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Issues: Whether the proceedings in the impugned show cause notice deserved to be stayed pending determination of whether the Delhi Jal Board is a local authority and the applicable GST rate on the works contracts.
Analysis: The petition challenged the show cause notice under writ jurisdiction on the ground that the rate applicable to works executed for the Delhi Jal Board depended on whether it qualified as a local authority. The Court noted that a similar issue was already under consideration in connected matters and that the question required determination to avoid protracted proceedings. Pending such determination, interim protection was found appropriate.
Conclusion: The proceedings in the impugned show cause notice were stayed.
Final Conclusion: The petitioner obtained interim protection, and the challenge to the notice was kept alive for further consideration.
Ratio Decidendi: Where the classification of the contracting authority is a live legal issue requiring adjudication, proceedings based on the disputed tax demand may be stayed to prevent unnecessary multiplicity and prolongation of litigation.
Maintainability of writ against show cause notice - Delhi Jal Board for carrying out certain works - Local authority status - Whether the works assigned by the Delhi Jal Board to private contractors would attract GST at the rate of 12% or 18%.
Maintainability of writ against show cause notice - Local authority status - HELD THAT: - The Court treated the controversy regarding the status of the Delhi Jal Board as a legal issue whose determination was necessary to avoid protracted proceedings. Following the interim order already passed in Tirupati Cement Products [2026 (3) TMI 1422 - DELHI HIGH COURT], the Court held that the same interim protection should extend to the petitioner as well. On that basis, while directing filing of counter affidavits, the Court stayed further proceedings pursuant to the impugned show cause notice pending consideration of the writ petition. [Paras 8, 16, 17]
The writ petition was entertained on the ground that the question whether the Delhi Jal Board is a local authority requires adjudication, and the proceedings under the impugned show cause notice were stayed in the meantime.
Final Conclusion: The Court held that the question whether the Delhi Jal Board is a local authority raises a legal issue fit for consideration in writ proceedings against the show cause notice. Pending such consideration, the impugned show cause notice proceedings were stayed.
Issues: Whether the fresh advance ruling application seeking a decision on taxability of storage or warehousing of frozen peas was admissible when the same question had already been decided in an earlier advance ruling.
Analysis: The application was examined in the light of the statutory bar under Section 98(2) of the CGST Act, 2017 and the corresponding State provision, which prohibits admission of an application where the question raised is already pending or decided in proceedings in the applicant's case. The record showed that the same applicant had previously obtained a ruling on the taxability of storage charges for frozen green peas, and the present questions were found to have already been answered.
Conclusion: The fresh application was not admissible and was not answered.
Maintainability of repeat advance ruling application- taxability of storage or warehousing of frozen peas - determination of the liability to pay tax on any goods or services or both.
Maintainability of repeat advance ruling application - Bar against admission of questions already decided - HELD THAT: - The Authority found that the questions raised in the present application had already been answered in the earlier advance ruling issued to the same applicant on the taxability of storage charges for frozen green peas. Applying Section 98(2), it held that an application cannot be admitted where the question raised is already pending or has already been decided in proceedings in the case of the applicant. Since the present application sought a fresh ruling on the same controversy, the statutory bar operated and the application was liable to be rejected without answering the questions on merits. [Paras 8]
The application was not admitted and no ruling was given on the questions raised.
Final Conclusion: The Authority rejected the application at the threshold on the ground that the same questions had already been decided in an earlier advance ruling in the applicant's own case. Accordingly, the application was not admitted and remained unanswered.
Issues: (i) Whether the purchaser of timber in an auction conducted before the commencement of the GST regime could insist on payment of the balance consideration and taxes under the Maharashtra Goods and Services Tax Act, 2017 instead of the tax regime governing the auction terms; (ii) Whether Section 64-A of the Sale of Goods Act, 1930 permitted shifting of the tax burden after the contract of sale had already been concluded.
Issue (i): Whether the purchaser of timber in an auction conducted before the commencement of the GST regime could insist on payment of the balance consideration and taxes under the Maharashtra Goods and Services Tax Act, 2017 instead of the tax regime governing the auction terms.
Analysis: The auction sale was completed on the dates of acceptance of the bids, and the purchaser had agreed to the auction conditions requiring payment of the balance price together with the then applicable tax and interest for delayed payment. The goods were ready for delivery on completion of the auction, and the extended time for payment did not alter the date on which tax liability was fixed. The later commencement of the GST regime did not alter the contractual tax obligation attached to a sale already concluded.
Conclusion: The claim to be assessed under the Maharashtra Goods and Services Tax Act, 2017 was rejected.
Issue (ii): Whether Section 64-A of the Sale of Goods Act, 1930 permitted shifting of the tax burden after the contract of sale had already been concluded.
Analysis: Section 64-A operates only where the contract does not reveal a different intention regarding tax liability. Here, the auction terms specifically fixed the tax payable on the auction price and also provided for interest on delayed payment. The purchaser had already paid part of the amount in terms of those conditions, showing that the parties intended the agreed tax regime to govern the transaction. In such circumstances, Section 64-A could not be invoked to reduce or remold the contractual tax obligation.
Conclusion: Section 64-A did not assist the purchaser.
Final Conclusion: The purchaser remained bound by the tax and interest obligations arising from the auction contract, and the later GST enactment did not displace those obligations.
Ratio Decidendi: Where an auction sale is concluded before the commencement of a later tax regime and the contract fixes the applicable tax liability, subsequent statutory changes do not override the agreed terms unless the contract itself shows a different intention.
Entitlement to substitute GST for the tax liability fixed under the auction contract - Auctioned timber - Tax on timber purchased in auction completed before 1-7-2017 remained payable under the pre-GST enactments -Contractual tax liability - Transitional applicability of GST - Section 64-A of the Sale of Goods Act.
Completed auction sale - Contractual tax liability - Transitional applicability of GST - Section 64-A of the Sale of Goods Act - HELD THAT: - The Court held that the sale stood completed on the dates of auction itself, and the tax liability became fixed on those dates under the conditions accepted by the purchaser. The contractual terms specifically required payment of the sale price with Forest Development Tax and Sales Tax then in force, and also imposed interest for delayed payment within the extended period. The mere fact that the outer limit for payment extended beyond 1-7-2017 did not postpone completion of sale or shift the governing tax regime, since the goods were ready for delivery upon completion of auction and delayed payment could not be used to invoke the transitional provision relating to supplies on or after the appointed day. The reliance on Section 64-A of the Sale of Goods Act was rejected because that provision operates unless a different intention appears from the contract, and here the contract itself fixed the applicable taxes and did not provide for reduction or substitution of tax liability on repeal of the earlier enactments. The Court therefore held the purchaser bound by the agreed terms, including liability to pay the balance amount with taxes under the then existing law and interest on delayed payment. [Paras 10, 12, 13, 14, 15]
The claim to discharge the balance liability under GST was rejected, and the purchaser was held bound to pay the balance amount, applicable taxes under the pre-GST law, and contractual interest for delay.
Final Conclusion: The petition was dismissed. The Court held that the auction sales having been completed before the GST regime came into force, the petitioner remained liable under the contractual terms and the pre-existing tax laws, and the amount deposited was directed to be transferred in favour of the concerned respondent.
Issues: (i) whether a show cause notice under Section 74 of the Nagaland Goods and Services Tax Act, 2017 was valid without allegations of fraud, wilful misstatement, or suppression of facts to evade tax; (ii) whether the impugned adjudication orders were sustainable when no opportunity of hearing was granted and the orders did not set out the relevant facts and basis of decision.
Issue (i): whether a show cause notice under Section 74 of the Nagaland Goods and Services Tax Act, 2017 was valid without allegations of fraud, wilful misstatement, or suppression of facts to evade tax.
Analysis: Section 74 can be invoked only where non-payment, short payment, erroneous refund, or wrongful availment or utilisation of input tax credit is attributable to fraud, wilful misstatement, or suppression of facts to evade tax. The notices issued to the petitioners merely referred to the remaining tax and interest liability and did not disclose the foundational ingredients required for invoking Section 74. In the absence of those jurisdictional assertions, the notices failed to satisfy the statutory threshold.
Conclusion: The show cause notices under Section 74 were invalid and could not be sustained.
Issue (ii): whether the impugned adjudication orders were sustainable when no opportunity of hearing was granted and the orders did not set out the relevant facts and basis of decision.
Analysis: Section 75 requires observance of the right of hearing when an adverse decision is contemplated and further mandates that the proper officer state the relevant facts and the basis of the decision in the order. The impugned orders were passed without affording a hearing and without recording the facts and reasons supporting the demand. The procedural safeguards under Section 75 were therefore not complied with.
Conclusion: The impugned adjudication orders were unsustainable and liable to be quashed.
Final Conclusion: The writ petitions succeeded, the notices and consequential orders were set aside, and the respondents were left at liberty to initiate fresh proceedings in accordance with law.
Ratio Decidendi: Proceedings under Section 74 of the Nagaland Goods and Services Tax Act, 2017 are jurisdictionally valid only when the notice expressly discloses fraud, wilful misstatement, or suppression of facts to evade tax, and any adverse tax order must comply with the hearing requirement and reasoned-order mandate under Section 75.
Validity of show cause notice under Section 74 - fraud, wilful misstatement and suppression of facts to evade tax - Opportunity of hearing in tax adjudication -Seeking extension of time for the purpose of complying with the said Notice.
Validity of show cause notice under Section 74 - The show cause notices issued under Section 74(1) of the NGST Act were invalid for not disclosing the jurisdictional ingredients required for invoking that provision. - HELD THAT: - The Court held that jurisdiction under Section 74(1) can be exercised only where the proper officer forms the opinion that tax was not paid, short paid, erroneously refunded, or input tax credit was wrongly availed or utilized by reason of fraud, wilful misstatement, or suppression of facts to evade tax. The notices reproduced in the judgment merely referred to the ascertained liability and proposed issuance of DRC-07 for the remaining tax and interest, but did not state that the case involved fraud, wilful misstatement, or suppression of facts, nor otherwise disclose the basis for invoking Section 74. Since the statutory conditions for assumption of jurisdiction were not reflected in the notices, the notices were held to be fatally defective and not sustainable as notices under Section 74(1). [Paras 30, 31]
The show cause notices were quashed, with liberty to the authorities to initiate fresh proceedings under Section 74, if otherwise permissible in law.
Opportunity of hearing in tax adjudication - Reasoned adjudication order - HELD THAT:- The Court found that adverse orders had been passed against the petitioners without granting them an opportunity of hearing, although Section 75(4) requires such hearing where an adverse decision is contemplated. It further held that Section 75(6) mandates that the proper officer must set out the relevant facts and the basis of decision in the order. The impugned orders, on their face, did not record the relevant facts or the reasoning forming the basis of adjudication. On these defects, the Court held that the adjudication orders were not in consonance with Section 75, and that the case warranted interference in writ jurisdiction notwithstanding the availability of appellate remedy. [Paras 32, 33, 34]
The adjudication orders and consequential summaries in DRC-07 were quashed.
Final Conclusion: The Court allowed both writ petitions and set aside the impugned show cause notices, adjudication orders, and consequential DRC-07 summaries. It reserved liberty to the authorities to commence fresh proceedings under Section 74, if legally permissible, and directed exclusion of the pendency period of the writ petitions for limitation purposes.
Issues: Whether the petitioner's representation seeking recognition of the amount already deposited as pre-deposit for filing the statutory appeals through the GST portal was required to be considered by the Appellate Authority, and whether the authority should act in accordance with the portal instructions and the Supreme Court decision relied upon.
Analysis: The petitioner had already complied with the earlier judicial direction to deposit 10% of the disputed tax, and the subsequent assessment orders were passed after de novo adjudication. The grievance was that, because of changes in the GST portal architecture and the appeal manual, the deposited amount was not being treated as the requisite pre-deposit for the appeals, and approval from the competent authority was being insisted upon. In that situation, the Court directed the Appellate Authority to consider the representation in the light of the appeal manual then in force and to take into account the Supreme Court decision referred to by the petitioner.
Conclusion: The representation was directed to be considered by the Appellate Authority, and the petitioner obtained a partial procedural relief.
Effect of the representation seeking recognition of the amount already deposited as pre-deposit for the purpose of filing an appeal under Section 107 of the respective GST Enactments - Appellate remedy - Portal-based compliance. - HELD THAT:- The learned counsel for the Petitioner has drawn the attention of this Court to an extract from the appeal manual in the GST portal, according to which the Petitioner is required to obtain approval from the competent authority. Hence, the Petitioner has submitted a representation dated 16.02.2026 in the light of the appeal filed on the same date against the de novo assessment orders dated 19.11.2025 for the respective tax periods.
The Court disposed of the writ petitions by directing the Appellate Authority to consider the petitioner's representation regarding adjustment of the earlier pre-deposit for the appeals filed against the de novo assessment orders, in the light of the GST portal appeal manual and after taking into account the Supreme Court decision VVF (India) Limited [2021 (12) TMI 477 - SUPREME COURT] referred to in the order.
Issues: Whether proceedings could validly be initiated under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017 in the absence of an express allegation in the show cause notice and assessment order of fraud, wilful misstatement, suppression of facts, or intention to evade tax.
Analysis: The notice and the impugned orders proceeded on turnover differences noticed on inspection and on voluntary payment of tax before the notice. The Court held that mere reference to inspection or non-reporting of transactions does not, by itself, establish the element of wilfulness or intention to evade tax. For action under Section 74, the offending conduct must be expressly put to notice and must be discernible from the notice and the order; such elements cannot be presumed. In the present case, the notice and order did not expressly record fraud, wilful misstatement, or suppression of facts, though the facts could have supported further enquiry. The Court therefore found the invocation of Section 74 unsustainable on the material as framed.
Conclusion: The impugned orders were set aside and the matter was remanded, with liberty to the authority to issue a fresh notice under Section 73 or Section 74, as the case may be, after making the necessary averments and to proceed in accordance with law.
Final Conclusion: The assessee obtained relief against the impugned assessment orders, but the revenue was left free to recommence proceedings with proper allegations and notice.
Ratio Decidendi: Section 74 can be invoked only when fraud, wilful misstatement, suppression of facts, or intention to evade tax is expressly alleged and made discernible from the show cause notice and the order; such ingredients cannot be presumed from inspection-based turnover differences alone.
Invocation of Section 74 in absence of express allegation of fraud, wilful misstatement or suppression -non filing of GSTR-9 and GSTR-9C imposing penalties - Requirement of specific notice of intention to evade tax.
Section 74 proceedings - Fraud, wilful misstatement or suppression - Show cause notice - HELD THAT:- The Court held that for invoking Section 74, the element of fraud, wilful suppression, misstatement or intention to evade tax cannot be assumed merely because inspection disclosed unreported transactions. The purpose of issuing a show cause notice under that provision is to put the assessee specifically on notice of the offending conduct so that the existence of those elements can be determined. Since, in the present case, the assessee had already paid the tax before issuance of the notice and neither the notice nor the impugned order expressly recorded intention to evade tax or wilful misstatement or suppression of facts, the proceedings under Section 74 were unsustainable. The matter was therefore remitted, leaving it open to the authority to issue a fresh notice under Section 73 or, if it formed the prima facie view that Section 74 applied, to issue a fresh notice containing the necessary allegations. [Paras 9, 10]
The impugned orders were set aside and the matter was remanded, with liberty to the authority to issue a fresh show cause notice under Section 73 or Section 74, as warranted in law.
Final Conclusion: The Court held that Section 74 proceedings could not be maintained in the absence of a clear and express allegation of fraud, wilful misstatement, suppression of facts or intention to evade tax in the show cause notice or the order. The impugned assessment orders were therefore set aside and the matter was remanded for fresh action in accordance with law.
Issues: Whether the petitioner was entitled to rectify the GST returns and corresponding invoice particulars for the relevant tax periods on account of bona fide inadvertent mistakes, and whether the impugned show-cause notice and consequential proceedings were liable to be quashed.
Analysis: The corrections arose from an inadvertent mismatch in the filing of GST returns during the first year of the GST regime, and the record showed that the tax credit was otherwise available and had only been reflected under the wrong head. The Court applied a purposive interpretation to the GST return provisions and held that bona fide clerical or arithmetical mistakes should not be defeated by a rigid reading of the time-limit provisions where no loss of revenue would result. It further found that the revenue itself had material to verify the actual transaction trail, and the proposed denial of credit was not justified on the facts. Reliance was placed on the line of authorities permitting rectification of bona fide errors where the correction does not prejudice the revenue or disrupt the credit chain.
Conclusion: The petitioner was entitled to the requested rectification, and the impugned notice and all further proceedings based on it were not sustainable.
Entitlement to rectify the GST returns and corresponding invoice particulars for the relevant tax periods on account of bona fide inadvertent mistakes - Correction of GSTR-1 classification errors - Validity of show-cause notice and proceedings founded on non-acceptance of corrected returns.
Correction of GSTR-1 classification errors - Show cause notice under Section 73 founded on refusal to recognise corrections - HELD THAT: - The Court held that the controversy stood covered by the decisions of this Court in Orient Traders [2023 (1) TMI 838 - KARNATAKA HIGH COURT] and Wipro Limited India [2023 (1) TMI 499 - KARNATAKA HIGH COURT] and by the view taken by the Bombay High Court in Aberdare Technologies Pvt. Ltd. [2024 (8) TMI 142 - BOMBAY HIGH COURT] which was also noticed as having been affirmed by the Apex Court. In the light of those decisions, bona fide correction of return particulars could not be denied merely because the assessee sought to amend the earlier disclosure. Since the sole basis of the impugned show cause notice was that the petitioner was not entitled to make the correction, that basis was unsustainable and the notice as well as consequential proceedings could not survive. [Paras 9]
The impugned show cause notice and all further proceedings pursuant thereto were quashed, and the respondents were directed to accept the returns filed by the petitioner together with the necessary corrections and proceed in accordance with law.
Final Conclusion: The writ petition was allowed. The Court quashed the show cause notice and consequential proceedings, and directed the respondents to accept the petitioner's corrected returns and proceed further in accordance with law.
Outcome: Delay condoned. The special leave petition was dismissed, and the pending application(s), if any, stood disposed of.
Validity of reassessment proceedings - notice as issued u/s 148A(b) to the petitioner on the basis of High Risk CRIU/VRU information available on ‘Insight Portal’ -denial of principle of natural justice - allegation of entity being a non-existent bogus entity - receipt of accommodation entries in the form of bogus capital expenses from fictitious entity -
HC [2025 (2) TMI 775 - DELHI HIGH COURT] held without issuing any notice in respect of the alleged non-existence of the said entity at the Jasola address and calling for an explanation in that regard, the respondent/Revenue passed the impugned order u/s 148A (d) of the Act dated 31.08.2024. This procedure, to our mind, is abject violation and infraction of the principles of natural justice, inasmuch as, the conclusion regarding the said entity being a non-existent bogus entity was never put to the petitioner in the show cause notice
HELD THAT:- No ground to interfere with the impugned judgment in exercise of our jurisdiction under Article 136 of the Constitution of India. Accordingly, the special leave petition is dismissed.
Outcome: Delay condoned. Special Leave Petitions dismissed. Accompanying interlocutory applications disposed of.
Profit on sale of investments by non-life insurance companies - computation of profits of insurance business u/s 44 and Rule 5 of the First Schedule - application of Section 14A to insurance companies - liability to deduct tax at source on payments to non-resident surveyors - liability to deduct tax at source on reinsurance premiums ceded to non-resident reinsurers - disallowance u/s 40(a)(i) for non-deduction of tax - depreciation rate on UPS as integral part of computer - applicability of minimum alternate tax / Section 115JB to insurance companies - rule of consistency in departmental assessments - Assessee carrying on a general insurance business - HELD THAT:- Special Leave Petitions were dismissed with no interference in the impugned judgment and order of the High Court.[2025 (6) TMI 1488 - MADRAS HIGH COURT]
Outcome: Delay condoned. The Special Leave Petition was dismissed and the interlocutory application(s), if any, stood disposed of.
Eligible assessee as contemplated u/s 144C(15)(b)(i) - Validity of order passed without serving a draft assessment order and non affording opportunity to enable it to file its objections (to the draft assessment order) before the DRP -faceless assessment - jurisdictional error for failure to follow mandatory procedure
HC [2025 (10) TMI 911 - BOMBAY HIGH COURT] held a final assessment order has been directly passed by the Faceless Officer without serving a draft assessment order on the Petitioner to enable it to approach the DRP. This is in clear violation not only of the provisions of Section 144C but also of Section 144B(1)(xxi) to (xxix) thereof.
HELD THAT:- Special Leave Petition was dismissed as the Court was not inclined to interfere with the impugned order under Article 136 of the Constitution of India.
Outcome: In one set of special leave petitions, notice was issued on limitation as well as on the special leave petitions and the matters were directed to be tagged with a connected diary number. In another special leave petition, the petition was dismissed on the ground of delay as well as on merits, and pending applications were disposed of.
Reopening of assessment u/s 147 - time limit for notice - computation of the “relevant assessment year” - HC [2025 (3) TMI 228 - DELHI HIGH COURT] held ex facie evident that AY 2014-15 falls beyond the ten-year block period as set out u/s 153C r.w.s. 153A of the Act. Consequently, the impugned notice is rendered unsustainable - HELD THAT:- Issue notice on limitations as well as on the Special Leave Petitions. Issue to be tagged.
Jurisdictional satisfaction u/s 153C - incriminating material having a bearing on the determination of the total income - nexus between seized material and specific assessment year(s) - distinction between Section 153A and Section 153C - abatement consequent to valid Section 153C satisfaction - no cascading/re en blanc reopening of block years - in HC order [2024 (4) TMI 461 - DELHI HIGH COURT] writ petitions are allowed and Section 153C notices are quashed insofar as they relate to the assessment years 2013-14 to 2020-21 listed in the chart, on the ground that the jurisdictional satisfaction required under Section 153C (year wise nexus of seized material to the determination of total income) was not recorded
HELD THAT:- In view of Order passed by this Court [2024 (12) TMI 1068 - SC ORDER] Special Leave Petition is dismissed on the ground of delay as well as on merits.
Outcome: Delay condoned. Special leave petitions dismissed and pending interlocutory applications disposed of.
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 u/s 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 judgment(s) and order(s) of the High Court; hence, the special leave petitions are dismissed.
Issues: Whether the 16-day delay in filing/uploading Form 10B audit report was liable to be condoned under Section 119(2)(b) of the Income-tax Act, 1961, and whether the intimation under Section 143(1) of the Income-tax Act, 1961, the rectified intimation under Section 154 of the Income-tax Act, 1961, and the refusal to condone delay were liable to be set aside.
Analysis: The petitioner was a charitable religious trust claiming exemption under Sections 11 to 13 of the Income-tax Act, 1961. The audit report in Form 10B was available but was uploaded belatedly by 16 days due to inadvertence. The refusal to condone the delay had already been found unsustainable in the earlier round, and the fresh rejection merely reproduced the earlier order without objective reconsideration. The delay was held to be bona fide and the omission was treated as an error of form, not substance. The authority under Section 119(2)(b) of the Income-tax Act, 1961 was required to adopt an objective approach to remove hardship and not to defeat exemption on such a trivial lapse.
Conclusion: The delay was condoned, the Form 10B was directed to be treated as filed along with the return, and the rejection of exemption and consequential demand were set aside in favour of the assessee.
Final Conclusion: The petitioner obtained complete relief against the tax demand and the impugned administrative orders were quashed, resulting in restoration of the claimed exemption position.
Ratio Decidendi: A bona fide and minor delay in furnishing a statutory audit report, when the report existed and the lapse is merely procedural or formal, may be condoned under Section 119(2)(b) of the Income-tax Act, 1961 to avoid undue hardship, and consequential denial of exemption cannot be sustained.
Assessment of trust - delay in filing audit report - audit report was not furnished along with the return, the petitioner was not entitled for exemption u/s 11 to 13 - delay of 16 days
HELD THAT: - The Court reiterated that the petitioner already had the audit report in the prescribed form and the delay in uploading it was only of 16 days. It treated the lapse as an error of form and not of substance, and held that in the absence of any genuine doubt regarding the activities of the trust, such a trivial lapse could not justify refusal of relief u/s 119(2)(b).
