the Bench were rejected. The appeal succeeds and the levy of ADD on the subject imports is not sustainable.

Scope of show cause notice for denial of exemption for all Bills of Entry primarily on the ground that MR had not been ascertained from Customs laboratory and that CSN values as per load port reports were not reliable - benefit of exemption under Notification No. 21/2002-Cus dated 01.03.2002 (as amended by Notification No. 12/2012-Cus dated 17.03.2012) - contemporaneous evidence - burden of proof on claimant - belated testing and evidence deterioration - Whether the impugned order has travelled beyond the scope of the Show Cause Notice by relying upon CIMFR test reports not referred to therein?

Scope of show cause notice - HELD THAT:- The Tribunal held that the Show Cause Notice was confined to two primary allegations (absence of MR from an authorised laboratory and asserted unreliability of load-port CSN values) and did not mention CIMFR testing or annex CIMFR reports. The impugned order, however, rested decisively on CIMFR reports dated after issuance of the notice and substituted the original grounds with this belated evidentiary basis. Supply of documents during adjudication and opportunity to rebut could not cure the jurisdictional defect of introducing a new foundational basis not pleaded in the notice. Reliance upon the belated CIMFR report therefore rendered the adjudication beyond the four corners of the Show Cause Notice and legally unsustainable. [Paras 8]

The reliance on CIMFR test reports not referred to in the Show Cause Notice renders the impugned order legally unsustainable.

Qualification for exemption under Notification No. 21/2002-Mean Reflectance and Crucible Swelling Number - HELD THAT:- The Tribunal recorded that the notification requires MR > 0.60 and CSN 1. The contemporaneous evidence at import comprised a load-port certificate (CSN 1.5, MR 1.75) and the Customs Chemical Examiner's report (CSN 3), both exceeding required thresholds; the later CIMFR report showing CSN 0.5 arose from testing more than two years after sampling. The adjudication did not establish any cogent scientific defect in the contemporaneous reports nor show that remnant samples were preserved to prevent deterioration. Preferring a belated test report over contemporaneous reports without demonstrating the former's reliability or explaining sample preservation was arbitrary; consequently the contemporaneous evidence establishes entitlement to exemption. [Paras 9]

The coal imported under the relevant bill of entry satisfied the conditions of exemption and the belated CIMFR report cannot displace the contemporaneous evidence.

Final Conclusion: The Tribunal set aside the portion of the impugned order denying exemption and confirming demand (and consequential interest) in respect of the specified bill of entry, holding the order unsustainable for travelling beyond the Show Cause Notice and on merits finding entitlement to the exemption.

Confiscation of gold ornaments exported with misdeclared gold under Section 113(i) - Non-export of the jewellery made from 5 kgs of duty free gold purchased by the appellant from MMTC Ltd. as per the said ‘20:80 Import of Gold Scheme’ - procedure prescribed under the Scheme vide Circular No.34/2013-Cus, -Redemption on payment of fine and reduction of penalty under Section 114

Confiscation for misdeclaration under Section 113(i) - HELD THAT:- The Court found that the shipping bill declared 5,268.600 gms of gold in the exported consignment while assay showed materially lower gold content (2,733.34 gms) with the balance being enamel, and the appellant admitted the misdeclaration. Such misdeclaration falls within the scope of Section 113(i).

Confiscation of the 244 gold bangles under Section 113(i) is sustained.

Applicability of Section 111(o) to duty free imported gold not exported under the 20:80 scheme - Confiscation of gold ornaments recovered (1607.820 gms) and unrecovered gold (1036.84 gms) under Section 111(o) - HELD THAT:- The Court held that Section 111(o) applies to goods exempted subject to conditions where the condition is not observed and the goods are thus prohibited or conditionally exempted; the gold imported under the liberalized 20:80 scheme, even if not exported, is at best liable to duty under the Scheme and cannot be treated as prohibited goods for confiscation under Section 111(o). Consequently, confiscation of the recovered and unrecovered gold under Section 111(o) cannot be sustained. [Paras 11]

Confiscation of the recovered and unrecovered gold under Section 111(o) is not sustained and is set aside.

Redemption on payment of fine and reduction of penalty under Section 114 - HELD THAT:- While penal consequences are justified for the appellant's intentional misdeclaration, the Court applied established principles limiting absolute confiscation of non prohibited goods without an opportunity to redeem. The Court directed redemption of the confiscated 244 bangles on payment of a fine equal to 10% of their value and reduced the penalty under Section 114 to a specified lesser amount; other penalties and confiscations founded on inapplicable provisions were set aside. [Paras 12]

Appellant permitted to redeem the 244 bangles on payment of a fine of 10% of their value; penalty under Section 114 reduced and other confiscations and penalties set aside.

Final Conclusion: The appeal is partly allowed: confiscation of the 244 gold bangles under Section 113(i) is sustained but redeemable on payment of a 10% fine and the Section 114 penalty is reduced; confiscation under Section 111(o) and other penalties are set aside.

Validity of Remand by Commissioner (Appeals) on the ground that a Tribunal judgment constituted 'additional evidence' under Rule 5 - Determination of the proper classification/categorization of imported goods, for deciding on the appropriate levy of customs duty i.e., additional duty of customs, more particularly the Integrated Goods and Service Tax (IGST) leviable under subsection (7) of Section 3 of the Customs Tariff Act, 1975 - Imported LCD monitors are classifiable for IGST @ 18% under Notification No. 01/2017-Integrated Tax (Rate) dated 28.06.2017 (serial Nos. 383C & 384 / CTH 8528 5200) Or attract IGST @ 28% under serial No. 154 (CTH 8528 5900) - binding precedents of the Tribunal and Supreme Court -

Whether the decision of the first appellate authority in remanding the matter for a fresh decision by the original authority, on the basis of the order passed by the Tribunal in an identical set of facts in the case of Philips India Limited. [2025 (7) TMI 1414 - CESTAT MUMBAI], as ‘additional evidence’, in the impugned order is sustainable or not?

