TaxTMI Updates e-Newsletter
Mar 14,2026

Condonation of delay - Non-suiting the petitioner - Maintainability of a writ petition - barred by laches - HELD THAT:- We find no good ground and reason to interfere with the impugned judgment/order passed [2025 (12) TMI 1804 - DELHI HIGH COURT] by the High Court, non-suiting the petitioner on the ground of delay.

The special leave petition is, accordingly, dismissed.

Entitlement of Anticipatory bail discretion - allegations of possession of stolen vehicle scrap and use of forged documents - Cooperation with investigation as a factor in bail.

Anticipatory bail discretion - HELD THAT:- The Court exercised its discretionary power to grant anticipatory bail to the appellant in respect of the FIR registered for offences under the IPC and the GST Act. The decision was founded on the appellant's voluntary appearance before and cooperation with the Investigating Officer and the fact that co-accused had already been enlarged on bail. The Court refrained from adjudicating contentious factual questions regarding alleged forged documents, observing that such disputes must be resolved during trial and that expressing any view at this stage would risk prejudicing the parties. The bail was therefore granted subject to such terms and conditions as the jurisdictional Investigating Officer deems fit, including attendance at trial hearings and continued cooperation with investigation. [Paras 5, 6]

Appellant entitled to anticipatory bail; to be enlarged on such terms as the Investigating Officer deems fit, including appearance at trial and cooperation with investigation.

Final Conclusion: The appeal is allowed and anticipatory bail granted to the appellant on terms to be imposed by the jurisdictional Investigating Officer; factual disputes about forged documents were left to trial and not decided by the Court.

Seeking Extension of time to file statutory appeal - right to personal hearing - admissibility of additional documents.

Extension of time to file statutory appeal - appellate authority to decide appeal on merits without being influenced by prior observations - Grant of time to the petitioner to prefer an appropriate statutory appeal and directions for expedition and merit-based disposal by the appellate authority. - HELD THAT: - The Court directed that the petitioner be granted six weeks to prefer an appropriate appeal against the final order of assessment. The appellate authority was directed to take up any such appeal filed within that period for hearing expeditiously and to decide it in accordance with law on its own merits, without being influenced by observations made by the Single Judge in the writ proceedings. The petitioner is permitted to raise all contentions available in law, and the appellate authority must consider the matters raised and decide after affording opportunity of hearing. [Paras 3, 4, 5, 6, 7]

Final Conclusion: The Special Leave Petition is disposed of by granting the petitioner six weeks to file the statutory appeal, which the appellate authority shall hear expeditiously and decide on merits without being influenced by earlier judicial observations.

Retrospective cancellation of registration - availed and utilized ITC from cancelled suppliers - non issuance of show cause notice - supply of supporting documents - non speaking order - Writ jurisdiction despite availability of alternate remedy in exceptional cases.

Requirement of notice and material for retrospective cancellation of GST registration - HELD THAT:- The Court held that although Section 29 of the CGST Act permits retrospective cancellation in specified contingencies, the power cannot be exercised mechanically. A show cause notice must put the assessee on notice of the action proposed, including any proposal for retrospective cancellation, and must either supply or identify the material relied upon. An order cancelling registration with retrospective effect must disclose the reasons and demonstrate application of mind; an order that merely reproduces the show cause notice without referring to material or stating reasons is non-speaking and unsustainable. Applying these principles to the facts, the impugned cancellation order was found to dispense with the required notice and reasons and to show non-application of mind, and therefore could not be sustained. [Paras 10, 11, 12, 13]

Impugned cancellation order set aside; authorities may proceed afresh to recover dues or cancel retrospectively only after serving proper notice, supplying material and affording hearing, and issuing a reasoned order.

Writ jurisdiction despite availability of alternate remedy in exceptional cases - HELD THAT:- In case of M/s Bansal Casting Vs. Union of India and others [2026 (3) TMI 573 - PUNJAB AND HARYANA HIGH COURT], to the effect that matter like the present would fall within the exceptions as carved out by Hon’ble the Supreme Court in M/s Godrej Sara Lee Ltd. Vs. The Excise and Taxation Officer-cum-Assessing Authority and other [2023 (2) TMI 64 - SUPREME COURT] and Whirlpool Corporation Vs. Registrar of Trade Marks [1998 (10) TMI 510 - SUPREME COURT], wherein this Court would exercise jurisdiction to interfere in matters despite availability of an alternate remedy.

The Court applied established exceptions permitting interference by writ jurisdiction even when alternate remedies exist, relying on precedent that circumstances like absence of fair notice, failure to supply supporting documents and issuance of a non-speaking order justify such intervention. Consequently, the objection as to alternate remedy was rejected and the petition entertained on merits. [Paras 14]

Objection based on availability of alternate remedy rejected; writ petition was maintainable and entertained.

Final Conclusion: The writ petition was allowed: the cancellation order was set aside for failure to propose retrospective effect in the show cause notice, non-supply of supporting material and absence of reasons reflecting application of mind; authorities are permitted to take lawful steps thereafter, including fresh retrospective cancellation only after proper notice, supply of material and an opportunity of hearing.

Retrospective cancellation of GST registration - no proposal in the show cause notice - supply of supporting documents - non speaking order - opportunity of hearing - natural justice - Whether registration of petitioners could have been cancelled with retrospective effect, even though, it is not so proposed in the show cause notice(s) (Form GST REG-17) issued to petitioners.

Retrospective cancellation of GST registration - HELD THAT: - The Court held that although the statute confers power to cancel registration retrospectively, such power cannot be exercised mechanically. A show cause notice must put the assessee on notice of the specific proposal sought to be taken (including any intention to cancel retrospectively) and disclose or supply the material on which the authority relies. An order under the statutory power to cancel with retrospective effect must record reasons and evidence of application of mind; a cryptic or non speaking order that relies on grounds not disclosed in the show cause notice and without reference to supporting material is unsustainable. In the present case there was no proposal for retrospective cancellation in the show cause notice, no supporting documents were supplied to the petitioner, and the impugned order does not reflect consideration of the material or reasons for retrospective cancellation. For these reasons the cancellation order was set aside, while leaving open the authority's power to proceed afresh after serving proper notice and affording an opportunity of hearing in accordance with law. [Paras 9, 10, 11, 13, 15]

Impugned cancellation order set aside; respondent authorities may take fresh steps including retrospective cancellation only after serving proper notice disclosing the proposal and material relied upon and affording opportunity of hearing.

Jurisdiction to entertain writ despite alternative remedy - Whether the writ jurisdiction could be exercised despite availability of an alternate remedy. - HELD THAT: - The Court rejected the respondents' objection about availability of alternate remedy. It followed authorities recognizing exceptions where the High Court in case of M/s Bansal Casting Vs. Union of India and others [2026 (3) TMI 573 - PUNJAB AND HARYANA HIGH COURT], to the effect that matter like the present would fall within the exceptions as carved out by Hon’ble the Supreme Court in M/s Godrej Sara Lee Ltd. [2023 (2) TMI 64 - SUPREME COURT] and Whirlpool Corporation [1998 (10) TMI 510 - SUPREME COURT] wherein this Court would exercise jurisdiction to interfere in matters despite availability of an alternate remedy.

Objection based on availability of alternate remedy repelled; writ jurisdiction rightly exercised in the circumstances.

Final Conclusion: The petition is allowed; the cancellation of registration is set aside for failure to disclose a proposal for retrospective cancellation, non supply of supporting material and for being non speaking, with liberty to the authorities to proceed afresh after serving proper notice and affording opportunity of hearing in accordance with law.

Validity of Orders issued in the name of a non-existent entity - jurisdictional defect - deemed cancellation of GST registration upon amalgamation - transferability of demands to successor's GST registration - non-applicability of limitation in view of section 75(3) CGST Act.

Orders issued in the name of a non-existent entity - Effect of amalgamation on GST registration and validity of orders issued in the name of the erstwhile (now non existent) entity; administrative steps to be taken by Revenue. - HELD THAT:- The Court held that where a company having a GST number has ceased to exist on account of amalgamation with another company, the GST registration of the erstwhile company is to be treated as cancelled from the appointed/merger effective date and an order cannot validly be framed in the name of a non-existent entity. Upon receipt of information that a company has merged and ceased to exist, the Department must treat the earlier GST number as deemed cancelled and make the new/merged entity's GST registration operational for posting orders. Any demands relating to the earlier GST number may be uploaded against the new GST number and dealt with by the successor in accordance with law. The Court directed the Revenue to upload the impugned orders on the petitioner's GST number within one month and declared the earlier orders on the non existent entity redundant upon such uploading (paras 8-12, 15). [Paras 9, 10, 11, 12, 15]

The GST registration of the erstwhile (merged) entity is deemed cancelled from the merger effective date; Revenue to upload the adjudication orders on the petitioner's GST number within one month and earlier orders shall be treated as redundant; demands, if any, may be uploaded on the new GST number.

Non-applicability of limitation in view of section 75(3) CGST Act - HELD THAT:- The Court recorded that the question of limitation does not arise in the present circumstances in view of Section 75(3) of the CGST Act and therefore neither party is precluded by limitation from raising or contesting claims arising from the orders that are to be uploaded on the new GST registration (para 14).

Limitation will not operate against either party in view of Section 75(3) CGST Act.

