TaxTMI Updates e-Newsletter
Mar 16,2026

Availability of writ remedy - non-constitution and non-functional of the GSTAT -Statutory framework provides an appellate forum under Section 112 - Requirement of payment under Section 112(8).

Availability of writ remedy where statutory appellate forum is non functional - HELD THAT:- The Court held that when the statutory appellate tribunal is not constituted or functional an aggrieved person may approach the writ court so as not to be left remediless; however, the availability of writ relief does not permit the Court to displace or relax statutory conditions attached to the appellate remedy where those conditions are operative. The principle was applied to the facts that the GSTAT has been made functional and timelines extended, and therefore the dispute is to be adjudicated by the designated forum rather than retained in the writ court. [Paras 4, 5]

Writ petition not retained on merits; petitioner directed to pursue remedy before the GSTAT as the forum is functional and timelines have been provided

Mandatory pre deposit condition under Section 112(8) of the GST Act - HELD THAT:- The Court reaffirmed that conditions in sub section (8) of Section 112 - payment in full of admitted amount and ten per cent of the disputed tax (subject to the statutory ceiling) - remain binding and the writ court will ensure strict compliance with such statutory pre conditions. In the present matter, because the GSTAT has been made functional and filing windows extended, the petitioner was directed to deposit the amounts required under Section 112(8) (if not already deposited) and file the appeal within the timeline published in the User Advisory and government notification; if the appeal is in order under Section 112 and relevant rules, it shall be entertained by the GSTAT. [Paras 3, 4, 5]

Petitioner directed to make the deposits required by Section 112(8) and file the appeal before the GSTAT within the prescribed timeline; GSTAT to entertain appeals found in order

Final Conclusion: The writ petition was disposed of by directing the petitioner to comply with the pre deposit requirement of Section 112(8) and to file the appeal before the GSTAT within the extended timelines; no opinion was expressed on the merits of the first appellate order.

Restoration of GST registration upon withdrawal of suspension - Opportunity of hearing before adjudication on show cause notice - no coercive recovery without following due procedure.

Restoration of GST registration upon withdrawal of suspension - HELD THAT:- The Court accepted the statement on behalf of the Revenue that the impugned suspension stands withdrawn and directed that the petitioner's registration shall forthwith be restored. The acceptance of the Revenue's statement was recorded in Court and the order restores the registration without further adjudication on the merits of the underlying show cause notice. [Paras 4, 6]

The suspension is withdrawn and the petitioner's registration is restored.

Opportunity of hearing before adjudication on show cause notice - HELD THAT:- The Court directed that the petitioner be granted an opportunity of hearing on the show cause notice, that the petitioner shall submit all materials within 10 days, the hearing shall occur within 7 days of submission, and an order on the show cause notice shall be passed in accordance with law within 15 days from the date of hearing, thereby requiring the Revenue to follow the prescribed procedural timeline before taking any adjudicatory action. [Paras 6]

An opportunity of hearing is to be provided and the specified timetable for submission, hearing and decision is mandated.

No coercive recovery without following due procedure - HELD THAT:- The Court directed that the impugned recovery notice shall not be acted upon and that the competent officer must follow lawful procedure, verify the record and consider the petitioner's contentions before passing any order for recovery, thereby restraining coercive steps until due process is complied with. [Paras 5, 6]

The recovery notice shall not be acted upon and any recovery must follow due procedure of law.

Final Conclusion: The petition is disposed of by recording the Revenue's withdrawal of suspension, restoring the petitioner's registration, directing a hearing and expedited adjudication on the show cause notice, and restraining action on the recovery notice until lawful procedure is followed.

Cancellation of registration for non filing of returns - statutory scheme under Section 29(2)(c) - Entitlement to approach the competent officer for restoration of registration by furnishing pending returns and paying tax, interest and late fees - Compliance by filing pending returns and payment of dues.

Power to drop cancellation proceedings on compliance with proviso to Rule 22(4) - Proper officer's duty when a registered person files pending returns and pays tax, interest and late fee after cancellation under Section 29(2)(c) - HELD THAT: - The Court held that the proviso to sub rule (4) of Rule 22, CGST Rules, 2017, entitles the proper officer to drop cancellation proceedings and pass an order in FORM GST REG 20 where the person served with a show cause notice furnishes all pending returns and makes full payment of tax dues along with applicable interest and late fee. In view of the serious civil consequences of cancellation under Section 29(2)(c), the Court directed that if the petitioner approaches the empowered officer within the prescribed period and complies with the proviso, the authority shall consider the application and take necessary steps for restoration of registration expeditiously. The Court also clarified the computation of limitation under Section 73(10) from the date of the order, with the financial year 2024 25 governed by Section 44 of the Act. (Paras. 9, 11-13) [Paras 9, 11, 12, 13]

If the petitioner files all pending returns and pays dues as required by the proviso to Rule 22(4), the proper officer may drop the cancellation proceedings and shall consider restoration of GST registration in accordance with law; limitation under Section 73(10) is to be computed from this order except for financial year 2024 25.

Final Conclusion: The writ petition is disposed of by directing the petitioner to apply to the concerned authority within two months and, upon compliance with the proviso to Rule 22(4), the authority shall consider restoration of GST registration; computation of limitation under Section 73(10) shall run from this order, with financial year 2024 25 governed by Section 44.

Suspension of the petitioner's GST registration by issuance of Form GST Reg-17 - proprietor of the proprietary concern in the capacity as a Director -

Quashing of unwarranted suspension of GST registration - Suspension of the petitioner's GST registration with effect from 27.02.2026 - HELD THAT:- The Court found that although a show cause notice in Form GST Reg-17 proposing cancellation was issued on 27.02.2026, the simultaneous suspension of the registration from that date was unwarranted. The suspension component of the show cause notice was therefore quashed, and the matter was left for the authority to proceed on the show cause notice without the suspended status continuing. [Paras 7]

The suspension of the GST registration with effect from 27.02.2026 is quashed.

Direction to decide show cause notice in accordance with established judicial guidelines for revival of registration - HELD THAT:- The Court directed the respondents to decide the show cause notice by following the guidelines laid down in Tvl. Suguna Cut Piece Center [2022 (2) TMI 933 - MADRAS HIGH COURT] thereby affording the petitioner an opportunity to regularize defaults and subjecting any revival to the conditions and safeguards enumerated in those guidelines. The order requires the authority to apply those established conditions and procedures when deciding on cancellation and any revival. [Paras 8, 9]

Respondents shall decide the show cause notice in accordance with the directions and conditions set out in Tvl. Suguna Cut Piece Center.

Final Conclusion: The writ petition is disposed of: the suspension of GST registration from 27.02.2026 is quashed, and the respondents are directed to decide the show cause notice proposing cancellation by applying the Court's measured guidelines for revival and associated safeguards as laid down in Tvl. Suguna Cut Piece Center.

Validity of the show cause notice proposing cancellation of GST registration - Retroactive cancellation of GST registration - direction to follow precedent guidelines for revival and Regularisation.

Retroactive cancellation of GST registration - HELD THAT:- The Court found that the impugned Show Cause Notice in Form GST Reg-17 which proposed cancellation of the petitioner's GST registration with effect from 01.07.2017 cannot be sustained and, to that extent, quashed. The challenge to the notice was disposed at the admission stage by recording that prospective or retroactive cancellation in the terms proposed was not permissible and therefore that portion of the notice was set aside. [Paras 7]

The portion of the show cause notice proposing cancellation with effect from 01.07.2017 is quashed.

Revival of GST registration subject to compliance with conditions - HELD THAT:- The Court directed the respondents to pass orders in response to the show cause notice by following the guidelines laid down in Tvl. Suguna Cut Piece Center [2022 (2) TMI 933 - MADRAS HIGH COURT] permitting revival subject to filing returns, payment of tax, interest, fines and fees, restrictions on utilization of Input Tax Credit until scrutiny and approval, and other safeguards to prevent misuse. The writ petition was disposed by applying those conditions to the present case and directing the authorities to act accordingly. [Paras 8, 9]

Respondents must adjudicate the show cause notice in accordance with the Tvl.Suguna Cut Piece Center directions and may revive registration only upon fulfilment of the prescribed conditions and safeguards.

Final Conclusion: The portion of the impugned notice proposing cancellation with effect from 01.07.2017 is quashed; the respondents are directed to decide the show cause notice afresh in accordance with the Court's guidelines in Tvl.Suguna Cut Piece Center, permitting revival of registration only upon compliance with the stipulated conditions and safeguards.

Validity of the impugned ex parte Orders - denied input tax credit without affording the petitioner opportunity to reply and reconcile discrepancies between GSTR-3B and GSTR-2A - reconciliation of returns.

Denied input tax credit without affording the petitioner opportunity to reply -HELD THAT:- The Court recorded that the impugned orders were passed ex parte and that the alleged discrepancy between ITC as per GSTR-3B and GSTR-2A is a matter capable of reconciliation by the petitioner through appropriate material. The Authority had rejected the ITC claim in one order on the ground of belated filing and had concluded the other proceeding ex parte on account of excess claim in GSTR-3B vis-a -vis GSTR-2A. In view of the petitioner's undertaking to appear and to demonstrate reconciliation, the Court held that the ex parte orders should be set aside and the matters remitted to permit the petitioner to reply to the show cause notices and make out its case before the Authority. [Paras 6, 7, 8, 9, 10]

Impugned ex parte orders set aside and matters remitted for fresh consideration after affording the petitioner opportunity to reply.

Remittal for fresh consideration upon furnishing deposit to safeguard revenue - HELD THAT:- The Court accepted the petitioner's undertaking to deposit 10% of the disputed tax in each of the two orders as a condition to ensure no immediate revenue loss. On that basis the Court directed that the matters be remitted to the Authority for adjudication after permitting the petitioner to file its replies and reconcile the alleged discrepancies, and fixed a date for the petitioner to appear before the Authority. The Court kept all contentions open and made the indulgence conditional on compliance with the deposit and attendance directions. [Paras 10, 11, 12, 13]

Remand ordered subject to petitioner depositing 10% of the disputed demand in each matter within the time directed and appearing before the Authority on the specified date.

Final Conclusion: The High Court set aside the impugned ex parte orders and remitted both matters for fresh consideration after permitting the petitioner to file replies and reconcile the alleged ITC discrepancies, subject to the petitioner depositing 10% of the disputed tax in each matter within the time directed and appearing before the Authority.

Validity of invoking Rule 86A - debit of electronic credit ledger where the credit has been fraudulently availed - wrongful availment of ITC - Show-cause notice alleges that the petitioner issued invoices without underlying supply and that the recipient wrongfully availed credit.

Rule 86A conditions for restriction of electronic credit ledger - restriction of utilisation of input tax credit - HELD THAT:- The Court held that Rule 86A may be exercised only where the credit in the electronic credit ledger has been fraudulently availed or is otherwise ineligible in terms of the conditions specified in the rule (for example, credit availed on the strength of documents issued by a person found non-existent, without receipt of goods/services, where tax charged has not been paid, where the recipient is non-existent, or where prescribed documents are not in possession). Where the factual allegation relates solely to wrongful availment of credit by the recipient of the petitioner's invoices (and not to the petitioner having fraudulently availed ITC or being ineligible under the rule), Rule 86A cannot be validly invoked against the petitioner. Applying this principle to the show-cause notice, which alleges only that the petitioner's customer wrongfully availed ITC, the notice invoking Rule 86A against the petitioner was without jurisdiction. [Paras 6, 7, 8, 9]

The show-cause notice under Rule 86A insofar as directed against the petitioner was without jurisdiction and could not be sustained.