Judicial judgments not 'additional evidence' under Rule 5 - Remand by Commissioner (Appeals) on the ground that a Tribunal judgment constituted 'additional evidence' under Rule 5 of the Customs (Appeals) Rules, 1982. - HELD THAT:- The Tribunal held that a judicial decision or order of the Court/Tribunal does not qualify as 'evidence' or 'additional evidence' within the meaning of Rule 5, read with the Customs Act and the definitions in the General Clauses Act and the Indian Evidence Act. Reliance on High Court authority (Sony India [2021 (8) TMI 622 - TELANGANA HIGH COURT] and Devkinandan J Gupta Metals LLP [2025 (7) TMI 1199 - BOMBAY HIGH COURT]) supported the view that documentary/evidentiary provisions refer to statements or documents arising in customs proceedings (such as Bills of Entry) and not judicial pronouncements. Consequently, treating the Tribunal's order as additional documentary evidence and remanding the matter for de novo adjudication was unsustainable. [Paras 8, 9]

Remand based on treating the Tribunal's judgment as 'additional evidence' under Rule 5 was incorrect and that part of the impugned orders is set aside.

Binding precedents of the Tribunal and Supreme Court - classification of monitors under CTH 8528 5200 attracting IGST @18% - Whether the appeals should be decided in accordance with the Tribunal's decision in Philips India Limited [2025 (7) TMI 1414 - CESTAT MUMBAI] and the subsequent upholding of that decision by the Hon'ble Supreme Court, determining the applicable IGST rate on the imported monitors. - HELD THAT: - The Tribunal found that the factual and legal controversy in the present appeals was identical to that in Philips India Limited, where the Tribunal had held classification under CTH 8528 5200 with IGST @18%, and that decision was subsequently upheld by the Supreme Court. Given the identity of issues and the finality of the Supreme Court's judgment, the Commissioner (Appeals) ought to have followed the binding precedent and decided the appeals on merits rather than remanding. As the appellants had paid IGST at the rate held appropriate by the Tribunal and upheld by the Supreme Court, no further liability arose. [Paras 10, 11, 12]

The impugned orders are set aside and the appeals are allowed in favour of the appellants, following the binding Tribunal and Supreme Court precedent that the monitors are classifiable under CTH 8528 5200 attracting IGST @18%.

Final Conclusion: The Tribunal set aside the Commissioner (Appeals) orders that had remanded the matters on the basis that a Tribunal judgment was 'additional evidence', and, applying the binding Tribunal and Supreme Court decision in Philips India Limited, allowed the appeals and held that the imported monitors are classifiable under CTH 8528 5200 attracting IGST @18%, with no further IGST payable.

Classification of goods -duty structure for product to be imported, viz., 'Alesea Reel Tracking Device' -classifiable under Heading 8526 (radio navigational aid apparatus) Or under Heading 8517 (apparatus for transmission/reception of data) Or any other heading - General Rules of Interpretation (GRI) -Principal function test for composite goods.

Principal function test for composite goods- Classification of the Alesea Reel Tracking Device - HELD THAT:- The device is a composite of GPS receiver, sensors (gyroscope, accelerometer, digital compass, thermometer) and a modem. Applying Section XVI Note 3 and GRI 1 and 3(b), the device must be classified according to the component or function imparting its essential character. The product literature and technical architecture show that the device's dominant commercial purpose is location tracking and geo-positioning dependent on the GPS radio receiver. The modem and sensors are ancillary and supportive: transmission merely relays data determined by the GPS module, and the sensors supply supplementary operational metrics. Consequently, the GPS-based radio navigational function imparts the principal character and governs classification as a radio navigational aid apparatus rather than as a general communication apparatus. [Paras 16, 17, 18, 21, 24]

The Alesea Reel Tracking Device is classified under Tariff Heading 8526, specifically subheading 8526 91 90 as other radio navigational aid apparatus.

Final Conclusion: The Authority held that the principal function of the Alesea Reel Tracking Device is GPS-based determination of geographic position and ruled that it is classifiable under tariff item 8526 91 90 (other radio navigational aid apparatus).

Willful disobedience of the interim orders - scope of interim protection​​​​​​​ -Oppression and mismanagement - status quo injunction against creation of third party interests - expeditious adjudication by the trial forum.

Interim preservation of subject matter pending adjudication - Continuation and scope of interim protection to preserve the project land and related rights until final adjudication of the Company Petition - HELD THAT:- The Court confined the controversy to the nature and scope of interim protection required to preserve the subject matter while the Company Petition under Sections 241, 242, 244 and 59 remains pending before the NCLT. Having reviewed the sequence of earlier orders and subsequent developments, the Court held that the existing interim arrangement granted by this Court must continue so as to ensure preservation of the principal asset and to prevent alteration of the property or creation of further third party interests. The Court modified the impugned NCLAT order accordingly and directed that the parties shall maintain status quo in terms of the earlier orders passed by this Court. The Court expressly left all merits open for determination by the competent forum. [Paras 22, 23, 25, 28, 29]

The interim arrangement operating pursuant to this Court's earlier orders shall continue; parties must maintain status quo and refrain from steps altering the property or creating further third party interests until disposal of the Company Petition.

Expeditious adjudication by the trial forum - HELD THAT:- Recognising that the substantive petition raising allegations of oppression and mismanagement remains pending, the Court directed the NCLT, Mumbai Bench to proceed with the matters between the parties and to make an endeavour to decide them expeditiously. The Court fixed a date for appearance and stated a preference that Company Petition No.159(MB) of 2021 be decided within two months from that appearance, while leaving all contentions on merits open for the NCLT's consideration. [Paras 30]

NCLT, Mumbai Bench directed to proceed with the pending matters and endeavour to decide the Company Petition preferably within two months from the parties' appearance; merits left open.