Final Conclusion: The writ petitions were disposed by directing the Revenue to treat the erstwhile entity's GST registration as deemed cancelled from the merger effective date, to upload the impugned orders on the petitioner's GST number within one month (making earlier orders redundant), and by holding that limitation does not arise in view of Section 75(3) of the CGST Act; the petitioner remains free to pursue available remedies.

Reopening of assessment - depreciation claimed in respect of an asset, which was owned by some other entity - whether respondent is owner of drilling ship ‘Bellford Dolphin’?

As decided by HC [2025 (9) TMI 586 - UTTARAKHAND HIGH COURT] whether respondent has wrongly claimed depreciation in respect of an asset, which was owned by some other entity. The notice under Section 148 was also issued to respondent to ascertain the fact, whether respondent is owner of drilling ship ‘Bellford Dolphin’. Although C.I.T. (A) and I.T.A.T. had decided the appeals in which quantum of depreciation allowable to the respondent was in issue, however, the question whether respondent is entitled for depreciation or whether he is owner of the drilling ship, was not considered at all. The question of ownership of drilling ship is a question of fact which could best have been decided by the authorities under Income Tax Act, therefore, we are of the considered opinion that interference made by learned Single Judge in the matter was uncalled for.

HELD THAT:- Having heard the learned counsel appearing for the petitioner(s) and having gone through the materials on record, we find no good ground to interfere with the impugned order passed by the High Court.

Special Leave Petition is, accordingly, dismissed.

Finality of Settlement Commission order - jurisdiction of Income Tax Settlement Commission - full and true disclosure under Section 245C - procedure under Section 245D - conclusive nature of settlement order under Section 245I - power of Settlement Commission to rectify or declare settlement void for fraud or misrepresentation - judicial review of Settlement Commission orders on legality and procedural compliance

As decided by HC [2016 (9) TMI 555 - ORISSA HIGH COURT]Income Tax Settlement Commission complied with the statutory procedure, its order under Section 245D(4) attained finality, and writ relief under Articles 226/227 to reopen the settlement was not maintainable; the petition was dismissed.

HELD THAT:- Respondent No. 1 is since deceased and is represented by his legal representatives. On perusal of the impugned order, we do not find any reason to interfere with the same

Special Leave Petition is dismissed.

Validity of reassessment order passed u/s 148A(d)- scope of reopening proceedings u/s 147 v/s proceedings u/s 148A - whether assessee is entitled to cross-examine a person whose statement u/s 132(4) is relied upon by the AO.

HELD THAT: - The scope of reopening proceedings under Section 147 of the Income Tax Act, 1961 is different from that of proceedings under Section 148A. While a proceeding under Section 147 involves a final and conclusive determination with regard to escapement of income, the proceeding under Section 148A is only for the purpose of arriving at a prima facie satisfaction to initiate proceedings under Section 147 of the Income Tax Act, 1961.

As at the stage of passing an order under Section 148A, cross-examination of a person whose statement has been relied upon is not required. Such cross-examination would become necessary only at the stage when an order under Section 147 of the Income Tax Act, 1961 is to be passed and the statement is relied upon by the Assessing Officer.

Merely because the Assessing Officer asked Amit Kumar Agarwal to appear before him for the purpose of cross-examination, it cannot be said that he was under any obligation under Section 148A of the Income Tax Act, 1961 to complete the process of cross-examination.

Final Conclusion: The writ petition challenging the order under Section 148A(d) was dismissed; the High Court held that Section 148A requires only a prima facie satisfaction to reopen and does not mandate cross-examination of a witness at that stage, while directing that the petitioner be afforded opportunity for cross-examination in the further course of proceedings.

Condonation of delay in filing return of income u/s 119(2)(b) -Delay and laches - discretionary jurisdiction under Article 226 - petitioner vehemently argues that impugned order should be quashed because respondent no. 1 failed to appreciate that delay was caused solely due to incorrect and arbitrary order passed by respondent no. 2, declaring the original return to be defective and invalid.

HELD THAT: - The High Court found that the petition, filed in February 2026, challenged an order but provided no explanation for the delay in approaching the court. While there is no fixed limitation for filing a writ, the Court must be approached within a reasonable time and the exercise of extraordinary writ jurisdiction under Article 226 is discretionary; delay and laches are relevant factors that may preclude relief. The Court rejected the submission that a three-year period from analogous provisions of the Limitation Act mandates condonation here, held the petitioner's reliance on Bhailal Bhai case [1964 (1) TMI 33 - SUPREME COURT] to be misplaced, and applied settled principles that delay defeats equity and warrants dismissal where no satisfactory cause is shown. [Paras 6, 11, 13]

Final Conclusion: The petition challenging the order passed under Section 119(2)(b) is dismissed for unexplained delay and laches; the Court declined to exercise its discretionary jurisdiction under Article 226 to grant relief.

Denial of exemption u/s 11 - claim of depreciation and claim of the corpus donation - activities of the appellant were not in nature of charitable activities at all as the appellant basically rendered professional services by way of giving advise for identifying charitable organizations for donors and the appellant did not bring on record any evidence to show any change in the nature of activities in the previous years wherein such exemption was denied - HELD THAT: - The Court held that AO has worked out the total donation received by the assessee and the percentage of donation retained by it, and thereafter applied the decision of Ahmedabad Urban Development Authority [2022 (10) TMI 948 - SUPREME COURT] wherein, it is held that the charitable organization cannot engage in trade, commerce or business or provide service for consideration unless such activities are identical to their core “general public utility” and within 20% monetary threshold.

AO found that for the subsequent years, as the assessee has retained donation less than 20% of the total donation received, the Assessing Officer came to the conclusion that the assessee cannot be treated as engaged in trade, commerce or business as prescribed in the decision of Ahmedabad Unrban Development Authority (supra).

There is no retention of income but there is a deficit of about 7%, the question of denying the exemption under Sec.11 of the Act would not arise in view of the decision of the Hon’ble Apex Court in the case of Ahmedabad Urband Development Authority (supra).

There is no need to remand the matter back to the Assessing Officer and considering the facts available on record, we answer both the questions in favour of the assessee and against the revenue.

Final Conclusion: Both substantial questions framed for Assessment Year 2009-10 were answered in favour of the appellant and against the revenue; the appeal is allowed and no remand to the Assessing Officer is directed.

Eligibility for deduction u/s 54F - investment in an under-construction residential property - claim denied as assessee had merely purchased an immovable property and not constructed the said villa, thereby disallowing the benefit u/s. 54F

HELD THAT: - The Tribunal found that the assessee sold an old property and paid the full consideration for an under-construction villa prior to filing the return, and the contractor confirmed receipt of that consideration in 2014.

Relying on the ratio in C. Aryama Sundaram [2018 (8) TMI 864 - MADRAS HIGH COURT] as affirmed by the Supreme Court [2023 (5) TMI 1119 - SC ORDER] wherein as held that not only cost of construction of new property incurred after sale of old property would be eligible for exemption u/s 54(1), but also cost to land on which new property was constructed, even if such land had been purchased three years prior to sale of old property.

Tribunal held that section 54/54F does not preclude relief where expenditure on acquisition or construction of the new residential house (including land) was incurred prior to the date of transfer, provided the investment falls within the statutory time-limits and the capital gain is accordingly applied. The reassessment which disallowed the claim was held to be based on a wrong appreciation of facts and law. [Paras 7, 8]

Final Conclusion: The Tribunal allowed the appeal, holding that the assessee was entitled to deduction under section 54F for investment in the under-construction residential property

Deduction u/s 80JJAA for three consecutive assessment years - Application of section 14A and Rule 8D where interest-free funds available - Revenue treatment of marketing expenditure despite capitalization under accounting standards - Taxability of write-back of creditors determined by reflection in profit before tax - Independence of Chapter VI A deductions from section 37(1) disallowance - Foreign tax credit not to be denied for procedural delay in filing Form 67 if filed before completion of assessment

Deduction u/s 80JJAA for three consecutive assessment years - Allowability of deduction under section 80JJAA claimed in respect of additional employee cost relating to earlier assessment years - HELD THAT: - The Tribunal held from the plain language of section 80JJAA(1) that deduction equal to 30% of the additional employee cost incurred in the previous year is allowable for three assessment years including the year in which employment is provided; the statute does not make continuation of employment in subsequent years a condition for the second and third year deduction. The assessee furnished working and Form 10DA during assessment proceedings and no specific defect was pointed out; the CIT(A)'s factual and legal conclusion that the impugned amount qualified under the statutory scheme was upheld. [Paras 15, 16, 17, 18, 19]

Tribunal upheld the CIT(A)'s allowance of the disputed portion of the section 80JJAA deduction.

Application of section 14A and Rule 8D where interest-free funds available - Sustainability of disallowance under section 14A read with Rule 8D where assessee had substantial own funds - HELD THAT: - The Tribunal accepted the CIT(A)'s factual finding that the assessee's interest free funds (share capital and reserves) substantially exceeded investments yielding exempt income, applying the presumption recognized in Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] in those facts, no disallowance of interest expenditure under Rule 8D was warranted. The Tribunal also held that, absent the Assessing Officer's recording of cogent dissatisfaction as required by section 14A(2), invocation of mechanical computation under Rule 8D(2)(iii) could not be sustained and deletion of the additional disallowance was justified. [Paras 26, 28, 30]

Tribunal upheld deletion of the section 14A/Rule 8D disallowance.