The statutory power was required to be exercised objectively to remove hardship, and its refusal had wrongly led to denial of exemption and consequential demand. On that basis, the Court itself allowed the application, condoned the delay, and annulled the consequential intimation and rectification orders founded on non-filing of Form 10B with the return. [Paras 14, 15, 16, 21]
The application u/s 119(2)(b) was allowed, the delay was condoned, Form 10B was directed to be treated as filed with the return, and the consequential demand was directed to be withdrawn.
Final Conclusion: The writ petition was allowed. The High Court quashed the fresh order passed after remand, condoned the 16-day delay in filing Form 10B for AY 2018-19, treated the form as filed along with the return, and set aside the consequential intimation and rectification orders with a direction to issue a nil-demand order.
Issues: (i) Whether interim relief could be granted to permit payment to the petitioner without statutory tax deduction or by furnishing security in lieu of deduction; (ii) Whether the petitioner's pending proceedings before the Board for Advance Ruling could be treated as withdrawn and whether the Assessing Officer should complete the assessment for Assessment Year 2018-19 while examining the petitioner's taxability under the Act of 1961 and the DTAA.
Issue (i): Whether interim relief could be granted to permit payment to the petitioner without statutory tax deduction or by furnishing security in lieu of deduction.
Analysis: The requested relief was considered against the statutory scheme governing tax deduction at source. The Court held that no direction could be issued to allow payment without applicable deduction, even on a security basis, unless it were first held that no tax was leviable on the payment. It was also observed that, in the prima facie view of the Court, deduction of tax remained a statutory obligation and no interim protection could be granted merely by offering security.
Conclusion: Interim relief against tax deduction was declined and the petitioner could not be permitted to receive payments without applicable deduction.
Issue (ii): Whether the petitioner's pending proceedings before the Board for Advance Ruling could be treated as withdrawn and whether the Assessing Officer should complete the assessment for Assessment Year 2018-19 while examining the petitioner's taxability under the Act of 1961 and the DTAA.
Analysis: The Court noted the prolonged pendency of the advance ruling proceedings and the resulting blockage of TDS and uncertainty in the petitioner's tax position. To secure a fact-finding exercise and ensure certainty of tax treatment, the Court directed the Assessing Officer to finalise the assessment for Assessment Year 2018-19 within a specified time and to examine the petitioner's contention that no tax was exigible under the Act of 1961 and the DTAA. The Court also allowed the withdrawal request and treated the pending applications before the Board for Advance Ruling as withdrawn.
Conclusion: The advance ruling proceedings stood withdrawn and the Assessing Officer was directed to complete the assessment and consider the petitioner's taxability on merits.
Final Conclusion: The petitioner obtained withdrawal of the advance ruling proceedings and a direction for assessment on merits, but no interim exemption from statutory tax deduction.
Ratio Decidendi: Interim relief cannot override a statutory tax deduction obligation unless the underlying taxability is first negated, and prolonged uncertainty in tax administration may be addressed by directing assessment on merits and permitting withdrawal of pending advance ruling proceedings.
Tax deduction at source as statutory obligation - Withdrawal of pending advance ruling application - Certainty of taxability for non-resident taxpayers - payment made by its Indian reseller amount to ‘Fee for Technical Services’ (FTS) or not? -
Tax deduction at source as statutory obligation - Interim relief against withholding tax - HELD THAT: - The Court held that deduction of tax is a statutory requirement and, in the absence of a determination that the payments made to the petitioner are not chargeable to tax, no direction can be issued to bypass withholding merely on equitable considerations or by substituting security. The Court also observed, prima facie, that such sweeping relief could not be granted in view of the nature of the transactions and the existence of issues concerning Permanent Establishment. [Paras 9, 19]
The prayer for interim relief against deduction of tax at source was declined.
Withdrawal of pending advance ruling application - Certainty of taxability for non-resident taxpayers - Assessment to examine DTAA and equalisation levy implications - The petitioner could not be left indefinitely without a determination of its tax position owing to pendency before the BFAR and non-completion of assessment, and the withdrawal application before the BFAR was therefore treated as allowed with a direction to complete the assessment for A.Y. 2018-19 - HELD THAT: - The Court found that the petitioner's rights, particularly as a non-resident taxpayer, could not be kept in suspended animation by continued pendency of the advance ruling application while assessments also remained stalled on that very ground. Emphasising the need for certainty in transactions and taxability, the Court directed the Assessing Officer to undertake at least one fact-finding exercise by finalising the assessment for A.Y. 2018-19 and to examine the petitioner's contention regarding non-applicability of tax under the Act of 1961 and the DTAA, as well as the effect and consequence of payment of equalisation levy. In order to remove the impediment caused by the pending advance ruling proceedings, the Court deemed the applications before the BFAR to have been withdrawn and allowed the petitioner's withdrawal request. [Paras 14, 15, 16, 17, 18]
The pending BFAR applications were deemed withdrawn, the withdrawal request stood allowed, and the AO was directed to finalise the assessment for A.Y. 2018-19 after examining the petitioner's taxability under the Act of 1961, the DTAA, and the equalisation levy aspect.
Final Conclusion: The Court refused interim protection against tax deduction at source, holding that withholding could not be dispensed with absent a finding that the payments were not taxable. At the same time, to end the impasse caused by the pending advance ruling proceedings, it treated the BFAR applications as withdrawn and directed completion of the assessment for A.Y. 2018-19 with examination of the petitioner's taxability position.
Issues: Whether premium paid to LIC to secure a monthly annuity for a retiring employee constituted a contingent liability or an expenditure referable to an existing contractual liability and was therefore allowable as a deduction.
Analysis: The payment was made to discharge a contractual obligation under the partnership arrangement and the LIC policy. The liability to provide the annuity existed at the time of payment, while retirement or completion of service was only the condition for enjoyment of the benefit. A future event that may affect the discharge of the liability does not by itself make the liability contingent. On the facts, the premium was not paid to create a mere reserve for an uncertain future event, and the reasoning that treated it as a contingent outgo was inconsistent with the governing principles on accrued liabilities and deductible expenditure under mercantile accounting.
Conclusion: The payment was an allowable business expenditure and not a contingent liability; the assessee succeeded on the issue.
Final Conclusion: The Tribunal's view was set aside and the appellate authority's order was restored, resulting in relief to the assessee.
Ratio Decidendi: A liability that has already accrued under a contractual obligation is not rendered contingent merely because its actual enjoyment or discharge depends on a future condition subsequent.
Contingent liability or Expenditure referable to an existing contractual liability - payment to partners at a predetermined amount per month after their retirement for the continued use of their share of goodwill - Deductibility of accrued liability - treatment to annuity premium for employees -
HELD THAT: - The Court held that the relevant test was whether the liability existed at the time of payment of premium. Since failure to pay the premium would defeat the employee's assured annuity under the arrangement, the payment was made towards an existing obligation and not merely to provide for an uncertain future event. The contingency attached only to the employee becoming entitled to receive the annuity on retirement, attaining the specified age, or completing the stipulated service; that contingency did not render the premium itself contingent, particularly when the policy did not provide for refund of premium on non-fulfilment of the event.
On that basis, the principle in Indian Molasses Co.(P.) Ltd. [1959 (5) TMI 5 - SUPREME COURT] was held inapplicable, and the rule stated in Bharat Earth Movers [2000 (8) TMI 4 - SUPREME COURT] drawing on Metal Box case [1968 (8) TMI 53 - SUPREME COURT], was applied to hold that a liability already accrued, though to be discharged in future, is deductible. [Paras 8, 9, 10, 11, 12]
The Tribunal erred in treating the payment as non-deductible; the appellate authority's view allowing the claim was restored.
Final Conclusion: The Court allowed the assessee's appeals and held that the LIC premium paid to secure post-retirement annuity was expenditure towards an existing liability, not a contingent liability. The Tribunal's order was set aside and the appellate authority's order was restored.
Issues: Whether reopening of the assessment beyond four years from the end of the relevant assessment year was valid in the absence of any recorded failure by the assessee to disclose fully and truly all material facts and in the absence of any new tangible material.
Analysis: The original assessment had been completed under Section 143(3) of the Income-tax Act, 1961, after scrutiny of the material placed by the assessee. The notice under Section 148 of the Income-tax Act, 1961 was issued beyond four years, so the proviso to Section 147 of the Income-tax Act, 1961 applied. In that situation, reopening could be sustained only if the Revenue showed both a failure to make a full and true disclosure and the existence of new material giving rise to a belief that income had escaped assessment. The reasons recorded for reopening relied on facts already reflected in the annual accounts and assessment record, and no fresh material was shown to have emerged after the original assessment. The reassessment was therefore founded only on a reappraisal of the same material, which amounts to a change of opinion.
Conclusion: The reopening was invalid and the reassessment could not be sustained; the challenge by the Revenue failed on jurisdiction.
Final Conclusion: No interference was warranted with the concurrent findings that the reassessment was without jurisdiction, and the appeal was dismissed.
Reopening beyond four years - reasons to believe - precondition as stipulated under proviso to Section 147 - new material for initiating reassessment - undisclosed capital gains by the assessee in view of the conversion of capital asset into stock in trade
HELD THAT: - The Court held that, since the notice for reopening was issued beyond four years from the end of the relevant assessment year, the precondition in the proviso to Section 147 had to be satisfied. The reasons recorded for reopening did not allege any failure on the part of the assessee to make a full and true disclosure, and the material relied on, including the annual accounts reflecting conversion of land and the joint development arrangement, had already been placed before and considered by the AO in the original scrutiny assessment.
In the absence of any new material coming into the possession of the AO after completion of the original assessment, the jurisdictional requirement for reassessment was missing.
The Court further noted that the reopening proceeded only on a different view of material already available on record and therefore amounted to a mere change of opinion, which could not sustain reassessment. [Paras 15, 17, 19, 20, 21]
The reopening u/s 147 and the consequential reassessment were rightly set aside, and no interference with the Tribunal's order was warranted.
Final Conclusion: The appeal of the Revenue was dismissed. The Court upheld the orders of the appellate authorities holding that the reassessment for Assessment Year 2014-2015, initiated beyond four years without any allegation of failure of disclosure and without any new material, was without jurisdiction and based only on a change of opinion.
Issues: Whether the assessment framed under section 143(3) of the Income-tax Act, 1961 was void for want of a valid notice under section 143(2) issued by the competent authority in accordance with the CBDT instructions governing pecuniary jurisdiction.
Analysis: The assessee's returned income exceeded the monetary threshold prescribed for metro corporate cases, so the jurisdiction to issue notice under section 143(2) vested exclusively in the Deputy Commissioner of Income Tax or Assistant Commissioner of Income Tax. The notice was, however, issued by an Income Tax Officer, who lacked the requisite pecuniary jurisdiction under CBDT Instruction No. 01/2011 dated 31.01.2011 read with CBDT Instruction No. 06/2011 dated 08.04.2011. The defect was treated as going to the root of the assumption of jurisdiction and not as a mere irregularity in service, so section 292B did not cure it.
Conclusion: The notice under section 143(2) was invalid and the assessment was vitiated for want of jurisdiction.
Final Conclusion: The appeal succeeded and the assessment order was quashed.
Ratio Decidendi: A notice under section 143(2) issued by an lacking the prescribed pecuniary jurisdiction is a jurisdictional defect that renders the assessment void ab initio and is not curable under section 292B of the Income-tax Act, 1961.
Validity of assessment framed for want of a valid notice u/s 143(2) - Jurisdictional validity of notice u/s 143(2) - curability u/s 292B
HELD THAT: - The Tribunal found that the assessee, being a corporate assessee in a metro city with returned income above the prescribed threshold, was covered by the CBDT Instructions allocating jurisdiction to the Deputy Commissioner/Assistant Commissioner for issuance of notice under section 143(2). Since the notice had admittedly been issued by the Income Tax Officer, the very assumption of jurisdiction for completing assessment under section 143(3) was by an incompetent authority. The Tribunal held that this was not a mere irregularity in service or form but a defect going to the root of jurisdiction, and therefore section 292B could not cure it. See Sapna Rastogi [2024 (8) TMI 1517 - ITAT DELHI][Paras 6, 7, 8]
The additional ground was allowed, and the assessment was held void ab initio and quashed.
Final Conclusion: The Tribunal held that the notice under section 143(2) having been issued by an officer lacking jurisdiction, the foundation of the assessment itself was invalid. The assessment was accordingly quashed and the assessee's appeal was allowed.
Issues: (i) Whether the delay of 520 days in filing the appeal deserved to be condoned; (ii) Whether transfer pricing adjustment could be sustained in respect of advertising, marketing and promotion expenses on application of the bright line test.
Issue (i): Whether the delay of 520 days in filing the appeal deserved to be condoned.
Analysis: The delay was explained as arising from administrative circumstances, including transfer of charge among officers. The length of delay was substantial, but the reasons furnished were accepted as sufficient for the purpose of condonation.
Conclusion: The delay was condoned.
Issue (ii): Whether transfer pricing adjustment could be sustained in respect of advertising, marketing and promotion expenses on application of the bright line test.
Analysis: The issue had already been considered in the assessee's own earlier and subsequent assessment years, and the consistent view, including reliance on the Delhi High Court decision in Sony Ericsson Mobile Communications India Pvt. Ltd. v. CIT, was that the bright line test could not be applied for making an adjustment in respect of AMP expenses. No factual distinction or subsequent change in law was shown to justify a different view.
Conclusion: The transfer pricing adjustment on AMP expenses was not sustainable and the relief granted by the first appellate authority called for no interference.
Final Conclusion: The appeal was dismissed and the order granting relief to the assessee was sustained.
Ratio Decidendi: A transfer pricing adjustment in respect of AMP expenses cannot be made by applying the bright line test where the issue stands covered by earlier binding or consistent decisions and no distinguishing facts or change in law is shown.
Transfer pricing adjustment on AMP expenses - Bright Line Test applicability -Consistency with earlier and subsequent years - international transaction of AMP expenses - HELD THAT: - The Tribunal found that the Department could not distinguish the facts from the assessee's preceding and subsequent assessment years, in which the same controversy had already been considered. It also noted the absence of any subsequent development in law to displace the basis adopted by the Commissioner (Appeals).
Since the adjustment rested on application of the Bright Line Test, which stood disapproved in the binding precedent noticed by the Tribunal, and the appellate authority had followed decisions in the assessee's own case, no interference was warranted. [Paras 3, 4]
The deletion of the AMP-related transfer pricing adjustment was upheld and the Revenue's appeal was dismissed.
Final Conclusion: Tribunal upheld the relief granted by the Commissioner (Appeals). The Revenue's challenge to the deletion of the AMP transfer pricing adjustment for AY: 2012-13 failed.
Issues: Whether the assessment under Section 143(3) of the Income-tax Act, 1961 was invalid for want of service of notice under Section 143(2) of the Income-tax Act, 1961.
Analysis: The Tribunal found that the record showed the notice under Section 143(2) had bounced and was not served on the assessee. Since service of the statutory notice is a jurisdictional requirement for completing scrutiny assessment under Section 143(3), the absence of service rendered the assessment legally unsustainable. The Tribunal held that the first appellate authority had correctly treated the defect as going to the root of jurisdiction and had rightly quashed the assessment.
Conclusion: The assessment under Section 143(3) was held to be invalid for non-service of notice under Section 143(2), and the Revenue's challenge failed.
Final Conclusion: The appellate order annulling the assessment was sustained, and the Revenue's appeal was dismissed.
Ratio Decidendi: Service of notice under Section 143(2) is a mandatory jurisdictional prerequisite for a valid scrutiny assessment under Section 143(3), and non-service vitiates the assessment.
Mandatory service of notice u/s 143(2)- validity of assessment u/s 143(3) carried out without service of notice u/s 143(2) - addition made u/s 68
HELD THAT: - Tribunal upheld the appellate finding that the material on record itself showed that the notice u/s 143(2) had not been served, the delivery status reflecting that the notice had bounced.
Since service of the statutory notice is foundational to assumption of jurisdiction for completing a scrutiny assessment, completion of assessment under section 143(3) in its absence rendered the order illegal and void ab initio.
Revenue could not dislodge this factual finding, and its objection that the point had not been raised as a ground before the first appellate authority was not accepted in view of the jurisdictional defect found on record. [Paras 4, 5]
Final Conclusion: The Tribunal held that non-service of notice under section 143(2) vitiated the assessment framed u/s 143(3). The Revenue's appeal was therefore dismissed.
Issues: Whether the addition made as unexplained investment under section 69A could be sustained when the assessee had not sold the shares during the relevant assessment year and the reopening was based on an investigation report without independent verification.
Analysis: The reassessment was initiated on the premise that the assessee had claimed bogus long-term capital gains and exemption in respect of shares of Yes Bank Ltd. and Eicher Motors Ltd. However, the record showed that no sale of those shares had taken place during the relevant year and no long-term capital gain had been declared for that assessment year. The addition eventually made under section 69A did not match the stated reason for reopening, and the conclusion rested only on the investigation report without independent enquiry by the Assessing Officer. Since the shares were acquired in an earlier year, the investment could not be treated as unexplained investment in the relevant assessment year.
Conclusion: The addition under section 69A was not sustainable and was directed to be deleted.
Final Conclusion: The assessee succeeded and the impugned addition was set aside.
Ratio Decidendi: An addition as unexplained investment cannot be sustained for the relevant year when the alleged investment was made in an earlier year and the reopening or addition is based only on an external report without independent enquiry and without any corresponding sale or income claim in that year.
Addition u/s 69A as alleged unexplained money invested in the shares - bogus deduction of long term capital gains u/s. 10(38)
HELD THAT: - The Tribunal found that the reassessment was initiated on the premise that the assessee had obtained bogus long-term capital gains and claimed exemption in respect of the shares in question. However, during the relevant year the assessee had not sold those shares and had not claimed any long-term capital gain. The shares were stated to have been acquired in Financial Year 2009-10, and therefore the investment in them could not be treated as unexplained investment in A.Y. 2018-19. The Tribunal also observed that the reasons recorded were founded only on the investigation wing report and not on any independent enquiry by the Assessing Officer. In these circumstances, the addition made under section 69A was held to be untenable. [Paras 6, 7]
The addition made under section 69A was directed to be deleted.
Final Conclusion: The appeal was allowed. The Tribunal held that, since no sale of the shares had taken place and no exempt long-term capital gain had been claimed in A.Y. 2018-19, and the investment related to an earlier year, the impugned addition under section 69A could not stand.
Issues: (i) Whether the section 153C assessments for the relevant assessment years were valid when the satisfaction note did not record that the seized material had a bearing on ination of the assessee's total income.
Analysis: The search action was carried out under section 132 of the Income-tax Act, 1961, and the impugned proceedings were initiated after the recorded satisfaction of the searched party's Assessing Officer and the assessee's jurisdictional Assessing Officer. The decisive requirement was whether the satisfaction note clearly stated that the seized material had a bearing on determination of the assessee's total income. As that element was not recorded, the statutory basis for invoking section 153C was held to be deficient.
Conclusion: The section 153C assessments were held to be invalid and non-est, and the assessee succeeded on this issue.
Final Conclusion: The common order resulted in the assessee succeeding on the jurisdictional challenge to the assessments, with the Revenue's appeals dismissed and the cross objections allowed.
Ratio Decidendi: For a valid assumption of jurisdiction under section 153C, the satisfaction note must expressly show that the seized material has a bearing on determination of the assessee's total income.
Validity of assessment u/s 153C r.w.s. 143(3) - mandation of Satisfaction note to be recorded u/s 153C - Bearing of seized material on determination of total income
HELD THAT: - The Tribunal held that, although satisfaction was recorded first by the Assessing Officer of the searched person and thereafter by the assessee's jurisdictional Assessing Officer, the statutory requirement was still not met because the recorded satisfaction did not state that the seized material sought to be used against the assessee had any bearing on determination of its total income.
Applying Saksham Commodities Ltd. [2024 (4) TMI 461 - DELHI HIGH COURT] it held that such a recital is essential to sustain proceedings under section 153C. In the absence of this jurisdictional requirement, the assessments were non-est in law. [Paras 3]
The section 153C assessments for all the three assessment years were quashed.
Final Conclusion: The cross-objections were allowed and the Revenue's appeals were dismissed. The Tribunal held that the absence of a satisfaction that the seized material had any bearing on determination of the assessee's total income vitiated the section 153C assessments for assessment years 2017-18, 2018-19 and 2019-20.
Issues: Whether the addition made on account of cash deposits during the demonetisation period was sustainable when the assessee produced books of account, cash book, bank statement, cash sales details, VAT returns and audited financial statements and the books were not rejected.
Analysis: The cash deposits were explained by the assessee as arising from recorded cash sales. The record showed cash book entries, bank deposit details, quarterly VAT returns reflecting sales, and audited accounts tallying with the declared turnover. No defect in the books of account was recorded and no rejection of books was made. In such a situation, an addition solely on the basis of cash deposits, while the corresponding sales were already accepted as business receipts supported by regular records, would amount to duplicative taxation. The reference to section 40A(3) did not dislodge the evidentiary value of the material produced by the assessee for explaining the source of cash deposits.
Conclusion: The addition of Rs. 37,75,000/- was deleted and the issue was decided in favour of the assessee.
Final Conclusion: The appeal succeeded on the sole disputed addition, while the remaining grounds, not pressed, did not survive for adjudication.
Ratio Decidendi: When cash deposits are satisfactorily linked to recorded sales supported by regular books and statutory returns, and the books are not rejected, an addition for unexplained cash deposit cannot be sustained on the same business receipts.
Unexplained cash deposit - addition without even rejecting the books of accounts - primary onus cast upon the Assessee of proving genuineness of cash sales.
HELD THAT: - The Tribunal found that the assessee had produced the cash book, bank deposit details, cash sales details, VAT returns and audited balance sheet to explain the source of the cash deposits. It was a matter of record that the Assessing Officer had not rejected the books of account and had not pointed out defects therein.
Once the sales stood recorded in the books, were reflected in VAT returns and the corresponding tax liability had been discharged, the cash deposits sourced from those sales could not again be treated as unexplained, since that would amount to double taxation of the same business receipts. [Paras 8]
The addition confirmed by the appellate authority on account of cash deposits was deleted.
Final Conclusion: The Tribunal allowed the appeal and deleted the addition relating to cash deposits, holding that the deposits were explained by recorded cash sales reflected in unrejected books and VAT returns.
Issues: (i) Whether the Oura Health ring / Smart Ring is classifiable under Heading 9031 as a measuring or checking instrument, and not under Heading 8517 as communication apparatus; (ii) Whether the Sizing Kit is classifiable under Heading 9031 as a measuring instrument or accessory, or under Chapter 39 as an article of plastic.
Issue (i): Whether the Oura Health ring / Smart Ring is classifiable under Heading 9031 as a measuring or checking instrument, and not under Heading 8517 as communication apparatus.
Analysis: The product was found to be a wearable device whose core function is measurement and monitoring of physiological parameters through sensors such as PPG, temperature sensor, and accelerometer. Its Bluetooth function was treated as merely supportive, enabling transfer of measured data to another device, and not as the product's intrinsic communication character. Applying Rule 1 of the General Rules for Interpretation, and where necessary Rules 3(b) and 3(c), the essential character was held to lie in the measuring sensors. The heading for communication apparatus under Chapter 85 was therefore not accepted as the proper classification.
Conclusion: The Smart Ring is classifiable under Tariff Item 90318000.
Issue (ii): Whether the Sizing Kit is classifiable under Heading 9031 as a measuring instrument or accessory, or under Chapter 39 as an article of plastic.
Analysis: The Sizing Kit was found to be a set of non-electronic trial-fit rings used only to determine the correct size for the Smart Ring. It does not contain sensors, calibrated measuring mechanisms, or any independent measuring function. It was also held not to be a part or accessory of the Smart Ring for classification purposes under Chapter 90, because it does not contribute to the operation or performance of the principal article. As its character is determined by its constituent material and it is not covered elsewhere, classification under Chapter 39 was accepted.