Final Conclusion: The Court modified the impugned NCLAT order to continue the interim protection in terms of its earlier orders, directed maintenance of status quo to preserve the project land and prevent creation of further third party interests, and instructed the NCLT, Mumbai Bench to proceed expeditiously with the Company Petition, leaving all merits to be decided by the NCLT.

Seeks a declaration that arrest by the Directorate of Enforcement under Section 19(1) of the Prevention of Money Laundering Act, 2002 is illegal and violates fundamental rights guaranteed under Articles 14, 19, 21 and 22 of the Constitution of India - seizure of unaccounted cash, diamond-studded jewellery and several documents pertaining to rental and lease arrangements - definition of "proceeds of crime" under Section 2(1)(u) - Scope of judicial review over arrest under special Acts - recording of statements under Section 50 - jurisdictional threshold for arrest under special Acts requires the arresting officer to have "reasons to believe" based on material in possession - money laundering - independence of the offence of money laundering -

Reasons to believe - scope of judicial review over arrest under special Acts - Legality of the petitioner's arrest by the ED under section 19 of the PMLA and compliance with statutory safeguards - HELD THAT:- The scope of judicial review over arrest under the special statutes is elucidated in the judgment of Radhika Agarwal [2025 (2) TMI 1162 - SUPREME COURT (LB)] wherein the Hon’ble Supreme Court has held that the power of judicial review must be exercised cautiously and only in cases of manifest arbitrariness or gross non-compliance with statutory safeguards.

The Court found that due process under the PMLA was followed prior to arrest: show cause under section 8(1) was issued, material was shared with the jurisdictional police, the petitioner was informed of the grounds of arrest and reasons to believe under section 19(1) and affixed his signature, and he was produced before the Special Court which remanded him. Relying on the principle that judicial review of arrests under special Acts is limited and to be exercised only in cases of manifest arbitrariness or gross non-compliance, the Court held that the sufficiency of the material forming the Arresting Officer's subjective satisfaction is not ordinarily amenable to detailed scrutiny at the nascent stage of investigation. The record showed tangible material - seizure of cash and jewellery, digital devices, recorded statements under section 50 and incriminating communications - which together provided a foundation for the Arresting Officer's reasons to believe. The petitioner's prior cooperation and multiple appearances did not render the arrest illegal. The Court therefore found no patent illegality or breach of statutory safeguards in the arrest process. [Paras 9, 10, 12, 14, 15]

The arrest was lawful; statutory safeguards under the PMLA were complied with and no interference with the remand orders was warranted.

Proceeds of crime - independence of the offence of money laundering - HELD THAT:- The Court held that the four FIRs concerning illegal construction (registered under sections 420, 467 and 471 IPC) are scheduled offences and that the ECIR registered on their basis and the later FIR under the PC Act are connected to the wider investigation. Under the PMLA's expansive definition, 'proceeds of crime' includes property derived or obtained directly or indirectly from criminal activity relating to a scheduled offence; thus possession, acquisition or concealment of such property constitutes the independent offence of money laundering. The recovery of disproportionate assets from the petitioner, coupled with statements recorded under section 50 and digital material, constituted sufficient material to form a reason to believe that the petitioner was prima facie involved in money laundering activity. Quantification that appears later in affidavit material does not demonstrate absence of material at the time of arrest. The petitioner's contention that prior arraignment in the earlier FIRs was necessary to attract PMLA was rejected as contrary to statutory scheme and precedent. [Paras 11, 12, 13, 14]

The predicate offences and seized assets furnished a prima facie foundation for proceedings under the PMLA; money laundering liability may be independent of prior arraignment in the FIRs.

Final Conclusion: Writ petition dismissed; the Court found no manifest arbitrariness or gross non compliance with PMLA safeguards in the arrest or remand proceedings and declined to quash the remand orders, without prejudice to parties' rights at trial or in bail proceedings.

Definition of "proceeds of crime" and "property" and the offence under Section 3 - commission of an offence under the PMLA - large scale illegal quarrying and quantified illegal extraction and sale of granite - Scope of High Court jurisdiction under Section 482 Cr.P.C. to quash a PMLA complaint.

Construction of "proceeds of crime" under the PMLA - offence of money laundering predicated on dealing with proceeds, not generation timing of predicate offence - HELD THAT:- The Court examined the complaint as a whole, the ECIR registration, the predicate FIRs and the evaluation and verification material and concluded that the averments identify properties and lease transactions said to have been used to generate and launder proceeds of scheduled offences. Relying on the statutory definitions in Sections 2(1)(u), 2(1)(v) and 3 PMLA and the principles in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)], the Court held that the complaint furnishes sufficient particulars and material to prima facie link the impugned property and lease transactions to proceeds of crime and to allege offences under Section 3; detailed investigation and evidence on these aspects are matters for trial and not for summary quashing under Section 482 Cr.P.C. [Paras 30, 33, 40, 42, 43]

The Special Court rightly took cognizance; the complaint prima facie discloses an offence under the PMLA and requires a fair trial.

Offence of money laundering predicated on dealing with proceeds, not generation timing of predicate offence - scope of High Court jurisdiction under Section 482 Cr.P.C. to quash a PMLA complaint - Acquisition of property prior to the period of predicate offences does not preclude its characterization as proceeds of crime where complaint pleads its subsequent use in laundering, and such pleaded material cannot be summarily quashed - HELD THAT:- The Court rejected the petitioner's contention that purchase of the land in 2000 (prior to the 2001 2012 predicate period) by itself negates any charge under PMLA. It observed that the complaint specifically pleads transfer/renewal of mining lease and use of the property to generate and launder proceeds (including Document No.2111/2004) and that under Sections 2(1)(u) and 2(1)(v) property acquired earlier can be involved in continuing laundering activity once used for concealment, possession, acquisition, use or projecting as untainted property. Given these pleaded facts, the matter is fit for trial and not for exercise of extraordinary quashing jurisdiction. [Paras 38, 39, 40, 41, 42]

The petitioner's argument based on prior acquisition is misplaced; the complaint's averments about subsequent lease/usage and laundering are sufficient to proceed to trial.