Taxability of write-back of creditors determined by reflection in profit before tax - Whether write-back of creditors not separately offered to tax could be added when it was reflected by reduction of general expenses in Profit and Loss account? - HELD THAT: - The Tribunal found as a fact, on verification of ledgers and financial records, that the write back of creditors was adjusted against general expenses and thus embedded in profit before tax. The form of presentation in accounts (separate disclosure versus reduction of expenditure) does not alter taxability; where the income is already reflected in profit, making a fresh addition would amount to double taxation. Revenue produced no material to controvert the CIT(A)'s factual finding. [Paras 36, 38, 39]

Tribunal upheld deletion of the addition in respect of write back of creditors.

AJIO marketing expenditure - capital vs revenue - Revenue treatment of marketing expenditure despite capitalization under accounting standards - Whether marketing and promotional expenditure incurred for the AJIO e commerce platform is capital in nature or allowable as revenue expenditure - HELD THAT: - Having found the factual matrix materially identical to the co ordinate Bench's earlier decision for A.Y. 2018-19 [2025 (8) TMI 1264 - ITAT MUMBAI] the Tribunal accepted that the impugned expenditures were routine advertising, marketing and sales promotion campaigns aimed at soliciting customers to buy merchandise on AJIO and did not create an enduring capital asset. The Tribunal reiterated that accounting treatment under Ind AS (capitalisation as intangible assets under development) mandated for financial reporting does not conclusively determine tax character; on the facts and precedents relied upon, the expenditure is revenue in nature. [Paras 82, 83, 86, 95]

Tribunal sustained the CIT(A)'s deletion of the capitalisation addition and treated the AJIO marketing expenditure as revenue expenditure.

Deduction u/s 80G in respect of CSR donations -Independence of Chapter VI A deductions from section 37(1) disallowance - HELD THAT: - The Tribunal held that Explanation 2 to section 37(1) merely disallows CSR expenditure as a business deduction but does not bar other statutory deductions; section 80G, a Chapter VI A provision, operates independently and contains only specific exclusions for certain CSR funds. Denying section 80G on the ground that the payment was a statutory CSR obligation would produce double disallowance and is not supported by the statutory scheme. The donee's 80G eligibility and the genuineness of donation were not disputed, and several Tribunal precedents were cited in support. [Paras 107, 115, 116]

Tribunal allowed the assessee's section 80G claim and deleted the addition.

Foreign tax credit denied - procedural delay in filing Form 67 if filed before completion of assessment - HELD THAT: - The Tribunal followed the co ordinate Bench's earlier decision for A.Y. 2018–19 and the Madras High Court [2023 (11) TMI 1000 - MADRAS HIGH COURT] precedent that the filing of Form 67 is procedural and that substantive relief under section 90/DTAA should not be denied solely for delay when Form 67 is on record before completion of assessment. Because the FTC claim requires verification of taxes paid and corresponding income, the Tribunal remitted the matter to the Assessing Officer for limited purpose of verification and directed grant of FTC in accordance with law. [Paras 125, 126, 128, 129]

Tribunal allowed the additional ground and restored the matter to the Assessing Officer for verification and grant of foreign tax credit.

Final Conclusion: For AY 2019 20 the Tribunal dismissed the Revenue's appeals and upheld the CIT(A)'s deletions/additions challenged by the Revenue on the issues of section 80JJAA, section 14A/Rule 8D, write back of creditors and AJIO marketing expenditure; the assessee's appeals were partly allowed by permitting the section 80G deduction and directing verification and grant of foreign tax credit after verification by the AO. Grounded factual findings were accepted where uncontested and matters requiring verification were remitted for limited adjudication.

Passing assessment order without issuing and serving mandatory notice u/s. 143(2) -return treated as accepted where Assessing Officer acts upon filed return - Validity of assessment completed without issuing notice u/s 143(2) where a return was filed in response to notice under section 148 and the Assessing Officer acted upon that return - HELD THAT: - The Tribunal held that where the assessee filed a return in response to a notice under section 148, and the Assessing Officer took cognisance of and acted upon that return (using the returned income as the starting point for computation), the return cannot be treated as invalid merely because electronic verification was pending and a manual ITR-V was later sent.

The court applied the settled principle that notice under section 143(2) is mandatory prior to framing an assessment once a return is filed, and relied on coordinate decisions holding an assessment/reassessment completed without issuing the mandatory section 143(2) notice to be void.

Tribunal concluded that absence of the jurisdictional notice vitiated the assessment framed under section 144B read with section 147. [Paras 7, 9, 11]

Final Conclusion: The appeal allowed - the assessment for A.Y.2018-19 is quashed as void for failure to issue the mandatory notice under section 143(2).

Reopening Notice u/s 148 issued to a deceased person - CIT(A) sustained the addition since the legal heir of the assessee could not explain as to who has filed the return and why the return was filed when the assessee deceased long back

HELD THAT:- The Tribunal held that the notice under section 148 issued in the name of the deceased assessee was legally invalid. Relying on precedents of High Courts, the Tribunal treated the foundational defect - issuance of notice to a person whose legal personality had ceased on death - as fatal. The fact that a return was later uploaded and purportedly verified in response to that notice was held to be immaterial because the assessee had already died and the death certificate was on record. Consequently, the notice could not confer jurisdiction to proceed against the deceased. [Paras 8, 9, 14]

The notice issued under section 148 in the name of the deceased assessee is void ab initio.

Final Conclusion: The Tribunal allowed the appeal, quashed the notice under section 148 issued in the name of the deceased assessee and set aside the consequent reassessment/assessment for A.Y.2019-20 as void ab initio; the return filed after death was held to be irrelevant.

Disallowance of deduction claimed u/s. 80G - CSR expenditure -Incorrect computation of income as per Intimation order u/s. 143(1)(a) -

Disallowance of deduction claimed u/s. 80G - CSR expenditure -assessee submitted that assessee has donated to Prime Minister Relief Fund and Maharashtra Chief Minister’s Relief Fund - HELD THAT: - The Tribunal examined section 135 of the Companies Act, Schedule VII, the CSR Rules (including the 2021 amendments), Explanation 2 to section 37 and section 80G of the Income-tax Act. It held that Explanation 2 to section 37 only excludes CSR expenditure from being allowable as a business expenditure under section 37(1) but does not, by itself, bar claim of deduction under other specific provisions such as section 80G. Section 80G contains express exclusions for certain funds (clauses (iiihk) and (iiihl)) but does not generally disallow deductions for donations made in discharge of CSR obligations to approved funds such as the Prime Minister's Relief Fund or a State Chief Minister's Relief Fund.

Tribunal applied strict construction principles for taxing statutes and concluded there is no statutory prohibition in section 80G preventing deduction of such donations unless expressly provided; thus the assessee's claim to deduction under section 80G for the donations in question is admissible. The Tribunal relied on decision in L & T Finance Ltd. [2024 (11) TMI 855 - ITAT KOLKATA] to be squarely applicable to the facts. [Paras 7, 8, 11, 12, 13]

Deduction under section 80G in respect of the donations made (though in discharge of CSR obligation) is allowed.

Incorrect computation of income as per Intimation order u/s. 143(1)(a) - As argued AO has not considered the income as per the return filed u/s. 139(1) - HELD THAT: - Only prayer of ld. Counsel for the assessee is to restore the matter to the file of ld. Jurisdictional Assessing Officer for necessary verification to which ld. DR did not object. We accordingly restore this issue to the file of ld. JAO for carrying out the necessary verification. [Paras 9]

Final Conclusion: The appeal is partly allowed - Claim of deduction under section 80G for donations made in discharge of CSR obligation is allowed, and the computation issue under the intimation u/s 143(1)(a) is remitted to the AO for verification.

Gain on sale of shares allotted on demutualisation/corporatisation - LTCG v/s STCG - period of holding includes pre-demutualisation membership under Explanation 1(ha) to section 2(42A) - Capital gain on sale of BSE shares to be assessed as long-term capital gain OR short-term capital gain - HELD THAT: - The Tribunal followed the Coordinate Bench (Third Member) decision in Techno Shares & Stocks Ltd. [2019 (11) TMI 359 - ITAT MUMBAI] and applied Explanation 1(ha) to section 2(42A) and the statutory mechanism in section 55(2)(ab). It held that, notwithstanding earlier depreciation claimed on the membership card, the cost and period of holding for demutualised shares must be determined by reference to the original membership and its acquisition date, and therefore the gain is long-term.

AO's reliance on section 50 to characterise the transfer as short-term because depreciation had earlier been claimed was held to be not applicable in view of the specific provision for demutualisation cases and the binding precedent.

Ground No. 1 allowed; the gain is long-term capital gain.

Cost of acquisition on demutualisation equals original cost of membership u/s 55(2)(ab) - Cost of acquisition of BSE shares allotted on demutualisation is the original cost of the membership card OR written down value - HELD THAT: - The Tribunal found that the Assessing Officer erred in rejecting the claimed cost and treating it as nil. Section 55(2)(ab) expressly governs cost of acquisition in demutualisation cases and, following the binding Third Member decision, the original cost of acquisition of the membership card must be adopted. The factual record showing original acquisition and depreciation history in earlier assessment files supported application of the statutory rule rather than the AO's approach.

Grounds No. 2 and 3 allowed; original cost of membership to be adopted as cost of acquisition.

Final Conclusion: The appeal is allowed: the gains on sale of demutualised BSE shares are held to be long-term, the original cost of the membership card under section 55(2)(ab) is to be adopted as cost of acquisition.