Conclusion: The Sizing Kit is classifiable under Tariff Item 39269099.
Final Conclusion: The ruling accepted the classification of the Smart Ring under Chapter 90, but not the claim that the Sizing Kit should also fall within Chapter 90; instead, it was treated as a plastic article under Chapter 39.
Ratio Decidendi: For tariff classification, the determinative factor is the goods' essential character and principal function as derived from the heading text, section notes, chapter notes, and the General Rules for Interpretation; ancillary connectivity features do not displace a primary measuring function, while items lacking an independent measuring role are classified according to their true material or article character.
Classification of 'Oura Health ring / Smart Ring' and 'Sizing Kit' - classifiable under Tariff Item 90318000 of the Customs Tariff as a measuring or checking instrument - Tariff classification - classification of Bluetooth connectivity of the Smart Ring warrants - Sizing Kit - classifiable under Tariff Item 90318000 Or Tariff Item 90319000, Or it falls to be classified under Chapter 39 - HSN explanatory notes - Essential Character - Composite Goods - Most Specific Description - Residuary Heading - Ancillary Function - Functional Classification - General Rules for Interpretation - Parts and Accessories.
Wearable health tracker - Heading 9031 vis-a-vis Heading 8517 - GRI 3(c) -nHELD THAT:- GRI 3 (c) states that when the essential character of a composite good cannot be determined, classification is based on the heading that occurs last in the numerical order among those which equally merit consideration.
The Authority found that the product performs continuous measurement and monitoring of physiological parameters through embedded sensors, while Bluetooth connectivity is only for syncing the collected data with an application and does not give the device the intrinsic character of a communication apparatus. On examination of Heading 9031, the ring was held to answer the description of a measuring or checking instrument not specified elsewhere in Chapter 90 and not falling within the exclusions noted thereunder. The Authority further held that, even if the goods were treated as composite goods involving both measurement and transmission functions, neither Heading 8517 nor Heading 9031 could prevail under GRI 3(a), and since both functions were regarded as equally important, classification would fall under GRI 3(c), whereby the later heading in numerical order, namely 9031, would apply. The ruling therefore placed the goods under tariff item 90318000 as other instruments, appliances and machines. [Paras 6, 7]
The smart ring merits classification under CTI 90318000.
Sizing kit - Parts and accessories - Articles of plastics - HELD THAT: - The Authority held that the Sizing Kit consists of plastic sample rings meant only for trial fitting to identify the appropriate ring size and contains no sensor, electronic equipment, calibrated scale, dimensional marking, or precision measuring mechanism. It therefore does not qualify as a measuring or checking instrument within Heading 9031. The Authority also rejected classification as a part or accessory under tariff item 90319000, holding that the kit neither forms an integral component of the smart ring nor facilitates its operation or performance, but only assists the customer in selecting the correct size before purchase. Treating it as a plastic ring sizer of general use without any measuring mechanism, the Authority classified it by its constituent material under Chapter 39, specifically tariff item 39269099. [Paras 6, 7]
The Sizing Kit is classifiable under CTI 39269099 and not under Heading 9031.
Final Conclusion: The application was answered by classifying the Oura Smart Ring/Health Ring under CTI 90318000 as other measuring or checking instruments, appliances and machines. The Sizing Kit was held to be outside Heading 9031 and classifiable under CTI 39269099 as an article of plastic.
Issues: (i) Whether kitchen exhaust hoods with different models, exceeding 120 cm in width and not fitted with a fan, are classifiable under CTH 8414 59 90 or under CTH 8414 80 90.
Analysis: Classification was determined under General Rule for the Interpretation 1 of the First Schedule to the Customs Tariff Act, 1975, with recourse to the specific tariff language. The goods were found to be kitchen exhaust hoods and not fans, because no supporting material established that they were fitted with a fan, blower, or air circulator. The entry for hoods having a maximum horizontal side not exceeding 120 cm was held inapplicable because the goods exceeded that limit. Once the goods were excluded from the fan-specific sub-headings and from the width-limited hood entry, the residual heading for other hoods applied. General Rule for the Interpretation 3(a) of the First Schedule to the Customs Tariff Act, 1975 did not alter that result because the description most closely matching the goods was the residual hood entry.
Conclusion: The goods are classifiable under CTH 8414 80 90, not under CTH 8414 59 90.
Final Conclusion: The advance ruling settled the classification in favour of the residual customs tariff entry for other kitchen exhaust hoods exceeding the specified width limit and lacking a fitted fan.
Ratio Decidendi: Where kitchen exhaust hoods are not shown to incorporate a fan and exceed the width-limited hood entry, they fall in the residual tariff heading for other hoods rather than in fan-based sub-headings.
Classification of goods - Kitchen Exhaust Hood with different Models - classifiable under CTH 8414 59 90 Or under CTH 8414 80 90 - Tariff classification -Nomenclature-based classification - Interpretation of ventilating hoods incorporating a fan.
Tariff classification - Kitchen exhaust hoods without fan - Residual entry - HELD THAT:- As per the Provisions of General Rules for Interpretation (GRI) -1 classification shall be determined according to the terms of the headings and any relevant Section or Chapter Notes and classification at sub-heading level shall be determined according to the terms of those sub- headings and further specification of goods.
Applying GRI-1, the Authority held that classification had to be determined from the tariff description itself. The applicant did not produce any supporting material to establish that the imported goods incorporated a fan, and at the hearing it was clarified that the goods were only kitchen exhaust hoods. Consequently, the goods could not fall under the fan-specific entries in sub-heading 8414 59. They were also outside tariff item 8414 60 00, which is confined to hoods having a maximum horizontal side not exceeding 120 cm, whereas the subject goods exceeded that dimension. Once excluded from both those entries, the goods were held classifiable under the residual entry 8414 80, specifically 8414 80 90, as other hoods exceeding 120 cm and not incorporating a fan. [Paras 8, 9]
The product was ruled to merit classification under heading 8414 80, specifically tariff item 8414 80 90.
Final Conclusion: The advance ruling holds that the imported kitchen exhaust hoods, being without fan and exceeding 120 cm in width, are not covered by the entries for fans or for hoods not exceeding 120 cm. They are classifiable under tariff item 8414 80 90 as the appropriate residual entry.
Issues: (i) Whether dashcams are classifiable under Tariff Item 8525 89 00 of the Customs Tariff Act, 1975 as other television cameras, digital cameras and video camera recorders. (ii) Whether dashcams are eligible for benefit under Sl. No. 288 of Notification No. 45/25-Cus. dated 24.10.2025 and, in the alternative, under Sl. No. 289 of the said notification.
Issue (i): Whether dashcams are classifiable under Tariff Item 8525 89 00 of the Customs Tariff Act, 1975 as other television cameras, digital cameras and video camera recorders.
Analysis: The goods were examined as vehicle-mounted recording devices with CMOS sensors, storage media, video encoding capability, loop recording and ancillary features such as display, GPS and wireless access in some models. Applying the General Rules for Interpretation and the HSN Explanatory Notes to Heading 85.25, the dispositive question was whether the goods fell within the heading for television cameras, digital cameras and video camera recorders, and whether they were excluded by the specific sub-heading notes for high-speed, radiation-tolerant or night-vision goods. The record showed that the goods did not meet the thresholds for high-speed cameras, were neither radiation-hardened nor night-vision cameras using photocathodes, and their function was continuous video recording rather than any special sub-heading category.
Conclusion: Dashcams are classifiable under Tariff Item 8525 89 00.
Issue (ii): Whether dashcams are eligible for benefit under Sl. No. 288 of Notification No. 45/25-Cus. dated 24.10.2025 and, in the alternative, under Sl. No. 289 of the said notification.
Analysis: For Sl. No. 288, the decisive requirement was that the goods must be digital still image video cameras. On the technical material and the product description, the goods were found to be designed primarily for continuous digital video recording in a vehicle, with still-image capture being incidental, and therefore they did not answer that description. For Sl. No. 289, the relevant enquiry was whether the goods were CCTV cameras or IP cameras. The goods were found to be standalone vehicle-mounted recording devices, not part of a closed-circuit surveillance system and not remotely controlled network cameras.
Conclusion: Benefit under Sl. No. 288 is not available, but concessional duty under Sl. No. 289 is available.
Final Conclusion: The ruling accepts the tariff classification of the goods under Heading 8525 89 00 and extends only the alternative concessional duty benefit, while denying the nil-rate exemption claimed under the entry for digital still image video cameras.
Ratio Decidendi: Vehicle-mounted dashcams that are designed principally for continuous digital video recording, and that do not satisfy the specific sub-heading conditions for high-speed, radiation-tolerant or night-vision cameras, fall in Tariff Item 8525 89 00; they do not qualify as digital still image video cameras for the nil-rate entry, but may avail the concessional entry if they are neither CCTV cameras nor IP cameras.
Classification of goods - dashcams - classifiable under Tariff Item 8525 89 00 of the Customs Tariff Act, 1975 as other television cameras, digital cameras and video camera recorders - eligibility of concessional rate of basic customs duty in terms of Sl. No. 288/289 of Notification No. 45/25-Cus. - Scope of digital still image video cameras - General Rules for Interpretation - HSN Explanatory Notes - Strict Interpretation of Exemption Notification - Essential Character - Principal Function.
Classification of dashcams - HELD THAT: - As per Rule 1 of GRI, the titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes.
On application of Rule 1 of the GRI, it is observed that the only relevant Heading for classifying the subject goods is Heading 85.25 which covers digital cameras and video camera recorders. Further, reference is made to the HSN Explanatory Notes to Heading 85.25 which lays down the characteristics of the television cameras, digital cameras and video camera recorders that fall under its purview.
Applying Rule 1 of the General Rules for Interpretation with the heading text, HSN Explanatory Notes and the Chapter 85 sub-heading notes, the authority held that dashcams are cameras which capture images through CMOS sensors and record them as digital video. On the technical material, the goods did not satisfy the specifications for high-speed goods, radiation-hardened or radiation-tolerant goods, or night vision goods using photocathodes. Since they fell within heading 85.25 as digital cameras or video camera recorders but outside sub-headings 8525.81, 8525.82 and 8525.83, they were held classifiable under the residual tariff item 8525 89 00. [Paras 6, 7]
The products in question were held classifiable under CTI 8525 89 00.
Digital still image video cameras - Exemption notification interpretation - Principal function test - HELD THAT:- The authority distinguished a dashcam from a digital still image video camera by examining its technical design and mode of operation. It found that a dashcam is designed as a continuous digital video recorder with loop recording, dedicated video encoding, event-triggered preservation, vehicle-linked power management, wide-angle surveillance-oriented optics, and recording in video formats such as MOV or ts using H.264 compression. The capability to take screenshots was treated as ancillary. On that basis, the goods were held to function as digital video recorders rather than digital still image video cameras, and therefore the nil-duty entry at Sl. No. 288 was held inapplicable. [Paras 6]
The claim for exemption under Sl. No. 288 was rejected.
CCTV camera - IP camera - Concessional customs duty - HELD THAT: - The authority held that dashcams are standalone vehicle-mounted recording devices, powered from the vehicle and recording locally on storage media, and are not part of a closed-circuit monitoring setup with centralised DVR/NVR architecture. It further found that they do not function as IP cameras, since their operation is not dependent on an IP network and they cannot be remotely controlled in the manner of network cameras. Having already been classified within sub-heading 8525.89, the goods therefore satisfied the description of 'all goods other than CCTV Camera/IP Camera' and qualified for the concessional rate. [Paras 6, 7]
The goods were held entitled to the concessional rate of basic customs duty under Sl. No. 289.
Final Conclusion: The authority ruled that dashcams are classifiable under CTI 8525 89 00. It denied the nil-duty benefit meant for digital still image video cameras under Sl. No. 288, but held the goods eligible for the concessional basic customs duty under Sl. No. 289 as they are neither CCTV cameras nor IP cameras.
Issues: (i) Whether the declared value of the imported goods was validly rejected and the assessable value was lawfully determined under the customs valuation rules; (ii) whether a separate penalty could be sustained on the proprietary concern in addition to the penalty imposed on the proprietor.
Issue (i): Whether the declared value of the imported goods was validly rejected and the assessable value was lawfully determined under the customs valuation rules.
Analysis: Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 permits rejection of the declared value where the proper officer has reason to doubt its truth or accuracy, and after such rejection the value is to be determined sequentially under Rules 4 to 9. The Court found that the buyer's consent letter relied upon by the importer was forged, which furnished sufficient basis to doubt the declared value. Once the declared value was rejected, the authorities were entitled to determine value with reference to similar goods under Rule 5. The Court also accepted that the goods were of the same category and that the prevailing data and exchange rate justified the revised valuation.
Conclusion: The rejection of the declared value and the consequent valuation were upheld.
Issue (ii): Whether a separate penalty could be sustained on the proprietary concern in addition to the penalty imposed on the proprietor.
Analysis: A proprietary concern has no independent legal existence separate from its proprietor. Since the business was carried on by the individual as proprietor of the concern, a separate penalty on the concern amounted to duplication of penalty for the same legal entity in substance. The Court held that the penalty could not survive insofar as it was imposed separately on the proprietary concern.
Conclusion: The separate penalty on the proprietary concern was set aside.
Final Conclusion: The valuation and all other findings were sustained, but the separate penalty imposed on the proprietary concern was annulled, resulting in only limited relief to the petitioner.
Ratio Decidendi: Under Rule 12, the declared import value may be rejected when there is reason to doubt its truth or accuracy, and once rejected, valuation must proceed sequentially with reference to similar goods; a proprietary concern is not a separate legal entity distinct from its proprietor for the purpose of imposing a separate penalty.
Rejection of declared value - Valuation of similar imported goods - misstatement or misdeclaration and that an excess quantity - Separate legal status of proprietary concern - separate penalty on the proprietary concern.
Rejection of declared value - Valuation of similar imported goods - HELD THAT: - The Court held that where the proper officer has reason to doubt the truth or accuracy of the declared value, the declared value can be rejected and valuation can thereafter proceed sequentially under the valuation rules. In the present case, the consent letter produced by the petitioner having been found to be forged furnished a valid basis to reject the declared value. After such rejection, adoption of the value of similar goods under Rule 5 was found proper, there being no dispute as to the nature of the goods as Heavy Melting Scrap. The Court also held that non-reflection of detailed underlying data in the impugned order did not vitiate the valuation in the facts of the case, since the similarity of the goods was clear and the variation in value was only marginal. [Paras 17, 18, 19, 20, 21]
The challenge to the valuation failed and the adjudication on that aspect was confirmed.
Relevance of collateral enquiry - The challenge founded on the second summons was rejected as being unrelated to the controversy decided in the impugned orders. - HELD THAT: - The Court accepted the respondents' stand that the second summons pertained to a different enquiry concerning possible violation of the Customs Brokers Licensing Regulations, 2013. Since that enquiry had no bearing on the conclusions reached in the original or appellate orders, which turned on valuation and weighment, the legality of that investigation was held not germane to the present challenge. [Paras 22]
The objection based on the second summons was held irrelevant to the validity of the impugned orders.
Separate legal status of proprietary concern - Duplicative penalty - Maintainability of petition by proprietary concern - HELD THAT: - The Court held that a proprietary concern is not a legal entity distinct from its proprietor. The business was carried on by the individual proprietor under the trade name of the proprietary concern, and the respondents had wrongly treated the concern as if it were a separate firm for purposes of penalty. Once penalty had been imposed on the proprietor, an independent penalty on the proprietary concern could not be sustained. On the same reasoning, the separate writ petition filed in the name of the proprietary concern was held to be superfluous and not maintainable. [Paras 23, 24]
The separate penalty imposed on the proprietary concern was set aside, and the writ petition filed in its name was dismissed as not maintainable.
Final Conclusion: The Court declined to interfere with the rejection of the declared value and the consequential valuation of the imported goods, and also rejected the challenge based on the second summons as irrelevant to the impugned adjudication. Relief was granted only to the limited extent of deleting the separate penalty imposed on the proprietary concern, while the separate writ petition filed in its name was dismissed as not maintainable.
Issues: Whether the order passed under Regulation 17(7) of the Customs Brokers Licensing Regulations, 2018 was valid when it was issued beyond the stipulated period after the inquiry report.
Analysis: The dates relating to the offence report, show cause notice, inquiry report, representation and the impugned order were undisputed. The challenge was confined to the expiry of the 90-day period contemplated under Regulation 17(7). The Court followed its earlier view that the timelines prescribed in Regulation 17 of the Customs Brokers Licensing Regulations, 2018 are mandatory and declined to treat the provision as merely directory on the basis of the cited contrary view from another High Court.
Conclusion: The impugned order, having been passed beyond the prescribed timeline, was set aside and the writ petition was allowed.
Ratio Decidendi: The time limit prescribed under Regulation 17(7) of the Customs Brokers Licensing Regulations, 2018 is mandatory, and an order passed beyond that period is liable to be invalidated.
Mandatory time-limitprescribed under Regulation 17(7) under Customs Brokers Licensing Regulations - order passed beyond the stipulated period after the inquiry report.
Regulation 17(7) time-limit - Mandatory procedural compliance - HELD THAT: - The Court proceeded on the admitted dates and found that the impugned order had been passed beyond 90 days from the submission of the inquiry report. Following its earlier view that the timelines prescribed under Regulation 17 of the CBLR, 2018 are mandatory, and reiterating the position stated in Santon Shipping Services vs. The Commissioner of Customs, [2017 (10) TMI 621 - MADRAS HIGH COURT], the Court declined to accept the contrary view relied on from the Kerala High Court [2024 (12) TMI 753 - KERALA HIGH COURT]. Since the final order was made beyond the period stipulated under Regulation 17(7), it could not be sustained. [Paras 6, 7]
The impugned order was set aside as having been passed beyond the mandatory period prescribed under Regulation 17(7) of the CBLR, 2018.
Final Conclusion: The writ petition was allowed. The impugned order was set aside on the sole ground that it was passed beyond the mandatory time-limit prescribed under Regulation 17(7) of the Customs Brokers Licensing Regulations, 2018.
Issues: (i) Whether the penalty imposed under Section 112 of the Customs Act, 1962 was sustainable in the absence of evidence linking the appellant to the offence. (ii) Whether the penalty imposed under Section 117 of the Customs Act, 1962 was justified when the appellant had recorded a statement and cooperated with the investigation despite not appearing to the summons.
Issue (i): Whether the penalty imposed under Section 112 of the Customs Act, 1962 was sustainable in the absence of evidence linking the appellant to the offence.
Analysis: The record showed that the appellant was engaged in business in foodgrains and pulses and had a business relationship with the consignor. No material was brought on record to establish that the appellant had committed any offence attracting penal liability under Section 112.
Conclusion: The penalty under Section 112 of the Customs Act, 1962 was not substantiated and was set aside.
Issue (ii): Whether the penalty imposed under Section 117 of the Customs Act, 1962 was justified when the appellant had recorded a statement and cooperated with the investigation despite not appearing to the summons.
Analysis: Though summons had been issued on more than one date, the appellant's statement was recorded during the investigation. The recorded statement established cooperation, and the circumstances did not justify penal action solely on the ground of non-appearance.
Conclusion: The penalty under Section 117 of the Customs Act, 1962 was not warranted and was set aside.
Final Conclusion: Both penalties were annulled, and the appeal succeeded with consequential relief as permissible in law.
Ratio Decidendi: A penalty cannot be sustained without evidentiary linkage to the alleged offence, and non-appearance to summons does not justify penalty where the person has otherwise cooperated with the investigation.
Validity of the penalty imposed under Section 112 of the Customs Act, 1962, in the absence of evidence linking the appellant to the offence - Penalty for non-compliance with summons - abetment or improper import.
Penalty for abetment or improper import - Requirement of supporting evidence - HELD THAT:- The Tribunal found that, though the appellant was engaged in business dealings with the consignor, no evidence had been brought on record to establish any offence committed by him so as to attract penalty. Mere business relationship with the consignor was not treated as sufficient to sustain the penalty in the absence of substantiating material. [Paras 11]
The penalty imposed on the appellant under Section 112 of the Customs Act was held to be unsubstantiated and was set aside.
Penalty for non-compliance with summons - Cooperation with investigation - HELD THAT: - The Tribunal noted that, although summons had been issued on multiple dates and the appellant had not appeared in response thereto, his statement had been recorded during the course of investigation. On that basis, it held that the appellant had cooperated with the investigation, and in such circumstances the penalty for non-compliance with summons was not warranted. [Paras 12]
The penalty imposed under Section 117 of the Customs Act was held to be unwarranted and was set aside.
Final Conclusion: The Tribunal set aside both penalties imposed on the appellant, holding that there was no evidence to justify the customs penalty and that the separate penalty for non-appearance was also not warranted in view of his cooperation in the investigation. The appeal was accordingly allowed with consequential relief as per law.
Issues: (i) Whether freight and insurance were liable to be added to the declared FOB value under Rule 10(2) of the Customs Valuation Rules, 2007. (ii) Whether the notice invoking the extended period was sustainable on the grounds of suppression and wilful misstatement.
Issue (i): Whether freight and insurance were liable to be added to the declared FOB value under Rule 10(2) of the Customs Valuation Rules, 2007.
Analysis: Section 14(1) of the Customs Act, 1962 fixes valuation on the transaction value, and Rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 permits loading where transportation cost is not ascertainable, with freight and insurance additions being attracted on the facts. The declared FOB basis was not supported by cogent documentary material showing that FOB and CIF were identical or that transportation and insurance were nil. The invoice terms indicated ex-works responsibility and risk with the buyer, supporting the departmental case for loading the assessable value.
Conclusion: The addition of freight and insurance was upheld against the appellant.
Issue (ii): Whether the notice invoking the extended period was sustainable on the grounds of suppression and wilful misstatement.
Analysis: The appellant had disclosed the FOB value and nil freight in the bill of entry documentation, and the Revenue did not establish a conscious withholding of material facts or deliberate misstatement. The dispute was treated as one of valuation interpretation, and the availability of credit rendered the matter revenue neutral. In such circumstances, the ingredients required to invoke the extended period under Section 28(4) of the Customs Act, 1962 were not satisfied.
Conclusion: The invocation of the extended period was held unsustainable in favour of the appellant.
Final Conclusion: The appeal succeeded because the demand could not be sustained through the extended limitation route, and the impugned order was set aside.
Ratio Decidendi: The extended period of limitation under customs law cannot be invoked unless the Revenue proves a conscious suppression of material facts or wilful misstatement; a valuation dispute supported by disclosure and revenue-neutral consequences does not by itself establish such suppression.
Transaction value - Customs valuation of imported goods - FOB value -Inclusion of freight and insurance in assessable value - Bona fide belief - Extended period of limitation - Suppression and wilful misstatement - demanding differential duty along with interest and proposing imposition of penalty under section 114A.
Customs valuation of imported goods - Inclusion of freight and insurance in assessable value - FOB and CIF value - HELD THAT:- The Tribunal held that the appellant's plea that the FOB value and CIF value were identical was not supported by cogent documentary material. In the absence of any contractual or other contemporaneous record showing that the invoiced value already covered freight and insurance up to the place of import, the claim of nil transportation cost could not be accepted merely on oral assertions. The invoice conditions indicating that the goods were dispatched at the buyer's risk and that the seller's responsibility ceased once the truck left the factory premises supported the Revenue's case that the consignments were ex works and that transportation and insurance components were liable to be added in terms of Rule 10(2) of the Valuation Rules. [Paras 11, 12]
On merits, inclusion of the prescribed freight and insurance elements in the assessable value was held to be justified.