Final Conclusion: The petition under Section 482 Cr.P.C. is dismissed; the High Court found that the complaint and accompanying material prima facie disclose offences under the PMLA against the petitioner and that the matters raised are for trial rather than summary quashing.

Condonation of delay - medical incapacity - non-appearance of the writ petitioner - alternative remedy - Right to effective appellate hearing - interim protection from coercive action pending appeal - Levy of Service Tax based solely on the ground on which the Tax Deduction at Source (TDS).

Right to effective appellate hearing - HELD THAT:- The Court recorded that the Order-in-Appeal noted repeated opportunities for personal hearing but also examined the medical records annexed to the writ petition which prima facie indicated that the petitioner's non-appearance was caused by grievous ailments. In the interests of justice the Court directed the petitioner to file an appeal before the Appellate Tribunal under Section-86 of the Finance Act, 1994, allowed that the delay suffered on account of the petitioner's ill-health shall be considered by the Tribunal in exercising its condonation power, and granted interim protection by restraining coercive action until the appeal is taken up and disposed of. [Paras 5, 6, 7]

Final Conclusion: The writ petition is disposed by directing the petitioner to prefer an appeal to the Appellate Tribunal within six weeks, with the Tribunal to consider condonation of delay caused by medical incapacity, and by prohibiting coercive action against the petitioner until the appeal is disposed of.

Levy of service tax on supply of electricity to tenants - extended period of limitation under Section 73 - best judgment assessment - wilful suppression with intent to evade - renting of immovable property as well as providing maintenance services, electricity and power backup to their tenants/lessee.

Supply of electricity to tenants - HELD THAT:- The Tribunal held that electricity falls under the Central Excise Tariff as goods and is not a 'service' for the purposes of Service Tax; earlier decisions of higher courts and Tribunal (including the Division Bench decision in M/s Shipra Estate Ltd [2024 (6) TMI 1414 - CESTAT ALLAHABAD] & Jai Krishan Estate [2024 (6) TMI 1414 - CESTAT ALLAHABAD]) treating supply of electricity as sale of goods were applied. On the facts, electricity was supplied through sub-meters and charged on the basis of units consumed; therefore the demand of Service Tax on such electricity receipts was set aside and the related penalty was also quashed as consequential to the setting aside of the demand. [Paras 14, 15]

Demand of Service Tax on electricity receipts set aside and related penalty quashed.

Extended period of limitation requires fraud or suppression - HELD THAT: - Relying on the Tribunal's reasoning in G.D. Goenka [2023 (8) TMI 995 - CESTAT NEW DELHI], the Tribunal held that mere self-assessment and discovery of alleged irregularities in audit do not establish wilful suppression, fraud or collusion necessary to invoke the extended limitation; the primary responsibility to scrutinise returns rests with the revenue officer and absence of prior scrutiny does not permit presumption of suppression. As no evidence of the requisite misconduct was found, the extended period was inapplicable and the demands raised under it could not be sustained. [Paras 16, 17, 18, 19, 20]

Demands raised by invoking the extended period of limitation set aside and consequent penalties cancelled.

Final Conclusion: The appeal is allowed: the demand of Service Tax on electricity receipts was set aside; the invocation of the extended period of limitation for the other CENVAT/Service Tax demands was held impermissible for want of evidence of fraud or suppression, and the consequential penalties were quashed.

Scope of the transitional provisions in Section 140 - availability of refund under Section 142(3) - Entitlement to cash refund of accumulated unutilized credit of Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess.

Transition of unutilised cesses into GST regime -HELD THAT:- The Tribunal held that section 140(1) of the CGST Act permits carry forward/transition only of eligible duties and taxes and does not include Education Cess, Secondary & Higher Education Cess or Krishi Kalyan Cess; circulars and amendments clarify that transition of such cesses was not permitted; earlier decisions and statutory scheme (including Cenvat Credit Rules and Section 11B jurisprudence) show the cesses were blocked or lapsed prior to 1.7.2017; binding precedents including the Larger Bench decision in M/s. KEI Industries Ltd. [2025 (11) TMI 1641 - CESTAT NEW DELHI- (LB)], the Division Bench of the Madras High Court in Sutherland [2020 (10) TMI 804 - MADRAS HIGH COURT] and the Supreme Court in UOI & Ors. vs. VKC Footsteps India Pvt. Ltd [2021 (9) TMI 626 - SUPREME COURT] establish that no refund or transition is permissible for these cesses and that refund claims filed after stipulated dates would be time-barred. Reliance on Slovak India [2006 (7) TMI 9 - KARNATAKA HIGH COURT] was held not to assist the appellant as it has been distinguished or doubted by later benches. Consequently, in absence of any enabling provision, refund or transition of the unutilised EC, SHEC and KKC cannot be entertained. [Paras 8, 9, 10, 11, 13]

Transition or cash refund of the accumulated Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess unutilised as on 30.6.2017 is not permitted; the claim is rejected.

Final Conclusion: The appeals are dismissed; the Tribunal upheld the rejection of refund and the denial of transition of accumulated EC, SHEC and KKC balances lying unutilised as on 30.6.2017.

Denial of Refund of Cenvat credit availed on tax paid under Voluntary Compliance Encouragement Scheme, 2013 (VCES) - admissibility of Cenvat credit governed by the Cenvat Credit Rules - providing services concerning Information Technology Software taxable under section 65 (105) (zzzze) of the Finance Act, 1994 to its clients outside India.