Final Conclusion: The impugned show-cause notice invoking Rule 86A against the petitioner was set aside as without jurisdiction and the blocked Electronic Credit Ledger is to be unblocked; other departmental contentions are left open.

Violation of principles of natural justice - failure to consider or record reasons for rejecting documentary evidence regarding movement of goods - Opportunity to rebut adverse material - right to cross-examination​​​​​​​ -burden of proof on movement of goods - entertainability due to availability of alternative remedy of appeal.

Violation of principles of natural justice - HELD THAT:- The Court found that the Proper Officer doubted movement of goods despite receipt of documentary material from the petitioner and did not explain why those documents were insufficient; further, adverse conclusions were based on statements of vehicle owners which were neither supplied to the petitioner nor subjected to any opportunity for confrontation or cross-examination. The absence of reasoning on the rejection of the petitioner's documentary proof and reliance on uncommunicated statements amounted to a breach of natural justice, rendering the adjudication order infirm. In consequence the matter was remanded for fresh adjudication with directions that any statements to be relied upon be supplied to the petitioner and that the petitioner be afforded an opportunity to cross-examine such witnesses and to be heard on the material relied upon by the Proper Officer (paras 13-17, 19-21). [Paras 16, 17, 19, 20, 21]

The impugned adjudication is set aside and remanded for fresh adjudication after supplying the relied-upon statements to the petitioner and affording opportunity for cross-examination and hearing; the Proper Officer to conclude the proceedings expeditiously.

Availability of alternative remedy not a bar where natural justice violated - Existence of statutory appeal did not preclude exercise of writ jurisdiction in view of the established breach of natural justice. - HELD THAT: - The Court applied the settled exception that a statutory appeal is not an absolute bar to writ jurisdiction when the petition discloses one of the recognised grounds for direct interference; since there was a patent violation of natural justice in the adjudication, the petition was maintainable notwithstanding the alternative statutory remedy (para 18). [Paras 18]

Writ jurisdiction was appropriately exercised because the adjudication involved a clear breach of natural justice.

Final Conclusion: The impugned adjudication order is set aside and the matter remanded for fresh adjudication; the Proper Officer must supply any statements intended to be relied upon, afford the petitioner an opportunity to cross-examine and be heard, and conclude the proceedings expeditiously (preferably within eight weeks).

Levy of late fee for delayed filing of annual returns - imposition of a general penalty - failure to file a Annual return in Form GSTR-9 / Form GSTR-9C within a prescribed period under Rule 80 of the respective GST rules for the Financial year 2018-2019 -Benefit of Notification No.7/2023-Central Tax dated 31.03.2023 as amended by Notification No.25/2023-Central Tax dated 17.07.2023 (partial waiver/ concessional late fee) -Conditional lifting of attachment upon payment of outstanding late fee.

Prohibition on double penalisation where late fee has been levied - Imposition of a general penalty under Section 125 in addition to a late fee under Section 47 for failure to file annual returns - HELD THAT:- The Court applied the ratio in the cited decision in Kandan Hardware Mart [2026 (1) TMI 383 - MADRAS HIGH COURT] and earlier authorities to hold that once a late fee under Section 47(2) of the respective GST enactments has been levied (including at concessional rates under relevant notifications), there is no scope to impose a separate general penalty under Section 125 over and above that late fee. The impugned order imposing the general penalty was therefore unjustifiable and was set aside, while the liability to pay the late fee remained. [Paras 3]

General penalty under Section 125 set aside; liability to pay late fee under Section 47(2) upheld.

Conditional lifting of attachment upon payment of outstanding late fee - HELD THAT:- The Court directed that the attachment of the petitioner's bank account shall be lifted subject to the petitioner paying the outstanding late fee confirmed by the impugned order. The lifting of the attachment is therefore conditional upon payment of the late fee within the period specified by the Court. [Paras 5]

Bank attachment to be lifted on payment of the late fee as confirmed by the impugned order.

Final Conclusion: The writ petition is partly allowed: the general penalty under Section 125 is quashed while the petitioner remains liable to pay the late fee under Section 47(2); the bank attachment is ordered to be lifted subject to payment of the confirmed late fee within the time directed.

Applicability of Entry No.234 of Schedule-I of Notification No.1/2017 and the explanation inserted by Notification No.24/2018 - execution of works contracts relating to movable property - supply of Solar Power Generating Systems and operation and maintenance of such services - Whether the appropriate amount of tax and interest has been paid or not, is a question of fact, which can always be verified by the 3rd respondent or any proper officer.

Concessional rate for solar power generating systems - Applicability of the notification explanation prescribing a 70%/30% apportionment and resulting uniform tax rate of 8.9% on the gross consideration for supplies involving Solar Power Generating Systems - HELD THAT:- The Court held that Entry No.234 of Schedule I in Notification No.1/2017, read with the explanation inserted by Notification No.24/2018 (w.e.f. 01.01.2019), applies to supplies of Solar Power Generating Systems even where such supplies occur in the course of contracts described as works contracts; the explanation requires treating 70% of the gross consideration as attributable to goods (taxable at the concessional rate) and 30% as services, which, when combined, yields a uniform effective rate of 8.9% on the gross consideration. The Court concluded that this statutory apportionment is applicable irrespective of whether the contract is characterised as relating to movable or immovable property and hence is determinative for the tax liability in the present matter. [Paras 5, 9]

The assessment must be computed by applying the 70:30 apportionment and a uniform effective rate of 8.9% on the gross consideration for the supplies of Solar Power Generating Systems.

The Court set aside the impugned assessment order and remanded the matter to the Assessing Authority to complete the assessment in terms of the judgment by applying the uniform rate of 8.9% on the gross consideration. The Court further observed that factual questions regarding whether the correct amount of tax and interest has been paid are matters of fact that the Assessing Authority or a proper officer can verify during reassessment. The question whether the contracts relate to movable or immovable property was left open and not decided by the Court in view of disposal on the basis of the notifications. [Paras 10, 11]

Final Conclusion: The writ petition is allowed; the assessment for April 2018 to March, 2020 is set aside and remanded to the Assessing Authority to recompute tax by applying the 70:30 apportionment and a uniform effective rate of 8.9% on the gross consideration and to verify payment of tax and interest, while the question of movable versus immovable character of the contracts remains open.

Determination of the liability to pay tax on any goods or services or both - classification of soaps - “toilet soap” or “laundry soap” - applying HSN headings, section and chapter notes and rules of interpretation -definition or guiding principle for determining “toilet soap” under HSN 3401 - definition of “toilet soap” as per BIS Standards (IS 2888:2004) and trade parlance - notification based rate determination - levy GST at a concessional rate of 5% for toilet soaps - product description in schedule controls tax rate - binding effect of advance ruling - labeling and declaration in classification - distinction between toilet soap and laundry soap.

Classification of soaps under HSN 3401 - Principle for determining 'toilet soap' under heading 3401 - HELD THAT:- The Authority held that the determinative principle is tariff classification under the HSN: H.S. Code 3401 11 pertains to goods for toilet use (including medicated products). The Notification's Explanation incorporates the rules of interpretation of the First Schedule to the Customs Tariff Act, 1975, so classification must follow the HSN headings and chapter notes rather than compositional metrics such as TFM when the HSN/notification contains no such compositional criterion. [Paras 5]

Toilet soap is to be identified by its placement under H.S. Code 3401 11 (goods for toilet use).

Classification of soaps under HSN 3401 - Whether 'other soap (not toilet soap)' denotes laundry soaps under the notification - HELD THAT:- The Authority concluded that the phrase 'other soap (not toilet soap)' in the Notification corresponds to the tariff description for laundry/household soaps under HSN 3401; the notification's entries and HSN subheadings (including 3401 19 42 for laundry soaps) govern the distinction between toilet soaps and other soaps. [Paras 5]

'Other soap (not toilet soap)' in the notification is to be treated as laundry soaps classified under the relevant HSN subheading.

Classification of soaps under HSN 3401 - Classification of the applicant's products within HSN subheadings - HELD THAT:- On the basis of information furnished by the applicant (including that some products are manufactured and supplied for washing the skin and others for washing purposes) and applying the HSN headings and subheadings, the Authority determined that toilet soaps for washing the skin manufactured and sold by the applicant fall under ITC(HS) Code 3401 11 90, while laundry soaps (other than toilet soaps) manufactured and sold by the applicant fall under 3401 19 42. [Paras 5]

The applicant's skin-washing soaps classify under 3401 11 90 and its laundry soaps classify under 3401 19 42.

GST rate determined by tariff classification - Applicable GST rate on the respective classified soaps - HELD THAT:- Having classified the goods under the relevant HSN entries, the Authority applied the rates specified in Notification No. 9/2025-Central Tax (Rate): goods falling under the Schedule I entry for 'toilet soap' attract the concessional rate provided for that Schedule, whereas goods falling under the Schedule II entry for 'soap (other than toilet soap)' attract the rate specified for that Schedule. The Authority relied on the linkage between tariff classification and the Notification's schedule entries to determine the applicable tax rates. [Paras 5]

Toilet soaps (as classified) attract the concessional rate specified for Schedule I; laundry soaps (as classified) attract the rate specified for Schedule II.

Final Conclusion: The Authority ruled that classification under the HSN controls: soaps for toilet use fall under H.S. Code 3401 11 (toilet soap) and other soaps fall under H.S. Code 3401 19 (including 3401 19 42 for laundry soaps); accordingly, the tariff classification determines the GST rate-toilet soaps subject to the concessional rate in the Schedule for toilet soap and other (laundry) soaps to the higher rate in the Schedule for other soaps.

Liability to GST or to VAT/other pre-GST - diesel and petrol charges invoiced separately on a per-kilometre basis - statutory scheme - power to recommend the date for levy of GST on specified petroleum products - appropriate classification - rate of tax - essential elements for a supply to be considered as a composite supply - Applicability of composite supply doctrine to supplies involving excluded petroleum products - pre-gst taxation of petroleum products - eligibility of input tax credit on VAT paid - Activity of handling of fleet operation for an organization for repair and maintenance for vehicles, insurance, drivers and fuel charges that is based on kilometer basis for commercial vehicles and equipment.

Levy of GST on petroleum products - HELD THAT:- The Authority determined that petrol and diesel remain outside the levy of GST until the date on which the GST Council recommends their inclusion; therefore such petroleum products are not leviable to tax under the CGST/CGGST Acts at present and cannot be treated as taxable supplies for GST purposes. The ruling follows the statutory scheme recognising the GST Council's role in fixing the date for levy on specified petroleum products and the statutory exclusion under section 9(2) reflected in the analysis. [Paras 5, 6]

GST is not leviable on diesel and petrol charges as of now.

Applicability of composite supply doctrine to supplies involving excluded petroleum products - The transaction cannot be treated as a composite supply under Section 2(30) where one element is petrol/diesel which is not leviable to GST. - HELD THAT:- The Authority applied the definition of composite supply and its requisites, noting that a composite supply requires all component supplies to be taxable; since petrol and diesel are not taxable supplies under GST at present, the composite-supply doctrine is inapplicable to bundle petrol/diesel with taxable services in the instant transaction. Consequently, treating fuel charges as part of a composite supply of services is rejected. [Paras 5, 6]

The concept of composite supply is not relevant to the transaction involving petrol/diesel in this case.