Extended period of limitation - Suppression and wilful misstatement - Revenue neutrality - HELD THAT:- The Tribunal found that the importer had disclosed in the import documents that freight was nil and had filed the Bills of Entry on that basis; therefore, there was no concealment of material facts. If the authorities considered that freight ought to have been added, it was for them to take action within the normal period, and the extended period could not be invoked merely because the assessment was not questioned earlier. The Revenue had not produced any positive material showing deliberate withholding or intentional evasion. The Tribunal further held that the dispute arose out of the appellant's understanding of the valuation position, which at best reflected a bona fide interpretational issue, and the admitted availability of credit rendered the matter revenue neutral, both of which negatived any allegation of wilful suppression. [Paras 14, 15, 16, 17]
The demand was held barred by limitation, and on that ground the impugned order was set aside and the appeal allowed.
Final Conclusion: Though the Tribunal upheld the Revenue's valuation position on merits, it held that the larger period had been wrongly invoked in the absence of proved suppression or wilful misstatement. The appeal accordingly succeeded on limitation and the impugned order was set aside.
Issues: Whether the enhancement of the assessable value of imported goods was sustainable when the declared transaction value was supported by invoice and banking documents, and whether the duty and interest paid under protest were refundable with interest.
Analysis: Section 14(1) of the Customs Act, 1962 gives primacy to transaction value for imported goods. Under Rule 3(1) and Rule 3(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, the declared value must be accepted unless there are valid grounds to reject it. Rule 12 requires the proper officer to have reasonable doubt about the truth or accuracy of the declared value before moving sequentially through the valuation rules. The recorded facts showed invoice support, banking remittances, and comparable earlier imports near the declared rate, while the Department relied mainly on a later and isolated comparative entry without first discarding the transaction value on cogent grounds. The enhancement was therefore held to be contrary to the statutory valuation sequence, and the amount paid under protest was treated as not lawfully payable.
Conclusion: The enhancement of assessable value was unsustainable. The duty and interest paid under protest were held refundable with applicable interest.
Final Conclusion: The appeal succeeded, the enhanced valuation was set aside, and consequential refund relief with interest followed.
Ratio Decidendi: Customs valuation must proceed from the declared transaction value, and it can be rejected only on recorded reasonable doubt under Rule 12 before resorting sequentially to the alternative valuation methods.
Enhancement of the assessable value of imported goods, merely on the basis of a higher comparable import, without first rejecting the declared transaction value in accordance with the Customs Valuation Rules - Sequential application of Customs Valuation Rules - Refund with interest of duty paid under protest.
Transaction value - Customs valuation - Reasonable doubt as to declared value - Comparable imports - HELD THAT: - The Tribunal held that, under Section 14(1) of the Customs Act and the Customs Valuation Rules, 2007, the normal rule is acceptance of the declared transaction value. Before resorting to valuation on any other basis, the department was required to record and establish reasons for doubting the truth or accuracy of that declared value and then proceed sequentially under the Rules. In the present case, the invoice and banking documents supporting the declared value were on record, there was no allegation of relationship between buyer and seller, and there was no material showing remittance of any extra consideration or any other basis to discard the declared value. The departmental comparison itself showed that most comparable consignments were valued below the appellant's declared price, yet the authorities adopted only one higher-priced Bill of Entry, which had arisen after the appellant's import, and used it to enhance value. The Tribunal further found that the departmental stand regarding difference in quality was contradicted by the revenue's own record stating that the goods were found as declared. Applying the principle in Century Metal Cycling Private Limited Vs Union of India, the Tribunal held that the department had bypassed the statutory scheme and had no legal basis to enhance the value. [Paras 10, 11, 13, 15, 16]
The enhanced assessable value was set aside and the appeal on valuation was allowed.
Refund of duty paid under protest - Interest on refund - Unjust retention of money by revenue - HELD THAT: - Having held that the enhancement of value was illegal, the Tribunal concluded that the differential duty and interest recovered from the appellant were not payable at all. It therefore directed refund of the amount paid under protest, together with interest for the period commencing from the date of payment till the date of refund. In doing so, the Tribunal accepted the principle that the revenue cannot retain money which was not lawfully due and relied on Sandvik Asia Ltd vs Commissioner Of Income Tax-I, Pune & Ors. [2006 (1) TMI 55 - SUPREME COURT] for grant of interest where money is unjustifiably withheld. [Paras 18, 20, 21, 22]
The appellant was held entitled to refund of the duty and interest paid under protest, along with applicable interest from 30.09.2022 till the date of refund.
Final Conclusion: The Tribunal held that the department had unlawfully enhanced the value of the imported goods without first dislodging the declared transaction value in the manner required by the Customs Valuation Rules. The appeal was allowed, the enhanced valuation was set aside, and the duty and interest paid under protest were directed to be refunded with applicable interest.
Issues: (i) Whether freight and insurance were liable to be added to the declared FOB value for arriving at the assessable value; (ii) whether the demand was barred by limitation and the extended period could be invoked on the basis of suppression or wilful misstatement.
Issue (i): Whether freight and insurance were liable to be added to the declared FOB value for arriving at the assessable value.
Analysis: The dispute turned on valuation under Section 14 of the Customs Act, 1962 and Rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The importer claimed that FOB and CIF values were effectively the same for the Bhutan land-border imports and that no transit cost existed between the points of export and import. The Tribunal held that this assertion required documentary substantiation, which was not produced. In the absence of a contractual or record-based demonstration that the transaction was truly on CIF terms or that transportation and insurance were nil and ascertainable, the declared FOB value could not be accepted as the final assessable value. The terms printed on the invoice-cum-challan also indicated buyer's risk and that responsibility ceased when the truck left the factory premises, supporting the Revenue's case that freight and insurance had to be loaded in accordance with the valuation rules.
Conclusion: The addition of freight and insurance to the FOB value was sustained.
Issue (ii): Whether the demand was barred by limitation and the extended period could be invoked on the basis of suppression or wilful misstatement.
Analysis: The show cause notice invoked the extended period under Section 28(4) of the Customs Act, 1962. The Tribunal found that the importer had disclosed the FOB value and, in the sample documents examined, had also indicated nil freight and the insurance element in the self-assessed declaration. On those facts, the Department failed to establish a positive act of suppression or deliberate misstatement. The Tribunal also treated the dispute as one of interpretation and noted that the matter was revenue neutral, since any additional duty paid would have been available as credit. In these circumstances, the strict requirements for invoking the extended period were not satisfied.
Conclusion: The extended period of limitation was not invocable and the demand was time-barred.
Final Conclusion: The appeal succeeded on limitation, the impugned order was set aside, and the demand, interest and penalty did not survive.
Ratio Decidendi: The extended limitation period under customs law cannot be invoked unless the Revenue proves a conscious suppression of material facts or wilful misstatement by positive evidence; a bona fide valuation dispute disclosed in the import documents, especially in a revenue-neutral setting, does not satisfy that standard.
Valuation under Section 14 of the Customs Act, 1962 and Rule 10(2) - addition of freight and insurance to the FOB value - Assessable value of imported goods - Extended period of limitation - Suppression of facts - Bona Fide Belief - Burden of Proof - Revenue neutrality.
Assessable value of imported goods - Inclusion of freight and insurance - FOB and CIF valuation - The declared FOB value of the imports from Bhutan could not be accepted as the complete assessable value without addition of freight and insurance under Rule 10(2) merely on the importer's assertion that FOB and CIF were identical. - HELD THAT: - The Tribunal held that the plea that the point of export and the point of import coincided, and therefore the FOB value itself represented the CIF value, required clear documentary substantiation. In the absence of any contractual material or other record showing that the invoiced price already included the relevant transportation and insurance components up to the place of importation, the contention could not be accepted on oral assertion alone. The endorsements in the invoice-cum-challan, including that the goods were despatched at buyer's risk and that the seller's responsibility ceased once the truck left the factory premises, supported the Revenue's case that transportation and insurance were not shown to be embedded in the invoiced value. On that basis, the statutory additions towards freight and insurance were held applicable on merits. [Paras 11, 12]
On merits, the addition of freight and insurance to the FOB value under Rule 10(2) was held to be legally sustainable.
Extended period of limitation - Suppression of facts - Revenue neutralityHELD THAT: - The Tribunal found that the importer had disclosed in the bill of entry and accompanying invoice-cum-challan the invoiced value, the freight as nil, and the insurance element as declared. In such circumstances, the allegation that material facts had been suppressed was not sustainable, since the primary documents placed before the assessing authorities themselves contained the basis of valuation adopted by the importer. The Tribunal held that if the authorities considered transportation cost liable to be added, action ought to have been taken within the normal limitation period, and recourse to the extended period could not be justified merely by applying the prescribed loading provision later on. It further held, following Collector of Central Excise v. Camphor Drugs & Liniments [1989 (2) TMI 116 - SUPREME COURT], Continental Foundation Jt. Venture v. Commissioner of Central Excise, Chandigarh-I [2007 (8) TMI 11 - SUPREME COURT] and Commissioner of Central Excise& Customs v. Alican Pharma Pvt. Ltd. [2012 (1) TMI 182 - GUJARAT HIGH COURT] that suppression must be shown by a positive and deliberate act, and that a bona fide understanding or interpretational dispute does not amount to willful misstatement. The Tribunal also treated the dispute as revenue neutral because the appellant would have been entitled to credit of the duty, which further negatived any inference of intent to evade. [Paras 14, 15, 16, 17]
The demand was held barred by limitation, and on that ground the appeal was allowed and the impugned order was set aside.
Final Conclusion: Though the Tribunal found merit in the Revenue's stand on valuation, it held that the extended period had been wrongly invoked as suppression or willful misstatement was not proved. The appeal accordingly succeeded on limitation and the order confirming duty, interest and penalty was set aside.
Issues: Whether penalty under Section 114 of the Customs Act, 1962 was sustainable against a Customs House Agent who permitted use of his licence without due diligence and thereby facilitated attempted export of prohibited red sanders.
Analysis: Section 114 fastens liability on any person who, in relation to goods, does or omits to do any act or omission rendering the goods liable to confiscation under Section 113, and separately refers to abetment. The provision was held to create liability on the basis of the act or omission itself, without requiring proof of conscious and knowing involvement for the first limb. On the findings, the appellant permitted misuse of his CHA licence, had no direct dealings with the exporter, exercised no supervision, and his omissions formed part of the transaction that led to the attempted smuggling of prohibited goods liable to confiscation.
Conclusion: Penalty under Section 114 of the Customs Act, 1962 was upheld and the challenge by the appellant failed.
Imposition of a penalty under Section 114(i) of the Customs Act, 1962 on the appellant for having facilitated the smuggling activities - Liability for act or omission - Customs Broker liability for lending licence - Mens rea under the first limb of section 114.
Penalty for act or omission rendering export goods liable to confiscation -HELD THAT:- The Tribunal held that section 114 contains two distinct limbs: one covering any person whose act or omission renders the goods liable to confiscation, and the other covering abetment. On a plain reading, the first limb creates liability based on the objective consequence of the act or omission and does not import a requirement of mens rea; knowledge or intent may be relevant only to the separate limb dealing with abetment. Since the impugned order did not proceed on abetment, the case had to be tested under the first limb alone. On the findings, the appellant had allowed his CHA licence to be used by another entity, had no direct dealings with the exporter, failed to verify credentials, and exercised no supervision over the clearance activity. The Tribunal treated these omissions as part of a single continuous transaction culminating in the attempted smuggling of red sanders, and not as a mere breach of licensing regulations. It therefore held that the appellant's conduct directly facilitated a contravention resulting in confiscability of the export goods and attracted penalty under section 114. The authorities cited by the appellant were distinguished, including A. Elango [2025 (7) TMI 92 - CESTAT CHENNAI] on the ground that they concerned abetment or different factual situations, whereas the present case involved lending of the CHA licence for processing the export documents. [Paras 7, 8, 9, 10, 11]
The penalty imposed on the appellant under section 114 was upheld and the appeal was dismissed.
Final Conclusion: The Tribunal held that the appellant's lending of the CHA licence and failure to exercise due diligence constituted an act or omission attracting penalty under the first limb of section 114, without any requirement to prove mens rea. The appeal was accordingly dismissed.
Issues: Entitlement to interest on the amount deposited during investigation and later refunded under the Customs Act, 1962.
Analysis: The amount was deposited during investigation under the mistaken impression of duty liability and at the insistence of the Revenue, while the assessee's liability was ultimately negatived. Such payment was not a voluntary discharge of duty but a deposit made under mistake of law. The refund having been sanctioned, the denial of interest was not sustainable. The issue of interest on delayed refund was treated as settled in favour of the assessee, and the applicable rate was taken as 12% from the date of deposit till the date of refund.
Conclusion: The appellant was entitled to interest at 12% on the refunded amount from the date of deposit till the date of refund, and the denial of interest was set aside.
Final Conclusion: The appeal succeeded to the extent of grant of interest on the refunded deposit, and the appellant obtained consequential monetary relief in addition to the refund already sanctioned.
Ratio Decidendi: An amount deposited during investigation under mistake of law and at the Revenue's insistence does not lose its character as a refundable deposit, and upon refund the assessee is entitled to interest from the date of deposit till the date of refund.
Pre-deposit - Voluntary payment - Entitlement to interest on the amount deposited during investigation -Deposit under mistaken notion of duty liability - Rate of interest on delayed refund.
Interest on refund of investigation deposit - HELD THAT:- The Tribunal found that the amount paid during investigation could not be treated as a voluntary duty payment, as the appellant had throughout disputed liability and the payment was made under a mistaken impression of duty liability at the insistence of the Revenue. Once the proceedings against the appellant stood dropped, the amount assumed the character of a refundable deposit. Following its earlier decisions in M/s. Harrisons Industries [2025 (7) TMI 220 - CESTAT KOLKATA] and M/s. Falcon Exports [2025 (7) TMI 1467 - CESTAT KOLKATA], and noting that the view in Harrisons Industries had not been entertained in further appeal by the High Court, the Tribunal held that refund of such investigation deposit carries interest as a matter of course. On the rate, the Tribunal applied the same line of authority and held that interest was payable at 12% from the date of deposit till the date of refund. [Paras 9, 10, 11, 12]
Interest at 12% was held payable on the refunded amount from the date of deposit till the date of refund, and the denial of interest was set aside.
Final Conclusion: The Tribunal held that the amount deposited during investigation was refundable as a deposit made under a mistaken notion of liability and not as voluntary duty, and that the appellant was entitled to interest thereon at 12% from the date of deposit till refund. The denial of interest in the impugned order was accordingly set aside.
Issues: Whether the confiscation of green peas and the penalty imposed under the Customs Act, 1962 were sustainable when the alleged smuggling was sought to be proved only through statements and markings on the sacks, without corroborative evidence.
Analysis: The goods were recovered from trucks parked near a godown and not from a customs station or the international border. The evidence relied upon by the Revenue consisted of the statement of the appellant, the statements of the truck drivers, and the markings on the sacks describing the goods as Canadian origin. Green peas are not notified under Section 123 of the Customs Act, 1962, so the burden remained on the Revenue to prove that the goods were smuggled. The statements were not admissible for reliance in the absence of examination of the persons concerned in terms of Section 138B of the Customs Act, 1962. Foreign markings on bags, by themselves, were held insufficient to establish smuggling without positive, tangible corroboration of the place, method, time, and persons involved.
Conclusion: The confiscation and the penalty were not sustainable and were set aside. The appeal was allowed with consequential relief.
Smuggling - Confiscation of green peas and the penalty imposed - Burden to prove smuggled nature of non-notified goods - Reliance on statements without examination under Section 138B - Foreign markings - proof of smuggling.
Burden to prove smuggled nature of non-notified goods - HELD THAT: - As held in the case of M/s G-Tech Industries [2016 (6) TMI 957 - PUNJAB & HARYANA HIGH COURT], the statements cannot be relied upon. Thus, when the statements cannot be relied upon, the only evidence that remains is in the form of markings on the sacks/gunny bags. The same cannot be held to be reliable evidence to prove a serious allegation such as smuggling.
The Tribunal held that, since the seizure did not take place at a customs station or near the international border, the allegation of smuggling required positive proof from the revenue. As green peas are not notified goods, the burden remained on the revenue to establish their smuggled character. That burden was not discharged because the department did not prove the place, manner, time or persons involved in the alleged smuggling. The statements relied upon were also not admissible for proving the case, as the makers of those statements were not examined in terms of Section 138B. Once those statements were excluded, the only surviving material was the foreign marking on the sacks, which by itself was held insufficient to prove smuggling. [Paras 7, 8]
The confiscation, redemption fine and penalty were set aside, and the appeal was allowed with consequential relief.
Final Conclusion: The Tribunal held that the revenue failed to prove that the seized green peas were smuggled goods. In the absence of admissible statement evidence and any corroborative material beyond foreign markings on the sacks, the confiscation, redemption fine and penalty were set aside and the appeal was allowed.
Issues: (i) Whether the imported goods were correctly classified as welded stainless steel pipes under Chapter 73 or as draping tubes/window curtain parts and accessories under Chapter 83; (ii) Whether the goods could be treated as prohibited for want of BIS certification under the applicable quality control regime; (iii) Whether the declared value could be rejected and enhanced on the basis of a chartered engineer's report; (iv) Whether confiscation and penalties could be sustained.
Issue (i): Whether the imported goods were correctly classified as welded stainless steel pipes under Chapter 73 or as draping tubes/window curtain parts and accessories under Chapter 83.
Analysis: The description and intended use of the goods showed that they were drapery rods or curtain parts/accessories, and the revision of classification rested on form rather than the tariff scheme. The exclusionary note in Section XV of the First Schedule to the Customs Tariff Act, 1975 makes articles of Chapter 83 outside Chapters 72 to 76, and the specific heading for curtain accessories could not be displaced by a more general chapter heading for tubes and pipes. No reliable finding supported the view that the goods were welded pipes so as to justify reclassification.
Conclusion: The reclassification under Chapter 73 was unsustainable and the assessee succeeded on classification.
Issue (ii): Whether the goods could be treated as prohibited for want of BIS certification under the applicable quality control regime.
Analysis: The applicable Steel and Steel Products (Quality Control) Order, 2020 and the associated policy framework did not cover ITC(HS) 8302 4900, nor did the imported description appear as an input item requiring BIS-compliant manufacture in the relevant tables. The mandatory waiver mechanism relied upon by customs was not applicable to these goods, and no lawful basis was established for treating the import as prohibited merely for lack of BIS certification.
Conclusion: The goods were not liable to be confiscated on the ground of non-compliance with BIS certification requirements.
Issue (iii): Whether the declared value could be rejected and enhanced on the basis of a chartered engineer's report.
Analysis: The valuation rules required rejection of declared value only on a lawful foundation, followed by the prescribed sequential method. A chartered engineer's opinion has no independent role in the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 for determining assessable value, and the circulars relied upon were directed to different situations involving used capital goods or comparison for depreciation. In the absence of a valid rejection under Rule 12 and lawful resort to the sequential method, enhancement of value could not stand.
Conclusion: The declared transaction value was not validly displaced and the re-determined value was set aside.
Issue (iv): Whether confiscation and penalties could be sustained.
Analysis: Since the reclassification failed, the alleged prohibition failed, and the valuation enhancement failed, the foundations for confiscation under sections 111(d), 111(l) and 111(m) and for penalties under sections 112 and 114AA also failed. The order purporting to refuse clearance under section 47 could not survive once the goods were held not to be prohibited and the declared value remained unshaken.
Conclusion: Confiscation and penalties were set aside.
Final Conclusion: The impugned order could not be sustained on classification, prohibition, valuation, confiscation, or penalty, and the bills of entry were entitled to be processed on the declared assessment basis.
Ratio Decidendi: A specific tariff entry for curtain parts/accessories prevails over a general entry for pipes and tubes, and declared transaction value cannot be rejected or enhanced except in accordance with the valuation rules and their sequential mechanism.
Misdeclaration - Classification of imported goods - consignments of ‘draping tubes (window curtain parts/accessories) - classified as welded stainless steel pipes under Chapter 73 Or as draping tubes/window curtain parts and accessories under Chapter 83 - determination of characteristic of the impugned goods and its value - Tariff classification of parts of general use - Specific use-based classification prevailing over generic description - BIS certification requirement under quality control order - Customs valuation and rejection of transaction value - Appellate remedy - Assumption of functions of proper officer - Appellate remedy where superior officer assumes functions of proper officer
Appellate remedy - Assumption of functions of proper officer - The appeal before the Tribunal remained maintainable notwithstanding that the Commissioner had assumed functions ordinarily exercised by the proper officer. - HELD THAT: - The Tribunal held that, although section 5(2) of the Customs Act enables a superior officer to exercise the powers of a subordinate officer, such assumption does not shift the statutory appellate forum to the office of the incumbent. To treat the superior officer's assumption of authority as altering appellate remedies would lead to denial of appellate recourse. The appellants, therefore, could not be denied a remedy merely because the impugned order was passed by the Commissioner while exercising functions otherwise entrusted to the proper officer. [Paras 2]
The Tribunal entertained the appeals and held that appellate recourse could not be denied on account of the Commissioner's assumption of the proper officer's functions.
Tariff classification - Parts of general use - Use-based classification - HELD THAT: - The Tribunal found that the adjudicating authority had not denied the goods' potential use as drapery rods and had proceeded only on the basis that their cross-section better fitted headings for tubes and pipes. That approach was held unsustainable because the order contained no proper finding that the goods answered the description of welded tubes and pipes for heading 7306. More importantly, the relevant section notes gave precedence to articles of Chapter 83 and excluded their treatment under Chapters 72 to 76 where applicable. Since the imported goods were intended and capable of use as drapery rods, the separate enumeration founded on use prevailed over the more generic description based on form. The revision of classification was therefore held to be erroneous. [Paras 10, 11]
The reclassification to tariff items 7306 4000/7306 6100 was set aside and the declared classification under tariff item 8302 4900 was restored.
BIS certification - Quality control order - Prohibited goods - HELD THAT: - The Tribunal examined the tables appended to the quality control order and found that ITC(HS) 8302 4900 was not enumerated therein. It further held that the customs authorities had misconstrued the requirement relating to BIS-compliant inputs for stainless steel pipes and tubes, since that condition did not bring the impugned goods within the order. In the absence of any finding linking the goods to the entries in the tables, neither BIS certification nor online waiver determination was applicable. Consequently, the invocation of section 111(d) for import without BIS certification lacked legal sanction. [Paras 12]
Confiscation founded on alleged non-compliance with BIS certification was held unsustainable.
Transaction value - Customs valuation - Sequential application of valuation rules - Chartered engineer's report - HELD THAT: - The Tribunal held that a chartered engineer has no assigned role within the scheme of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 for rejection or determination of value in the present context. The circulars relied upon did not justify such reliance, as they were concerned with limited comparison exercises, particularly in relation to used capital goods, and did not authorise substitution of the statutory valuation methodology. The impugned order had neither benchmarked rejection of the declared value under rule 12 in the manner required by law nor followed the mandated sequential application of the valuation rules thereafter. The re-determined value, therefore, failed the statutory test. [Paras 13, 14, 15]
The rejection of transaction value and the re-determined assessable value were set aside.
Final Conclusion: The Tribunal set aside the impugned order in entirety. It held that the declared classification and transaction value were liable to be accepted, that the goods were not imported in breach of any BIS-based prohibition, and that the penalties could not survive.
Issues: (i) Whether oven roasted areca nuts, roasted pistachios, roasted almond nuts and roasted cashew nuts are classifiable under the claimed Customs Tariff Items, and whether the roasting process takes them out of Chapter 8 into Heading 2008. (ii) Whether the benefit of Notification No. 46/2011-Cus dated 01.06.2011 is available for the imported goods, subject to proof of origin under the applicable rules.
Issue (i): Whether oven roasted areca nuts, roasted pistachios, roasted almond nuts and roasted cashew nuts are classifiable under the claimed Customs Tariff Items, and whether the roasting process takes them out of Chapter 8 into Heading 2008.