Refund of Cenvat credit availed on tax paid under VCES - HELD THAT:- The Tribunal held that the question of refund concerned the Cenvat credit legally admissible under the Cenvat Credit Rules and not the tax paid under the VCES Scheme itself. The CBEC FAQs (Circular Nos. 169/4/2013-ST and 170/5/2013-ST) clarify that admissibility of Cenvat credit is to be determined under the Cenvat Credit Rules and that Rule 6(2) of the VCES Rules only prohibits utilization of Cenvat credit for payment under the scheme. Applying Rule 5 of the Cenvat Credit Rules, and following the Tribunal's earlier decisions (including the appellant's own earlier order and the decision in M/s. Oxygen Bio Research P Ltd.[2018 (9) TMI 175 - CESTAT AHMEDABAD]), the denial of refund because the underlying tax was paid under VCES was held not to be applicable where the credit itself is legally admissible and refundable to an exporter. [Paras 5, 6, 7]

Denial of refund of the Cenvat credit of Rs. 10,87,454/- was set aside and the appellant was directed to be granted the refund with applicable interest.

Final Conclusion: The Tribunal allowed the appeal, holding that Cenvat credit attributable to service tax paid under VCES is refundable to the exporter under the Cenvat Credit Rules, set aside the Commissioner (Appeals) denial, and directed payment of the refund with interest.

Port Services -Service tax under the category of ‘Business Auxiliary Service’ (BAS) and along with penalty under section 78 - Concessionaire agreement and the nature of port dues collection and application - double taxation - agency/commission-agent characterization - Whether the appellants are acting as commission agent on behalf of the Government of Andhra Pradesh (GOAP) and are getting payment by way of retention of 15% of port due charges and therefore, their activity is required to be classified under BAS and subject to service tax both pre and post July, 2012.

Same service cannot be taxed twice - Whether retention of 15% out of port dues by the concessionaire amounts to consideration for taxable services under Business Auxiliary Service/Port Services. - HELD THAT:- The Tribunal found that the 15% retained by the appellant was part of port dues, a statutory levy collected from port users and credited to a dedicated fund to meet agreed maintenance and improvement obligations under the concession agreement. The concessionaire was granted exclusive rights and the agreement itself provided for the appellant to undertake and fund maintenance from the port dues fund; no additional amount was paid by the Government of Andhra Pradesh to the appellant as consideration. The CA certificate and admitted position showed that port dues had already borne service tax. In this factual matrix there was no basis to treat the retention as a commission or separate consideration for services rendered on behalf of the GOAP, and taxing the retained amount would amount to double taxation of the same service. Having decided the issue on merits, the Tribunal did not examine limitation. [Paras 8, 9]

The retention of 15% of port dues is not consideration for BAS/Port Services and the service tax demand on that amount is unsustainable.

Final Conclusion: The service-tax demands in the impugned orders insofar as they relate to the 15% retention out of port dues are set aside on merits and the appeals are allowed.

Validity of notifications being Notification No. 04/2025-Central Excise (first notification), Notification No. 04/2025-Central Excise (N.T.) (second notification) and Notification No. 05/2025-Central Excise (N.T.) (called “Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection Duty) Rules hereinafter referred to as the 2026 Rules) - ultra vires Section 3A of the Central Excise Act, 1944 and the Constitution of India - Capacity-based excise liability under Section 3A - deeming fiction - determination of annual production capacity by relevant factors -reasonableness of mechanistic capacity formulas - regulatory compliance measures including CCTV.

Capacity-based excise liability under Section 3A - HELD THAT:- The Court held that Section 3A vests power in the Central Government to notify goods for capacity-based taxation and to frame rules specifying factors relevant to production and the manner of determining annual capacity. Rule 4 of the 2026 Rules, by enumerating number of packing machines and their maximum capacity, falls within the scope of Section 3A(2)(b)(i) and (ii). Rule 5, which prescribes computation based on number and speed of packing machines and retail sale price, provides the manner of determination contemplated by Section 3A(2)(b)(ii). The Court rejected the submission that these rules are prima facie beyond legislative mandate, observing that the statutory scheme permits deeming annual capacity and that the 2026 Rules are prima facie within that legislative authority (paras 25-33). [Paras 28, 30, 31, 32, 33]

Notifications and the 2026 Rules are prima facie within the legislative mandate of Section 3A and not manifestly ultra vires on the ground that they determine capacity by the factors and manner prescribed.

Reasonableness of mechanistic capacity formulas - HELD THAT:- The Court considered the contention that Rule 5 prescribes arbitrary maximum figures without accounting for working hours, shifts or man-days. It held that the correct test is not actual production but conformity with the legislative objective to curb tax evasion under Section 3A. The petitioners did not demonstrate that the figures were impossible; conditions appearing harsh do not render the rule irrational when justified by revenue protection. Consequently, the prima facie view was that the mechanistic formula does not invalidate the Rules (paras 31-33). [Paras 31, 32, 33]

The mechanistic capacity formula in Rule 5 is not prima facie arbitrary or irrational so as to warrant interim relief.

Regulatory compliance measures including CCTV - Legality of mandating CCTV installation under Rule 16 as a compliance and anti-evasion measure - HELD THAT:- The Court found no unreasonableness in mandating CCTV installation, observing that such a requirement aids enforcement and compliance in the context of Section 3A's objective to curb tax evasion. The Court treated CCTV mandate as a permissible regulatory measure within the impugned Rules (para 36). [Paras 36]

Requirement of CCTV installation under the Rules is prima facie reasonable and permissible.

Capacity-based duty rate specification - HELD THAT:- The Court observed that Section 3A(3) authorises levying duty at a rate on the unit of production or other specified production factor, and held that the second notification prescribing rates of duty relates to the factor relevant to production and is prima facie consistent with that provision (para 37). [Paras 37]

The second notification prescribing duty rates is prima facie consistent with Section 3A(3).