Addition u/s 56(2)(x) - two residential flats purchased by the assessee - whether stamp duty value as on the date of such allotment letters (08.05.2010) should be taken instead of the stamp duty value on date of registration (20.03.2018)?

HELD THAT: - The Tribunal found that the allotment letters dated 08.05.2010 recorded fixed terms of allotment, were accepted by the assessee, and acknowledged receipt of part payments by non-cash modes. Applying the statutory provisos to section 56(2)(x)(b), and following coordinate-bench precedents, the Tribunal held that the allotment letters operate as agreements fixing the consideration and that the provisos are satisfied because part consideration was paid by banking channels on or before the date of the allotment letters.

Consequently, the stamp duty valuation as on the date of the allotment letters, and not the valuation at registration, is the relevant figure for the purposes of section 56(2)(x)(b). The Tribunal observed that the stamp duty value as on the allotment date was not on record and therefore restored the matter to the Assessing Officer for the limited purpose of comparing the transaction value with the stamp duty valuation as on the date of the allotment letters, directing that the AO decide after affording the assessee adequate opportunity of being heard. [Paras 10, 14, 15]

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, held that the allotment letters qualify as agreements and the provisos to section 56(2)(x)(b) apply, deleted the addition based on valuation at registration and restored the matter to the AO to determine and apply the stamp duty value as on the allotment date after providing the assessee a fair hearing.

Estimation of income by rejecting books of account - AO estimated the net profit at 8% of the total turnover and made an addition - confirmations, ledger entries, bank statements and third party verifications were produced and major vendors were non residents filing nil returns - HELD THAT: - The Tribunal found that the assessing officer's ad hoc estimation at 8% lacked cogent material and was not justified merely because certain foreign shipping vendors filed nil returns in India. The assessee had furnished party wise ledgers, bank statements and confirmations from a substantial number of creditors, and the CIT(A) independently issued notices under section 133(6) to major vendors, two of which responded confirming transactions. Prior similar estimation for an earlier year had been deleted by the CIT(A) and there was no material before the AO to justify departing from the assessed books. The Tribunal therefore held that the AO's rejection and consequent estimation were arbitrary and sustained the CIT(A)'s deletion of the addition. [Paras 6]

The AO's estimate of profit at 8% and the rejection of books are not sustainable; the CIT(A)'s deletion of the addition is upheld.

Final Conclusion: The order of the CIT(A) deleting the ad hoc addition made by estimating profit at 8% is upheld.

Accrual of income during the impugned year - Addition on account of Profits and gains from Business of the assessee on sale of the property - Year of assessment - assessee argued units constituted its stock-in-trade and the sale was duly recognized as business income in the year in which possession was handed over and consideration was received - whether the registration of the assignment deed in the impugned year can trigger taxation of business income in A.Y. 2018-19, despite the fact that the entire consideration was received and possession handed over in F.Y. 2013-14?

HELD THAT: - The Tribunal found on undisputed facts that the assessee, a real estate developer, received substantial consideration and handed over possession in F.Y. 2013-14, and that only the formal registration of the assignment deed occurred later.

Applying the commercial and accounting principle that sale of stock-in-trade is recognised when consideration is received and possession handed over, and having regard to the principles in section 2(47) read with section 53A, the Tribunal held that registration in a subsequent year does not create accrual of business income in that later year.

AO did not dispute receipt of consideration or handing over of possession and failed to show any accrual in AY 2018-19; the VAT assessment for F.Y. 2013-14 corroborated recognition of the sale in that year.

Section 43CA was inapplicable where no transfer of stock-in-trade occurred in the impugned year. The Tribunal also noted the principle that the same income cannot be taxed twice and that the addition based solely on Insight Portal data without demonstrating accrual in the impugned year was unsustainable. [Paras 8, 9]

Final Conclusion: The Tribunal dismissed the revenue's appeal and upheld the deletion of the addition in Assessment Year 2018-19, holding that recognition of sale of stock-in-trade occurred in F.Y. 2013-14 when consideration was received and possession was handed over, and not on later registration.

Validity of reopening of assessment - period of limitation - Time-bar of reassessment notice under section 148 by operation of the first proviso to section 149(1) - six-year limitation under the old regime - last date for issuing the notice u/s 148 of the Act under erstwhile section 149(1)(b) of the for the AY 2015-16 - whether the issuance of the notice u/s 148 of the Act on April 08, 2022, for AY 2015- 16, falls within the permissible time limits or not?

HELD THAT: - The Tribunal held that for AY 2015-16 the six-year limitation under the pre Finance Act, 2021 regime expired on 31/03/2022, so the first proviso to amended section 149(1) prevents issuance of a notice under section 148 after that date if it was already time barred under the old law.

Tribunal applied the reasoning in Union of India v. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] and subsequent High Court authorities to conclude that procedural compliance with section 148A or exclusion of time under the erstwhile provisos cannot revive a notice which was beyond the old limitation period; consequently the notice dated 08/04/2022 was held invalid as barred by limitation and the consequential reassessment order was without jurisdiction. [Paras 8, 9]

The notice under section 148 dated 08/04/2022 for AY 2015-16 is time barred by the first proviso to section 149(1) and the consequent reassessment order is quashed.

Final Conclusion: The Tribunal allowed the appeal, holding the notice under section 148 issued on 08/04/2022 for AY 2015-16 to be time barred by the first proviso to section 149(1) and quashed the reassessment order; other grounds were rendered academic.

Suspension of Customs Broker licence for public interest and national security under Regulation 16(1) CBLR, 2018 - Smuggling of Narcotic drugs into India - contraventions of Regulation 10(d), 10(e), 10(f) and 10(n) of CBLR, 2018 - Principles of natural justice - delay or absence of immediate necessity - CHA failed to have due diligence before handling the work of the importer by filing the documents with customs.

Suspension of Customs Broker licence for public interest and national security - Duty of due diligence under CBLR, 2018 - Suspension of the appellant's Customs Broker licence under Regulation 16(1) of CBLR, 2018 upheld. - HELD THAT: - The Tribunal upheld the suspension because the Customs Broker failed to exercise required due diligence under Regulation 10(d), 10(e), 10(f) and 10(n) of CBLR, 2018. The broker accepted KYC and authorisation documents handed by a person who was not shown to be the importer's authorised representative, did not verify the identity and genuineness of that person, and did not take adequate steps despite the importer's business being unrelated to the imported consignments. The container had been scanned and marked as a "scanned mismatch" pursuant to the public notice of Mundra Customs and therefore was required to undergo 100% examination; nevertheless the examination record shows only one package was opened and sampled while the broker was present and did not ensure compliance. The matter involved large-scale smuggling of narcotic drugs and implicated national security and foreign exchange concerns; an investigation by the National Investigation Agency had been completed and its report forwarded to the authorities, and the suspension followed promptly thereafter. The Tribunal rejected the contention of inordinate delay, finding the suspension was taken after receipt of the investigative report and the cited precedents on delay were inapplicable. Given the prima facie findings and ongoing detailed inquiry, interference with the suspension at this stage was not warranted, although the Tribunal directed that the inquiry be completed within the timelines prescribed by CBLR, 2018. [Paras 4]

The suspension of the Customs Broker licence is sustained and the Commissioner is directed to complete the inquiry within the timelines in CBLR, 2018.

Final Conclusion: The Tribunal dismissed the appeal and upheld the Commissioner's suspension of the Customs Broker licence on grounds of failure of due diligence and prima facie involvement in a narcotics smuggling matter, while directing completion of the inquiry in accordance with CBLR, 2018 timelines.

Mis declaration of imported goods - goods were, Zinc coated or galvanised and painted steel sheets and were described as painted steel sheets - rejection and redetermination of transaction value on contemporaneous imports - duty to supply documents relied upon in show cause notice - Whether in the facts of the case, the goods can be said to have been mis-declared in the Bills of Entry.

Mis declaration of imported goods - HELD THAT:- The Court found that the imported items were zinc coated (galvanised) and painted, but their description as 'painted steel sheets' in the Bills of Entry was at best incomplete and not a mis declaration. The proper officer assessing the Bill of Entry could have sought further particulars or put queries in the Customs EDI system; absence of explicit description as 'painted galvanised steel sheets' did not amount to deliberate mis declaration. Consequently, confiscation, redemption fine and penalties founded on mis declaration were unsustainable. [Paras 14, 15]

No mis declaration; confiscation, redemption fine and penalties imposed on that ground set aside.

Rejection and redetermination of transaction value on contemporaneous imports - duty to supply documents relied upon in show cause notice - HELD THAT:- Although Rule 12 permits rejection of declared value and Rules 4-9 permit redetermination using contemporaneous imports, the tribunal held that where re determination relies on other Bills of Entry and documents, copies of those documents must be enclosed with the SCN or supplied when requested. The officers did not furnish the contemporaneous Bills of Entry or supporting documents relied upon, depriving the importer of the opportunity to reply or to demonstrate non comparability (e.g., zinc coating specifications, commercial quantities). Evidence collected 'behind the back' of the importer cannot be used to sustain the re determination. [Paras 16, 17, 18, 19]

Redetermination of value and consequent demand set aside for failure to supply the Bills of Entry and documents relied upon; confirmed duty recovery and penalties based on that redetermination unsustainable.