Continued taxation of petroleum products under pre-GST regime - Petroleum products continue, for the present, to be taxed outside GST under the pre-GST levy framework including Central Excise and State VAT. - HELD THAT:- Having held that GST does not presently extend to petrol and diesel, the Authority recorded that such products continue to be subject to the earlier regime of central excise and State VAT as applicable, and thus the fuel component will be governed by those taxes unless and until GST is made applicable by the notified date. [Paras 5, 6]

Petroleum products continue to be taxed under Central Excise and State VAT regimes at present.

Eligibility of input tax credit on VAT paid - Input tax credit under the CGST framework is not available for VAT paid on petrol/diesel. - HELD THAT:- The Authority referred to the statutory scheme governing input tax credit (Sections 16 and 17 of the CGST Act) and concluded that VAT paid on petroleum products, which are outside GST, does not qualify as input tax credit under the CGST provisions; therefore VAT on fuel purchases cannot be availed as ITC under GST. [Paras 6]

VAT paid on petrol/diesel is not eligible for input tax credit under the CGST Act.

Final Conclusion: The Authority ruled that petrol and diesel are not subject to GST at present and therefore cannot be treated as taxable components in composite supplies; they continue to be taxed under the pre-GST regime (central excise/VAT), and VAT paid on such fuel is not admissible as input tax credit under the CGST provisions.

TCS u/s 206C - compounding fees received from illegal miners/transporters of minerals - Scope of Mines and Minerals (Development and Regulation) Act, 1957/ ‘the MMDR Act’ - As decided by HC [2025 (6) TMI 2041 - CHHATTISGARH HIGH COURT] ITAT is completely unjustified in holding that compounding fee/fine (TCS) would be chargeable under Section 206C(1C) of the IT Act by relying upon the definition contained in Section 2(47) of the IT Act. Accordingly, we are unable to uphold the judgment & order passed by the ITAT relying on Section 2(47) of the IT Act. Impugned judgment & order passed by the ITAT making demand and levying interest & penalty for non-compliance of Section 206C(1C) of the IT Act cannot be sustained

HELD THAT:- We are not inclined to interfere with the impugned judgments and orders of the High Court; hence, the special leave petitions are dismissed.

Reopening of assessment u/s 147 - Disallowance of deduction claimed u/s 80P (2) (d) - As decided by HC [2025 (1) TMI 817 - GUJARAT HIGH COURT] when the issue which is sought to be raised for disallowance of the deduction claimed by the assessee u/s 80P (2) (d) which is on the interest income earned by the petitioner from the fixed deposit kept with the Cooperative Bank is held in favour of the petitioner of this Court in case of Ashwinkumar Arban Co-operative Society Ltd. [2024 (11) TMI 971 - GUJARAT HIGH COURT] it cannot be said that this is a fit case to reopen the assessment in the facts of the case.

Special leave petition has been filed 225 days beyond the period of limitation.

HELD THAT:- Cause shown for condonation of delay is not sufficient. The application for condonation of delay to file the special leave petition stands rejected.

Consequently, the special leave petition is dismissed as time-barred.

Reopening of assessment - reassessment beyond four years - reason to believe - change of opinion - disclosure of material facts - proviso to Section 147 - Period of limitation

HELD THAT:- We recall the order passed by us [2025 (1) TMI 1804 - SC ORDER] and restore the SLP (C) to its original file.

The Miscellaneous Application is, accordingly, disposed of.

There is a gross delay of 369 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioner.

Even otherwise, we see no good ground to interfere with the impugned order passed by the High Court.[2023 (9) TMI 1611 - GUJARAT HIGH COURT]

Validity of reopening of assessment - assumption of jurisdiction under Section 149(1)(b) - prima facie formation of opinion under Section 148A precludes characterization as a roving inquiry - cash withdrawal would fall within the ambit of the expression “asset” as defined under Section 149 or not?

HELD THAT:- We find no good ground to interfere with the impugned order(s) passed by the High Court.

The Special Leave Petitions are, accordingly, dismissed.

Reliance on District Valuation Officer's report after rejection of books of account - Commissioner of Income Tax (Appeal) faulted the method of valuation by the District Valuation Officer but not the procedure seeking valuation by District Valuation Officer.

Reliance on District Valuation Officer's report after rejection of books of account - Assessing Officer's referral to the District Valuation Officer - HELD THAT: - The Court examined the assessment order and found that the Assessing Officer recorded inconsistencies between the return, the balance sheet disclosure and the construction agreement, considered the books produced by the assessee and rejected them before seeking the DVO's report. The Tribunal's conclusion that referral to the DVO was permissible was endorsed because the factual record showed rejection of the books and consequent need for valuation by the DVO. The Court therefore held that the rule in Sargam Cinema [2009 (10) TMI 569 - SC ORDER] that DVO opinion should not be relied upon without rejection of books was satisfied on the facts.

Records and evidence clearly establishes that the books of accounts produced by the assessee were considered and rejected. Only thereafter, the Assessing Officer has resorted to get the District Valuation Officer’s report splitting the value of the building between the individual and HUF. Based on the District Valuation Officer report, substantial portion of investment been suppressed and that portion of income been deemed to be escaped income of the assessee. [Paras 17, 20, 21]

Final Conclusion: The High Court found no procedural infirmity in the Assessing Officer's referral to the DVO and approved the CIT(A)'s direction to adopt State PWD rates for valuation; the Tax Case Appeal is dismissed.

Addition to the taxable income on the basis of the statement furnished by the appellant to the bank - Reliance on hypothecation statement for income assessment - inflated stock declaration to obtain higher bank credit amounts to commercial immorality - appellate interference limited where findings are supported by evidence and not perverse

Reliance on hypothecation statement for income assessment - Addition of notional addition to returned income where the AO has relied upon a hypothecation statement furnished to a bank - HELD THAT: - The Court found the factual position materially different from the precedent relied upon by the appellant because the hypothecation statement specifically recorded both quantities and values and bore a certification that the figures represented the true and accurate stock position in conformity with books of account. The Tribunal had found a substantial unexplained discrepancy between the bank statement and the books, and the practice of declaring inflated stock figures to secure higher credit was held to be commercially immoral and not acceptable fiscal conduct. On that basis the AO was justified in placing reliance on the hypothecation statement to make the addition. [Paras 13, 14, 16, 17]

Addition to taxable income upheld as the hypothecation statement showing inflated quantities and values was admissible material and the discrepancy was not satisfactorily explained.

Appellate interference limited where findings are supported by evidence and not perverse - Whether the Tribunal's order was perverse or based on no evidence so as to warrant interference? - HELD THAT: - The appellant failed to demonstrate that the Tribunal's conclusions were perverse or unsupported by evidence. The Court observed that the findings of the AO, as affirmed on appeal, rested on proper appreciation of the material on record and there was no basis shown for upsetting those findings in exercise of appellate jurisdiction. [Paras 18, 19]

Final Conclusion: The appeal is dismissed. The addition made on the basis of the hypothecation statement is sustained and the Tribunal's order is not shown to be perverse or unsupported by evidence.

Penalty u/s 271(1)(c) - inaccurate claim of business loss - as alleged assessee had reduced and understated its income by furnishing inaccurate particulars of its income and concealing particulars of income, which were detected during the course of assessment proceedings only - ITAT recorded a finding that mere treatment of business loss as speculation loss by the Assessing Officer did not automatically warrant inference of concealment of income, thus deleted penalty

HELD THAT: - The Court accepted the findings of the CIT(A) and the ITAT that there was no material on record showing that the assessee had concealed income or furnished inaccurate particulars in its return. Relying on the principle in Reliance Petroproducts (P.) Ltd. [2010 (3) TMI 80 - SUPREME COURT] the Court held that mere making of a claim which is not sustainable in law does not, by itself, amount to furnishing inaccurate particulars; the particulars supplied must be shown to be incorrect, erroneous or false before Section 271(1)(c) can be invoked.

ITAT's conclusion that treatment of a business loss as a speculation loss by the AO did not automatically imply concealment or inaccurate particulars was upheld, and the authorities' rejection of a claim does not itself attract penalty absent a finding of inaccurate particulars or concealment. [Paras 3, 4]

Final Conclusion: The appeal is dismissed; the High Court upholds the orders of the CIT(A) and ITAT deleting the penalty under Section 271(1)(c) for Assessment Year 2009-10, holding that rejection of a claim does not amount to furnishing inaccurate particulars or concealment absent specific findings to that effect.

Stay of demand -transfer of admitted liquidation funds to the Income Tax Department without referring the matter to the Principal Commissioner of Income Tax/Commissioner under CBDT guidelines - revenue entitlement to recover demand pending disposal of appeal under Section 220(6)

Whether the petitioners are entitled to operate their attached bank accounts and for remittance of the matter to the Principal Commissioner of Income Tax/CIT to decide the quantum/proportion of lump sum payment for stay? - HELD THAT: - The Court held that while Paragraph 4(B)(a) contemplates a reference to the administrative Principal Commissioner/Commissioner to determine the quantum/proportion of disputed demand to be paid for grant of stay where additions are based on credible search evidence, the respondent did not make such reference when rejecting the stay petitions. The omission amounted to departure from the procedure mandated by the CBDT guideline, which the respondent was bound to follow. Having found this procedural defect, the Court remitted the matter to the Principal Commissioner of Income Tax/CIT to pass appropriate orders in accordance with Paragraph 4(B)(a) and having regard to the cited authority, within three weeks of receipt of the order. [Paras 41, 46, 48, 49]

Impugned stay rejection set aside to the extent of non reference; matter remitted to the Principal Commissioner/CIT to decide the quantum for stay in accordance with the CBDT Office Memorandum.

Revenue entitlement to recover demand pending disposal of appeal under Section 220(6) - Whether the Income Tax Department was entitled to recover the assessed demand pending disposal of appeals? - HELD THAT: - The Court recorded that, pending disposal of appeals before the appellate authority, the Income Tax Department is entitled to effect recovery of the amount subject to any stay under Section 220(6) of the Income Tax Act, 1961, and referred to the decision in Pr.CIT v. LG Electronics India (P.) Ltd. [2018 (7) TMI 1905 - SC ORDER] as authority for the proposition that the Principal Commissioner/Commissioner may decide the amount to be transferred in search based cases. This finding furnishes the legal basis for the Department's action to seek recovery in the absence of an operative stay. [Paras 42, 44, 45]

Revenue entitled to recover the demand pending appeal subject to any stay; the Principal Commissioner/CIT to determine appropriate orders as directed.

Operation of bank accounts after partial distribution in liquidation - Permissibility of operating bank accounts of the petitioners which had been attached pursuant to the garnishee/transfer - HELD THAT: - In view of the remand and the distributions already made by the liquidator, the Court permitted the individual petitioners and the petitioner company to operate the bank accounts which had been attached. This direction was tied to the Court's remit that the Principal Commissioner/CIT pass appropriate orders within the stipulated timeframe. [Paras 49]

Petitioners permitted to operate the attached bank accounts; Principal Commissioner/CIT to pass orders within three weeks.

Final Conclusion: The Court found procedural infirmity in the assessing officer's failure to refer the stay petitions to the Principal Commissioner/CIT under the CBDT Office Memorandum and remitted the matter for fresh decision; it also affirmed the Department's entitlement to recover demands pending appeal subject to any stay, and permitted the petitioners to operate their bank accounts while directing the Principal Commissioner/CIT to pass appropriate orders within three weeks.

Effect of business reorganisation on assessment proceedings - Statutory intervention under Section 170A - principles of natural justice - double taxation avoidance -transferor transferee succession.