Interim relief and prima facie assessment - Appropriateness of granting interim relief restraining enforcement of the impugned notifications and Rules - HELD THAT: - After evaluating the statutory scheme, the Rules' alignment with Section 3A, and authorities cited, the Court concluded on a prima facie basis that the petitioners had not established that the notifications or Rules were beyond legislative power or manifestly arbitrary. The Court therefore declined to grant the interim injunction sought by the petitioners (paras 34-42). [Paras 38, 39, 40, 41, 42]

No interim order granted; respondents entitled to continue implementation subject to final adjudication.

Final Conclusion: On a prima facie examination the impugned notifications and the 2026 Rules fall within the legislative competence of Section 3A of the Central Excise Act, 1944 and are not manifestly arbitrary; the petition for interim relief is refused and the respondents may file affidavits in opposition as directed.

Demand for recovery of modvat/cenvat credit availed on GP sheets alongwith interest and penalty - burden of proof for clandestine clearance - production of sufficient initial evidence - extended period of limitation - contemporaneous documents.

CENVAT credit on GP sheets -HELD THAT:- The Tribunal held that the Revenue failed to produce evidence identifying buyers of allegedly cleared GP sheets or documentary proof that GP sheets procured were clandestinely sold and replaced by HR/CR sheets. Reliance on opinions that GP sheets are not normally used in manufacture did not establish inevitable non-use by the appellants. In the absence of primary evidence of diversion or market disposal, the departmental case did not raise a presumption sufficient to shift the onus to the appellants, and credit could not be denied merely on surmise or circumstantial reasoning. [Paras 7]

Demand for CENVAT credit denial sustained by the lower authorities was not supported by evidence and was therefore set aside.

Burden of proof for clandestine clearance - HELD THAT:- Adopting the reasoning reproduced from the Tribunal's decision in Silence Auto, the Court affirmed that while the legal onus of proof remains, the evidentiary onus shifts only after the Revenue adduces sufficient evidence to give rise to a reasonable inference of clandestine clearance. Here, the Revenue did not produce evidence of buyers or alternate procurement sources for HR/CR sheets; therefore the evidence was insufficient to shift the burden and the appellants' explanations remained unrebutted. [Paras 7]

Revenue did not discharge the initial evidentiary burden; therefore the onus did not shift to the appellants and departmental allegations failed.

Demand barred by limitation - HELD THAT:- The Tribunal observed that the appellants had regularly reflected the credit in statutory records, filed returns and had their accounts defaced by jurisdictional authorities without objection; earlier assessments did not indicate concealment or suppression. On these facts, invoking the extended period was not justified and the demand was time-barred. [Paras 7]

The extended period of limitation could not be invoked and the demand was held to be barred by limitation.

Final Conclusion: Following precedents arising from the same investigation, the Tribunal concluded that the Revenue failed to produce sufficient evidence of clandestine clearance and could not invoke extended limitation; the impugned orders were set aside and the appeals allowed with consequential relief.

Criminal conspiracy under Section 120B of the IPC - Challenged the order of Acquittal of the second accused (A2) on charge of demanding and accepting illegal gratification under the Prevention of Corruption Act, 1988 - phenolphthalein test - relevance of conduct of accused -corroboration by independent witnesses​​​​​​​ - hostile witness credibility - testimony of trap and independent witnesses may corroborate trap proceedings - admissibility of electronic evidence.

Criminal conspiracy under Section 120B of the IPC - HELD THAT:- The Court accepted the High Court's finding that the prosecution failed to prove a prior meeting of minds between the two accused. There was no evidence that A1 ever made a demand or that A2 made the alleged demand in A1's presence; the charge-sheet alleged a conspiracy but the proof as to A1's role and any common intention was absent. Consequently, the conspiracy allegation could not be sustained. [Paras 9, 30]

The conspiracy under Section 120B is not proved and cannot be sustained against the accused.

Conviction under Section 7 Prevention of Corruption Act for demand and acceptance of bribe sustained - testimony of trap and independent witnesses may corroborate trap proceedings - statement of co-accused insufficient to establish culpability of other accused - HELD THAT:- The Court found that, notwithstanding the failure to establish conspiracy or A1's culpability, the evidence proved demand and acceptance by A2. PW1's testimony of the demand on the crucial dates was corroborated by the Trap Laying Officer (PW22) and by the independent witnesses (PW10 and PW18) as to pre-trap proceedings, recovery of the powdered envelope containing the marked notes and the hand/garment wash turning pink. Electronic voice recordings were excluded, but the Court relied on the contemporaneous pre-trap documentation (HOM), identification of marked notes and the conduct at the trap as sufficient corroboration. The Court also held that a statement attributing the demand to A1 by A2 (or by one accused against another) cannot be the basis to convict A1 in absence of independent proof. [Paras 6, 18, 22, 29, 30]

Acquittal of A2 is set aside; conviction under Section 7 of the PC Act is restored against A2. Sentence reduced by the Court to one year rigorous imprisonment with a fine as modified by the Court, and related default sentence restored.

Final Conclusion: The appeal is allowed in part: the High Court's acquittal on the conspiracy charge is upheld as to its rationale that no conspiracy was proved, but the acquittal of A2 on the substantive offence under Section 7 of the PC Act is set aside and his conviction and a modified sentence are restored; A1's culpability remains unproven.

Entitlement to be released on bail - illegal arrest - mala fide - Misuse of criminal process by successive FIRs to thwart bail - non-cooperation of the petitioners with the investigation - exercise of Article 32 jurisdiction to protect fundamental rights - restraining coercive action where arrest not yet effected subject to cooperation - anticipatory bail - offences punishable under Sections 420, 467, 468, 471, 409, 107, 109 of the Indian Penal Code, 1860 (“IPC”) and Sections 7(c), 12/13(2) read with Section 13(1)(a) of the Prevention of Corruption Act, 1988 (“PC Act”).