Final Conclusion: The impugned order is set aside; there was no mis declaration to justify confiscation or penalties, and the re determination of value based on contemporaneous imports is unsustainable because the Bills of Entry and documents relied upon were not furnished to the appellants; all three appeals are allowed.

Liability to pay customs duty and interest for non-fulfilment of EPCG export obligation - benefit of Notification No. 102/2009-Cus dated 11.09.2009 -Confiscation, redemption fine and penalty unsustainable where non-fulfilment due to circumstances beyond importer's control and no fraudulent conduct.

Liability to pay customs duty and interest for non-fulfilment of EPCG export obligation - HELD THAT:- The Tribunal found it was admitted that the appellant imported capital goods availing Notification No.102/2009-Cus and did not comply with condition 2(8); accordingly the appellant is liable to pay the differential customs duty and interest. The appellant had deposited the duty which was appropriated by the adjudication order; however applicable interest had not been paid and the revenue is free to recover interest in accordance with law. [Paras 7, 8]

The demand of duty with interest is upheld; revenue may proceed to recover the outstanding interest in accordance with law.

Confiscation, redemption fine and penalty unsustainable where non-fulfilment due to circumstances beyond importer's control and no fraudulent conduct - HELD THAT:- The Tribunal held there was no allegation of fraud and the non-fulfilment of export obligation resulted from factors beyond the appellant's control (delay in infrastructure provision), and by applying the Tribunal's precedent in the matter of M/s. Rajyalakshmi Labs [2006 (7) TMI 64 - CESTAT, BANG.], the confiscation under section 111(o), redemption fine and penalty under section 112(a) could not be sustained. The Tribunal therefore set aside only the confiscation, redemption fine and penalty while leaving the duty and interest intact. [Paras 7, 8]

Confiscation of goods, the redemption fine and the penalty are set aside; other liabilities remain.

Final Conclusion: The appeal is partially allowed: the Tribunal confirmed the demand of customs duty and interest for non-fulfilment of the EPCG export obligation and permitted revenue to recover interest, but set aside the confiscation, the redemption fine and the penalty because non-fulfilment was due to circumstances beyond the appellant's control and there was no fraudulent conduct.

Rejection of transaction value under Customs Valuation Rules - contemporaneous price - burden of proof - requirement of giving reasons and opportunity under Rule 12 - reasonable doubt that the declared value does not represent the transaction value - Whether rejecting the price declared by the appellant of imported goods and enhancement of assessable value by the respondent relying upon the prices of contemporary imports made through other ports is as per law.

Rejection of transaction value under Customs Valuation Rules - HELD THAT: - The Tribunal found that although the adjudicating authority had reason to doubt the declared transaction value, the method and basis for adopting contemporaneous prices (NIDB data) for re-determination were not made available to the importer prior to hearing and were not transparently explained. Rule 12 mandates that when the proper officer doubts the declared value he must intimate the grounds in writing and provide a reasonable opportunity to be heard; the authorities must give cogent reasons both at the preliminary and final stages before discarding the transaction value. The reassessment here lacked a clear, disclosed justification showing that the comparable prices related to identical or similar goods within the meaning of the Valuation Rules and did not afford the importer sufficient opportunity to rebut the applicability of the substitute value. [Paras 18, 19, 20]

Rejection of the declared transaction value and the manner of re-determination by reference to contemporaneous prices was held improper for lack of transparent reasoning and failure to afford appropriate opportunity; impugned order set aside.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order because the reassessment adopting contemporaneous prices was not shown to be consistent with the Valuation Rules and was effected without adequate disclosure of reasons and opportunity to the importer.

Classification of Goods - import of "video conferencing solutions" and "webcams" - Automatic Data Processing (ADP) machines-such as a PC, laptop, or NUC - which are connected to internet, process information, and run the compatible video conferencing applications - Application of Chapter Note 6(D) excluding transmission or reception apparatus from heading 8471 - finished webcam devices designed to operate in conjunction with video conferencing software installed on a processing unit such as a desktop, laptop, or Next Unit of Computing (NUC) for live video and audio conferencing. None of these products function independently; they require a host device to run the software, perform computing and data transmission tasks i.e. processing and generating an output in the form of a live feed.

Classification of VoIP and video conferencing equipment under Heading 8517 - Application of Chapter Note 6(D) excluding transmission or reception apparatus from heading 8471 - HELD THAT:- The Authority examined catalogue specifications, technical features and expert/telecom authority findings and applied the General Rules of Interpretation. The goods incorporate built in computing capability, support codecs (e.g. H.264/SVC) and UVC, and in several models can run video conferencing applications in appliance mode without a separate host ADP. Technical opinion and precedent concerning VoIP functionality establish that such equipment performs reception, conversion and transmission of voice and images over IP networks. Consequently the subject goods are not of a kind solely or principally used in an ADP system within the meaning of Chapter Note 6(C), and Note 6(D) excludes apparatus for transmission or reception from classification as parts of ADP machines. Having regard to the descriptive terms of the headings and relative chapter notes, and applying GIR 1, the goods better fall within the scope of heading 8517 and, being not covered by any more specific four or six digit subheading, are classifiable under the residual entry 8517 62 90. [Paras 6, 7]

The subject goods are classifiable under CTH 8517 62 90.

Final Conclusion: On the facts and technical material before it, the Authority ruled that the video conferencing solutions and webcams are apparatus for transmission or reception of voice, images or other data and are classifiable under CTH 8517 62 90.

Entitlement to grant of regular bail - Multi-layered syndicate involving government officials, private individuals, and intermediaries - Mandatory twin conditions for bail under Section 45 of the PMLA- statutory presumption -offence of money laundering - definition and scope of proceeds of crime - tampering with evidence - principle of parity in grant of bail - delay or prolonged custody - commission of Scheduled offence under Sections 420, 467, and 476 of the IPC -Misused of official position as a Revenue Sub-Inspector and custodian of sensitive government records to facilitate a massive land scam and he provided the syndicate with illegal access to original land records and personally carried out or facilitated their forgery and manipulation, thereby enabling the fraudulent acquisition of high-value properties.

Mandatory twin conditions for bail under Section 45 of the PMLA - HELD THAT:- The Court applied the jurisprudence of the Supreme Court (including Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] and Tarun Kumar [2023 (11) TMI 904 - SUPREME COURT]) and held that the mandatory twin conditions in Section 45 - that the court must be satisfied there are reasonable grounds for believing the accused is not guilty and is not likely to commit an offence while on bail - must be met before granting bail. Having considered the material seized (tampered government registers, trunks of documents), statements and digital evidence, and the statutory presumption under Section 24, the Court concluded that the petitioner failed to satisfy those twin conditions and that the stringent rigours of Section 45 preclude bail in the present case. [Paras 76, 77, 102, 103, 104]

Bail under Section 45 of the PMLA is refused because the petitioner has not satisfied the statutory twin conditions.

Proceeds of crime within Section 2(1)(u) of the PMLA - Whether the seized registers, documents and other material prima facie constitute proceeds of crime or link the petitioner to money laundering activities - HELD THAT: - The Court examined the definition of "proceeds of crime" in Section 2(1)(u) and the evidence on record (seizure of 17 original tampered registers, 11 trunks of documents, forged sale deeds, handwritten diaries and WhatsApp entries indicating cash payments). Relying on the prosecution complaint and investigative material, the Court held that these materials satisfy, at the prima facie stage, the description of property involved in criminal activity relatable to scheduled offences and corroborate the petitioner's alleged role in processes connected with proceeds of crime; therefore the petitioner's contention that no prima facie case under Sections 3 and 4 of the PMLA is made out was rejected. [Paras 62, 66, 69, 71, 79]

On the prima facie material, the seized records and corroborative entries are treated as linked to proceeds of crime and indicative of the petitioner's involvement in money laundering processes.

Principle of parity in grant of bail - HELD THAT:- The Court applied settled law that parity is available only where facts and role are substantially similar. After comparing the petitioner's alleged role as a public servant and custodian of records with those co accused who received bail, the Court found distinguishable and more serious conduct by the petitioner (active misuse of official position, centrality to the forgery scheme). Accordingly, parity was held inapplicable. [Paras 93, 95, 97, 98, 99]

Parity with co accused granted bail is not available to the petitioner because his role is materially different and more serious.

Delay or prolonged custody - ground for bail in scheduled offences - HELD THAT:- The Hon’ble Apex Court while dealing with the offences under UAP Act 1967, in the case of Gurwinder Singh v. State of Punjab [2024 (3) TMI 175 - SUPREME COURT] and taking in to consideration the ratio of judgment of Union of India vs. K.A. Najeeb [2021 (2) TMI 1212 - SUPREME COURT] has observed that mere delay in trial pertaining to grave offences as one involved in the instant case cannot be used as a ground to grant bail.

Applying precedent, the Court held that while custodial period is a relevant factor, prolonged incarceration alone cannot override the gravity of scheduled offences and the statutory requirements of Section 45. Given the seriousness of the allegations, the strength of prima facie material, and the risk of interference with the investigation/trial, the period of custody did not justify bail. [Paras 81, 85, 86, 103]

Length of custody is not a sufficient ground for bail in this case.

Final Conclusion: The petition for regular bail is dismissed: the Court found prima facie material linking the petitioner to proceeds of crime and money laundering, determined that the mandatory twin conditions of Section 45 PMLA are not met, rejected the parity and delay grounds, and accordingly refused bail.