Effect of business reorganisation on assessment proceedings - Validity of draft assessment order and giving effect order issued in the names of the transferor and transferee companies after amalgamation - HELD THAT:- The Court held that the draft Assessment Order dated 29.12.2023 issued in the name of the transferor company and the giving effect order dated 30.12.2023 issued in the name of the transferee company were unsustainable where the companies had ceased to be separate entities pursuant to NCLT orders and where modified returns had been filed in consequence of the scheme of amalgamation. The Court observed that allowing proceedings to be carried independently against the transferor would risk dual demands and would defeat the statutory scheme enacted by Section 170A and the corresponding rules, and accordingly quashed the impugned orders. [Paras 13, 14, 19, 20]

Draft Assessment Order dated 29.12.2023 and the giving effect order for Assessment Year 2020-2021 are quashed as unsustainable in view of the amalgamation and the statutory scheme under Section 170A.

Obligation to file modified return under section 170A - Consequences of a successor entity filing a modified return under Section 170A and direction for further proceedings - HELD THAT:- The Court applied the purpose and operation of Section 170A (as introduced w.e.f. 01.04.2022 and amended w.e.f. 01.04.2023) and Rule 12AD to hold that where a modified return has been furnished by a successor entity pursuant to an NCLT order, assessment proceedings must take that modified return and the business reorganisation into account. The Court directed the Transfer Pricing Officer to examine the modified return filed on 30.11.2022 and to pass a fresh order on merits, leaving the petitioner free to approach the Dispute Resolution Panel thereafter. [Paras 15, 16, 18, 21]

Transfer Pricing Officer to consider the modified return filed and pass a fresh order on merits; petitioner may thereafter pursue remedy before the Dispute Resolution Panel or accept the order.

Final Conclusion: The impugned draft assessment and giving effect orders for Assessment Year 2020-2021 are quashed; the Transfer Pricing Officer is directed to consider the modified return filed pursuant to the amalgamation and pass a fresh order on merits, after which the petitioner may seek appropriate recourse.

Addition u/s 68 - unexplained cash credits - whether identity, creditworthiness and genuineness not proved? - AO entitled to lift corporate veil and treat credits as unexplained where investor is a shell and money trail establishes accommodation entries - ITAT deleted addition - ITAT has proceeded solely on the basis of documents filed by the assessee, such as incorporation certificates, PAN, ITRs, audited accounts and VSVS compliance,

HELD THAT: - The Court held that the assessee bears the heavy initial onus under section 68 to establish (i) identity of the investor, (ii) its capacity/creditworthiness, and (iii) genuineness of the transaction, and that mere production of incorporation certificates, PAN, ITRs or routing of funds through banking channels is not conclusive where surrounding circumstances indicate otherwise.

AO conducted detailed field enquiries, survey actions, analysis of bank records and recorded statements which showed that the alleged investor was a paper/shell entity controlled by the assessee's group and that the funds were routed back into the assessee's books through layering and entry operators. Those tangible, independent findings justified lifting the corporate veil and treating the credited amounts as unexplained cash credits.

In NRA Iron & Steel [2019 (3) TMI 323 - SUPREME COURT] Hon’ble Supreme Court categorically held that when investor Companies have negligible income, no genuine business, and no real financial capacity, then mere production of documents or banking records cannot establish genuineness of the transactions

CIT(A) rightly upheld the AO's conclusion relying on binding precedents; the ITAT erred in reversing those findings by placing decisive weight on formal compliance documents and VSVS settlement without confronting the money-trail and field-verification evidence. Consequently the ITAT's conclusion was held to be perverse and contrary to record. [Paras 16, 17, 20, 21, 22]

Final Conclusion: The substantial question is answered in favour of Revenue - ITAT was not justified in setting aside the CIT(A)'s order /finding treating the share capital/premium as unexplained cash credits under section 68 for AY 2014-15 is restored.

Loss on account of sale of shares - appellant had sold certain partly convertible debentures and on sale of these debentures, which are converted into shares - Whether a speculation loss and cannot be set off against the other income ?” -Applicability of Explanation to Section 73(1) to allotment/creation of shares - distinction between creation and transfer of shares for taxation of speculation loss

HELD THAT: - The Court held that shares received on conversion of partly convertible debentures are 'created' by allotment from the company's own capital and do not constitute purchase of existing shares. Relying on its decision in AMP Spinning and Weaving Mills (P.) Ltd [2016 (9) TMI 214 - GUJARAT HIGH COURT] the Court held that allotment or creation of shares cannot be equated with purchase and sale for the purposes of the Explanation to Section 73(1). Consequently, where no purchase and sale of shares occurred, the deeming provision in the Explanation is not attracted and the loss cannot be treated as a speculation loss under Section 73(1).

In the facts of the case, on conversion of the partly convertible debentures, the shares were allotted to the petitioner by the Company from its own capital by ‘creation’ of the shares and not from ‘transfer’ of the shares from any other person. Therefore, the Explanation to Section 73(1) of the Act cannot be applied to the facts of the case. [Paras 11, 12]

Tribunal was not justified in holding that the loss on account of sale of shares is speculation loss and the same cannot be set off against the other income.

Final Conclusion: The Court allowed the appeal, holding that shares allotted on conversion of partly convertible debentures are created and not purchased, so the Explanation to Section 73(1) does not apply and the loss on their sale cannot be treated as a speculation loss.

Penalty levied u/s 270A - non-compliance to the statutory notices issued by the office of the Ld. CIT(A) / NFAC - quantum appeal of the assessee is still pending before the Ld. CIT(A) / NFAC

HELD THAT: - The Tribunal found that the Ld. CIT(A) dismissed the penalty appeal for want of prosecution because of non-compliance, while a connected quantum appeal remained pending before the Ld. CIT(A). The Tribunal held that the penalty issue ought to have been decided only after adjudication of the quantum appeal. In the interests of justice the Tribunal restored the penalty appeal to the file of the Ld. CIT(A) with a direction to decide the penalty issue after the quantum appeal is finally disposed of and to afford the assessee a hearing; the Ld. CIT(A) is to decide the issue as per fact and law. [Paras 8]

Final Conclusion: The Tribunal allowed the appeal for statistical purposes and directed restoration of the penalty issue to the Ld. CIT(A) to be decided after the quantum appeal, with opportunity of hearing to the assessee.

Penalty u/s 271D - appellant accepted loans in cash from agriculturists who have agricultural income only - scope of exception as per proviso to Section 269SS - simultaneous addition u/s 69 - HELD THAT: - The Tribunal found that the Assessing Officer rejected the assessee's claim of cash loans and made an addition of unexplained investment under Section 69, while nevertheless initiating penalty proceedings u/s 271D treating the transactions as contraventions of Section 269SS. This dual approach was held to be internally inconsistent: a penalty u/s 271D could not be sustained in respect of a cash loan that the AO had not accepted as a recorded fact.

The Tribunal concluded that initiation and levy of penalty was arbitrary and unjustified in the absence of an undisputed finding of cash receipt/loan, and that penalty could be imposed only after the claim of loan is accepted by the assessing/appellate authority. [Paras 3, 4]

Final Conclusion: The appeal is allowed and the penalty imposed under Section 271D is deleted because the Assessing Officer did not accept the cash loan claim and simultaneously made an addition under Section 69, rendering the penalty unsustainable.

Cancellation of registration u/s 12AB(4) - Transactions directly or indirectly resulted in extension of benefit to certain trustees or related parties within the meaning of section 13(3) of the Act, thereby allegedly attracting the provisions of section 13(1)(c ) - Scope of specified violation under section 12AB(4) - distinction between activities and transactions for registration - consequences of section 13(1)(c) confined to assessment stage - requirement of specific statutory limb in show-cause notice - jurisdiction for registration matters vested in CIT (Exemptions)

Distinction between activities and transactions for registration - HELD THAT: - The Tribunal held that Clause (e) targets the genuine nature and conduct of the predominant activities of the trust or institution and not isolated or disputed financial transactions. The Assessee's predominant activity-imparting education through functioning schools-was neither shown to be a sham nor to have deviated from its stated objects; the PCIT's order confined itself to specific alleged financial irregularities and did not record any adverse finding that the Society's core activities were fictitious or carried out contrary to registration conditions. Consequently, invoking Clause (e) without an adverse finding on the genuineness or statutory conditions was misconceived. [Paras 9]

Invocation of Clause (e) was rejected and the cancellation could not be sustained on that ground.

Scope of specified violation under section 12AB(4) - consequences of section 13(1)(c) confined to assessment stage - Whether alleged payments/transactions attracting section 13(1)(c) (benefit to specified persons) constitute a 'specified violation' under Explanation to section 12AB(4) warranting cancellation of registration - HELD THAT: - The Tribunal concluded that the Explanation to section 12AB(4) must be interpreted purposively and restrictively to cover violations that strike at the predominant object of the trust. Judicial precedent and the post Finance Act, 2022 statutory scheme confine the consequence of violations under section 13 to denial or taxation of the diverted income (and related penal consequences), not automatic cancellation of registration. The legislature's amendments (including section 115BBI and the 2022 changes) manifestly limit the effect of section 13 violations to assessment stage consequences, so stretching section 13 allegations into grounds for cancellation under section 12AB(4) is impermissible. [Paras 10, 12]

The PCIT's reliance on alleged section 13(1)(c) violations as a basis for cancellation failed; no specified violation under Explanation to section 12AB(4) was established.

Requirement of specific statutory limb in show-cause notice - Validity of the show-cause notices and the proceedings when the notices did not specify which clause of the Explanation to section 12AB(4) was alleged to be attracted - HELD THAT: - The Tribunal found that the Explanation enumerates distinct, mutually exclusive 'specified violations' and that communicating the precise statutory limb relied upon is a mandatory precondition to assume jurisdiction. Notices that merely contain omnibus or general allegations without identifying the specific clause leave the assessee unable to meet the statutory case and vitiate the proceedings. The PCIT's notices failed to specify the exact limb of the Explanation relied upon, constituting a jurisdictional defect. [Paras 13]

Proceedings were vitiated by failure to specify the particular clause of the Explanation to section 12AB(4) in the show cause notices.

Scope of specified violation under section 12AB(4) - Application of section 12AB(4) to alleged violations occurring in periods prior to its effective date (retrospective application) - HELD THAT: - The Tribunal held that the concept of 'specified violation' and the cancellation mechanism under section 12AB(4) were introduced with effect from 1/4/2022 and cannot be applied retrospectively to earlier assessment years in the absence of clear legislative intent. Fiscal disabilities must be construed strictly and prospectively; accordingly, treating acts of earlier years as 'specified violations' under the post 2022 regime was without authority of law. [Paras 14]

The cancellation could not be sustained insofar as it was founded on alleged 'specified violations' predating 1.4.2022.

Jurisdiction for registration matters vested in CIT (Exemptions) - Whether the Learned PCIT (Central), Kanpur had jurisdiction to cancel the Assessee's registration when the registration and related exemption matters were within the administrative jurisdiction of the Commissioner of Income tax (Exemptions)? - HELD THAT: - The Tribunal examined the statutory scheme, the CBDT Notification delineating territorial and functional jurisdiction of CIT (Exemptions), and the limits of powers under section 127 (transfer of 'case' between assessing officers). It concluded that section 127 transfers assessing officer cases for assessment purposes and does not, absent specific delegation or notification, transfer the distinct registration/grant/cancellation jurisdiction vested in the CIT (Exemptions). There was no subsequent Board authorisation or notification conferring section 12AB cancellation powers on the PCIT in place of the CIT (Exemptions). Hence the PCIT's exercise of power to cancel registration on the basis of the transfer order under section 127 was legally untenable. [Paras 15, 16]

The impugned cancellation was invalid for want of jurisdiction in the authority that passed the order.