Misuse of criminal process by successive FIRs to thwart bail - HELD THAT: - The Court found that the subsequent FIRs registered after this Court granted interim bail prima facie appeared to have been deployed to ensure that Petitioner No.1 remained in custody. The Court noted the timing of filing and of the State's counter-affidavit, observed remands granted after bail was ordered, and treated repeated registration and custodial remands as cumulative conduct indicative of an attempt to frustrate the bail order. Applying Article 32 to vindicate the petitioners' fundamental rights, the Court concluded that Petitioner No.1 was entitled to immediate release on bail in the two FIRs registered on 24.11.2025 and 26.11.2025, while leaving untouched the anticipatory bail previously granted in FIR No.9/2025. [Paras 11, 12, 13]

Petitioner No.1 is released on bail in FIR No.20/2025 and FIR No.458/2025; no order is passed in relation to anticipatory bail in FIR No.9/2025.

Restraining coercive action where arrest not yet effected subject to cooperation - HELD THAT:- The Court refrained from permitting any coercive action against Petitioner No.2 while noting that she had not been arrested. The protection is conditional: no coercive steps shall be taken provided Petitioner No.2 cooperates with the investigation. This restraint is protective in nature and linked to the Court's determination on abuse of process and protection of fundamental rights. [Paras 13]

No coercive steps shall be taken against Petitioner No.2, subject to her cooperation with the investigation.

Final Conclusion: The writ petition under Article 32 is allowed: Petitioner No.1 is directed to be released on bail in the FIRs registered on 24.11.2025 and 26.11.2025; no coercive action shall be taken against Petitioner No.2 provided she cooperates with the investigation, and the anticipatory bail in FIR No.9/2025 is left undisturbed.

Contempt jurisdiction -framing of charges - Propriety of invoking contempt jurisdiction where an unchallenged administrative order exists - requirement of clear and categorical judicial directions for compliance - prohibition on remanding matters for reconsideration when executive perspective is firmly evident.

Propriety of invoking contempt jurisdiction where an unchallenged administrative order exists - Contempt proceedings should not proceed when a fresh, appealable administrative order exists and has not been challenged without first providing the opportunity to challenge that order. - HELD THAT: - The Court observed that respondents had not challenged the detailed government order dated 09.05.2025 and that initiation or continuation of contempt proceedings in such circumstances was inappropriate. The Court recorded the recent tendency to invoke contempt jurisdiction for quick relief even where appealable orders exist and held that the respondents must be permitted to challenge the administrative decision before the High Court proceeds with contempt determination. Consequently the Supreme Court permitted filing of a writ against the 09.05.2025 order and directed that the writ petition be taken up along with the contempt proceedings so the High Court can first decide the writ issue. The reasoning appears at paragraphs 16-18. [Paras 16, 17, 18]

Respondents are permitted to file a writ petition challenging the order dated 09.05.2025; the High Court shall take up that writ petition first and hear it along with the pending contempt proceedings.

Requirement of clear and categorical judicial directions for compliance - prohibition on remanding matters for reconsideration when executive perspective is firmly evident - High Courts must issue clear, categorical directions specifying existence of rights and the manner of compliance; where the executive's position is manifest, the High Court should not remit the matter back for further reconsideration. - HELD THAT: - The Court criticised the practice of issuing vague "consider" or remand directions that produce episodic and inconclusive litigation. It held that courts must articulate directions clearly-identifying the right, its violation and the exact manner of compliance-so the executive has no discretion except to comply, appeal or face contempt. In the present case the Supreme Court expressly directed that the High Court, when deciding the permitted writ, shall not remand the matter back to the authorities for reconsideration because the government's perspective is clearly evident; if satisfied on merits the High Court must issue clear directions for compliance, otherwise it may dismiss with reasons. These findings and directions are recorded at paragraphs 14-18 and implemented in the orders set out at paragraph 18 (a)-(e). [Paras 14, 15, 16, 18]

The High Court must frame its decision with clear and categorical directions specifying compliance; it shall not remit the matter back to the authorities for reconsideration and must either direct compliance or dismiss the writ with clear reasons.

Final Conclusion: The appeal is disposed by permitting the respondents to challenge the administrative order dated 09.05.2025 by filing a writ; the High Court is directed to first decide that writ (to be heard with the pending contempt proceedings), to avoid remanding the matter for fresh reconsideration, and to give clear, categorical directions or dismiss with reasons.

International exhaustion of rights - importation, refurbishment, debranding and resale of end-of-life HDDs infringement under Section 29 - registered trade marks Or amounted to passing off Or reverse passing off - noscitur a sociis principle - Seeking decrees of permanent injunction restraining them from altering, impairing, repacking, rebranding or performing any similar activity on the HDDs originally manufactured and sold by the appellants, as would amount to infringement or passing off - Whether the respondents have infringed the registered trade marks of the appellants, or are guilty of passing off, or reverse passing off.

Principle of Noscitur a sociis - The noscitur a sociis principle is as old as the hills, and is a hallowed principle of interpretation of statutes, predicated on the principle that words, in a statue, take colour from the company they keep. As far back as in Angus Robertson v. George Day, referenced in M.K. Ranganathan v. Govt. of Madras [1955 (4) TMI 20 - SUPREME COURT] and Ahmedabad Primary Private Teachers Assn v. Administrative Officer [2004 (1) TMI 639 - SUPREME COURT] the Privy Council observed that it was “a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them”. A subset of the noscitur a sociis principle is the ejusdem generis doctrine, which applies where there are a number of expressions used together, which may be said to constitute a genus, in which case each of the said expressions is to be so interpreted as to be part of the genus. The ejusdem generis doctrine has, however, no application in a case in which there are only two words keeping company with each other as, just as one swallow cannot make a summer, one word cannot make a genus. In such a case, therefore, it is the noscitur a sociis principle which applies.

The application of the principle is, of course, subject to the statute itself not indicating to the contrary. Here, the opening words of Section 30(4) would eminently support interpreting the word “changed”, as used later in the provision, noscitur a sociis with the word “impaired”.