Provisional attachment - interim measure to protect property - reason to believe presumption of interconnected transactions - illegal gratification -Cash recovered and seized by the Central Bureau of Investigation from the possession - scheduled offences - confirmation of attachment notwithstanding custody of property by trial court.

Provisional attachment as an interim protective measure - Whether the provisional attachment could be confirmed though the seized currency/FDR was in the custody of the trial court - HELD THAT:- The Tribunal held that attachment under the PMLA is an interim protective measure to preserve property for possible eventual confiscation and may be confirmed even if the property is in custody of a court in related criminal proceedings. The possibility that the property may be confiscated on conviction and that a legally entitled person can claim return if there is no conviction meant that mere custody by the trial court did not preclude confirmation of the Provisional Attachment Order. [Paras 6]

Provisional Attachment Order confirmed despite the property being in custody of the trial court

Reason to believe based on charge-sheet - claim of untainted sale proceeds as defence to be tested at trial - Whether the registration of FIR, filing of charge-sheet and other materials furnished a sufficient reason to believe to justify confirmation, and whether the respondents' claim that the amount was sale proceeds precluded attachment - HELD THAT:- The Tribunal concluded that the registration of FIR and filing of a charge-sheet which resulted in framing of charges provided strong prima facie material constituting a reason to believe for attachment under the PMLA. The respondents' plea that the seized cash represented sale proceeds was treated as an after thought defence which must be proved at trial; voluntary disclosures to CBI and recorded conversations were held to corroborate the prosecution case and to support continuation of attachment pending adjudication. [Paras 6]

The grounds relied upon by ED justified confirmation of the provisional attachment; the defence claim as to sale proceeds must be determined at trial

Final Conclusion: The appeal is allowed; the adjudicating authority's order refusing confirmation is set aside and the provisional attachment is confirmed, without prejudice to the rights of parties in the ongoing criminal trials.

Liabllity to service tax on the income from supply of fresh water - category of “Port Services” as defined under Section 65(82) of the Act - pure agent exclusion under valuation rules - extended period of limitation and penalties - Whether supply of water by the appellant to various vessels falls under sale of water or supply of water service.

Supply of water as part of port services - Whether the appellant's supply of water to vessels is a sale of goods or a taxable port service - HELD THAT:- The Tribunal accepted the CBEC clarification that water-supply charges form part of the taxable value of port services and noted Notification No.31/2010-ST exempted supply of water only w.e.f. 01.07.2010. The appellant could not produce invoices or VAT returns conclusively showing pure sale transactions; invoices indicated supply by barge including procurement, transportation and other service elements. The appellant also admitted port authorisation for the activity. On these facts and the contemporaneous Board clarification, the Tribunal held the transactions constituted provision of port service and were leviable to service tax for the period prior to the exemption effective 01.07.2010. [Paras 5]

Supply of water to vessels was held to be part of port services and taxable prior to 01.07.2010; the service-tax demand in respect of those supplies is upheld.

Extended period of limitation where omission discovered on audit - HELD THAT:- The Tribunal accepted the department's account that non-payment of service tax in respect of water-supply to vessels came to light only during audit of records, and on that basis the extended period was rightly invoked by the authorities. The Tribunal therefore upheld the demand made invoking the extended period. [Paras 5]

Extended period invocation for the service-tax demand was upheld.

Pure agent exclusion under valuation rules - Whether the appellant acted as a pure agent and so excluded the reimbursed water cost from taxable value - HELD THAT: - The appellant failed to produce evidence demonstrating that it acted as a pure agent meeting the conditions of the valuation rule; the claim of pure-agent treatment was not supported by contemporaneous documentation. Consequently the Tribunal rejected the pure-agent contention and included the amounts within the taxable value of port services. [Paras 5]

The pure agent claim was rejected and the amounts were included in the taxable value.

Penalty under Section 78 requires mens rea - Whether penalties under Sections 77 and 78 of the Finance Act, 1994 were appropriately imposed - HELD THAT: - While the Tribunal affirmed imposition of the penalty under Section 77, it found no mens rea on the part of the appellant to evade payment of service tax and, taking a lenient view, set aside the equal penalty imposed under Section 78. The Tribunal therefore differentiated between the two statutory penalties based on the absence of willful evasion. [Paras 5]

Penalty under Section 78 set aside for lack of mens rea; penalty under Section 77 affirmed.

Final Conclusion: The Tribunal upheld the service-tax demand (including invocation of extended limitation) holding supply of water to vessels to be a port service taxable before 01.07.2010, rejected the pure-agent plea, set aside the penalty under Section 78 for lack of mens rea but affirmed the penalty under Section 77.

Immunity under Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES) - bars a subsequent demand or proceedings for the same issue and period -Expression “same subject matter” - Overlapping tax liability - beneficial legislation that offered a one-time amnesty for service tax defaulters - Whether the appellant have disclosed his tax dues under the VCES scheme and the designated authority having acknowledged the discharge of such dues under the scheme, can issue a notice for tax dues during the same period.

Immunity under VCES - same issue / same subject matter bar - HELD THAT:- The Tribunal held that once a declarant furnishes details and receives an acknowledgement of discharge under the VCES, section 108 grants immunity from penalty, interest and further proceedings in respect of the declared tax dues. Applying the proviso to Section 106(1) and the conclusive effect in Section 108(2), the court treated a later show-cause notice seeking recovery of an overlapping liability as proceedings on the same issue and therefore barred. The Tribunal relied on the principle in the cited Supreme Court in the case of M/S ARMOUR SECURITY (INDIA) LTD. Vs COMMISSIONER, CGST, DELHI [2025 (8) TMI 991 - SUPREME COURT], authority that the bar applies where proceedings seek to assess or recover an identical liability or where there is even the slightest overlap in tax liability, and concluded that the portion of demand already verified and settled under VCES could not be reopened. [Paras 6, 7, 10, 11]

Demand insofar as it overlaps with tax dues acknowledged and discharged under the VCES is barred and cannot be sustained

Final Conclusion: The impugned order was set aside insofar as it sought to recover tax on the same issue and period already discharged under the VCES; the appellant is entitled to consequential relief in accordance with law.

Service tax liability - Imposition of penalty - reasonable cause - voluntary payment of tax and interest prior to show cause notice - Whether penalty imposed under various provisions of the Finance Act, 1994 by the learned Commissioner is justified or it is a fit case for invocation of Section 80 of the Finance Act, 1994.

Section 80 - penalty not to be imposed where reasonable cause - voluntary payment of tax and interest prior to show cause notice - HELD THAT:- The Tribunal found that the impugned receipt arose from a solitary transaction for facilitating a joint development agreement, that the receipt was disclosed in income tax returns, and that the assessee entertained a bona fide belief that he was not providing Real Estate Agency services. On being informed by the investigating authority, the assessee promptly discharged the service tax liability and interest before issuance of the show cause notice and paid additional interest when pointed out during appeal. Applying the statutory test in Section 80, the Tribunal held these circumstances constitute reasonable cause for the failure to discharge tax earlier and therefore justify non imposition of penalties under Sections 76, 77 and 78 of the Finance Act, 1994. The Tribunal set aside the penalties accordingly and allowed the appeal to that extent. [Paras 6, 8]

Penalties imposed under the Finance Act, 1994 are set aside under Section 80 on the grounds of reasonable cause and voluntary payment of tax and interest prior to the show cause notice.

Final Conclusion: The Tribunal modified the impugned order by invoking Section 80 and set aside the penalties imposed under the Finance Act, 1994; the appeal is allowed to that extent.

Remuneration for Clearing & Forwarding and transportation - Reverse charge liability for GTA services - double taxation - principles of interpretation of bundled services - Whether remuneration received on account of transportation of goods by “Goods Transport Agency” are required to be clubbed with “Clearing & Forwarding Agent's” remuneration for the purpose of levy of service tax.

Clearing and Forwarding Services distinct from Goods Transport Agency services - Reverse charge liability for GTA services - Whether transportation charges paid to the appellant as Goods Transport Agency were required to be clubbed with Clearing & Forwarding Agents' remuneration for levy of service tax - HELD THAT:- The Tribunal in the case of Commissioner of Customs, Central Goods, Service Tax and Central Excise, Indore Vs. Awasthi Brother [2025 (8) TMI 169 - CESTAT NEW DELHI], where it was observed that the appellant is engaged in providing two services namely C & F Services and GTA Services. Both services though provided under the same contract are indicated separately with separate charges for each. In respect of GTA Services provided, the service tax on the value of such services was to be paid by the recipient of the services on the reverse charge basis. Undisputedly, this service tax was paid by the service recipient and this fact is also certified by the recipient of the services.

The Tribunal held that where a single agreement separately specifies remuneration for C&F services and for transportation, the two services are distinct and not a single composite service. Transportation activities were held classifiable as GTA services because serially numbered goods receipts/consignment notes were issued and the contracts separately recorded rates for each service. Further, under the statutory scheme and Rule 2(1)(d)(d) of the Service Tax Rules, 1994, tax liability for GTA services in the present facts lay on the service recipient under reverse charge; therefore transportation consideration could not be included in the assessable value of C&F services to avoid double taxation. The Tribunal applied earlier decisions and administrative instructions reaching the same conclusion and set aside the impugned demand. [Paras 8, 9]

Transportation charges attributable to GTA services are not to be clubbed with Clearing & Forwarding Agents' remuneration; the impugned demand is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that transportation services (GTA) with separately stated charges are distinct from C&F services and, being subject to reverse charge at the hands of the recipient, their consideration cannot be included in the assessable value of C&F services; the impugned demand was set aside.