Analysis: The classification was determined by applying the General Rules for Interpretation, the Section and Chapter Notes, and the HSN Explanatory Notes. The decision distinguished roasting from drying and treated roasted cashew nuts as specifically covered by the tariff entry for cashew nut, roasted, salted or roasted and salted. Roasted almond nuts and roasted pistachios were treated as falling within the specific inclusion for other roasted nuts and seeds under Heading 2008. In relation to areca nuts, the ruling treated moisture content of 10% to 15% as inconsistent with the claimed roasted character and placed the goods in the areca nut entry under Chapter 8 rather than under roasted nuts.
Conclusion: Roasted cashew nuts are classifiable under CTI 20081910. Roasted almond nuts and roasted pistachios are classifiable under CTI 20081991. Areca nuts with moisture content of 10% to 15% are classifiable under CTI 080280, with the appropriate sub-classification depending on form.
Issue (ii): Whether the benefit of Notification No. 46/2011-Cus dated 01.06.2011 is available for the imported goods, subject to proof of origin under the applicable rules.
Analysis: The exemption was treated as conditional and dependent on the importer establishing origin to the satisfaction of the jurisdictional customs authority in accordance with the relevant rules of origin and the administration rules governing trade agreements.
Conclusion: The notification benefit is available only on proof of the required origin conditions.
Final Conclusion: The advance ruling sustains the proposed classification for roasted cashew nuts, roasted almond nuts and roasted pistachios, rejects the claimed roasted classification for the areca nuts described with 10% to 15% moisture content, and leaves the exemption benefit contingent on compliance with origin requirements.
Ratio Decidendi: For tariff classification, the specific description in the tariff and the HSN Explanatory Notes prevail, and goods resulting from roasting are to be classified as roasted nuts where the tariff expressly so provides, while goods not answering that description remain within the appropriate fresh or dried nut entry.
Classification of Roasted Areca nuts, Roasted Pistachios, Roasted Almond Nuts and Roasted Cashew Nuts for imports - benefit of Notification No. 46/2011-Cus - Moisture-content based classification of areca nut - General Rules for Interpretation, the Section and Chapter Notes - HSN Explanatory Notes - Specific tariff entry over general entry - Preferential exemption subject to proof of origin
Maintainability of advance ruling - Chapter 08 classification - HELD THAT:- The Authority held that the issue of classification of roasted areca nuts already stood covered by the Madras High Court decision upholding earlier rulings of the Authority, and therefore no fresh ruling was required on that claim under the statutory bar. It further examined the applicant's own description that the moisture content of the goods remained between 10% and 15%, and, following the High Court order referred to in the ruling, concluded that goods within that moisture range are to be regarded as raw areca nuts and not roasted areca nuts. Applying the tariff structure and the interpretative rules, such goods were found to fall under heading 0802, under the appropriate tariff item for whole, split or ground areca nut, as the case may be. [Paras 8, 15]
The claim for roasted areca nut classification was not entertained, and the goods as described were held classifiable under CTI 080280, with the appropriate sub-classification depending on their form.
Classification of roasted nuts - Specific tariff entry over general entry - HSN Explanatory Notes - HELD THAT:- The terms dry-roasting, oil roasting and fat-roasting however are not defined in the Customs Tariff Act, 1975. Therefore, these terms have to be understood in a commonly accepted sense. The Hon'ble Apex Court in the case of Alladi Venkateswarlu Vs. the Government of Andhra Pradesh [1978 (2) TMI 184 - SUPREME COURT] held that "the commonly accepted sense of a term should prevail in construing the description of an article of food". In common trade parlance, "drying" is a method of food preservation by the removal of water content. On the other hand, "roasting" means the excess or very high heat treatment that produces fundamental chemical and physical changes in the structure and composition of the goods, bringing about a charred physical appearance. Therefore, drying is a moisture removal process involving methods such as dehydration. evaporation; etc., whereas roasting is a severe heat treatment process.
The Authority held that roasting is a process distinct from the processes contemplated in Chapters 7, 8 or 11, such as drying, steaming, boiling or provisional preservation, and that goods prepared by such other process fall within Chapter 20. It relied on the tariff structure, the HSN Explanatory Notes treating dry-roasted, oil-roasted or fat-roasted nuts as covered by heading 2008, and the common understanding that roasted nuts are commercially distinct from raw nuts. Since roasted cashew nuts are specifically named in CTI 20081910, that specific entry had to prevail. Roasted almond nuts and roasted pista nuts, being roasted nuts not specifically covered elsewhere, were held to fall under CTI 20081991 as other roasted nuts and seeds. [Paras 10, 11, 12, 13, 15]
Roasted cashew nuts were held classifiable under CTI 20081910, and roasted almond nuts and roasted pista nuts under CTI 20081991.
Preferential exemption subject to proof of origin - Rules of origin compliance - HELD THAT: - The Authority did not grant the notification benefit as an automatic consequence of tariff classification. It held that the preferential duty benefit would be available only if the importer proves to the satisfaction of the proper officer that the goods are of the eligible originating country in accordance with the relevant origin rules and the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020. [Paras 14, 16]
Eligibility for the notification benefit was left conditional upon the importer establishing origin before the proper officer in accordance with the applicable rules.
Final Conclusion: The Authority declined to issue a ruling on the applicant's claim regarding roasted areca nuts, holding that goods with 10% to 15% moisture content are to be treated as raw areca nuts classifiable under heading 0802. Roasted pista nuts and roasted almond nuts were held classifiable under CTI 20081991, and roasted cashew nuts under CTI 20081910, while the claimed notification benefit was made subject to proof of origin in accordance with the applicable rules.
Issues: Whether the bail granted to the respondent accused should be cancelled on the ground of alleged breach of bail conditions, need for further custodial interrogation, and alleged infirmity in the order granting bail.
Analysis: Cancellation of bail requires cogent and overwhelming circumstances, ordinarily showing interference with the administration of justice, evasion of process, abuse of liberty, absconding risk, or tampering with evidence or witnesses. The material on record showed that the respondent had complied with the conditions imposed by the trial court, had been permitted to travel abroad on earlier occasions with conditions, had returned, and had even surrendered his passport before it was later returned by the trial court. The record also indicated cooperation with the investigating agency, attendance when called, and supply of documents and login credentials. No credible material was placed to show breach of bail conditions, misuse of liberty, or any supervening circumstance justifying cancellation. The order granting bail was also treated as reasoned, and the request for further custodial interrogation was held not to furnish a sufficient ground to take away liberty already granted.
Conclusion: The prayer for cancellation of bail was rejected and the respondent's bail was not disturbed.
Application seeking Cancellation of bail - Supervening circumstances - breach of any bail condition - Scope of power to commit to custody under section 483(3) BNSS -
Cancellation of bail - Supervening circumstances - Misuse of bail - Cancellation of the bail granted to the respondent accused was not warranted. - HELD THAT: - The Court held that cancellation of bail, being a harsh interference with personal liberty, cannot be ordered mechanically and requires cogent and overwhelming circumstances. On the material placed, no breach of bail conditions, attempt to abscond, tampering with evidence, or non-cooperation with the investigation was established. The record showed that the respondent had travelled abroad only with permission of the trial court, returned to India, surrendered and thereafter obtained return of passport through court orders, attended the investigating officer when called, and supplied documents and email credentials. The case was also found to rest substantially on documentary material already in the possession of the applicant. In these circumstances, the Court found no supervening event or other ground justifying cancellation of bail. [Paras 13, 16, 18, 19]
The prayer for cancellation of bail was rejected for want of any supervening or other legally sustainable ground.
Scope of power to commit to custody under section 483(3) BNSS - Appellate or revisional scrutiny of bail order - HELD THAT: - The Court observed that although section 483(3) of the BNSS confers power to direct arrest and commit an accused to custody, the provision does not state that the Sessions Court may test or re-examine the Magistrate's order granting bail under section 480 of the BNSS as if exercising appellate or revisional jurisdiction. The applicant's contention that the bail order was perverse and that further custodial interrogation was required ought therefore to have been pursued before the appropriate appellate forum. The Court also noted that the bail order had been passed earlier and the present application had been filed later without justified delay. [Paras 14, 15]
The Court declined to treat the application as a vehicle for appellate or revisional scrutiny of the order granting bail.
Final Conclusion: The application for cancellation of bail was rejected. The Court found no supervening circumstance, misuse of liberty, or breach of conditions warranting cancellation, and further held that the proceeding could not be used to re-examine the Magistrate's bail order as though in appeal or revision.
Issues: (i) Whether the interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016 stayed proceedings for making absolute the attachment of properties under the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999; (ii) Whether the Insolvency and Bankruptcy Code, 2016 overrides the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 on the ground of repugnancy.
Issue (i): Whether the interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016 stayed proceedings for making absolute the attachment of properties under the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999.
Analysis: The attachment proceedings under the MPID Act were held to be aimed at protecting depositors and not at securing a debt owed by the appellants to the State. In the absence of a debtor-creditor relationship, the property attached under the MPID Act could not be treated as a debt for the purposes of Section 96 of the Insolvency and Bankruptcy Code, 2016. The interim moratorium therefore did not apply to the MPID proceedings.
Conclusion: The moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016 did not stay the MPID attachment proceedings.
Issue (ii): Whether the Insolvency and Bankruptcy Code, 2016 overrides the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 on the ground of repugnancy.
Analysis: The two enactments operate in distinct legislative fields. The MPID Act falls within the State List, while the Insolvency and Bankruptcy Code, 2016 operates in the Concurrent List. Repugnancy under Article 254(1) of the Constitution of India arises only where both laws occupy the Concurrent List and are inconsistent. Since the statutes operate in different spheres, Section 238 of the Insolvency and Bankruptcy Code, 2016 did not displace the MPID Act.
Conclusion: The Insolvency and Bankruptcy Code, 2016 does not override the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 on the ground of repugnancy.
Final Conclusion: The appeals failed because the requested stay of MPID attachment proceedings under the insolvency moratorium was legally unavailable, and the State enactment continued to operate unaffected by the insolvency law.
Ratio Decidendi: A statutory moratorium under the Insolvency and Bankruptcy Code does not apply to MPID attachment proceedings absent a debt-based debtor-creditor relationship, and no repugnancy arises where the two enactments operate in different legislative fields.
Interim moratorium under Section 96 - Seeking stay proceedings for making absolute attachment - Attachment under depositors protection law - Repugnancy and overriding effect - Binding precedent - Statutory attachment proceedings under the MPID Act.
Interim moratorium under insolvency law - Attachment under depositors protection law - Debtor-creditor relationship - Repugnancy and overriding effect - HELD THAT: - The Court held that the property sought to be made absolute under the MPID Act was not a debt and that no debtor-creditor relationship existed between the appellants and the State. On that basis, the interim moratorium under Section 96 of the IBC was held inapplicable to the attachment proceedings. The Court further held that the MPID Act and the IBC operate in distinct legislative fields, the former under List II and the latter under List III, and therefore the doctrine of repugnancy under Article 254(1) had no application. Consequently, it could not be contended that the IBC would override the MPID Act through Section 238. The Court followed the principle stated in National Spot Exchange Ltd. v/s. Union Of India . [Paras 8, 9]
The challenge to rejection of the applications seeking stay of MPID proceedings was rejected and the appeals were dismissed.
Final Conclusion: All the appeals were dismissed. The Court held that Section 96 of the IBC did not stay proceedings for making absolute attachment under the MPID Act, and imposed costs on each appeal for pursuing repetitive proceedings contrary to the settled legal position.
Issues: Whether the cancellation of the completed e-auction and direction for fresh valuation and re-auction were justified on the grounds of inadequate notice period, post-facto sharing of material information, and alleged undervaluation of the asset.
Analysis: The appeal arose from sale of a 50% undivided share in residential property belonging to the bankrupt estate. The auction notice was issued on 02.06.2023 and the auction was held on 27.06.2023, with the sale certificate issued after the successful bidder deposited the entire consideration. The record showed that the principal secured creditor held overwhelming voting strength, yet material steps such as valuation and auction progression were communicated to the creditors only after completion through progress reports. The Tribunal treated this as post-facto disclosure that prevented meaningful creditor participation at the valuation and sale-planning stages. It also found that the asset was a complex, indivisible and encumbered fractional interest, for which a shorter notice period and single valuation were insufficient to secure adequate market exposure and proper value discovery. The Tribunal relied on the need for value maximisation, stakeholder consultation, and the trustee's duty to proceed with greater caution where secured interests and pending SARFAESI proceedings existed.
Conclusion: The cancellation of the auction and direction for fresh valuation and re-auction were upheld, as the process was found to be procedurally deficient and inadequate for fair market participation.
Ratio Decidendi: In insolvency sale of a complex and encumbered asset, post-facto disclosure to creditors, coupled with compressed notice and valuation steps, may justify setting aside a concluded auction where the process fails to secure fair participation and value maximisation.
Validity of cancellation of the e-auction - Sanctity of auction - Adequacy of auction notice period - Stakeholder consultation and value maximisation - Undervaluation of encumbered fractional asset - Whether the Adjudicating Authority was justified in cancelling the e-auction held on 27.06.2023 on the basis that the auction notice, published on 02.06.2023, allowed only twenty-five days before the auction date.
Adequacy of auction notice period - Stakeholder consultation and value maximisation - Undervaluation of encumbered fractional asset - Procedural fairness in insolvency sale - HELD THAT: - The Tribunal held that the material defect in the sale process was not confined to the 25-day gap between publication and auction, but arose from the cumulative effect of several procedural lapses. The Bankruptcy Trustee shared key developments with the Committee of Creditors only after valuation, publication, auction, selection of the highest bidder and issuance of the sale certificate had already taken place, thereby reducing the CoC to a post-facto recipient of information and depriving the principal creditor of any meaningful opportunity to examine valuation or influence the sale process. Given that the asset was a 50% undivided share in a residential flat, encumbered and inherently difficult to market, the Tribunal held that a longer notice period was required to enable due diligence and wider bidder participation. The valuation adopted for the sale was substantially lower than earlier values on record, was not shared with Union Bank before the auction, and no additional valuation was obtained though the circumstances warranted greater caution under Regulation 30(3). The Trustee also proceeded without properly disclosing or accounting for the existing mortgage, the secured creditor's charge over the whole property, the co-owner's interest, and the pending SARFAESI proceedings. On these facts, the Adjudicating Authority was right in concluding that the auction process lacked sufficient fairness, transparency and value maximisation to sustain the sale. [Paras 64, 65, 66, 71, 74]
The order setting aside the auction, directing fresh valuation and re-auction, was upheld.
Finality of prior appellate order - Acceptance of refund - HELD THAT: - The Tribunal noted that in the earlier appeal filed by the bankrupt against the same impugned order, a coordinate Bench had already found no ground to interfere with the direction for re-auction. It further recorded that the appellant had obtained refund of the amount deposited in the auction and yet continued to pursue the present appeal. The Tribunal treated this conduct as impermissible, holding that he could not seek to set aside an order from which he was no longer adversely affected after having accepted the refund flowing from it. [Paras 67, 68, 69, 73]
The appellant's challenge was held not maintainable in substance after acceptance of refund, reinforcing dismissal of the appeal.
Final Conclusion: The Appellate Tribunal upheld the order setting aside the completed auction sale. It held that the cumulative procedural defects in valuation, disclosure, stakeholder consultation and auction notice rendered the sale process inadequate for fair market participation and value maximisation, and also noted that the appellant had already accepted refund of the auction amount.
Issues: (i) Whether the adverse remarks concerning delay in filing extension and liquidation applications, and the belated submission of hard copies, called for interference; (ii) Whether the observations that the Resolution Professional was lax in filing progress reports and was canvassing for a particular resolution plan could stand.
Issue (i): Whether the adverse remarks concerning delay in filing extension and liquidation applications, and the belated submission of hard copies, called for interference.
Analysis: The extension applications were moved with delay, and the record showed that in some instances the applications were received after the extended period had already expired. The liquidation-related application was also filed belatedly. Those remarks were supported by the record and did not warrant interference.
Conclusion: The remarks on delay and belated filing were upheld and remained adverse to the Appellant.
Issue (ii): Whether the observations that the Resolution Professional was lax in filing progress reports and was canvassing for a particular resolution plan could stand.
Analysis: The record did not show any specific duty or direction requiring periodic progress reports in the manner assumed by the Adjudicating Authority, and the criticism on that score was not supported by the established facts. The remarks on canvassing were also unsustainable because the Resolution Professional acted on the CoC's directions and merely facilitated the process, including by explaining the applicable regulatory framework. Such conduct could not be treated as taking sides in the resolution process.
Conclusion: The remarks on progress reports and canvassing were directed not to be read adversely against the Appellant.
Final Conclusion: The appeal succeeded only in part, with the impugned observations partly retained and partly neutralised.
Ratio Decidendi: Adverse remarks against a resolution professional must be grounded in the record, and facilitating the CIRP in accordance with CoC directions does not amount to impermissible canvassing.
Adverse remarks against resolution professional - Delayed filing of CIRP extension and liquidation applications - Duty to file progress reports - Role of resolution professional vis-a-vis Committee of Creditors - Canvassing for approval of resolution plan.
Adverse remarks against resolution professional - Delayed filing of CIRP extension and liquidation applications - HELD THAT: - The Appellate Tribunal found that the observations in the impugned order regarding late physical filing of applications were founded on the admitted factual position. It held that the extension application had been pursued belatedly and, in one instance, when the period sought to be extended had already expired, rendering the application infructuous. It further held that the liquidation initiation application had also been filed with delay after rejection of the resolution plan by the CoC. Since these remarks were supported by the material on record, no case was made out to expunge or modify them. [Paras 35, 36, 38, 45]
The adverse remarks in paragraph 74, paragraph 84, and the second part of paragraph 85 of the impugned order were left undisturbed.
Duty to file progress reports - Adverse remarks against resolution professional - The remark that the appellant was lax in filing progress reports could not be sustained in the absence of any shown direction or legal requirement obliging such periodic filing. - HELD THAT: - The Appellate Tribunal held that the adverse observation on non-filing of progress reports was not substantiated by the record. The Adjudicating Authority had neither referred to any order requiring the appellant to file periodic progress reports nor identified any provision of the Code or the Regulations imposing such a duty in the manner suggested. In the absence of such factual or legal foundation, that part of the remark could not be treated as adverse to the appellant. [Paras 37, 45]
The first part of paragraph 85 of the impugned order was held not to operate adversely against the appellant.
Canvassing for approval of resolution plan - Role of resolution professional vis-a-vis Committee of Creditors - The observation that the appellant had canvassed the CoC to approve a particular resolution plan was not borne out by the facts. - HELD THAT: - The Appellate Tribunal found that the negotiations and revisions to the plan had occurred at the instance of the CoC, and that the appellant acted on the CoC's directions during the CIRP. It emphasised that resolution of the corporate debtor is primarily creditor-driven and the CoC takes decisions in its commercial wisdom, while the RP's role is supervisory and to act in accordance with law. On that factual basis, informing the CoC of the scheme of the relevant regulation and circulating a note as requested could not be characterised as canvassing for approval of any particular plan. The adverse imputation on that count was therefore held to be unsupported. [Paras 42, 43, 44, 45]
The remarks in paragraph 87, insofar as they imputed canvassing by the appellant for approval of a particular resolution plan, were held not to be adverse to the appellant.
Final Conclusion: The appeal was partly allowed. The Appellate Tribunal declined to interfere with the remarks founded on delay in filing applications, but held that the observations regarding alleged laxity in filing progress reports and alleged canvassing for a resolution plan should not be read adverse to the appellant.
Issues: Whether the company appeals were barred by limitation and whether the delay in filing could be condoned by reckoning limitation from the date of uploading of the impugned order and by excluding the time taken to obtain the certified copy.
Analysis: The appeals arose from orders pronounced in open court on 01.08.2025. The statutory period under Section 61(2) of the Insolvency and Bankruptcy Code, 2016 had to be counted from the day after pronouncement. The party seeking exclusion under Section 12 of the Limitation Act, 1963 was required to apply for a certified copy within the limitation period so as to claim exclusion of the time requisite for obtaining it. The record showed that the certified copy was applied for only on 29.09.2025, long after expiry of the initial limitation period, and no reliable material established that the impugned order was first uploaded only on 26.09.2025. The gap between pronouncement and uploading, even if assumed, could not extend the limitation in the absence of a timely application for the certified copy. Section 4 of the Limitation Act, 1963 did not advance the case on these facts.
Conclusion: The delay could not be condoned and the appeals were held to be time-barred.
Ratio Decidendi: In an appeal under Section 61(2) of the Insolvency and Bankruptcy Code, 2016, limitation runs from pronouncement in open court, and exclusion of time for obtaining a certified copy under Section 12 of the Limitation Act, 1963 is unavailable unless the application for the copy is made within the prescribed limitation period.
Application for seeking condonation of delay - Limitation for appeal under the Insolvency and Bankruptcy Code - Commencement of limitation from the date of pronouncement in case it is pronounced in open court in the presence of the party Or from date of uploading in case it is not pronounced in open court and the party to the proceedings - Exclusion of time for obtaining certified copy.
Commencement of limitation - Pronouncement and uploading of order - Certified copy and exclusion of time - The appeals were held barred by limitation, as the period for filing under Section 61 commenced from the date of pronouncement of the order and not from the later date asserted for uploading, and no exclusion under Section 12 of the Limitation Act was available since the certified copy was not applied for within the prescribed limitation period. - HELD THAT: - The Appellate Tribunal held that where the order had been pronounced in open court in the presence of the party, limitation began to run from that date. The appellant failed to place acceptable material to establish that the operative order became available only on the later date asserted, and the plea founded on a representation made to the Registry was rejected as such a representation was not a recognised judicial process for determining rights or limitation. The Tribunal further held that the interval between pronouncement and uploading represented the time taken by the Tribunal to prepare the order, and under the Explanation to Section 12 of the Limitation Act that period could not be excluded unless an application for certified copy had been made within the limitation period. Since the appellant applied for the certified copy only after expiry of the statutory period, the time taken in furnishing that copy could not be excluded, and the appeals, having been filed beyond the outer condonable limit, were not maintainable. [Paras 27, 28, 29, 30, 31]
The delay was not condonable and both appeals were dismissed as barred by limitation.
Final Conclusion: The Appellate Tribunal rejected the plea that limitation should run from the alleged later uploading of the order and held that, the order having been pronounced in open court, limitation commenced from the date of pronouncement. As the certified copy was sought only after expiry of the prescribed period, no exclusion of time was available and both appeals were dismissed as time-barred.
Issues: (i) Whether a miscellaneous application seeking recall of a non-speaking order dismissing an SLP is maintainable after disposal of the SLP. (ii) Whether subsequent developments in insolvency proceedings, including an OTS and withdrawal under Section 12A of the Insolvency and Bankruptcy Code, 2016, can justify recall of the earlier dismissal. (iii) Whether alleged suppression or fraud was made out so as to reopen the disposed of SLP.
Issue (i): Whether a miscellaneous application seeking recall of a non-speaking order dismissing an SLP is maintainable after disposal of the SLP.
Analysis: A post-disposal miscellaneous application can be entertained only in narrow situations such as correction of clerical or arithmetical errors or where directions in an executory order have become impossible to implement because of later events. Once the SLP stands disposed of, the Court becomes functus officio except within those limited contours. A mere attempt to reopen a dismissed SLP does not satisfy the settled standard of maintainability.
Conclusion: The miscellaneous application was not maintainable and was against the applicant.
Issue (ii): Whether subsequent developments in insolvency proceedings, including an OTS and withdrawal under Section 12A of the Insolvency and Bankruptcy Code, 2016, can justify recall of the earlier dismissal.
Analysis: The later events relied upon arose in a separate statutory framework and beyond the civil revision from which the SLP had arisen. Such developments could not be examined collaterally in a miscellaneous application filed in the disposed of SLP. The Court also reiterated that withdrawal under Section 12A of the Insolvency and Bankruptcy Code, 2016 depends on the commercial wisdom of the Committee of Creditors, which is not to be substituted by judicial assessment of competing offers. The applicant's attempt to compare the alleged superiority of its offer with the approved settlement was therefore outside the permissible scope of review.
Conclusion: The subsequent insolvency developments did not furnish a ground for recall and the issue was against the applicant.