Reverse passing off not actionable under Indian trade mark law - No cause of action for "reverse passing off" is available under the Trade Marks Act in India. - HELD THAT:- In Kaviraj Pt Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories [1964 (10) TMI 83 - SUPREME COURT] the Supreme Court observed that “an action for passing off is a Common Law remedy being in substance an action for deceit, that is, a passing off by a person of his own goods as those of another”. Similarly, in Satyam Infoway Ltd v. Siffynet Solutions (P) Ltd. [2004 (5) TMI 529 - SUPREME COURT] the Supreme Court held that “an action for passing off, as the phrase ‘passing off’ itself suggests, is to restrain the defendant from passing off its goods or services to the public as that of the plaintiff’s”.

The Court held that Section 27(2), read with Sections 134 and 135, and settled Supreme Court authorities, confine the saved right to actions against a defendant who passes off his goods or services as those of the plaintiff. The statutory scheme and authorities treat passing off as an action by a proprietor against a user who misrepresents his own goods as those of the plaintiff; they do not support a cause of action against a person for representing another's goods as his own. Consequently, claims framed as "reverse passing off" under the Trade Marks Act cannot sustain relief in trademark proceedings. [Paras 91, 92, 93, 94, 148]

The appellants' claim of "reverse passing off" under the Trade Marks Act is rejected as not actionable.

Passing off requires misrepresentation, goodwill and damage - HELD THAT: - While “passing off” envisages confusion in the mind of the consumer, when he sees the goods, or the mark, of the defendant, “reverse passing off” envisages exactly the opposite, i.e., clarity in the mind of the consumer, regarding the origin of the goods, despite the defendant seeking to mask it. The likelihood of confusion, for the purposes of passing off, must exist at the initial interest stage, and we see no reason why this principle should not apply to the likelihood of clarity, in the mind of the consumer, in a case of reverse passing off.

There is nothing to indicate that the shapes of the colours of the HDDs were unique to the appellants, and were not used by anyone else in the industry, nor is there enough material for us to come to a prima facie conclusion that an average consumer would be able to identify the HDDs as originating from the appellants solely on that basis. The onus, to make out such a case, was undeniably on the appellants and, to our mind, the onus has not been satisfactorily discharged.

There is yet another reason why the appellants cannot, prima facie, seek an injunction against the respondents on the ground of “passing off” or “reverse passing off”. “Passing off” involves not merely an aspect of misrepresentation, but also misappropriation of the goodwill of the plaintiff, resulting in damage to the plaintiff. The three ingredients of passing off, it is trite, are goodwill, misrepresentation and damage[Refer S. Syed Mohideen v. P. Sulochana Bai [2015 (3) TMI 1197 - SUPREME COURT] Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd. [[2017 (12) TMI 1886 - SUPREME COURT] Cadila Health Care v. Cadila Pharmaceuticals Ltd. [2001 (3) TMI 928 - SUPREME COURT] Brihan Karan Sugar Syndicate [2023 (9) TMI 707 - SUPREME COURT]. If these are the ingredients of passing off, we see no reason why they would also not be the ingredients of reverse passing off.

Applying the established threefold test (goodwill, misrepresentation and damage or likelihood of damage), the Court found no prima facie misappropriation of appellants' goodwill nor material to show that consumers, at the initial interest stage, would identify the refurbished HDDs as originating from the appellants. Alleged identification by technical tools (e.g., Crystal Disk Info) does not establish initial-interest clarity and is evidentiary, requiring trial. Absent evidence of goodwill misappropriation or probable damage, passing off is not made out. [Paras 106, 107, 108, 109, 148]

There is no prima facie case of passing off; the appellant's passing-off claims are rejected.

Infringement under Section 29 requires use of the registered trade mark in the course of trade - Section 30(3) is a limitation on infringement; Section 30(4) excepts the limitation where legitimate reasons to oppose further dealings exist - HELD THAT:- It is nobody’s case that the respondents’ trade marks are either identical with, or deceptively similar to, the appellants’ registered trade marks. Sale of goods bearing a registered trademark, after removing the trademark, cannot constitute “infringement” under any of the sub-sections of Section 29. Without proceeding sub-section by sub-section, a bare reading of Section 29 reveals that infringement, within the meaning of the Section, takes place only where the infringer uses the allegedly infringed registered trademark, or a trademark which is deceptively similar thereto, in the course of trade. “Use of a registered trademark” is defined in Section 29(6). It includes, in clause (b), offering or exposing the goods, bearing the registered trade mark, for sale, but does not include purchase of goods bearing a registered trademark. Before selling the HDDs, the respondents remove the appellants’ trademarks. They do not, therefore, use either the appellants’ registered trademarks or any mark which is deceptively similar thereto, in the course of trade. They do not, therefore, commit any act of infringement, as defined in Section 29 of the Act.

The Court reiterated that infringement is governed by Section 29 and requires the defendant's use of the registered mark (or a deceptively similar mark) in the course of trade. Here, respondents effaced the appellants' marks before selling refurbished HDDs and did not use identical or deceptively similar marks; therefore Section 29 is not triggered and there is no infringement. Even assuming Section 30(3) needed consideration, the Court found the goods were lawfully acquired and imports were not shown to be unlawful, so the conditions of Section 30(3) are satisfied. Section 30(4) applies only where legitimate reasons exist to oppose further dealings-in particular where the goods are "changed or impaired" in a manner that harms the proprietor's goodwill-and must be read with "impaired"; the acts pleaded (debranding, reformatting, relabelling and loading new software) did not prima facie constitute such change or impairment nor show legitimate reasons to oppose further dealings. Accordingly, no prima facie infringement is made out.

No prima facie infringement is established; Section 30(3) protections are satisfied on the material before the Court and Section 30(4) does not apply to bar that protection.

Final Conclusion: On the interlocutory record, the Court found no actionable "reverse passing off", no prima facie passing off, and no prima facie infringement of the registered marks; the appellants' interlocutory reliefs therefore fail and the appeals are dismissed.