Demand of service tax -barred by limitation - invoking the extended period of limitation - liability for service tax collected but not deposited - penalty under Section 78 for wilful suppression.

Application of extended period for suppression - liability for service tax collected but not deposited - Whether the confirmed demand of service tax is time-barred or recoverable by invoking extended limitation in view of alleged suppression and receipt of service tax from client - HELD THAT:- The present litigated amount of Rs. 5,91,883/- is very much part of the Service Tax amount paid by the client to the appellant. Therefore, when the appellant has received the amount as Service Tax but the same was not disclosed in the ST 3 Return and not paid to the exchequer, the benefit of extended period cannot be extended to the appellant. The cited case laws of the Learned Advocate, which are basically on account of non payment of Excise Duty / Service Tax on account of bonafide belief, interpretation, disclosure of details in the Returns etc., cannot be come to the rescue of the appellant, in view of the factual details discussed above.

Confirmed demand of service tax for the stated periods is not time-barred and is recoverable by invoking the extended period.

Final Conclusion: The appeal is dismissed; the Tribunal upheld the Adjudicating Authority's finding that the confirmed service tax was collected by the appellant but not deposited, permitting invocation of the extended limitation period and sustaining the demand and the mandatory penalty.

Leviability of service tax on certain discounts from the mobile company and distributors, as also, certain payments received towards activation charges and other miscellaneous income - trading activity - invocation of extended period of limitation - penalty under section 78 - mens rea and waiver - Whether amounts characterised as trade/turnover/quantity/cash/price-drop discounts are leviable to service tax.

Leviability of service tax on trading discounts - HELD THAT:- The Tribunal upheld the Adjudicating Authority's conclusion that amounts shown in the books as various discounts are relatable to trading activity (sale of mobile phones) and therefore not taxable as services under BAS/MMRS where supporting documents substantiate that characterisation. The department did not challenge that finding; amounts shown as discounts and substantiated were to be excluded from service-tax computation. Where the adjudicating authority did not accept documentary proof, those amounts were subject to re-examination on remand. [Paras 3, 9, 10]

Discounts shown to relate to sale of goods are not leviable to service tax; amounts not substantiated remain to be re-examined on remand.

Leviability of service tax on activation charges - penalty under section 78 - mens rea and waiver - HELD THAT:- The Tribunal accepted that activation charges are taxable but recognised that earlier conflicting judicial authorities left the law unsettled until Supreme Court decisions provided clarity. Given the ongoing litigation and that the assessee began paying tax once clarity emerged, the Tribunal held that there was no deliberate or mala fide intent to evade tax; therefore, imposition of penalty under section 78 is not sustainable in the facts of this case and was set aside. [Paras 9, 11, 13]

Activation charges are taxable, but penalty under section 78 is not imposable in the present factual matrix and is set aside.

Invocation of extended period of limitation - HELD THAT:- The Tribunal found that the principal components of the demand related to activation charges and amounts later held to be discounts; non-payment arose from contested legal position and from alleged documentary deficiencies, not from proven deliberate evasion. In absence of concrete evidence of intent to evade, the extended period could not be invoked and any demand must be restricted to the normal period on remand. [Paras 5, 12]

Extended period of limitation is not sustainable; demand, if any, must be confined to the normal period on remand.

Final Conclusion: The Tribunal partly allowed the appeal: it upheld the impugned demand except for the disputed amounts remanded for re-examination, set aside penalty under section 78, and held the extended period of limitation inapplicable, directing limited recomputation by the adjudicating authority. Representatives may produce evidentiary certificates on remand to substantiate non-taxable character of amounts.

Demand of service tax on services provided to SEZ units - Requirement of Form-A1 for SEZ service exemption - exemption to services to SEZ units (Notification No. 9/2009 ST as amended by Notification Nos. 15/2009 ST, 17/2011 ST, 40/2012 ST and 12/2013 ST) - work contractor and executed job of construction of roads and other constructions to Special Economic Zone (SEZ) Developers - appellant had not produced Form – A1 from the Developers evidencing that the services were to be used for authorized services.

Requirement of Form-A1 for SEZ service exemption - Whether a demand for service tax can be sustained solely because the supplier failed to produce Form A1 to claim exemption for services provided to an SEZ unit - HELD THAT:- The lower authorities confirmed the demand on the ground that the appellant had not furnished Form A1 and therefore did not satisfy the conditions of the exemption notification. The Tribunal noted that the relevant notification provisions requiring Form A1 and Form A2 were set aside by the High Court in M/s GMR Aerospace Engineering Ltd. [2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT], and that this judgment was upheld by the Supreme Court [2019 (7) TMI 1975 - SC ORDER]. In view of the judicial invalidation of the notification provisions that mandated furnishing Form A1/A2, there was no legal basis to sustain the demand predicated solely on non production of Form A1. [Paras 8, 9]

The demand based solely on non production of Form A1 is not sustainable; the impugned order is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal and set aside the demand which rested solely on the appellant's failure to produce Form A1, holding that the notification provisions requiring Form A1/A2 had been invalidated by higher judicial decisions and therefore could not sustain the demand.

Clubbing of turnovers - Entitlement to SSI exemption Notification No.7/1997-C.E. and No.8/2003-C.E. for the relevant period - exceeding the turnover limit as prescribed under the said Notification - suppression of facts - Remand pending determination by a higher forum - penalty imposable for absence of suppression and s.11AC finding - manufacture of pesticides viz., water soluble Neem Extracts, Neem Oil, Neem Husk, Neem De-oiled cake and Econeem falling under Chapter subheading 3808 of Central Excise Tariff Act.

Remand pending determination by a higher forum - HELD THAT:- The Tribunal noted that its prior final order dated 17.11.2016 (which held that clearances of both units are to be clubbed for applying the SSI exemption for the relevant period) is under challenge before the Supreme Court. Given the admitted Civil Appeal before the Supreme Court arising from that order and the likelihood that the outcome will determine the core controversy, the Tribunal exercised its discretion to remit the matters to the adjudicating authority to await the Supreme Court's decision rather than decide afresh. The remand was ordered so that further adjudication proceeds subject to the Supreme Court's determination of the admitted appeal. [Paras 7]

Appeals filed by the assessee are allowed by remanding the matters to the adjudicating authority to await the Supreme Court's decision.

Penalties under Rule 173Q and Rule 25 of the Central Excise Rules - absence of a finding of suppression as contemplated by Section 11AC -HELD THAT:- The Tribunal upheld the Commissioner's conclusion that there was no finding of suppression and that the demand was confined to the normal period. Because the statutory precondition for invoking Section 11AC was not satisfied, the requirements for imposing penalties under Rule 173Q and Rule 25 were not fulfilled. On that basis the Tribunal found that the imposition of penalty could not be sustained and the penalties were properly dropped. [Paras 8]

Impugned order upholding the dropping of penalties under Rule 173Q and Rule 25 is affirmed and the Revenue's appeals on penalty are dismissed.

Final Conclusion: The appeals by the assessee are remitted to the adjudicating authority to await the Supreme Court's decision on the admitted appeal arising from the Tribunal's earlier order; the Revenue's appeals against the dropping of penalties are dismissed because there was no finding of suppression and the statutory condition for invoking penalties under Section 11AC was not met.

Eligibility of CENVAT credit for input services relating to setting up or expansion of business premises - time-bar of demand where credit was disclosed in statutory return and scrutiny initiated after normal limitation period - Whether the credit availed by the appellant in respect of service tax paid towards lease of the premises from where no taxable service was provided can be considered as ineligible CENVAT credit to confirm demand with interest and to impose penalty.

Eligibility of CENVAT credit for input services relating to setting up or expansion of business premises - HELD THAT:- The Tribunal applied the limbs of the definition of input service and accepted that services relating to setting up or expansion of business premises constitute an independent category of input services. The invoice from the service provider evidenced that the payment related to modernization/expansion of the appellant's business premises; accordingly the credit availed on the service tax component qualifies as CENVAT credit under the limb dealing with setting up/expansion and is therefore allowable. The Tribunal relied on the reasoning in M/s. Coco Cola India Pvt. Ltd. Vs. Commissioner of C. Ex., Pune-III[2009 (8) TMI 50 - BOMBAY HIGH COURT] that each limb of the definition operates independently and satisfaction of one limb suffices for availment of credit. [Paras 9]

CENVAT credit on the payment to the lessor for setting up/expansion of premises is admissible and not an ineligible credit.

Demand barred by limitation -HELD THAT:- The Tribunal found that the disputed credit was disclosed in the ST-3 return filed in October 2010 for the period April 2010 to September 2010. The Department commenced scrutiny only in 2015, nearly five years later and close to expiry of the extended limitation period. That delayed scrutiny, initiated well after disclosure in the statutory return, did not constitute suppression by the assessee; consequently the show cause notice issued on 24.09.2015 alleging ineligible credit for September 2010 was beyond the normal limitation and the demand is time-barred. [Paras 10, 11]

The demand is barred by limitation and cannot be sustained.

Final Conclusion: The impugned order confirming demand and imposing penalty is set aside: the CENVAT credit in question is admissible as an input service for setting up/expansion of premises and the departmental demand is time barred; the appeal is allowed with consequential relief in accordance with law.