Final Conclusion: The Tribunal quashed the PCIT's order cancelling the Society's registration for multiple independent reasons: Clause (e) was misapplied as the Society's predominant educational activities were genuine; alleged section 13 violations do not, under the amended statutory scheme, justify cancellation but are matters for assessment; the show cause notices failed to identify the specific statutory limb relied upon; retrospective application of section 12AB(4) was impermissible; and the PCIT lacked jurisdiction to pass the cancellation order. The Assessee's appeal was allowed.

Penalty for late filing of e-TDS returns u/s 272A(2)(k) - Failure to deposit tax to Government account before due date

HELD THAT: - The Tribunal affirmed the CIT(A)'s conclusion that the penalty was correctly imposed because the assessee failed to deposit the due tax to the Government account within the statutory time, and there was no material before the Tribunal to contradict that finding. The Tribunal therefore upheld the penalty imposed for the delayed filing of the e-TDS returns, treating the absence of timely deposit as determinative of liability to penalty. [Paras 6, 7]

Final Conclusion: Assessee appeal is dismissed and the penalty imposed under s.272A(2)(k) for delayed filing of e-TDS returns is sustained as the assessee failed to demonstrate timely deposit of the tax and produced no contrary material.

Maintainability of the statutory appeal - Low tax effect as a ground for disposal.

Low tax effect - question of law kept open - HELD THAT:- The Court noted the Revenue's appeal against the High Court's refusal to entertain the statutory appeal. Having been informed of the respondent's liquidation and the limited monetary consequence, the Court elected to dispose of the appeal on the narrow basis of low tax effect rather than decide the contested legal question regarding maintainability; the substantive question of law was expressly left open for determination in an appropriate case. [Paras 6, 7]

The appeal is disposed of on the ground of low tax effect and the question of law is left open.

Final Conclusion: The Supreme Court dismissed the appeal by disposing it on the ground of low tax effect and did not decide the substantive legal issue, which it left open for future adjudication.

Liability for non-registration of sales contracts when those contracts, though registered with the Turkish Grain Board (TMO), were not reflected on the online portal accessible to the CBN - fixation of the Country Cap and the conduct surrounding registration/uploading - violation of the Articles 14 and 19(1)(g) of the Constitution of India - legitimate expectation - international memorandum of understanding - forum non conveniens for foreign authority actions.

Role of domestic authority confined to verification of entries on foreign portal - HELD THAT:- The MOU and the Guidelines allocate the responsibility to maintain the online portal to the Turkish Grain Board (TMO) and prescribe that CBN's function is to verify registrations reflected on that portal and thereafter register them. The Court held that uploading to the portal is a distinct step from registration by TMO and, in the absence of the Appellants' contracts being reflected on the portal, CBN had no obligation to register them or to intervene in TMO's registration process. Consequently, no legal liability could be fastened on CBN for non-uploading by TMO and any grievance about uploading lies against the foreign authority operating the portal. [Paras 41, 42, 44, 48, 56]

CBN not liable for non-registration because its duty arises only upon contracts being reflected on the TMO portal; the grievance concerns TMO's non-uploading.

Judicial restraint in economic policy absent arbitrariness - Whether fixation of the Country Cap and the registration process violated Articles 14 and 19(1)(g) of the Constitution or warranted judicial interference - HELD THAT:- The fixation of the Country Cap and the manner of allocation fall within the domain of economic policy. The Court applied the established principle that courts should not substitute their view for a plausible administrative or policy decision unless it is shown to be manifestly arbitrary, unreasonable or tainted by mala fides. No material established either arbitrariness in the fixation of the Country Cap or a breach by CBN of duties under the MOU and Guidelines; therefore constitutional relief was not warranted. [Paras 22, 46, 55, 57]

No violation of Articles 14 or 19(1)(g) established; fixation of Country Cap and related administrative action do not attract judicial interference.

Final Conclusion: The Court affirmed the Single Judge's conclusions: CBN's role is limited to registering contracts reflected on the TMO portal and it cannot be held liable for the TMO's non-uploading, and no arbitrariness or constitutional breach was shown in the fixation of the Country Cap; the appeals are dismissed.

Entitlement to transmission of shares by legal heirs - jurisdiction of the NCLT to decide validity of transfer instruments incidental to oppression and mismanagement proceedings - company's duty to facilitate transmission of dematerialised shares - preliminary objections of maintainability - Deceased KJS Ahluwalia had gifted his shares to the wife of the appellant and in terms of such gift deed the appellant had filed letters before the various banks for releasing Mr. KJS Ahluwalia from various guarantees. He referred to the additional documents filed by him to show in June, 2017 Mr KJS Ahluwalia as well as his another brother Mr. Prashant had resigned as director from this company and intimations to this effect were sent to ROC. Further, it was argued the issue of inheritance of shares etc. cannot be looked into by the Ld. NCLT per settled law by the Hon’ble Supreme Court.

Entitlement to transmission of shares by legal heirs - HELD THAT:- The Tribunal upheld the finding that Respondents Nos.1 and 2, being Class I legal heirs of the deceased member, are prima facie entitled to transmission of the shares recorded in the deceased's name and therefore meet the numerical and percentage thresholds under Section 244. The impugned order relied on the register of members and the company's annual statements which continued to record the shares in the name of the deceased; it noted absence of transmission effectuated by the purported donee and observed suspicious circumstances surrounding the alleged gift deed and the Power of Attorney. The Court recorded and applied the reasoning in the impugned order that, on the material before the NCLT, legal representatives stand in the shoes of the deceased member and may seek transmission under the statutory scheme, and found no reason to interfere with those findings. [Paras 15, 16, 17]

The entitlement to transmission and consequent maintainability of the petition under Section 244 is sustained.

Jurisdiction of the NCLT to decide validity of transfer instruments - The NCLT has jurisdiction in proceedings under Sections 241-242 to examine, on a prima facie basis, the validity of instruments such as a gift deed and related documents that are integral to the complaint. - HELD THAT:- The Court accepted the NCLT's conclusion that determination of the validity of the gift deed and related instruments is integral to the oppression and mismanagement petition and falls within the Tribunal's wide jurisdiction to decide matters incidental or integral to such complaints. The impugned order applied the principles extracted from the cited authority Shailja Krishna [2025 (9) TMI 413 - SUPREME COURT] to hold that the NCLT may examine the validity of the transfer-instrument as part of exercising its summary jurisdiction; while noting that issues of fabrication and forgery are serious, the Tribunal found on the material before it that the circumstances warranted a prima facie conclusion in favour of the legal heirs and that further enquiry could continue in the main proceedings. [Paras 15, 16, 17]

The NCLT's exercise of jurisdiction to examine the validity of the gift deed and related instruments in the course of the company petition is upheld.

Company's duty to facilitate transmission of dematerialised shares - The company cannot evade its statutory obligation to effect transmission by invoking dematerialisation; it must follow the prescribed procedure to facilitate transmission and register the legal heirs upon compliant application. - HELD THAT: - The Court endorsed the impugned direction that the company must process transmission in accordance with the Articles and statutory procedure even where shares are in demat form and that there is no requirement of a succession certificate to compel transmission. The impugned order noted correspondence from Respondent seeking transmission which the company did not act upon, and the Tribunal directed the company to apply the prescribed rules for effecting transmission and to enter the names of the legal heirs in the register upon receipt of a proper application. The Court found no error in treating the company's failure to respond as insufficient to absolve it of its transmission duties. [Paras 19]

The direction to the company to proceed with transmission and registration in accordance with law is maintained.

Final Conclusion: The appellate challenge fails. The NCLT's interim conclusions on maintainability, the prima facie entitlement of the legal heirs to transmission, and the Tribunal's jurisdiction to examine the validity of the transfer instruments are sustained, and the directions to the company to facilitate transmission are upheld; the appeal is dismissed.

Validity of confirmation of sale and sale certificate under the moratorium imposed by Section 14 of the Insolvency and Bankruptcy Code - application of the Second Schedule to the Income-tax Act, 1961 - Commencement of the corporate insolvency resolution process (CIRP) -overriding effect of moratorium - ministerial nature of sale certificate issuance.

Confirmation of sale under Second Schedule of the Income-tax Act vests title - sale certificate is ministerial evidence of title - Effect of confirmation of sale under the Second Schedule of the Income-tax Act on transfer of title to the auction purchaser. - HELD THAT:- The Tribunal held that under the statutory scheme (Second Schedule, Rules 60-65), once the Tax Recovery Officer confirmed the sale and the full purchase money was deposited, the sale became absolute and title vested in the auction purchaser. The issuance of the sale certificate is a ministerial act and evidence of the date on which the sale became absolute; an interim withholding of the certificate does not postpone vesting of title. The Court applied authorities recognising that confirmation of sale, not the mere issuance of a certificate, is the determinative event by which title passes. [Paras 13, 23]

The confirmation of sale on 20.11.2023 vested title in the Auction Purchaser; issuance of the sale certificate was a ministerial formality and did not affect vesting.

Moratorium under Section 14 of the IBC does not affect a sale already become absolute - Whether the moratorium under Section 14 of the IBC invalidated the confirmed sale in this case. - HELD THAT: - The Tribunal concluded that because the sale had become absolute on confirmation prior to commencement of the CIRP, the moratorium could not nullify the sale. The Adjudicating Authority erred in treating confirmation and issuance of the sale certificate as contemporaneous and in relying on the SARFAESI precedent which concerned a different statutory scheme; the correct application is that a moratorium cannot retrospectively invalidate a sale that had already become absolute. [Paras 24, 25]

The moratorium under Section 14 of the IBC did not affect the sale which had become absolute prior to commencement of CIRP; the Adjudicating Authority's order allowing the RP's application was erroneous.

Final Conclusion: Both appeals are allowed; the Adjudicating Authority's order is set aside and the RP's application is dismissed. Parties shall bear their own costs.

Seeking to protect rights arising from the sale of a secured asset during an operative moratorium -Right to be heard of persons - moratorium principle - Transaction involving the sale of secured asset by Indian Bank, they both have now come forward with separate applications for impleading.

Right to be heard of persons - HELD THAT:- The Court held that when a civil right is in peril of being affected by ongoing proceedings, those whose rights are so imperiled are entitled to be heard. The applicants had sold and acquired an asset of the corporate debtor during a period when a moratorium arising from an earlier insolvency order was in force and asserted that the impugned admission of CIRP could affect their interests. Irrespective of the ultimate merit of their contentions, their substantive rights were exposed to adjudicatory scrutiny and, therefore, the applicants were necessary and proper parties whose participation was required to prevent collateral damage to their rights and to ensure that justice is seen to be done. On that basis the Court exercised its discretion to permit impleader. [Paras 4, 5]

Both applications for impleader are allowed; the applicants are directed to be impleaded as respondents 3 and 4 and the appellant is directed to amend the memo of parties and serve the appeal papers on them with specified timelines for filing objections and rejoinder.

Final Conclusion: The applications for impleading the applicants were allowed on the ground that their substantive rights were imperilled and they were necessary and proper parties; directions were given for their impleader, amendment of the memo of parties, service of papers and timelines for pleadings.

Seeking directions for a fresh transaction/forensic audit and re-examination of admitted claims - bogus claimants based on sham cash receipts while abandoning the conduct of forensic audit - suspended management of the Corporate Debtor​​​​​​​ - commercial wisdom of committee of creditors - maintainability of application under insolvency code - confidentiality of committee of creditors information - duty of resolution professional to form and record opinion before filing avoidance applications.