Issue (iii): Whether alleged suppression or fraud was made out so as to reopen the disposed of SLP.
Analysis: Fraud may vitiate proceedings, but the exception must be specifically established. The order dismissing the SLP was non-speaking and did not rest on any representation shown to have been suppressed. The material relied upon at best disclosed a separate grievance arising from later or parallel proceedings and did not establish that the dismissal order itself had been procured by fraud.
Conclusion: Alleged suppression or fraud was not proved and no recall was warranted.
Final Conclusion: The Court declined to reopen the dismissed SLP or to enter into the merits of later insolvency proceedings, leaving the parties to pursue any available remedy before the competent forum.
Ratio Decidendi: A miscellaneous application filed after disposal of an SLP is maintainable only in exceptional post-disposal situations, and a non-speaking dismissal cannot be recalled on the basis of later events or unsubstantiated allegations of suppression, especially where the relief sought would require collateral review of a separate statutory process governed by commercial wisdom.
Maintainability of post-disposal miscellaneous application - Non-speaking Order - Functus officio - Collateral challenge to subsequent insolvency proceedings - Commercial wisdom of the Committee of Creditors - Doctrine of Merger - non-disclosure of the proposal for a One Time Settlement (“OTS”) - Application seeking interim injunction restraining Respondent Nos. 1 to 3 from selling, alienating, encumbering, or otherwise creating third party rights in respect of the suit property during the pendency of the suit.
Maintainability of post-disposal miscellaneous application - Functus officio - HELD THAT:- The Court held that the order sought to be recalled was not an executory order but a final order declining interference and dismissing the special leave petition. A post-disposal miscellaneous application is entertainable only in narrow situations such as correction of clerical or arithmetical errors or where implementation of directions in an executory order has become impossible because of subsequent events. Once the matter stood disposed of, the Court became functus officio, and the present case did not fall within any recognized exception. The mere fact that notice had been issued in the miscellaneous application did not cure the defect of maintainability. [Paras 4, 5]
The recall application was held to be not maintainable.
Collateral challenge to subsequent insolvency proceedings - Fraud on the Court - Finality of disposed proceedings -HELD THAT: - The Court found that the special leave petition arose from an interlocutory dispute in a suit for specific performance, whereas the recall application sought to rely upon later events in a separate statutory framework under the Insolvency and Bankruptcy Code. The propriety of those later steps could not be examined collaterally in a miscellaneous application filed in a disposed proceeding of a different origin. The plea of suppression and fraud was also rejected, since the earlier non-speaking order dismissing the special leave petition did not show that it turned on any particular representation now said to have been withheld. Later developments in another forum might furnish an independent cause of action, but could not retroactively unsettle the finality of the earlier disposal. [Paras 6, 8, 9]
The Court declined to reopen the disposed special leave petition on the basis of alleged suppression or subsequent events in insolvency proceedings, leaving remedies, if any, to be pursued before the competent forum.
Commercial wisdom of the Committee of Creditors - Withdrawal under Section 12A of the IBC - Limited judicial review - HELD THAT:- In Essar Steel (India) Ltd. Committee of Creditors v. Satish Kumar Gupta. [2019 (11) TMI 731 - SUPREME COURT], where this Court held that it is the commercial wisdom of the majority of the CoC which determines, through negotiations and assessment of viability, how and in what manner the corporate insolvency resolution process is to proceed. More particularly, this Court observed that the adjudicating authority cannot make any inquiry beyond the limited statutory parameters, nor can it issue directions in relation to the exercise of commercial wisdom of the CoC, whether in approving, rejecting, or otherwise dealing with a proposal. Likewise, in Vallal RCK v. Siva Industries & Holdings Ltd [2022 (6) TMI 173 - SUPREME COURT], this Court reiterated that where a withdrawal under Section 12A of the IBC has received the requisite approval, the scope of interference remains narrow and the commercial decision of the CoC is not to be displaced except on grounds known to law.
The Court held that once the matter entered the domain of withdrawal under Section 12A of the Insolvency and Bankruptcy Code, the choice whether to accept a settlement or adopt one commercial course over another lay essentially within the collective commercial wisdom of the Committee of Creditors. Judicial review in that sphere remains limited and does not extend to substituting the Court's own assessment of the financial attractiveness of competing offers. Although action in the insolvency process may be scrutinized in an appropriate proceeding on a sustainable legal ground such as statutory illegality or jurisdictional infirmity, that exercise could not be undertaken in the present miscellaneous application arising from a disposed special leave petition. [Paras 10, 11, 12]
The Court refused to compare the applicant's offer with the settlement accepted in the insolvency process or to interfere with the Committee of Creditors' commercial decision in these proceedings.
Final Conclusion: The miscellaneous application seeking recall of the order dismissing the special leave petition was dismissed as not maintainable and as an impermissible attempt to raise grievances arising from subsequent insolvency proceedings in a disposed matter. The Court left open all rights and contentions of the parties in the pending civil suit and in any proceedings under the Insolvency and Bankruptcy Code before the competent forum.
Issues: Whether the appeal was filed within limitation under Section 61(2) of the Insolvency and Bankruptcy Code, 2016, and within the maximum condonable period.
Analysis: The appeal under Section 61(2) had to be filed within 30 days, with a further condonable period not exceeding 15 days. The limitation was held to commence from the date of pronouncement of the order in open court, not from the date of uploading. The order recorded delivery on 21.04.2025, and there was no material to show that it was not pronounced on that date. Uploading was treated as an administrative act and not the trigger for limitation. On that computation, the appeal filed on 10.06.2025 was beyond the outer limit of 45 days, and the Tribunal could not entertain it. The merits of the restoration challenge were not examined because the limitation bar was held to be decisive.
Conclusion: The appeal was time-barred and not maintainable, and the limitation objection succeeded against the appellant.
Ratio Decidendi: For an appeal under Section 61(2) of the Insolvency and Bankruptcy Code, 2016, limitation begins from the date of pronouncement in open court, and once the statutory period of 30 days plus the maximum condonable 15 days expires, the appellate tribunal lacks jurisdiction to entertain the appeal.
Commencement of limitation from pronouncement of order - Maintainability of appeal beyond the condonable period under Section 61(2) of the IBC.
Pronouncement in open court - Jurisdictional bar of limitation - HELD THAT: - The Appellate Tribunal held that the scheme of Section 61(2) prescribes a 30-day period for appeal with a further condonable period of 15 days, and that this limit is peremptory and jurisdictional. Relying on V. Nagarajan v. SKS Ispat & Power Ltd. [2021 (10) TMI 941 - SUPREME COURT (LB)] and A. Rajendra Vs Gonugunta Madhusudan Rao [2025 (4) TMI 319 - SUPREME COURT (LB)], it held that once an order is pronounced in open court, knowledge of the order is imputed to the parties and limitation begins from that date. In the present case, the impugned order itself recorded that it was delivered on 21.04.2025 and also recorded appearance of counsel; there was no material to show that the order had not been pronounced in open court on that date, and the appellant had not specifically denied such pronouncement. The Tribunal therefore rejected the contention that limitation should run only from the date of uploading, holding that uploading is merely an administrative act and cannot postpone the statutory commencement of limitation. Since the appeal, even after granting exclusion for the time spent in obtaining the certified copy, was filed beyond the outer 30 plus 15 day limit, the Tribunal lacked power to entertain it. [Paras 7, 8]
The appeal was held to be barred by limitation and consequently not maintainable.
Final Conclusion: The Appellate Tribunal dismissed the appeal as barred by limitation, holding that the statutory period ran from the date of pronouncement of the impugned order and not from its later uploading. In view of that bar, it declined to examine the merits of the controversy.
Issues: Whether the National Company Law Tribunal had jurisdiction under Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 to direct de-freezing of the corporate debtor's demat account frozen by the stock exchange for non-payment of annual listing fee, and whether the dispute fell within the insolvency framework notwithstanding the securities law regime.
Analysis: The demat accounts contained shares admittedly owned by the corporate debtors, and the annual listing fee had already been quantified and crystallised; what remained was only recovery and the consequential freeze of the accounts. The statutory scheme under Sections 17, 18, 25, 35 and 36 of the Insolvency and Bankruptcy Code, 2016 requires the interim resolution professional, resolution professional and liquidator to take custody and control of the corporate debtor's assets and to preserve them for the benefit of creditors. Section 60(5)(c) confers residuary jurisdiction on the Adjudicating Authority over questions of law or fact arising out of or in relation to insolvency or liquidation. The securities law framework under the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992 and the Listing Obligations and Disclosure Requirements Regulations, 2015 empowers stock exchanges to regulate compliance and impose consequences for default, but once the dues are crystallised and the issue is the availability of the corporate debtor's own assets for insolvency or liquidation, the matter acquires a sufficient insolvency nexus. The earlier freezing action did not oust the Adjudicating Authority's jurisdiction where the relief sought was to enable administration and realisation of the corporate debtor's assets in insolvency proceedings.
Conclusion: The Adjudicating Authority had jurisdiction to entertain and allow the application for de-freezing of the demat accounts, and the challenge by the stock exchange failed.
Final Conclusion: The appeals were dismissed and the directions for de-freezing of the corporate debtors' demat accounts were upheld as a valid exercise of insolvency jurisdiction.
Ratio Decidendi: Where the dues are crystallised and the relief sought is for access to the corporate debtor's own assets in insolvency or liquidation, the Adjudicating Authority may exercise Section 60(5)(c) jurisdiction notwithstanding the securities law framework.
Residuary jurisdiction of NCLT under Section 60(5)(c) - De-freezing of demat accounts of corporate debtor - non- payment of annual listing fee by the CD - Crystallised annual listing fee dues - Interplay between IBC and securities regulatory framework.
Residuary jurisdiction under Section 60(5) - Corporate debtor's ownership of securities - Crystallised regulatory dues - Overriding effect of IBC - HELD THAT: - Having considered the scheme of the Regulatory framework of the appellant in view of the SCRA, SEBI Act, LODR Regulations and various circulars issued by the appellant, which we have reproduced herein before, we are of the considered view that aforesaid Act and Regulations and Circular orders are not in contravention to any of the Provisions contained under IBC except Section 14 of the code and Section 28 of the SEBI Act. It is to be recalled that by the effect of Moratorium as provided under Section 14 of the IB Code no recovery of any Fee or Dues can be made during moratorium under Section 28 of the SEBI Act and to that extent by virtue of section 238 of the Code the provision contained under Section 14 of the Code would have over riding effect vis a vis section 28 of the SEBI Act. But present is not a case where effect of Moratorium is required to be examined or considered as the Demat Accounts of the CD's have already been de freezed by the Ld. Adjudicating Authority and the main contention of appellant is that the Ld. Adjudicating Authority is not having jurisdiction either to entertain any such application or for passing impugned orders. At the cost of repetition, it is stated that by passing the aforesaid SEBI Act or SCRA or DOLR Regulations and by issuance of circular letters the business of listing of the securities has been controlled and streamlined and any cause of action with regard to conduction or regulation of such business or levying of any penalty or reduction of the same would certainly fall within the domain of the Securities Regulatory Framework. However, where no such cause of action is accruing in the realm of the public law and the Fee or dues towards the CD have been finalised/crystallized and only the recovery of the same is left the matter will fall squarely within the ambit of the IBC and the NCLT by virtue of Section 60 (5) and Section 238 of the Code would have jurisdiction with regard to the same.
In the instant case it appears to be admitted situation that the annual listing fee required to be paid by both the CD’s was quantified/crystallized and no further proceeding with regard to the payment of this annual listing fee was pending anywhere with any authority created under the Securities Regulatory Framework and what had remained is only the payment or Recovery of the same and it is only on the happening of the default of the payment of the same the Demat accounts of the CD’s were debit freezed, therefore keeping in view the law laid down by the Hon’ble Supreme Court in Embassy Property Development Pvt. Ltd [2019 (12) TMI 188 - SUPREME COURT] and Gujarat Urja Vikas Nigam Ltd [2021 (3) TMI 340 - SUPREME COURT] and keeping an eye on the fact that the ownership of the CD's with regard to the shares lying in the aforesaid Demat accounts have not been disputed by anyone, the de freezing of these Demat accounts of the CD was a question arising out of and in relation to the Insolvency Resolution of the aforesaid CD’s and thus NCLT/Adjudicating Authority was having jurisdiction to pass impugned orders by assuming jurisdiction as provided under Section 60 (5) of the Code and we do not find any illegality in exercise of such jurisdiction by the NCLT.
Since the IRP/RP and liquidator are under the Code bound to take control and custody of the corporate debtors' assets, including securities, and to preserve or realise them in CIRP or liquidation, the question of de-freezing such demat accounts had a direct nexus with insolvency resolution and liquidation. In that situation, the dispute fell within Section 60(5)(c), and to the extent any inconsistency arose in relation to recovery, the IBC would prevail. The Tribunal therefore distinguished matters lying in the public law or regulatory domain from cases where only payment of finalised dues remained, and held that the NCLT could validly entertain and decide the applications for de-freezing. [Paras 76, 77, 78, 79, 80]
The impugned orders directing de-freezing of the demat accounts were upheld, and the challenge to the NCLT's jurisdiction was rejected.
Final Conclusion: The appeals were dismissed. The Tribunal held that, in the facts of the case, de-freezing of the demat accounts of the corporate debtors was a matter arising out of and in relation to the insolvency resolution or liquidation process, and the NCLT had jurisdiction to grant that relief.
Issues: (i) Whether income tax and other statutory dues existing on the date of approval of the resolution plan, but not filed in the corporate insolvency resolution process, stood extinguished upon approval of the plan; (ii) whether reliefs, concessions and waivers relating to income tax liabilities could be granted without prior approval of the competent authority under the Income Tax Act, 1961.
Issue (i): Whether income tax and other statutory dues existing on the date of approval of the resolution plan, but not filed in the corporate insolvency resolution process, stood extinguished upon approval of the plan.
Analysis: The governing principle applied is that the resolution process is intended to revive the corporate debtor on a clean slate. Once a resolution plan is approved, claims not forming part of the plan and not lodged in the process are frozen and cannot survive against the successful resolution applicant. Statutory dues owed to governmental authorities are treated on the same footing if they were not included in the plan.
Conclusion: The unpaid income tax and other statutory dues that existed prior to approval of the resolution plan and were not filed in the insolvency process stood extinguished and could not be continued against the resolution applicant.
Issue (ii): Whether reliefs, concessions and waivers relating to income tax liabilities could be granted without prior approval of the competent authority under the Income Tax Act, 1961.
Analysis: The reliefs, concessions and waivers sought in relation to income tax were treated as matters to be dealt with by the competent authority under the applicable tax law. The approval of the resolution plan did not itself confer a tax waiver or dispense with the statutory approval mechanism for such reliefs.
Conclusion: The observation requiring the resolution applicant to approach the competent authority for income tax-related concessions and waivers was upheld.
Final Conclusion: The appeal succeeded to the extent that pre-resolution, unfiled income tax and other statutory dues were held to be extinguished, while the tax authority's approval requirement for concessions and waivers remained undisturbed.
Ratio Decidendi: Upon approval of a resolution plan, all claims and statutory dues not included in the plan and not lodged in the insolvency process stand extinguished, and the successful resolution applicant takes the corporate debtor free from such past liabilities.
Extinguishment of Claims - Clean Slate Principle - Resolution Plan Binding Effect - Statutory Dues - reliefs, concessions and waivers relating to income tax liabilities - without prior approval of the competent authority under the Income Tax Act, 1961. - Corporate Insolvency Resolution Process.
Extinguishment of statutory dues - Approved resolution plan - Income Tax Department dues and other statutory dues existing on the date of approval of the resolution plan, but not claimed in the CIRP and not forming part of the plan, stand extinguished. - HELD THAT: - Applying the principle laid down in Ghanshyam Mishra & sons Pvt. Ltd. vs Edelweiss Asset Reconstruction Company Limited [2021 (4) TMI 613 - SUPREME COURT], the Appellate Tribunal held that once a resolution plan is approved, all dues, including statutory dues, which are not part of the plan cannot survive for the period prior to approval. Since it was an admitted position that the Income Tax Department had not filed any claim before the Resolution Professional, such dues could not be fastened on the successful resolution applicant after approval of the plan. [Paras 10, 11, 15]
The Appellate Tribunal held that the unclaimed dues of the Income Tax Department and other statutory authorities existing on the date of approval of the resolution plan stood extinguished.
Concessions and waivers under the Income Tax Act - Competent authority approval - HELD THAT: - The Appellate Tribunal distinguished between extinguishment of past dues on approval of the resolution plan and the grant of statutory concessions, reliefs or waivers under the tax law. It held that while unclaimed pre-approval dues stood extinguished, the successful resolution applicant was still required to approach the competent authority for any affirmative relief, concession or waiver under the Income Tax Act, and the observation of the Adjudicating Authority to that effect disclosed no error. [Paras 11, 12]
The condition that concessions, reliefs or waivers under the Income Tax Act would be subject to prior approval of the competent authority was upheld.
Final Conclusion: The Appeal was disposed of by clarifying that unclaimed Income Tax Department dues and other statutory dues existing on the date of approval of the resolution plan stood extinguished. The remainder of the Adjudicating Authority's directions, including the requirement of approaching the competent authority for concessions or waivers under the Income Tax Act, was left undisturbed.
Issues: Whether the direction to return the deposited amount to the corporate debtor and to decline acceptance of the affidavit was justified.
Analysis: The corporate debtor had deposited the amount pursuant to the earlier order within the time allowed. The affidavit filed in support of the deposit recorded the debtor's submission that the amount should not be released or remitted to the operational creditor while the stated sanctions-related constraints continued. That statement did not furnish a basis to undo the deposit or to direct its return. The operational creditor also had no objection to the amount continuing in deposit. Since the matter had already been reserved, the adjudicating authority was required to take a decision on the basis of the deposit and the affidavit already filed.
Conclusion: The direction returning the deposited amount and refusing to take the affidavit on record was set aside, and the deposited amount was ordered to remain with the Assistant Registrar.
Final Conclusion: The impugned order was modified to preserve the deposited amount in court custody and to permit the adjudicating authority to proceed on the basis of the deposit and affidavit already filed.
Validity of the direction to return the deposited amount to the corporate debtor and to decline acceptance of the affidavit.
Deposit made pursuant to judicial direction - The adjudicating authority was not justified in directing release of the amount deposited by the corporate debtor and in refusing to take the affidavit on record merely because the affidavit stated that the deposited amount should not be released to the operational creditor until stated sanctions-related conditions were satisfied. - HELD THAT: - The Appellate Tribunal found that it was undisputed that the corporate debtor had complied with the earlier direction and deposited the entire amount within the time granted. Paragraph 8 of the affidavit did not impose any condition on the making of the deposit; it only contained the corporate debtor's submission regarding future release or remittance of the deposited amount to the operational creditor. Such a statement could not constitute a valid reason to order refund of the amount already deposited under the court's direction or to decline to take the affidavit on record. Since the matter had already been reserved, the deposit was required to remain with the Assistant Registrar and the adjudicating authority was to decide the case after considering the deposit and the affidavit, without treating this appellate order as a ground for rehearing. [Paras 9, 11, 12, 13, 14]
The impugned direction returning the deposit and the affidavit was set aside; the deposit was directed to remain with the Assistant Registrar, and the adjudicating authority was left to decide the reserved matter after considering the deposit and affidavit.
Final Conclusion: The Appellate Tribunal modified the impugned order by setting aside the direction for return of the deposited amount and the affidavit. The deposit was directed to continue with the Assistant Registrar, and the adjudicating authority was to proceed to decide the reserved matter on that basis, without any rehearing.
Issues: Whether the Corporate Insolvency Resolution Process, after approval of the resolution plan and commencement of liquidation proceedings due to persistent default by the successful resolution applicant, could be de novo revived at the instance of the erstwhile resolution professional.
Analysis: The approved resolution plan had already been acted upon to the extent possible, but repeated defaults in payment led to invocation of the liquidation mechanism under Section 33 of the Insolvency and Bankruptcy Code. The appellant himself had initiated liquidation proceedings and later sought restoration of that application. In these circumstances, the request to restore and revive the concluded CIRP was inconsistent with the statutory scheme, because the CIRP had already culminated in an approved plan and, upon its failure, had moved into the liquidation stage. The cited precedents did not assist the appellant, as they arose on materially different facts and did not lay down a principle permitting revival of a closed CIRP after failure of the revised plan and initiation of liquidation.
Conclusion: The request for de novo revival of the CIRP was rightly rejected and the appeal failed.
Ratio Decidendi: Once a resolution plan has been approved and, upon persistent non-implementation, liquidation proceedings have been validly initiated, the CIRP cannot be revived de novo, particularly at the instance of the party who himself sought liquidation.
Application seeking de novo revival of Corporate Insolvency Resolution Process (CIRP) after approval and failure of resolution plan - Effect of Corporate Insolvency Resolution Process, after approval of the resolution plan and commencement of liquidation proceedings due to persistent default by the successful resolution applicant - Liquidation on non-implementation of approved resolution plan
Revival of CIRP after approval and failure of resolution plan - The Corporate Insolvency Resolution Process could not be restored and revived de novo after the resolution plan had already been approved, attempted to be implemented, rescheduled on default, and the appellant himself had invoked liquidation on continued non-compliance. - HELD THAT: - The Appellate Tribunal held that once the CIRP had culminated in approval of the resolution plan, the process ceased to subsist as a live insolvency resolution proceeding. Subsequent default in implementation of the approved plan, including failure even after a revised payment schedule, did not permit the clock to be put back by reopening the CIRP afresh. In such a situation, the statutory course was to proceed with liquidation, particularly when the appellant himself had already moved an application under Section 33 and had also sought restoration of that liquidation application. The earlier orders relied upon by the appellant were held not to lay down any principle enabling revival of CIRP in the present circumstances; they were either confined to accommodating implementation of a revised schedule or arose on materially different facts. The Tribunal also found the appellant's present stand inconsistent, since having treated the resolution process as having failed and having sought liquidation, he could not later seek reinstatement of CIRP and his own appointment as Resolution Professional. [Paras 22, 23, 24, 25, 26]
The application seeking de novo revival of CIRP was held to be not maintainable in law, and the only available course was to proceed with the pending liquidation process.
Final Conclusion: The appeal was dismissed. The Appellate Tribunal upheld rejection of the application for restoration and revival of CIRP, holding that after approval and failed implementation of the resolution plan, the matter could proceed only in liquidation.
Issues: (i) Whether a shareholder had locus standi to maintain the application and the present company appeal challenging the earlier insolvency proceedings and the approved resolution plan. (ii) Whether the later application seeking to reopen the concluded CIRP and allege fraud was maintainable in view of the finality already attained and the conduct of the appellant.
Issue (i): Whether a shareholder had locus standi to maintain the application and the present company appeal challenging the earlier insolvency proceedings and the approved resolution plan.
Analysis: The challenge was examined against the appellant's admitted status as a shareholder. The proceedings relating to admission of CIRP, approval of the resolution plan, and subsequent challenges had already been carried through earlier rounds of adjudication. In that context, the appellant was found not to be a person entitled to agitate the cause in his individual capacity on behalf of the corporate debtor. The earlier decisions had already treated the resolution plan as implemented and concluded, leaving no surviving personal grievance that could support the present challenge.
Conclusion: The shareholder lacked locus standi to maintain the application and the appeal.
Issue (ii): Whether the later application seeking to reopen the concluded CIRP and allege fraud was maintainable in view of the finality already attained and the conduct of the appellant.
Analysis: The earlier proceedings on the same foundation had been conclusively decided, and the approval of the resolution plan had attained finality after dismissal of the earlier appellate proceedings and the further challenge before the Supreme Court, followed by dismissal of review. The later application was filed after a substantial delay and sought to revive issues that had already been negatived. The Tribunal found concealment of material facts, repetition of earlier grounds, and an attempt to use the forum for a collateral criminal-law style invocation under the guise of insolvency proceedings. Such repeated invocation of the same allegations was treated as an abuse of process and not a maintainable basis to disturb concluded proceedings.