Adjustment of refund for the tax period 2007-08 against the demand for the tax period 2008-09 - Prohibition on importing MVAT Section 50 into Settlement Act proceedings- self contained code- amnesty scheme - Prohibition on importing MVAT Section 50 into Settlement Act proceedings - Refund adjustment barred where settlement extinguishes dues - Requirement of reasonable opportunity before adverse settlement action - principles of natural justice.

Settlement Act - Prohibition on importing MVAT Section 50 into Settlement Act proceedings - Refund adjustment barred where settlement extinguishes dues - HELD THAT:- The Court held that the Settlement Act constitutes a self-contained code setting out conditions, method and consequences of settlement; it does not authorize designated authorities to import or exercise the specific power of adjustment under Section 50 of the MVAT Act when determining settlement amounts. Section 6 of the Settlement Act and the definitions of 'arrears', 'disputed tax' and 'un-disputed tax' show that a refund is not a 'payment made in respect of a statutory order' for the purposes of arriving at settlement dues, and the Settlement Act prescribes year wise computation of arrears for settlement. Accordingly, where an assessee had applied under the Settlement Act and the settlement amount for 2008-09 had been determined/paid as per the scheme, the department could not, in the settlement exercise, adjust an independently determined refund for 2007-08 by invoking Section 50 of the MVAT Act; such an adjustment would defeat the scheme's object of giving quietus to litigation and is without jurisdiction. [Paras 20, 21, 22, 25, 26]

Impugned settlement order adjusting the 2007-08 refund against 2008-09 demands was quashed and the petitioner's settlement for 2008-09 shall be accepted without such adjustment.

Requirement of reasonable opportunity before adverse settlement action - HELD THAT:- The Court found that the designated authority passed the impugned order adjusting the refund without giving the petitioner an opportunity to make submissions as contemplated by Section 13(2) and the proviso to Section 13(3) and the general requirements of natural justice. Passing the adverse settlement order without affording the opportunity to be heard rendered the action liable to be set aside. [Paras 24, 26]

Impugned order set aside for violation of principles of natural justice.

Final Conclusion: The Settlement Order dated 18th April 2024 adjusting the refund for 2007-08 against 2008-09 was quashed: the Settlement Act cannot be used to import Section 50 MVAT adjustment powers, the impugned order breached natural justice, and the petitioner is entitled to the refund for 2007-08 to be paid with interest while the 2008-09 settlement proceeds without that adjustment.

Negotiable Instruments Act - Legally enforceable debt for section 138 NI Act - presumption under section 139 NI Act - absence of board resolution - corporate liability versus personal liability of directors - manipulating the Book of Accounts, opening fake Account of Customers, wrongly advising the Company’s customers, mis-utilizing and mis-appropriating the funds of the customers as well as of the Company and causing financial losses to the Company.

Legally enforceable debt for section 138 NI Act - Whether the Complaint under Section 138 NI Act disclosed a legally enforceable debt such that proceedings against the petitioner were maintainable. - HELD THAT:- The Court examined whether the complainant had produced the mandatory corporate documentation to establish entitlement to the alleged commission/brokerage and whether the pleaded material sufficiently identified how the claimed amount became due and payable. The Court found no Board resolution or contemporaneous company record establishing the 10% brokerage or any calculation showing the sums claimed; the two letters relied upon were unsigned by the company, bore indicia of subsequent fabrication and were produced many years after the complaint. Given the absence of basic particulars, audited-account entries or any reliable documentary basis to show a legally enforceable debt payable by the petitioner personally, the complaint did not disclose a case under Section 138 and was an abuse of process. [Paras 86, 89, 91, 92, 95]

Complaint under Section 138 NI Act did not disclose a legally enforceable debt and is quashed.

Presumption under section 139 NI Act - Whether the statutory presumption under Section 139 of the Negotiable Instruments Act arose against the petitioner in the absence of basic particulars and proof of a debt. - HELD THAT:- The Court held that the presumption under Section 139 does not automatically arise where the complaint omits the fundamental facts required to demonstrate the existence of a legally enforceable debt. In the present case the complaint was bereft of particulars showing how the alleged debt had arisen, and the primary onus to set out relevant data to attract the presumption was not discharged. Therefore the presumption under Section 139 could not be invoked to sustain the complaint against the petitioner. [Paras 91, 92, 94]

Presumption under Section 139 NI Act does not arise on the facts of this case.

Corporate liability versus personal liability of directors - Whether the cheques drawn on the petitioner's personal account could be treated as discharging a debt of the company or otherwise render the petitioner personally liable. - HELD THAT:- The Court noted that liabilities claimed by the complainant were debts of the company and that there was no material to show the petitioner had assumed personal liability or had any personal obligation to discharge company debts. In the absence of evidence that the petitioner was personally liable or that the cheques were issued in discharge of a debt owed by him, the cheques could not sustain criminal proceedings against the petitioner under Section 138. [Paras 71, 83, 93]

No basis established to treat the petitioner as personally liable for the company's alleged debt; criminal proceedings could not be sustained on that ground.

Final Conclusion: The Court concluded that the complaint and summoning order did not disclose the ingredients of an offence under Section 138 NI Act, the statutory presumption under Section 139 did not arise on the material, and there was no showing of personal liability of the petitioner; the complaint and consequent proceedings were quashed.

Negotiable Instruments Act - dishonour of cheque - essential ingredient of Section 138 - Inherent jurisdiction under Section 482 Cr.P.C. - abuse of process - Misuse of a blank cheque - forgery/fabrication of underlying documents, including an MOU - unaccounted transaction.

Inherent jurisdiction under Section 482 Cr.P.C. to be exercised sparingly - Allegations of forgery and misuse of signed instruments require trial adjudication, not quashing - HELD THAT:- It is well settled that the inherent jurisdiction under Section 482 Cr.P.C. is to be exercised sparingly and only in cases where the Complaint, on the face of it, does not disclose the commission of any offence or where continuation of proceedings would amount to abuse of process of Court. The Court is not required to conduct a mini trial or evaluate disputed facts or defense evidence, at this stage.

The Court applied the established principle that Section 482 Cr.P.C. is to be exercised sparingly and not to conduct a mini-trial. Here the issuance of the cheque and the signatures thereon were not disputed, and the petitioner's defence rested on allegations that the cheque and related documents were forged or that a blank signed instrument was misused. Those factual and evidentiary contentions require testing at trial; they are not matters for summary determination on a quashing petition. Earlier attempts to obtain quashing or discharge had been dismissed, and the Trial Court's and revisional court's non-suit of the petitioner on preliminary applications indicated that the disputed defenses must be addressed by evidence in the trial court. On this basis the petition for quashing was held to lack merit. [Paras 46, 47, 48, 51, 52]

Petition for quashing of the Section 138 NI Act complaint dismissed; allegations of forgery and misuse to be adjudicated at trial.

Final Conclusion: The High Court refused to quash the criminal complaint under Section 138 NI Act, holding that the inherent jurisdiction under Section 482 Cr.P.C. should be sparingly exercised and that disputed allegations of forgery and misuse of signed instruments must be decided in the trial court.

Negotiable Instruments Act - Dishonour of cheque - presentation of undated security cheques - notice of demand - barred by the six months limitation in Clause (a) proviso to Section 138 - Loan transactions -abuse of process - Guarantor liability contingent on contractual demand and occurrence of default - Master Facility Agreement and Deed of Guarantee -

Conditions for presentation under Section 138 of the Negotiable Instruments Act - HELD THAT:- Section 138 (a) NI Act provides that a Cheque must be presented to the Bank within six months from the date of its drawn or within its validity, whichever is earlier, which has also been affirmed by the Supreme Court in MSR Leathers [2012 (10) TMI 232 - SUPREME COURT] and also by Coordinate Bench of this Court in Ansh Chug [2020 (2) TMI 177 - KARNATAKA HIGH COURT]

The court held that Section 138 requires a cheque to be presented within six months from the date on which it is drawn or within its validity. Undated cheques handed over on the date of the loan agreement are to be reckoned from that date. The impugned cheques, issued on the date of the loan agreement and presented nearly eleven months later, were presented after the statutory six month period and therefore the condition in the proviso to Section 138 was not satisfied. [Paras 20, 21]

Presentation of the cheques was invalid for being made after the statutory six month period

Guarantor liability contingent on contractual demand and occurrence of default - Whether the Bank could invoke security cheques and initiate Section 138 proceedings in the absence of a contractually required notice/demand and when the loan account was subsisting and being serviced - HELD THAT:- On a reading of the Master Facility Agreement and the Deed of Guarantee, events of default are contractually defined and the Bank was required to take prescribed steps (including issuance of notice/demand) before invoking security. The record did not show a crystallised default or that the contractual protocol (prior notice/demand and invocation of remedies) had been followed; payments continued and the loan account remained subsisting and restructured. The Bank also failed to controvert these assertions. In those circumstances proceeding under Section 138 would be impermissible and an abuse of process. [Paras 43, 46, 47, 48, 50]

Invocation of the security cheques and continuation of Section 138 proceedings was unjustified in the absence of a contractual default and prior demand/notice

Final Conclusion: Considering that the cheques were presented after the six month period and that the Bank had not shown a contractually crystallised default or compliance with the demand/notice mechanism, the complaints under Section 138 NI Act were quashed and the petitions allowed.