Admissibility of forensic/transaction audit commissioned by suspended management - HELD THAT:- The Tribunal upheld the Adjudicating Authority's refusal to take the Baker Tilly report on record because the report lacked indicia of authenticity and ownership (unsigned, unstamped, bearing disclaimers), was presented as a draft without substantiating certification, and was commissioned by an interested party. The court emphasised that such a suo-moto report from the suspended management raises conflict of interest concerns, undermines independence and credibility, may breach confidentiality of CoC/RP material, and therefore the Adjudicating Authority was entitled to decline reliance on the report. [Paras 10, 11]

The forensic/transaction audit report commissioned by the suspended management was not admissible and the Adjudicating Authority did not err in refusing to take it on record.

Locus of suspended management to initiate forensic audit - Whether the suspended management had authority or maintainable cause under the IBC to conduct a forensic audit and seek its acceptance under Section 65/Sections 60(5) and 65. -HELD THAT:- The Tribunal endorsed the Adjudicating Authority's view that there is no provision in the Code entitling the suspended management to conduct an independent forensic audit and to seek its formal acceptance where no allegation of fraudulent initiation of CIRP is made. The impugned application seeking to place the report on record and obtain rulings thereon was therefore not maintainable in the form presented. [Paras 8, 10]

The suspended management lacked a recognised entitlement to unilaterally commission and press for judicial acceptance of a forensic audit; the application under Sections 60(5)/65 was not maintainable on that basis.

Duty of resolution professional to form and record opinion before filing avoidance applications - Whether the Resolution Professional improperly filed avoidance applications without forming or recording the requisite opinion or without affording the suspended management an opportunity to respond. - HELD THAT: - The Tribunal accepted the Adjudicating Authority's finding that the RP had submitted a detailed report reflecting formation and determination of his opinion before filing avoidance applications and that the suspended management had filed objections to those applications; consequently the grievance that the RP failed to afford a fair chance or had not formed the statutory opinion was not established. [Paras 11]

The challenge to the RP's filing of avoidance applications was rejected; the RP had complied with the requirement of recording his opinion and the suspended management had avenues to object.

Final Conclusion: The appeal is dismissed and the impugned order is affirmed; the Tribunal found no infirmity in the Adjudicating Authority's refusal to admit the forensic report commissioned by the suspended management, held that the suspended management lacked entitlement to unilaterally conduct such an audit for judicial acceptance, and rejected the challenge to the RP's filing of avoidance applications.

Validity of enhancement of penalty imposed by the Adjudicating Authority - discretionary imposition of penalty - maximum penalty limit - presumption as to documents - imported against remittances - contravening the provisions of Section 10(6) of FEMA, 1999 read with Regulation 6(1) of the Foreign Exchange (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000 and Section 4 of FEMA, 1999.

Judicial discretion in imposition of penalty under Section 13(1) of FEMA - Whether the Adjudicating Authority's quantum of penalty was within the permissible discretion under Section 13(1) of FEMA - HELD THAT:- The Tribunal held that Section 13(1) prescribes only a maximum limit (up to three times the amount involved) and does not fix a minimum or mandatory quantum, leaving the amount of penalty to the Adjudicating Authority's judicious discretion. The Adjudicating Authority had evaluated the evidence and imposed a penalty substantially below the statutory maximum; the Tribunal found that the order reflects objectivity and judiciousness and that the statutory scheme permits such discretion. The Supreme Court p in State of MP and Ors. Vs. Bharat Heavy Electricals [1997 (8) TMI 252 - SUPREME COURT] was applied to underline that a statutory maximum does not preclude discretionary reduction of penalty. [Paras 5, 6, 7]

The Adjudicating Authority's imposition of penalty was within the discretionary scope of Section 13(1) of FEMA and did not warrant interference.

Appellate enhancement of penalty - Whether the appeal for enhancement of the penalty should be allowed in the facts of this case - HELD THAT:- The Tribunal considered the magnitude of the penalty already imposed (noting it was 27.39% of the alleged contravention), the Adjudicating Authority's reasoned exercise of discretion, and practical considerations including the respondents' inability to comply with pre-deposit directions and non-realisation of any penalty to date. In view of these factors and the absence of a legal infirmity in the adjudication on quantum, the Tribunal concluded that enhancing the penalty would serve no useful purpose and declined to interfere with the impugned order. [Paras 6, 8, 9]

The appeal for enhancement of penalty is dismissed; enhancement is not warranted on the facts and circumstances of the case.

Final Conclusion: The Tribunal dismissed the Enforcement Directorate's appeal for enhancement of penalty, holding that the Adjudicating Authority had lawfully exercised its discretion under Section 13(1) of FEMA in fixing the quantum and that enhancement was not justified in the circumstances.

Provisional attachment - Proceeds of crime - sale proceeds from shares sold to a bona fide third party - profits derived from extraction of limestone under the Kadapa mining lease - reason to believe for attachment under Section 5 - substitution of provisionally attached property.

Proceeds of crime - Whether sale proceeds/returns from shares acquired by the appellant constitute proceeds of crime in the appellant's hands - HELD THAT: - The Tribunal applied its earlier reasoning in Alpha Avenue [2019 (8) TMI 12 - ATPMLA, NEW DELHI] and found that the appellant's purchase of shares was an outgo and there is no material establishing that the consideration paid by the appellant was itself 'derived or obtained' by criminal activity. The fact that an innocent third party purchaser (PARFICIM) bought the shares at a profit and was not charged, and that the sale proceeds represent returns from a bona fide secondary transaction, precludes characterization of those sale proceeds as proceeds of crime in the appellant's hands. Consequently the Tribunal held that neither the original purchase nor the sale consideration received by the third party can be treated as proceeds of crime attributable to the appellant (see paras 22-24). [Paras 22, 23, 24]

Sale proceeds/returns from the shares are not proceeds of crime in the appellant's hands.

Proceeds of crime - Whether profits derived from extraction of limestone from the Kadapa mines constitute proceeds of crime and the correct quantification thereof - HELD THAT:- The Tribunal held that, on the material before the Adjudicating Authority and having regard to the sequence of events leading to grant and transfer of prospecting and mining permissions, there was sufficient material to prima facie treat profits from mining activity as representing the 'value' of proceeds of crime under Section 2(1)(u) and hence amenable to attachment (para 28). However, the Directorate had revised its computation after deducting verifiable extraction costs; the Tribunal accepted that revision and concluded that the quantifiable proceeds attributable to mining reduce to Rs. 92.52 crore (paras 29). The overall revised traceable proceeds therefore stand reduced accordingly. [Paras 28, 29]

Profits from mining were properly treated as 'value' of proceeds of crime on the material, but the quantification is reduced to reflect deduction of extraction costs.

Reason to believe for attachment under Section 5 - Whether the respondent had 'reason to believe' to invoke provisional attachment under Section 5 of the PMLA - HELD THAT:- The Tribunal examined the 'reason to believe' recorded by the Deputy Director and held that the statutory threshold requires reasonable grounds and not conclusive proof. The recorded reasons, including investigational findings of intermingling of proceeds, risk of dissipation, and material relied upon by the Directorate, were held sufficient to invoke Section 5(1) (paras 31-32). The contention that delay negated urgency was rejected. [Paras 31, 32]

There existed sufficient 'reason to believe' to justify provisional attachment under Section 5.

Substitution of provisionally attached property - HELD THAT:- The Tribunal reviewed precedent and statutory scope and concluded that it lacks a specific statutory power under the PMLA and Rules to permit substitution of attached properties (para 35). Noting that certain High Court orders have entertained substitution in writ jurisdiction, the Tribunal held it cannot, as a creature of the statute, independently exercise such equitable relief. Nevertheless, because the Directorate expressly indicated willingness to accept adequate alternate security, the Tribunal clarified that its conclusion does not prevent the ED from releasing properties against suitable security if the ED chooses to do so (para 36). [Paras 35, 36]

The Appellate Tribunal has no statutory power to order substitution of attached properties, though the Directorate may, in its discretion, accept adequate alternate security and release properties.

Final Conclusion: The appeal is partly allowed: the Tribunal held that the sale proceeds/returns from the share transactions are not proceeds of crime in the appellant's hands, affirmed that mining derived profits may be treated as 'value' of proceeds of crime but accepted the Directorate's revised quantification (reducing the attributable proceeds from extraction to the lowered figure), found that there was sufficient 'reason to believe' for provisional attachment, and concluded the Tribunal cannot order substitution of attached properties though the ED may, if it chooses, release properties against adequate security.

Provisional attachment - proceeds of crime in possession of a person - fraudulent actions resulted in defaults on promise to return the money with high returns - Multiple FIRs and an ECIR describing a scheme of collecting funds from investors and diverting them into purchases and transfers - reverse burden of proof in proceedings under the Prevention of Money Laundering Act, 2002.

Provisional attachment of proceeds of crime in possession of a person - HELD THAT: - The Tribunal applied the principle that section 5(1) (as explained in the cited Apex Court passage) permits provisional attachment where material indicates that a person is in possession of proceeds of crime; the sweep is not confined to persons named as accused. The Court found evidence that amounts derived as proceeds of crime were transferred for purchase of properties in the appellant's name and that sums were transferred into her bank account by the main accused. In that factual matrix the attachment of properties purchased out of such funds was held to be permissible under the Act, and the appellant's non-accused status did not preclude provisional attachment. (Paras 11, 12, 13) [Paras 11, 12, 13]

Provisional attachment of the appellant's properties stood validly made as they were found to have been purchased out of proceeds of crime.

Reverse burden of proof in PMLA proceedings - The appellant was required to discharge the reverse burden to show that transfers to her husband or to her account were not proceeds of crime, and failure to produce supporting bank records warranted upholding the attachment. - HELD THAT:- The Tribunal recorded that the appellant relied on alleged transfers from her account to the main accused but failed to produce the husband's bank statements or other evidence to establish that the impugned transfers were bona fide, longstanding savings or repayments. The Tribunal held that where the material indicates transfers from the accused, the onus shifts to the recipient to substantiate legitimate source; the appellant's inability to produce the clinching bank evidence disentitled her to relief. (Paras 10, 11, 13) [Paras 10, 11, 13]

The appellant failed to discharge the reverse burden of proof and accordingly the attachment was not interfered with.

Final Conclusion: The Tribunal dismissed the appeal, holding that provisional attachment of properties acquired out of proceeds of crime was permissible even though the appellant was not an accused, and that the appellant failed to discharge the reverse burden of proof by producing bank records to show legitimate source of the impugned transfers.

Validity of confirmation of provisional attachment of the property owned/used - acquisition of property - proceeds of crime - money laundering - funds collected from public through E-Nuggets Mobile application on an assurance of higher returns by making illicit use of accounts at Federal Bank branches in Kolkata - Scheduled offences.

Provisional attachment under PMLA - acquisition of property from proceeds of crime - HELD THAT: - The Tribunal found on the material of investigation that the appellant company and its director featured in the earlier criminal inquiry and that the property was acquired within the relevant check period and by payments made during that period, indicating acquisition from proceeds of crime. The Tribunal rejected the submission that a mere leasehold or absence of asserted proprietary right by the appellant precluded attachment, noting the appellant's possession and use and the investigative findings linking the property to layering of illicit funds. On that basis the Adjudicating Authority's confirmation of the provisional attachment was held to have been made on sufficient material and did not warrant interference. [Paras 11, 14, 15]

Confirmation of the provisional attachment was upheld as valid.