Conclusion: The later application was not maintainable and was rightly rejected as an abuse of process.
Final Conclusion: The company appeal failed, the impugned rejection of the later applications was sustained, and costs were imposed for abuse of the judicial process.
Ratio Decidendi: A shareholder cannot maintain insolvency-related proceedings to reopen a resolution plan that has attained finality, and repetitive allegations of fraud after conclusion of the CIRP are barred as an abuse of process.
Locus standi of shareholder in insolvency proceedings - Finality of approved resolution plan - admission of CIRP, approval of the resolution plan, and subsequent challenges - Abuse of process by re-agitation of concluded issues - Inherent powers - Whether at all an order passed by a forum exercising the power under Rule 11 of the NCLT Rules, 2016, and consequentially a challenge given to that order in an Appeal under Section 61 of the I & B Code, 2016, could be maintainable before this Appellate Tribunal.
Inherent powers of Tribunal - Criminal process before civil forum - HELD THAT: - The Appellate Tribunal held that the application was a conscious attempt to blend intended criminal proceedings with insolvency proceedings. It found that NCLT, being a civil forum, cannot be forced to perform criminal functions under the penal provisions referred to by the appellant, and the recourse to Rule 11 could not enlarge its jurisdiction for that purpose. [Paras 5]
The rejection of the application seeking such criminal action was upheld.
Locus standi of shareholder - Finality of resolution plan - Abuse of process - Suppression of material facts - HELD THAT: - The Appellate Tribunal held that the appellant, in his admitted capacity as a shareholder, had no locus to agitate the cause of the corporate debtor. It further found that the allegations founded on the same memorandum of understanding and fraud had already been tested in earlier proceedings culminating in dismissal of the appellant's challenge before the Appellate Tribunal, dismissal of the civil appeal by the Supreme Court, and dismissal of the review petition. The later application under the Code was therefore a concealed attempt to de novo reopen concluded proceedings, filed belatedly despite final implementation of the resolution plan. The Court also accepted the finding that the appellant had suppressed material facts and repeatedly pursued the same grievance, rendering the proceedings a clear abuse of process. [Paras 10, 13, 14, 15, 16]
The appeal was held not maintainable in substance and was dismissed with costs for abuse of the judicial process.
Final Conclusion: The Appellate Tribunal upheld the common order rejecting the appellant's applications, holding that a shareholder could not reopen concluded insolvency proceedings or invoke the NCLT's inherent powers to set criminal law in motion. The appeal and all interlocutory applications were dismissed with costs.
Outcome: The two company appeals were closed in view of the dissolution of the corporate debtor and no adjudication on merits was undertaken.
Powers conferred to the Adjudicating Authority under sub-section (7) of Section 59 - NCLT erroneously classified amounts as separate amounts whereas these were the part of the margin money - kept outside the liquidation estate - Mootness - Infructuousness - Dissolution of Corporate Debtor - HELD THAT:- Owing to the fact that, as of now since the liquidation process has already been completed, resulting into a consequential dissolution, the proceedings of the Company Appeal (AT) (CH) (Ins) No. 330/2024 has been admitted by the Counsels to have been rendered redundant, and would need no adjudication on merits because pursuant to the order of dissolution, all disputes would be taken to have been concluded and determined and thus owing to the order passed on 03.12.2025, the instant Company Appeal would stand disposed of, in terms of the dissolution order and nothing much material is required to be considered and decided, owing to the facts which we have already dealt with in the preceding paragraph.
So far as the connected Company Appeal (AT) (CH) (Ins) No. 390/2024 is concerned, which has been preferred by the liquidator, as against the same impugned order, owing to the admission made by the Counsels for the parties, about the implications flowing from the order of dissolution, no detailed elaboration is required to be made on merits, as regards the controversy agitated by the liquidator in the said Company Appeal, because of the order of the dissolution dated 03.12.2025. Hence this Company Appeal too would stand closed, under the same conditions, which we have already dealt with, while dealing with the Company Appeal (AT) (CH) (Ins) No. 330/2024. Hence, these two Company Appeals would stand closed, subject to the aforesaid observations which has been made by us.
Issues: Whether a scheme of arrangement or settlement approved in company proceedings can provide for quashing, compounding, dismissal, or discharge of pending criminal proceedings and thereby dilute the effect of criminal prosecution.
Analysis: The scheme clause seeking joint applications for quashing or dismissal of criminal proceedings was found impermissible. Serious offences alleged in the case were required to be carried to their logical conclusion before the competent criminal court. A civil forum could not determine or dilute the consequences of criminal prosecution by incorporating or accepting a settlement covenant to that effect. The clarification was also recorded that lifting of attachment or disbursement of settlement amounts would not affect the criminal case.
Conclusion: Such a covenant in the scheme could not be sustained to the extent it sought to affect criminal proceedings, and the criminal prosecution would continue independently.
Seeking directions for convening a meeting of the Investors/Creditors, as well as Company Petition - sanction of the Scheme approved by the NSEL Investors Forum - Scheme of arrangement and criminal prosecution - Limits of civil forum in affecting criminal proceedings- Implementation of attachment-related settlement without dilution of criminal charges.
Scheme of arrangement and criminal prosecution - Limits of civil forum in affecting criminal proceedings - HELD THAT:- The Court accepted implementation of the scheme in view of the stand of the enforcement authority and the need to address the grievances of the investors, but held that clause 24.6 of the scheme, which contemplated a joint application for quashing, compounding, dismissal or discharge of criminal proceedings, could not be countenanced. It held that the alleged offences were serious and had to be taken to their logical conclusion before the competent criminal court. A civil forum such as the NCLT could not determine or dilute the consequences of criminal prosecution by incorporating or accepting such a covenant in a consensual scheme. [Paras 10, 11, 13]
The scheme was permitted to be implemented, but the lifting of attachment and disbursement to investors were expressly held not to dilute or affect the continuation of criminal proceedings, which were directed to proceed independently.
Final Conclusion: The Court allowed the interim application in terms of the amended prayer and disposed of the connected appeals, applications and writ petition. It clarified that release of attached assets and distribution to investors under the sanctioned scheme would not dilute the criminal charges, which must continue to their logical conclusion.
Issues: Whether properties acquired prior to the check-period and before the alleged commission of the scheduled offence could be provisionally attached as equivalent-value property under the Prevention of Money Laundering Act, 2002.
Analysis: The attachment was examined in the context of the definition of "proceeds of crime" and the object of the statute. The Tribunal held that the definition is not confined to tainted property directly or indirectly derived from the scheduled offence, but also extends to the value of such property where the original proceeds are not available. On that footing, if the proceeds of crime are not traceable, attachment of other property of equivalent value is permissible. The Tribunal further held that the distinction between the check-period for determining disproportionate assets and the period relevant for provisional attachment does not prevent attachment under the second limb of the definition, and that the impugned attachment was supported by the value of the proceeds of crime and the overall asset position.
Conclusion: The challenge to attachment of the two properties acquired before the check-period was rejected; such properties could validly be attached as equivalent-value property.
Ratio Decidendi: Under Section 2(1)(u) of the Prevention of Money Laundering Act, 2002, where the proceeds of crime are unavailable, attachment may extend to other property of equivalent value even if it was acquired prior to the commission of the scheduled offence, provided the statutory conditions are satisfied.
Provisional Attachment Order (‘PAO’) - properties acquired prior to the check-period - determination of the assets disproportionate to known source of income - definition of “proceeds of crime” - Attachment of property of equivalent value - deemed tainted property - statutory interpretation - literal construction.
Proceeds of crime - Attachment of property of equivalent value - Property acquired prior to commission of crime - HELD THAT:- The definition of “proceeds of crime” which has three limbs and also clarified recently by the Punjab and Haryana Court in the case of Dilbag Singh @ Dilbag Sandhu [2024 (11) TMI 833 - PUNJAB AND HARYANA HIGH COURT]. The first limb is applicable when property is derived or acquired directly or indirectly out of the scheduled offence. However, if such property is not available having been laundered, then the Enforcement Directorate may invoke second limb of the definition to attach the property of equivalent value. The third limb is when the property is taken out of the country than the property of equivalent value in India thereof can be attached. The respondent have invoked second limb to provisionally attached two properties acquired prior to commission of crime which would also fall in the definition of ‘proceeds of crime’ though not in first limb definition but in the second limb of the definition. The appellant has confused itself by the check-period for determination of the assets disproportionate to known source of income and the period taken by the respondent for provisional attachment of the property which has no nexus with the check-period of the crime.
The Tribunal held that once the disproportionate assets were quantified, that amount constituted the proceeds of crime, and provisional attachment could extend to properties of equivalent value for securing the claim till conclusion of trial. Interpreting the definition of proceeds of crime, it held that the expression covers not only property directly or indirectly derived from the scheduled offence, but also the value of such property where the actual tainted property is not available. On that construction, even properties acquired prior to the commission of crime would fall within the second limb of the definition when attached only as equivalent-value properties. The appellants' reliance on the check-period was held to be misplaced, since the check-period was relevant for determining disproportionate assets, whereas attachment of equivalent-value property was not confined to assets acquired during that period. As the value of the attached immovable properties was still below the quantified proceeds of crime, attachment of the two earlier-acquired properties was not illegal. [Paras 7, 8, 9, 10, 11]
The challenge to attachment of the two properties acquired before the check-period was rejected, and the confirmation of provisional attachment was upheld.
Final Conclusion: The Tribunal held that the definition of proceeds of crime permits attachment of property of equivalent value even if such property was acquired before the commission of the scheduled offence, provided the actual proceeds of crime are not available. As the quantified proceeds of crime exceeded the value of the attached properties, no interference with the impugned order was warranted and the appeals were dismissed.
Issues: Whether the provisional attachment of property of equivalent value under the Prevention of Money Laundering Act, 2002 was sustainable where the tainted amount was alleged to have been routed through business activities and the appellants claimed that execution responsibility lay with the subcontractor.
Analysis: The appeals arose from confirmation of provisional attachment based on allegations of submission of fake bitumen invoices and generation of proceeds of crime quantified at Rs. 1,08,95,583/-. The Tribunal held that the contractual responsibility for execution of the road work remained with the appellant company, and the plea that the subcontractor alone was responsible was not supported by reliable documentary proof. The Tribunal further held that the definition of proceeds of crime is not confined to property directly derived from the scheduled offence, but extends to the value of such property where the tainted property is unavailable, thereby permitting attachment of property of equivalent value. It also found no merit in the challenge based on the earlier High Court order or on the allegation that the adjudicating order was mechanical.
Conclusion: The challenge to the provisional attachment failed, and the attachment of equivalent value was upheld.
Final Conclusion: The appellants remained liable for the alleged laundering-linked loss, and the impugned attachment order stood sustained.
Ratio Decidendi: Where proceeds of crime are not traceable, the authority may attach property of equivalent value, and a subcontracting arrangement does not by itself displace the principal contractor's responsibility absent cogent proof.
Provisional attachment - statutory definition of "proceeds of crime" in Section 2(1)(u) - burden of proof - utilization of bitumen under forged invoices - Whether property of equivalent value can be provisionally attached where the actual proceeds of crime are not traceable.
Proceeds of crime include property equivalent in value - HELD THAT:- The High Court of Jharkhand in the Writ Petition (Criminal) preferred by the appellant and decided by the order dated 26.10.2021. Therein the provisional attachment order passed earlier was interfered on the ground that movable or immovable property attached by the respondent could not be linked directly with the proceeds of crime. The matter was sent to the respondents for afresh proceedings in pursuance to which the fresh provisional attachment order was caused. There the reference of the judgement in the case of Madhu Koda [2024 (6) TMI 1570 - APPELLATE TRIBUNAL UNDER SAFEMA, NEW DELHI] has been given where definition of proceeds of crime given under section 2(1)(u) of the Act of 2002 has been explained. We may clarify that the proceeds of crime does not mean a property acquired or derived directly or indirectly out of the criminal activity relating to scheduled offence only, but in absence of the availability of the proceeds, the property of equivalent value can also be attached as would fall within the definition of proceeds of crime.
The Tribunal applied the three limb interpretation of the definition of "proceeds of crime" and held that where tainted property is not available or has vanished, the second limb permits attachment of property equivalent in value. Reliance was placed on the Tribunal's earlier reasoning and binding Supreme Court authority to conclude that the statutory phrase permits attaching deemed tainted or equivalent value property to protect interests pending trial; the impugned provisional attachment was therefore sustainable on that basis. [Paras 23, 24, 26]
Attachment of property equivalent in value to the proceeds was permissible and the provisional attachment was upheld on this legal basis
Provisional attachment valid where proceeds cannot be traced but prima facie nexus exists - Whether the appellants' claim that the subcontractor was responsible for the alleged fake invoices absolves the appellants from provisional attachment - HELD THAT:- The Tribunal found that the agreement for execution of work was between the appellant and the authority and that responsibility for compliance remained with the appellant. The appellants failed to substantiate transfers to the subcontractor by reliable documentary evidence (such as bank statements), and ledger entries alone were insufficient. Consequently, the alleged subcontractor liability did not negate the prima facie nexus relied upon for provisional attachment. [Paras 19, 21, 22]
The plea of transfer of responsibility to the subcontractor was rejected and did not preclude confirmation of the provisional attachment
Provisional attachment valid where proceeds cannot be traced but prima facie nexus exists - HELD THAT:- The Tribunal treated the contractual deduction imposed for non deposit of drums as corroborative of non compliance with contractual obligations and not as negating the respondents' case. The penalty did not demonstrate utilisation of the alleged quantity of bitumen nor displace the prima facie finding that supported attachment of equivalent value property. [Paras 27]
The deduction/penalty did not vitiate the provisional attachment
The Tribunal considered the charge that the Adjudicating Authority's order was a template and found that the Tribunal's own detailed consideration of the appellants' arguments is now merged with that order. The Tribunal held that the order was not a cyclostyle or template order and that arguments raised had been addressed. [Paras 28]
Allegation of a cyclostyle order was rejected
Final Conclusion: The Tribunal dismissed the appeals, upheld the provisional attachment of property equivalent in value to the proceeds of crime, rejected the appellants' claims of subcontractor responsibility and of a template order, and found no ground to interfere with the confirmation of attachment.
Issues: (i) Whether a composite contract for supply and laying of electrical wiring and related works in Government buildings could be classified as 'Erection, Commissioning and Installation Service' for the period prior to 01.06.2007; (ii) Whether demand could be sustained under 'Works Contract Service' for the period after 01.06.2007 when the show cause notice proposed classification only under 'Erection, Commissioning and Installation Service'.
Issue (i): Whether a composite contract for supply and laying of electrical wiring and related works in Government buildings could be classified as 'Erection, Commissioning and Installation Service' for the period prior to 01.06.2007
Analysis: The charging scheme under the Finance Act, 1994 as it then stood covered service contracts simpliciter and did not extend to composite works contracts involving both supply of goods and labour. The activities in question were composite electrical contracts involving supply of materials and execution of wiring and related work, and therefore did not fall within the taxable category invoked for the pre-01.06.2007 period.
Conclusion: The classification under 'Erection, Commissioning and Installation Service' for the period prior to 01.06.2007 was not sustainable and the assessee succeeded on this issue.
Issue (ii): Whether demand could be sustained under 'Works Contract Service' for the period after 01.06.2007 when the show cause notice proposed classification only under 'Erection, Commissioning and Installation Service'
Analysis: The show cause notice formed the foundation of the demand and confined the proposal to classification under 'Erection, Commissioning and Installation Service'. A demand cannot be confirmed under a different taxable category not proposed in the notice. The consequential levy of interest and penalty could not survive once the demand itself failed on this ground.
Conclusion: The demand under 'Works Contract Service' for the later period was beyond the scope of the show cause notice and was not sustainable, with the assessee succeeding on this issue.
Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential reliefs in law.
Ratio Decidendi: Composite contracts involving both supply of goods and execution of work cannot be taxed as service contracts simpliciter for the period before works contract taxation was introduced, and a demand cannot be sustained under a taxable entry not proposed in the show cause notice.
Composite works contracts - Taxability prior to introduction of works contract service - Show cause notice as foundation of demand - extended period of limitation - Whether the appellant’s activity undertaken as a composite contract for supply and laying of electrical wiring and related works in Government Buildings can be classified under ‘Erection, Commissioning and Installation Services’ as proposed in the notice for the period prior to 01-07-2007? - HELD THAT: - The Tribunal found that the appellant's contracts were composite in nature, involving both supply of materials and labour, and were treated by the appellant as works contracts for VAT purposes. Applying the law declared in Larsen and Toubro Vs. CCE, Kerala [2015 (8) TMI 749 - SUPREME COURT], it held that the taxable entries relating to erection, commissioning or installation covered service contracts simpliciter and not composite works contracts. Since no machinery then existed to segregate the non-service element in such composite contracts, the levy under erection, commissioning or installation service for the period prior to 01.06.2007 was impermissible. [Paras 16]
The demand under erection, commissioning or installation service for the period prior to 01.06.2007 was held untenable and set aside.
Whether the demand upheld by the Appellate Authority by classifying the appellant’s work under works contract service for the period after 01-07-2007 when the proposal in the SCN itself was only for classification under the aforesaid ‘Erection, Commissioning and Installation Services’ was tenable? - HELD THAT:- It is well settled that the show cause notice is the foundation in the matter of levy and recovery of duty, penalty and interest and the Department cannot travel beyond the show cause notice. The Judgements of the Honourable Supreme Court in CCE, Bhubaneshwar0I v. Champdany Industries Ltd. [2009 (9) TMI 7 - SUPREME COURT], CCE Nagpur v. Ballarpur Industries [2007 (8) TMI 10 - SUPREME COURT] and CC, Mumbai v. Toyo Engineering India Limited [2006 (8) TMI 184 - SUPREME COURT] are authorities for the aforesaid propositions. We find that coordinate benches of this Tribunal has also held consistently that the narrow confines of the SCN do not permit confirmation of demand under any other category than what has been proposed and that Revenue cannot travel beyond the proposals in the SCN.
The Tribunal held that the show cause notice proposed taxation only under erection, commissioning and installation service for the entire disputed period, and the adjudicating authority had also confirmed the demand on that basis. In those circumstances, the appellate authority could not travel beyond the notice and uphold the demand under a different taxable category. Relying on the settled principle that the show cause notice is the foundation for levy, recovery, interest and penalty, the Tribunal held that confirmation under works contract service was beyond the scope of the notice and therefore unsustainable. As the demand itself failed, the consequential interest and penalty also could not survive. [Paras 17]
The appellate authority's classification of the post-01.06.2007 demand under works contract service was held unsustainable, and the related demand, interest and penalty were set aside.
Final Conclusion: The Tribunal held that the appellant's composite electrical contracts were not taxable under erection, commissioning or installation service prior to 01.06.2007, and that the post-01.06.2007 demand could not be sustained under works contract service since that basis was not proposed in the show cause notice. The impugned order was therefore set aside and the appeal was allowed with consequential reliefs.
Issues: (i) Whether construction of a residential complex consisting of only four flats attracted service tax under the category of construction of residential complex service; (ii) Whether the demand raised merely on comparison of ST-3 returns and bank statements, without independent verification of the nature of service, was sustainable; (iii) Whether invocation of the extended period of limitation was justified.
Issue (i): Whether construction of a residential complex consisting of only four flats attracted service tax under the category of construction of residential complex service.
Analysis: The statutory definition of residential complex applies to a complex comprising a building or buildings having more than twelve residential units, along with the prescribed common facilities. The documentary record, including the development agreement, showed construction of only four residential units. On those facts, the activity did not satisfy the statutory threshold for levy under this category.
Conclusion: The demand under construction of residential complex service was not leviable and was rightly set aside, in favour of the assessee.
Issue (ii): Whether the demand raised merely on comparison of ST-3 returns and bank statements, without independent verification of the nature of service, was sustainable.
Analysis: The demand was based on a comparison of amounts reflected in ST-3 returns and bank statements, without establishing by independent evidence that the receipts were attributable to taxable services. Mere arithmetical comparison, without verifying the nature and taxability of the underlying activity, was held insufficient to sustain a service tax demand.
Conclusion: The demand over and above the amount already admitted and paid was unsustainable on this basis and was set aside, in favour of the assessee.
Issue (iii): Whether invocation of the extended period of limitation was justified.
Analysis: The assessee was registered, had been filing ST-3 returns, had informed the department about cessation of operations, and had already paid the short-paid amount before adjudication. No corroborative material established wilful suppression, misstatement, or intention to evade tax. In the absence of such foundational facts, the extended limitation period could not be invoked.
Conclusion: Invocation of the extended period was unsustainable and the additional demand was set aside, in favour of the assessee.
Final Conclusion: The appeal resulted in deletion of the disputed service tax demand apart from appropriation of the amount already paid, with the related interest and penalties also not surviving.
Ratio Decidendi: Service tax liability cannot be fastened on a residential construction activity unless the statutory threshold is met, and a demand cannot be sustained solely on comparison of return figures and bank entries without independent verification and proof of taxability; absent wilful suppression, the extended period of limitation is not invocable.
Taxability of construction of residential complex service - statutory definition of residential complex - Independent verification of taxable service - demand raised merely on comparison of ST-3 returns and bank statements, without independent verification of the nature of service - Extended period of limitation - Appropriation of tax already paid.
Construction activity relating to a building consisting of only four flats - HELD THAT: - The Tribunal found from the development agreement that the appellant had constructed only four residential units. Applying the statutory definition of residential complex, it held that service tax under this category arises only where the complex comprises more than twelve residential units. Since the project involved only four units, the activity fell outside the levy and the demand under this category could not be sustained. [Paras 8]
The demand under construction of residential complex service, along with consequential interest and penalties, was set aside.
Appropriation of tax already paid - Commercial and industrial construction service - Penalty waiver on voluntary payment - HELD THAT:- The Tribunal accepted the Chartered Accountant's certificate certifying payment of service tax on the invoices raised for the relevant services, noting that the Revenue had produced no contrary material to dislodge it. On that basis, it held that the appellant had discharged the liability for commercial and industrial construction service, and the amount already paid towards short payment had to be appropriated. As the short payment had been voluntarily made good before adjudication, penalty on that amount was also found unwarranted. [Paras 9]
The amount already paid was appropriated towards the appellant's liability under commercial and industrial construction service, and penalty in respect of that amount was set aside.
Demand based on comparison of ST-3 returns and bank statements - Independent verification of taxability - HELD THAT: - The Tribunal found that the show cause notice proceeded only on a comparison between the figures in the ST-3 returns and the bank statements, without verifying the nature of the service rendered or establishing that the receipts related to taxable services. It held that such comparison, in the absence of independent verification or substantive evidence of taxability, was insufficient in law to sustain the demand. Therefore, the demand over and above the amount already paid and admitted by the appellant was liable to be set aside on this ground as well. [Paras 10]
The balance demand founded solely on comparison of ST-3 returns and bank statements was held unsustainable and was set aside.
Extended period of limitation - Wilful suppression of facts - HELD THAT: - The Tribunal noted that the appellant was registered, had been filing ST-3 returns regularly, had informed the Department about stoppage of operations, and had furnished records during audit. It also noted that the short-paid amount had been voluntarily paid before adjudication. In the absence of corroborative evidence showing wilful misstatement or suppression with intent to evade tax, the essential basis for invoking the extended period was not made out. The demand beyond the amount already paid and admitted was therefore unsustainable on limitation as well. [Paras 11]
The invocation of the extended period was held invalid, and the remaining demand was set aside on limitation also.
Final Conclusion: The appeal was disposed of by setting aside the demand under construction of residential complex service in full, appropriating the service tax already paid towards commercial and industrial construction service, and deleting the related penalty. The remaining demand, beyond the amount already paid and admitted, was set aside both for want of independent verification of taxability and because the extended period of limitation was not invocable.
Issues: (i) Whether the appeal was maintainable before the Tribunal in view of the monetary limit under the second proviso to section 35B(1) of the Central Excise Act, 1944 read with section 86(7) of the Finance Act, 1994.