Quashing of subsequent FIR does not annul prior PMLA proceedings where earlier FIR and investigation disclose role - Effect of the alleged quashing of the second FIR on the attachment proceedings under the Act of 2002 - HELD THAT: - The Tribunal recorded that two FIRs had been registered but that the first FIR and the resultant investigation already disclosed the role of the appellant and its director in the scheme. In view of the continued existence of the earlier FIR and the investigative findings linking the appellant to laundering, the purported quashing of the subsequent FIR did not vitiate the PMLA proceedings or the attachment which flowed from the earlier inquiry. [Paras 16]

The alleged quashing of the second FIR did not invalidate the attachment proceedings; no interference was warranted on this ground.

Final Conclusion: The appeal is dismissed; the Tribunal upheld the Adjudicating Authority's confirmation of the provisional attachment, finding sufficient investigative material linking the property to proceeds of crime and that quashing of a later FIR did not defeat the continuing proceedings under the Act.

Validity of impugned show cause notice - Applicability of Notification No.25/2012 and Notification No.30/2012 to legal services between an individual advocate and an advocate/partnership firm - lack of jurisdiction - reverse charge mechanism.

Whether the impugned proceedings for recovery of service tax could be sustained where Notifications dated 20th June 2012 exempt or fix the extent of service tax for legal services between an individual advocate and an advocate/partnership firm, and whether the Designated Officer acted with jurisdiction in passing the impugned order - HELD THAT:- The Court held that Notification No.30/2012 (and Notification No.25/2012) set out that in respect of services provided by an individual advocate or a firm of advocates by way of legal services the percentage of service tax payable by the person providing the service is Nil and that the notifications exempt or prescribe nil liability for the specific transaction between an advocate and an advocate/partnership firm. Because the notifications clearly preclude levy in the circumstances, the Designated Officer, having not considered or applied those notifications, acted without jurisdiction in confirming the demand. The court concluded that no useful purpose would be served by remitting the matter and therefore quashed the impugned order as passed contrary to the binding notifications. [Paras 5, 6]

The impugned order confirming service tax demand was quashed as the Designated Officer acted without jurisdiction in relation to services covered by the notifications.

Final Conclusion: The petition is allowed and the impugned order is quashed on the ground that Notifications No.25/2012 and No.30/2012 govern the levy on legal services between an individual advocate and an advocate/partnership firm, and the Designated Officer acted without jurisdiction in proceeding contrary to those notifications.

Liability to pay service tax - exemption threshold - Validity of demand imposed on the basis of inputs received from Central Board of Direct Taxes (CBDT) Or on the basis of declaration made in the Income Tax Returns - Application of exemption threshold to determine service tax liability.

Liability to pay service tax - HELD THAT:- The Court noted the coordinate decision in W.P. No. 11154/2023 and held that proceedings under the Finance Act seeking to impose service tax liability cannot be sustained if they rest solely on inputs derived from income tax returns or CBDT information without independent adjudication. The High Court extended those observations to the present matter where the Order in Original had been upheld on the ground that the petitioner did not appear and place records; the appellate order therefore did not undertake full adjudication on merits and cannot be allowed to stand. [Paras 5]

The Court set aside the Orders in Original and Appeal insofar as they depended on such inputs and remitted the matter for fresh consideration.

Remand for fresh adjudication with opportunity to reply to show cause notice - application of exemption threshold to determine service tax liability - HELD THAT:- Relying on the directions and observations in W.P. No. 11154/2023 (para 10 as extracted), the Court directed that the adjudicating authority consider whether the petitioner falls within the statutory definitions and exemption/negative lists and whether the claimed liability is barred by limitation. The petitioner was granted an opportunity to appear and file a fresh reply to the show cause notice and to demonstrate that the value of services rendered falls within the exemption threshold, which, if established, would negate service tax liability. Other contentions were expressly kept open for decision by the authority on reconsideration. [Paras 6, 7]

Accordingly, the Order in Original at Annexure-A is set aside, the Order in Appeal at Annexure-B is also set aside.

Final Conclusion: The High Court set aside the impugned Orders in Original, the appellate order and the recovery notice, and remitted the matter to the adjudicating authority to be reconsidered from the stage of reply to the show cause notice, permitting the petitioner to file fresh pleadings and to establish whether the exemption threshold negates any service tax liability; other contentions remain open.

Joint assessment of total rental income - Co-owners of a commercial property, receive rental consideration in proportion to their undivided shares - entitlement to individual slab exemption - Association of persons - Renting of Immovable Property Service” as per section 65(105)(zzzz) read with Section 65(90a) of the Finance Act, 1994 and the provisions of Section 65(B)(41) ibid - Whether joint owners of a commercial property should be assessed individually with separate slab exemptions, or collectively as an ‘association of persons’ without such exemption.

Association of persons - individual assessment of co-owners - entitlement to individual slab exemption - HELD THAT:- We find that a similar matter was considered by this Bench in the case of Naresh Gopaldas Lund and Ors Vs Commissioner of GST & Central Excise, Coimbatore [2026 (1) TMI 1161 - CESTAT CHENNAI]. The Tribunal applied established principles on the legal concept of association of persons, holding that mere co-ownership of property does not establish an association. Formation of an association requires volition - a conscious, consensual joining for a common purpose (not mere incidental or automatic co-ownership) and joint management or conduct of a joint enterprise to produce income. The facts showed segregated receipt and crediting of rent to each co-owner and no evidence of joint management or a common venture; therefore the essential element of volition and joint action was absent. Reliance on precedent led to the conclusion that co-owners must be assessed on their respective shares, and each is eligible for applicable slab exemption against his individual turnover. [Paras 5, 6]

Co-owners are not an "association of persons" for service tax; each appellant to be assessed individually and may avail the applicable slab exemption; impugned orders set aside with consequential relief.

Final Conclusion: The Tribunal allowed the appeals, holding that joint owners of the commercial property are liable to be assessed separately for service tax on their respective shares and are entitled to individual slab exemptions; the impugned order is set aside and consequential relief granted.

Denial of CENVATCredit in respect of various input services - exceeding 20% limit - excess utilization - extended period of limitation - imposition of penalty under Section 78 of the Act read with Rule 15 - clerical error doctrine - failed to bring any corroborative evidence on record to indicate wilful mis-statement or suppression of facts - reverse the proportionate credit attributable to the value of exempted output services in terms of in terms of option (ii) in sub-rules (3) & (3A) of Rule 6 of the CENVAT Credit Rules.

Whether CENVAT utilisation in excess of 20% in particular months breaches Rule 6(3)(c) when overall utilisation in the financial year is within 20% -HELD THAT:- The Tribunal held that the CENVAT Credit Rules do not prescribe monthly computation of the 20% restriction in Rule 6(3)(c). Although CENVAT was utilised in excess of 20% for February and April 2005, the appellant's utilisation for the Financial Years 2004-05 and 2005-06 as whole remained within the 20% limit. Consequently the demand based on monthly computation was unsustainable and set aside. [Paras 8]

Demand of Rs.9,33,806/- based on alleged excess utilisation was set aside.

Validity of Input Service Distributor registration notwithstanding later digital re-registration - HELD THAT:- The Tribunal found that the Head Office had obtained ISD registration in 2004 and that the Department erred in treating the later digital-registration date as the effective registration date. The Tribunal further observed that a substantial benefit cannot be denied solely for non-compliance with a procedural formality where payment of duty and utilisation are not in dispute. [Paras 9]

Demand of Rs.26,94,914/- based on denial of Head Office distributed credit was set aside.

Exercise and effect of option (ii) under Rule 6(3) / 6(3A) - proportionate reversal of CENVAT credit - HELD THAT:- The Tribunal examined Rule 6(3) as amended and the appellant's communication, concluding the appellant had furnished details consistent with opting for option (ii) (proportionate reversal) despite a clerical reference to option (i). The Tribunal held there is no requirement to separately 'opt' for payment of 8% when option (ii) is exercised, and therefore the demand framed by applying flat 8% was legally unsustainable. The appellant is liable to reverse proportionate CENVAT credit attributable to exempted services and to pay interest thereon; the exact quantum was not verified and therefore the matter was remanded to the adjudicating authority solely to quantify the proportionate credit and interest. [Paras 10]

Demand computed by applying 8% was set aside; appellant must reverse proportionate credit under option (ii) and the matter remanded for limited quantification with interest.

Imposition of penalty - HELD THAT:- The Tribunal found that the demand was made on the basis of accounts and records submitted by the appellant and that the Department did not produce corroborative evidence of wilful mis-statement or suppression with intent to evade tax. On these facts the imposition of penalty was not warranted. [Paras 11]

Penalty imposed in the impugned order was set aside.

Final Conclusion: The Tribunal set aside the demands relating to alleged monthly excess utilisation and to denial of Head Office distributed credit; it held the 8% levy was inapplicable where option (ii) was rightly exercised, remanding only for quantification of proportionate reversal and interest; the penalty was set aside for lack of evidence of suppression.

Appeal filed before the Commissioner time barred - Proof of postal delivery for service of order - statutory time limit prescribed under Section 85(3A) of the Finance Act, 1994 - Condonation beyond statutory maximum - invoking the extended period under the proviso to section 73(1) of the Finance Act, 1994.

Proof of postal delivery for service of order - Whether the appeal before the Commissioner (Appeals) was time barred in view of service of the Order in Original by speed post - HELD THAT:- The Court held that proof of delivery requires evidence beyond mere dispatch, but the appellant's own affidavit established that the Order in Original was received at the departmental address by the occupant and was handed over to the appellant only later. On that basis the department discharged the burden of establishing proof of delivery at the address on record, and the appeal was therefore delayed beyond the statutory filing period. [Paras 6, 7, 8]

The appeal was time barred because service of the order at the address on record was established and the appeal was filed after the permissible period.

Limitation prescribed under Section 85(3A) not amenable to condonation beyond statutory maximum - Whether the Commissioner (Appeals) had jurisdiction to condone delay beyond the maximum period permitted by statute - HELD THAT: - The Court applied the precedent that the appellate authority is a creature of statute and has no power to condone delay beyond the specific maximum period prescribed; the proviso permits extension only for the limited additional period and excludes wider reliance on general limitation provisions. [Paras 9]

The Commissioner (Appeals) could not condone delay beyond the statutory maximum and correctly rejected the appeal on limitation grounds.

Final Conclusion: The impugned order rejecting the appeal as time barred is upheld: service was held proved at the address on record and the Commissioner (Appeals) correctly refused condonation beyond the statutory limit, accordingly the appeal is dismissed.

Availement and utilized irregular Cenvat credit -Activities primarily funded through grants and subsidies received from BCCI by virtue of its membership - non-payment or short -payment of service tax on various categories of services -Mega Exemption Notification No. 25/2012-S.T. dated 20.06.2012 - Exemption for promotion of sporting events - renting of immovable property exclusion​​​​​​​ - bundled services for promotion of sporting events exempt from service tax - doctrine of mutuality - denial of CENVAT credit without proof of ineligibility unsustainable - extended period of limitation.

Grants and subsidies from BCCI not taxable as consideration - doctrine of mutuality - bundled services for promotion of sporting events exempt from service tax - HELD THAT:- The Tribunal held that the sums recorded as 'BCCI subsidy' are grants/subventions pursuant to BCCI's constitutional obligations and were not paid as quid pro quo for any identifiable taxable service; accordingly they do not constitute taxable consideration. The Tribunal applied the concept of bundled services and found that the appellant's activities are naturally bundled with promotion of cricket, attracting exemption prior to 30.06.2012 and under the Mega Exemption Notification thereafter. The doctrine of mutuality was held applicable because BCCI distributes subsidies inter se among member associations, and an association cannot render a service to itself; amounts flowing from a mutual surplus are not services. Reliance was placed on JSCA and other tribunal/SC authority ratios as applied to the facts, leading to the conclusion that the confirmed demand based on those receipts is unsustainable. [Paras 6]

Demand confirmed on grants/subsidies and other receipts in connection with promotion of cricket set aside; no service tax payable on those amounts.

Denial of CENVAT credit without proof of ineligibility unsustainable - HELD THAT:- The Tribunal found no allegation in the OIO that the impugned credit related to ineligible input services and observed that the appellant had received and utilised the input services, applying precedent that mere absence of documentary support cannot sustain denial where inputs are admitted and utilised. As to rent a cab, the Tribunal held that the test is nexus and non personal use rather than proof of cab being capital goods, and no finding of personal use was recorded; hence disallowance was presumptive and contrary to settled law. [Paras 7]

Demand arising from disallowance of the CENVAT credit (including rent a cab credit) is not sustainable and the credits are allowed.

Extended period of limitation not invocable where demand based on assessee's books - Confirmation of demand for the extended period of limitation is unsustainable. - HELD THAT:- Relying on authorities and the principle that demands raised on the basis of the assessee's published books/accounts do not warrant invocation of the extended period, the Tribunal observed the department was aware of the appellant's activities from returns and published documents; suppression with intent to evade tax was not established. Consequently, the extended period could not be invoked and penalty for suppression could not be imposed. [Paras 6, 8]

Demands confirmed for the extended period of limitation and associated penalties are set aside.

Grants and subsidies from BCCI not taxable as consideration - Revenue's appeal against quantification, appropriation and non imposition of penalty is unsustainable because the underlying demand itself is not maintainable. - HELD THAT:- The Tribunal examined Revenue's challenge to the adjudicating authority's appropriation of earlier payments and to quantification, but concluded that since the demand itself (based on BCCI subsidies and receipts connected with promotion of cricket) was found legally unsustainable, errors or delays in filing returns and alleged incorrect quantification did not sustain the Revenue's appeal. Accordingly the Revenue's contentions were rejected and its appeal dismissed. [Paras 4, 9]

Revenue's appeal dismissed; relief granted to appellant because the demand was held not sustainable.

Final Conclusion: The Tribunal set aside the entire demand of service tax (and interest and penalty) confirmed in the impugned order for April 2010 to March 2015, allowed the appellant's appeal with consequential relief, and dismissed the Revenue's appeal as unsustainable.

Levy of service tax on reimbursement for warranty labour - Inclusion of reimbursed cost of spare parts in taxable value.

Levy of service tax on reimbursement for warranty labour - HELD THAT:- The Tribunal held that the question whether service tax is payable on amounts paid by the manufacturer to dealers for providing free warranty services is no longer res integra. Applying the Tribunal's earlier decisions on identical facts in the case of Marikar Motors Ltd. Vs. CCE, C&ST, Thiruvananthapuram [2025 (4) TMI 821 - CESTAT BANGALORE], the amounts reimbursed by the manufacturer as labour charges for warranty services cannot be subjected to service tax when they are payments made by the manufacturer to the dealer for services rendered free to the customer. The Tribunal relied on its precedents which addressed the same factual matrix and reached the conclusion that such reimbursements do not attract service tax, and applied those precedents to the present appeal. [Paras 7, 11]

Demand of service tax on labour reimbursements paid by the manufacturer to the dealer during warranty period is set aside.

Inclusion of reimbursed cost of spare parts in taxable value - HELD THAT:- The Tribunal treated the issue as covered by its earlier decisions, which followed the ratio that reimbursable expenses such as cost of spare parts used during warranty and extended warranty services are not includible in the taxable value for service tax purposes. The Tribunal referred to prior Bench decisions and to the Supreme Court's view in Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT] as applied by this Tribunal, and held that where spare parts have effectively been sold on payment of VAT or are reimbursed by the manufacturer, their cost cannot be treated as consideration for levy of service tax on the dealer. [Paras 8, 11]

Demand of service tax on reimbursement of cost of spare parts used in warranty services is set aside.

Final Conclusion: The impugned order is set aside; both appeals are allowed and the service tax demands in respect of reimbursed labour charges and reimbursed cost of spare parts for warranty services are not sustained, with consequential reliefs, if any, to follow as per law.

Classification of services - classifiable as 'business auxiliary service' or as 'air travel agent service' - Scope of travel agent service - Definition of 'business auxiliary service' under Section 65(19) of the Finance Act, 1994 -Extended period of limitation and suppression in classification disputes - remand for verification of deposited tax where collections admitted.

Classification of services between business auxiliary service and air travel agent service - Services rendered by the appellant are air travel agent service and not business auxiliary service. - HELD THAT:- The Tribunal examined the definition of business auxiliary service and the facts that the appellant provided services to end users as an IATA/air travel agent without undertaking promotion or marketing on behalf of airlines or IATA agents. The activities fell within the statutory definition of air travel agent as services connected with booking of passage for travel by air; they did not satisfy the seven categories under the business auxiliary service definition. Reliance was placed on earlier tribunal decisions reaching the same conclusion. Consequently the demand confirmed under the head of business auxiliary service was held unsustainable (paras 11.1-11.3). [Paras 11]

Demand confirmed under business auxiliary service set aside.

Scope of travel agent service - Charges such as passport, visa processing, NOC and insurance do not fall within the definition of travel agent service as alleged; the demand under that head cannot be sustained. - HELD THAT: - The Tribunal found that the miscellaneous charges collected by the appellant do not specifically fall within the statutory contours of services connected with booking of passage for travel and do not fall within the four corners of the travel agent definition relied upon by the department. Therefore the demand under travel agent service was held unsustainable (para 11.4). [Paras 11]

Demand under travel agent service set aside.

Remand for verification of deposited tax - excess collection and short payment reconciliation - HELD THAT:- Although the department had recorded both a short payment and an excess collection under the air travel agent service category, the Tribunal concluded that the appellant's activities are properly classified as air travel agent service and that amounts claimed as excess collection cannot be treated as such without verification. The Tribunal therefore remanded the limited issue of verifying whether the service tax collected by the appellant under this category was indeed deposited in government accounts for adjudication (para 11.5). [Paras 11]

Limited remand to adjudicating authority to verify the appellant's claim of deposit of collected tax.

Extended period of limitation and suppression in classification disputes - HELD THAT:- The Tribunal held that where classification is disputed, the allegation of suppression with intent to evade tax cannot be sustained if the demand particulars are derived from the appellant's books of account. Consequently, invocation of the extended period of limitation was inappropriate and penalties predicated on suppression were not tenable (para 12). [Paras 12]

Extended period invocation set aside and penalty held not imposable.

Final Conclusion: The demands confirmed under business auxiliary service and travel agent service were set aside; the classification of the appellant as an air travel agent was accepted. The question whether amounts collected under air travel agent service were deposited is remanded for verification, and the invocation of extended limitation and penalty was quashed.

Demand of duty on raw materials consumed in excess of SION norms - duty already been demanded and paid on scrap generated from those raw materials -Prohibition against double taxation of duty on raw materials and duty on scrap - imposition of penalty for clearances of scrap in excess of SION norms.

Prohibition against double taxation of duty on raw materials and duty on scrap - HELD THAT:- The Tribunal held that where duty was demanded and paid on scrap cleared in excess of SION norms, an additional demand of duty on the quantity of raw material alleged to have gone into generation of that excess scrap would amount to demanding duty twice on the same raw material. The Revenue produced no contrary evidence of diversion of excess raw material. In these circumstances the confirmation of duty on the excess raw material was set aside as legally unsustainable. [Paras 6, 7]

The confirmation of demand of duty on the excess raw materials was set aside.

Validity of penalty imposed for clearance of scrap in excess where the appellant is a 100% EOU under departmental supervision and had disclosed relevant facts - HELD THAT:- The Tribunal found that the appellant, being a 100% EOU, had informed the Department of manufacturing processes and scrap generation and operated under direct supervision of Central Excise officers; therefore, imposition of penalty for clearance of scrap in excess was unwarranted. Having regard to the supervision and disclosures, the penalty was held to be unsustainable and was set aside. [Paras 7]

The penalty imposed was set aside.

Final Conclusion: The appeal was allowed in part: the demand of duty on excess raw materials was quashed and the penalty was set aside, while the admitted duty on scrap clearances remained unaffected.

Applicability of monetary threshold under national litigation policy to pending appeals - monetary limit for filing or pursuing appeals - bar to continuation of litigation.

Applicability of monetary threshold under national litigation policy to pending appeals - Whether the Circular dated 26.06.2024 fixing monetary limits for non-pursuance of appeals applies to pending appeals and bars the present appeals where the tax component is below the prescribed threshold - HELD THAT:- The Court examined the Circular's wording, including the expression "Appeal should not be pursued," and Para 3(i) which confines the monetary calculation to the aggregate amount of tax in dispute (including CGST, SGST/UTGST, IGST and Compensation cess). The Court held that the Circular is explicit that the monetary limit applies not only to future filings but also to pending appeals, and that the threshold prescribed for the Supreme Court operates as a bar to pursuing appeals where the tax component falls below that limit. The Court therefore declined to decide the underlying question of law and limited its determination to the applicability of the Circular as a bar to continuation of the appeals. [Paras 4, 5, 6, 7]

The Circular applies to pending appeals and, as the tax component in these appeals is below the prescribed monetary limit, the appeals are barred from being pursued and are dismissed on that ground; the merits are left open.

Final Conclusion: The appeals were dismissed on the ground that the national litigation policy Circular fixing monetary thresholds applies to pending appeals and bars continuation where the tax component is below the prescribed limit; the Court did not express any view on the merits of the underlying legal dispute.

Entitlement to simple interest under Section 20 - refund with interest - statutory time limit for refund - approval by prescribed authority.

Refund with interest under Section 20 of the Haryana Value Added Tax Act, 2003 - HELD THAT: - The Court held that once the Assessing Officer, by order dated 14.08.2015, declared the petitioner entitled to a refund, the petitioner was entitled to interest in terms of Section 20 of the 2003 Act. The decision in M/s Raghav Industries [2022 (7) TMI 1619 - PUNJAB AND HARYANA HIGH COURT] - upheld as final - and the conjoint reading of Section 20 with Rule 42 establishes that the approval procedure must be finalised within the time contemplated for interest computation so as not to render Section 20(9) otiose; accordingly interest is payable from the date of the petitioner's refund application until the date of payment. Applying that principle, the Court held the petitioner entitled to interest from the date of application (22.04.2016) until the date the refund was released (28.08.2019). [Paras 8, 9, 10]

Petitioner entitled to interest on the refund from 22.04.2016 to 28.08.2019 in terms of Section 20 of the 2003 Act.

Approval period under Rule 42 to be counted within sixty days for interest computation - HELD THAT:- The Court held that the fact the refund was not granted in the original assessment of 01.06.2006 is immaterial where the appellate authority remitted the matter and the assessing authority subsequently, by order dated 14.08.2015, allowed the refund. The statutory scheme and Rule 42 require the approval process to be completed in time so that interest periods under Section 20(9) and (10) operate as intended; the petitioner's case is squarely covered by the reasoning in M/s Raghav Industries and entitles the petitioner to interest despite the refund not having been allowed in the original assessment. [Paras 9]

Refund allowed by the assessing authority on remand attracts interest under Section 20 notwithstanding that no refund was granted in the original assessment.

Final Conclusion: Writ petition disposed holding the petitioner entitled to interest on the refund in terms of Section 20 of the 2003 Act for the period from 22.04.2016 to 28.08.2019; the decision in M/s Raghav Industries was applied as final authority.