Analysis: The disputed tax involved was Rs. 20,112/-, with penalties aggregating to amounts below the prescribed monetary threshold, and the dispute did not involve any question relating to rate of tax or valuation. In such circumstances, the Tribunal was entitled to decline admission of the second appeal under the statutory bar governing low-value disputes.
Conclusion: The appeal was not maintainable before the Tribunal and was not admitted.
Final Conclusion: The proceeding ended at the threshold on maintainability, and no examination on merits was undertaken.
Ratio Decidendi: Where the disputed duty or penalty falls below the prescribed monetary limit and the case does not raise a rate or valuation issue, the Tribunal may refuse to admit the appeal under the statutory second proviso.
Maintainability of second appeal on monetary threshold - Additional evidence at appellate stage - seeking adjournment on the ground for discovering and producing certain documents which were not even produced at the earlier stages of adjudication and appeal - Strict construction of exemption - Burden of proof - Cum-tax benefit.
Additional evidence at appellate stage - Due diligence - HELD THAT:- The Tribunal held that production of fresh documents at the second appeal stage is in the nature of introducing new factual material and must have been pursued at the earliest stage of the proceedings. Additional material cannot be permitted to fill evidentiary gaps or to reopen the factual foundation of the case in second appeal, particularly where the documents were neither produced earlier nor shown to be unavailable despite due diligence. On that basis, the request for adjournment for securing such documents was rejected. [Paras 2]
The adjournment request was dismissed.
Maintainability of second appeal on monetary threshold - Discretion to refuse admission - HELD THAT:- The Tribunal found that the tax demand involved in the appeal was less than the prescribed threshold of two lakhs rupees. It further recorded that the dispute did not involve determination of any question relating to the rate of taxation or valuation of services, which alone would take the matter outside the monetary-limit bar. Applying the statutory discretion under the second proviso to Section 35B(1) of the Central Excise Act, 1944, read with Section 86(7) of the Finance Act, 1994, the Tribunal declined to admit the second appeal. [Paras 4, 5]
The appeal was held not maintainable and was not admitted.
Final Conclusion: The Tribunal refused the appellant's request to defer the hearing for production of fresh documents at the second appellate stage and held that the appeal itself was not liable to be admitted. Since the tax involved was below the statutory monetary threshold and no question of rate of taxation or valuation arose, the appeal was treated as not maintainable.
Issues: (i) Whether the amortised value of moulds and dies supplied free of cost by customers or retained in the appellant's factory is includible in the assessable value of aluminium die-cast components; (ii) Whether the extended period of limitation and the penalty imposed were sustainable.
Issue (i): Whether the amortised value of moulds and dies supplied free of cost by customers or retained in the appellant's factory is includible in the assessable value of aluminium die-cast components.
Analysis: Under Section 4 of the Central Excise Act, 1944, the transaction value governs assessable value, but any additional consideration flowing directly or indirectly from the buyer must be included. Rule 6 of the Central Excise Valuation Rules, 2000 specifically brings within assessable value the money value of additional consideration and the value of tools, dies and moulds supplied by the buyer free of cost or at reduced cost. The valuation circular relied upon in the order also treats buyer-supplied moulds as an element of cost to be amortised over production and added proportionately to the value of the finished goods. On the facts, the moulds and dies were essential production tools used for the appellant's die-cast components and their cost formed part of the manufacturing cost of the goods.
Conclusion: The amortised value of moulds and dies is includible in the assessable value of the finished goods, against the assessee.
Issue (ii): Whether the extended period of limitation and the penalty imposed were sustainable.
Analysis: Invocation of the extended period under Section 11A of the Central Excise Act, 1944 requires suppression of facts, wilful misstatement, fraud or intent to evade duty. The relevant accounting treatment and valuation methodology were reflected in statutory records and had been examined in departmental and audit proceedings, so the material facts were available to the department. The dispute was essentially one of valuation interpretation, and the ingredients necessary for invoking the extended period and for penalty under Section 11AC of the Central Excise Act, 1944 were not established.
Conclusion: The extended period was not sustainable and the penalty was liable to be set aside, in favour of the assessee.
Final Conclusion: The valuation addition was upheld, but the demand was confined to the normal period and the penalty was set aside, resulting in partial relief to the assessee.
Ratio Decidendi: Buyer-supplied moulds and dies, or their amortised cost, constitute additional consideration includible in the assessable value of the finished excisable goods, but the extended limitation period and penalty cannot be invoked absent suppression, wilful misstatement, fraud, or intent to evade duty.
Assessable Value - moulds and dies manufactured as per customer specifications and cleared on payment of excise duty by raising separate invoices - Extended Period of Limitation - Suppression of Facts - Wilful Misstatement - Intent to Evade Duty - imposition of penalty - Whether the amortized value of moulds and dies supplied free of cost by customers or retained in the appellant’s factory is includible in the assessable value of aluminium die-cast components manufactured by the appellant under Rule 6 of the Central Excise Valuation Rules, 2000 read with Section 4 of the Central Excise Act, 1944.
Assessable value - Additional consideration - Amortisation of mould and die cost - HELD THAT: - The statutory provisions governing valuation of excisable goods are contained in Section 4 of the Central Excise Act. Under this provision the assessable value of goods is the transaction value when the price is the sole consideration for sale. However, when additional consideration flows directly or indirectly from the buyer to the manufacturer, the value of such additional consideration must also be included in the assessable value.
The Tribunal held that the valuation scheme under Section 4 read with Rule 6 recognises buyer-supplied tools, dies and moulds as additional consideration when they are used in the manufacture of the finished goods. Since such moulds and dies are essential production tools dedicated to manufacture for particular customers, their cost contributes to the manufacture of the castings and is therefore required to be apportioned through amortisation and added to the value of the finished goods. The plea of double taxation was rejected, the decision in CCE, Vs. Mega Rubber Technologies Pvt. Ltd [2016 (1) TMI 157 - CESTAT MUMBAI] being distinguished on facts, while the Larger Bench view in Mutual Industries Ltd. vs CCE, Mumbai [2000 (3) TMI 74 - CEGAT, COURT NO. I, NEW DELHI], the decision in Vimal Moulders (India) Pvt. Ltd. vs CCE [2003 (6) TMI 129 - CESTAT, NEW DELHI] and the coordinate Bench ruling in Best Cast IT Ltd. vs Commissioner of GST & Central Excise, Chennai,[2023 (6) TMI 99 - CESTAT CHENNAI] were followed. [Paras 14, 15, 16, 17, 18]
The differential duty demand was held sustainable on merits to the extent the amortised value of such moulds and dies is includible in the assessable value.
Extended period of limitation - Suppression of facts - Penalty under Section 11AC - HELD THAT: - The Tribunal found that the relevant facts regarding treatment of moulds and dies and valuation of the finished goods were reflected in the appellant's statutory records and had earlier come under departmental as well as CERA audit. In such circumstances, suppression or deliberate intent to evade duty could not be alleged, particularly when the dispute turned on interpretation of the valuation provisions. Applying the principle in Nizam Sugar Factory vs CCE [2006 (4) TMI 127 - SUPREME COURT] the extended period was held unavailable. Since penalty under Section 11AC requires fraud, wilful misstatement or suppression with intent to evade duty, and those ingredients were absent, the penalty could not survive; the Tribunal also referred to CCE vs Dai Ichi Karkaria Ltd [1999 (8) TMI 920 - SUPREME COURT (LB)] in that context. [Paras 20, 21, 22, 23, 24]
The demand was confined to the normal period of limitation and the penalty was set aside.
Final Conclusion: The Tribunal held that the amortised cost of customer-related moulds and dies was includible in the assessable value of the die-cast components. However, as the extended period was wrongly invoked, the demand was restricted to the normal period and the penalty was set aside, resulting in partial allowance of the appeal.
Issues: (i) whether the refund claim relating to the amount paid on 09.05.2019 was barred by limitation under the transitional refund framework; (ii) whether Section 142(3) of the Central Goods and Services Tax Act, 2017 created an independent right to cash refund of credit that was otherwise not availed under the existing law, including on the strength of the COVID limitation exclusion and the export-related refund theory.
Issue (i): whether the refund claim relating to the amount paid on 09.05.2019 was barred by limitation under the transitional refund framework.
Analysis: The claim was treated as a refund of amount paid under the existing law, governed by Section 142(3) of the Central Goods and Services Tax Act, 2017 and, therefore, by the limitation applicable under Section 11B of the Central Excise Act, 1944. The relevant date was the date of payment, and the one-year period had already expired before the COVID exclusion period commenced. The exclusion ordered for the pandemic did not revive a claim that had already become time-barred. The amount paid under the 09.05.2019 challan was also treated as one for which credit could have been taken only within the prescribed period under the earlier CENVAT scheme.
Conclusion: The refund claim of Rs.3,94,708/- was time-barred and was not allowable in favour of the assessee.
Issue (ii): whether Section 142(3) of the Central Goods and Services Tax Act, 2017 created an independent right to cash refund of credit that was otherwise not availed under the existing law, including on the strength of the COVID limitation exclusion and the export-related refund theory.
Analysis: Section 142(3) was held to be a transitional provision that preserves only claims already maintainable under the existing law and does not create a fresh right to refund where no such entitlement existed earlier or where the right had already been lost. The claim could not be sustained on the basis of the EODC, because the amount paid pursuant to the customs obligation was not shown to be a refund claim under the Customs Act, 1962. The export-based refund route under Rule 5 of the Cenvat Credit Rules, 2004 was also not applicable on the facts found.
Conclusion: No independent entitlement to refund arose under Section 142(3), and the alternative grounds for refund failed.
Final Conclusion: The impugned rejection of the disputed refund survived judicial scrutiny, and no interference was called for in the appeal.
Ratio Decidendi: Section 142(3) of the Central Goods and Services Tax Act, 2017 does not confer a new refund right; it only preserves and channels claims that were otherwise valid under the existing law, subject to the applicable limitation.
Transitional Credit - Rebate Claim - barred by limitation - Refund limitation under transitional provisions - invoking provisions of Section 142 of CGST Act, 2017 - COVID limitation extension - Refund under proper statutory provision - excess import without payment of customs duty.
Refund limitation under transitional provisions - Section 142(3) of the CGST Act - CENVAT credit time limit - HELD THAT: - The Tribunal held that, even proceeding on the appellant's own case that the amount paid was such as could have been taken as CENVAT credit, the right to take that credit was itself subject to the six-month limitation from the date of the duty-paying document. Therefore, in relation to the challan dated 09.05.2019, the appellant could have taken credit only up to 09.11.2019 and could not thereafter seek refund by invoking the transitional provision. Relying on the interpretation adopted in M/s Rungta Mines Ltd. [2022 (2) TMI 934 - JHARKHAND HIGH COURT], the Tribunal held that Section 142(3) does not create a fresh refund right where none survived under the existing law; it only preserves an existing entitlement to be dealt with under the old law. [Paras 4]
The rejection of the refund claim pertaining to the challan dated 09.05.2019 on limitation was upheld.
COVID limitation extension - Expiry of substantive claim before pandemic period - HELD THAT: - The Tribunal held that the appellant's entitlement to take CENVAT credit, and consequently to maintain the claim founded upon that entitlement, had already expired on 09.11.2019. Since that expiry occurred before the onset of the COVID period for which limitation stood extended, the benefit of the suo motu extension order could not revive a claim that had already become time-barred. [Paras 4]
The plea based on exclusion of the COVID period was rejected.
The Tribunal held that any amount paid against the bill of entry on account of excess import was customs duty under Section 12 of the Customs Act. Consequently, any refund claim arising therefrom had to be pursued under Section 27 of the Customs Act. As the appellant had not filed a refund claim under that statutory route, the reliance placed on the EODC issued by the DGFT was held to be misconceived. [Paras 4]
The EODC-based claim for refund under the excise/GST transitional provisions was rejected.
Final Conclusion: The Tribunal dismissed the appeal and upheld the denial of refund in respect of the amount paid through challan dated 09.05.2019. It held that the claim was time-barred, the COVID limitation orders did not revive it, and any refund referable to customs duty could only be pursued under the Customs Act.
Issues: (i) whether CENVAT credit on the disputed input services was admissible under Rule 6(5) of the CENVAT Credit Rules, 2004 notwithstanding the restrictions in Rule 6(1), Rule 6(2) and Rule 6(3); (ii) whether the retrospective amendment enabling proportionate reversal under Section 73 of the Finance Act, 2010 could validate the assessee's reversal and defeat the demand, interest and penalty.
Issue (i): whether CENVAT credit on the disputed input services was admissible under Rule 6(5) of the CENVAT Credit Rules, 2004 notwithstanding the restrictions in Rule 6(1), Rule 6(2) and Rule 6(3).
Analysis: Rule 6(5) contained a non-obstante clause and allowed credit of the whole of service tax paid on the specified taxable services unless such service was used exclusively in relation to exempted goods or exempted services. The disputed services were treated as falling within the specified categories, including management, maintenance or repair services and consulting engineer service, and the record did not establish exclusive use for exempted goods. In that situation, the limitations in Rule 6(3) could not override the specific allowance under Rule 6(5).
Conclusion: The disputed input service credit was admissible and the demand founded on Rule 6(3) was not sustainable.
Issue (ii): whether the retrospective amendment enabling proportionate reversal under Section 73 of the Finance Act, 2010 could validate the assessee's reversal and defeat the demand, interest and penalty.
Analysis: The amendment was intended to resolve disputes relating to common inputs and input services used for dutiable and exempted goods by permitting proportionate reversal for the relevant past period. The assessee had reversed the disputed amount with interest during the pendency of the controversy and placed supporting documents before the department. In light of the retrospective scheme and the object of settling such disputes, the reversal could not be ignored for sustaining the adjudged demand and penal consequences.
Conclusion: The assessee was entitled to the benefit of the retrospective amendment and the demand with interest and penalty could not be upheld.
Final Conclusion: The adjudication confirming the CENVAT demand, interest and penalty was set aside, and the appeal succeeded for the assessee.
Ratio Decidendi: A specific credit-allowance provision operating with a non-obstante clause prevails over the general reversal mechanism, and a retrospective dispute-settlement amendment permitting proportionate reversal must be applied to pending controversies according to its remedial object.
Denial of CENVAT Credit of Service Tax paid on various input services -Overriding effect of non-obstante clause - manufacture of dutiable finished goods and exempted goods in factory - Proportionate reversal under retrospective amendment - Extended period of limitation - imposition of penalty under Section 11AC ibid and Rules 15(2) and 15(4) of CCR, 2004 - Whether the credit of service tax paid on input services distributed under ISD, which was taken by the appellant's unit at Waluj as CENVAT credit, was availed properly in terms of Rule 6 of the CCR, 2004, or is it in violation of the said rule.
Rule 6(5) specified services - Common use in dutiable and exempted goods - Non-obstante override of Rule 6(3) - Credit of service tax on the disputed input services could not be denied merely because the services were commonly used for dutiable and exempted goods and separate records were not maintained. - HELD THAT:- The Tribunal held that Rule 6(5) of the CENVAT Credit Rules, 2004 granted full credit of service tax paid on the specified taxable services, notwithstanding sub-rules (1), (2) and (3) of Rule 6, unless such services were used exclusively in relation to exempted goods. The disputed services, including maintenance-related services connected with garden, parking area, EPABX, computers and lifts, as well as software development maintenance, were found to fall within the specified categories covered by Rule 6(5). Since the department did not allege exclusive use in exempted goods, the bar under Rule 6(3) could not be invoked. The legal principle applied was that the non-obstante clause in Rule 6(5) overrides the restrictions otherwise flowing from Rule 6(3). [Paras 9]
The demand founded on non-compliance with Rule 6(3) was unsustainable, and full credit on the disputed input services was allowable.
Retrospective amendment - Proportionate reversal of common credit - Settlement of pending CENVAT disputes - HELD THAT:- The Hon’ble High Court of Punjab & Haryana in the case of Principal Commissioner, CGST Commissionerate, Ludhiana Vs Suraj Solvents & Vanaspati Industries [2023 (3) TMI 7 - PUNJAB AND HARYANA HIGH COURT] have held that even if the assessee had not moved any application to the department while reversing the proportionate credit, since they pursuing their legal remedies it cannot be said that they had not complied with the requirements of retrospective amendment introduced to resolve the disputes of CENVAT Credit Rules, 2001/2002/2004.
The Tribunal further held that the retrospective amendment made for the period up to 31.03.2008 permitted proportionate reversal where common inputs or input services were used in dutiable and exempted products, with the object of resolving pending disputes. As the dispute was pending when the Finance Act, 2010 came into force, and the appellants had paid the amount attributable to such credit along with interest and furnished supporting material, the department ought to have examined the claim under that scheme instead of ignoring it. Even on the assumption that any part of the disputed services fell outside Rule 6(5), the continuance of the demand without addressing the benefit of the retrospective amendment was held to be legally untenable. [Paras 10]
The alternative basis adopted by the adjudicating authority to sustain the demand could not stand, as the appellants' proportionate reversal with interest required recognition under the retrospective amendment.
Final Conclusion: The Tribunal held that the disputed input services were covered by Rule 6(5), whose overriding clause excluded the application of Rule 6(3) restrictions, and that, in any event, the appellants' proportionate reversal with interest required consideration under the retrospective amendment. The impugned demand, interest and penalty were therefore set aside and the appeal was allowed.
Issues: Whether interest at 12% was payable on the amount deposited during investigation and later refunded, and whether the deposit could be treated as a voluntary payment or a pre-deposit attracting the refund regime under the Central Excise Act, 1944.
Analysis: The amount was deposited during investigation at the insistence of the Department and was not a voluntary discharge of duty liability. The payment was made under a mistaken notion regarding excise liability and, on the facts recorded, could not be characterised as duty voluntarily paid. In such circumstances, the refund claim was not governed by the refund provisions applicable to duty claims under Section 11B of the Central Excise Act, 1944. Following the view already taken in the Tribunal's earlier decision, as affirmed by the High Court, interest was held payable on the refunded amount from the date of deposit till the date of refund, at the rate of 12%.
Conclusion: The appellant was held entitled to interest at 12% per annum on the refunded deposit from the date of deposit till the date of refund.
Ratio Decidendi: An amount deposited during investigation at departmental insistence, and later refunded, carries interest where it is not a voluntary duty payment but a deposit made under a mistaken notion of liability.
Interest on refund of investigation deposit - pre-deposit under Section 35F - Deposit made under mistaken notion - voluntary payment of central excise duty - refund provisions applicable to duty claims under Section 11B - Distinction between duty payment and pre-deposit.
Interest on refund of investigation deposit - Deposit made under mistaken notion - Distinction between duty payment and pre-deposit - HELD THAT: - The Tribunal found from the record, including the recital in the appellate order, that the amount was deposited during search proceedings on departmental insistence and not as a voluntary discharge of central excise duty. Since the appellant had throughout disputed the liability and ultimately succeeded, the amount could not assume the character of duty. On that basis, the Tribunal held that the bar applicable to refund of duty under Section 11B was inapplicable, and the case was governed by the principle that an amount deposited under mistake and without authority of law cannot be retained by the Department. Following its earlier decision in M/s. Harrisons Industries [2025 (7) TMI 220 - CESTAT KOLKATA], which had been affirmed by the High Court by dismissal of the Revenue's appeal on the ground that no substantial question of law arose, the Tribunal held that such refunded deposit carried interest at 12% per annum from the date of deposit till the date of refund. The decision relied on by the Revenue in M/s. Goldy Engineering Works [2025 (4) TMI 1186 - SC ORDER] was distinguished because, in that case, the amount had been treated as duty and the issue of payment under mistaken notion had not arisen in the manner found in the present case. [Paras 7, 8, 9, 10]
The appellant was held entitled to interest at 12% per annum on the refunded amount from the date of deposit till the date of refund.
Final Conclusion: The Tribunal held that the amount deposited during investigation was not a voluntary duty payment but a deposit made under mistake at departmental insistence, and therefore carried interest on refund. The appeal was accordingly allowed to the extent of granting interest at 12% per annum from the date of deposit till the date of refund.
Issues: (i) Whether the State Electricity Regulatory Commission has the power and jurisdiction to consider and factor in a Generation Based Incentive while determining tariff; (ii) what duties and obligations govern tariff determination when the Commission exercises that exclusive jurisdiction.
Issue (i): Whether the State Electricity Regulatory Commission has the power and jurisdiction to consider and factor in a Generation Based Incentive while determining tariff.
Analysis: Tariff determination is the exclusive province of the Electricity Regulatory Commissions under the Electricity Act, 2003, and there is no unallocated regulatory residue outside that field. Regulation 20 of the 2015 Tariff Regulations expressly requires the Commission to take into consideration any incentive or subsidy offered by the Central or State Government if availed by the generating company. The existence of a Union grant does not exclude the statutory power of the Commission; it only means that the Commission must consider the incentive in accordance with the governing statutory framework and regulations.
Conclusion: The Commission has the power and jurisdiction to consider and factor in the Generation Based Incentive while determining tariff.
Issue (ii): What duties and obligations govern tariff determination when the Commission exercises that exclusive jurisdiction.
Analysis: The Commission must exercise its tariff power holistically and in harmony with the statutory policy of promoting renewable energy, protecting consumer interests, and ensuring affordability and sustainability. A subsidy or incentive designed to support generators cannot be treated mechanically as a consumer-side deduction merely because tariff fixation lies with the regulator. The incentive must be given contextual and purposive effect so that the policy objective behind the grant is not defeated. Regulatory power must operate as a collaborative enterprise and not in a manner that nullifies the purpose of the policy or grant.
Conclusion: The Commission is obliged to treat the incentive purposively and consistently with the object of promoting renewable generation, rather than by automatic or mechanical deduction.
Final Conclusion: The appeal fails, and the tariff regulator's authority is affirmed, but the impugned treatment of the incentive is rejected because the benefit was intended to remain with the generating company over and above tariff.
Ratio Decidendi: A tariff regulator may consider a government incentive or subsidy only in a manner that is consistent with the statutory scheme and the purpose of the incentive, and the existence of a government grant does not by itself oust the regulator's tariff jurisdiction.
Power and jurisdiction of State Electricity Regulatory Commission to consider a government incentive or subsidy, including Generation Based Incentive, while determining tariff - Exclusive tariff jurisdiction - Regulatory treatment of government incentives - duties and obligations govern tariff determination by the State Electricity Regulatory Commission -Renewable energy promotion- Harmonious construction of statutory regulation and policy grants.
Tariff determination - Exclusive regulatory jurisdiction - Government incentives - HELD THAT:- The Court held that the Electricity Act, 2003 is a complete code and leaves no unallocated regulatory field outside the Commission's domain in matters of tariff. Regulation 20 expressly requires the Commission to take into consideration incentives or subsidies availed by the generating company while determining tariff, and the expression shall imposes a statutory obligation of consideration. The contention that a Parliamentary grant under Article 282 becomes immune from regulatory treatment was rejected, since the grant reaches the generating company as intended and is neither intercepted nor diverted by the Commission; the Commission only determines the tariff payable by the distribution licensee. Accordingly, the existence of a Union incentive scheme does not denude the Commission of its statutory tariff power. [Paras 22, 23, 26, 27, 28]
The Commission's power extends to considering and, where justified under the statutory framework, factoring the Generation Based Incentive into tariff determination.
Purposive tariff fixation - Renewable energy promotion - Collaborative regulation - HELD THAT: - The Court held that tariff fixation under the Electricity Act is not a mechanical exercise and must be guided by the statutory objective of promoting generation from renewable sources. The Generation Based Incentive was introduced to attract investment in wind energy and to increase renewable power generation, and therefore had to be treated in a manner that preserved its generator-focused purpose. Regulation 20 requires the Commission to take such incentive into account, but that does not mean mandatory deduction or automatic pass-through in every case; the treatment must be contextual and purposive. Since the electricity sector operates through coordinated action of governments, policy-makers and regulators, the Commission must act as part of a collaborative regulatory enterprise and cannot exercise tariff power in a manner that nullifies the legislative or policy objective underlying the grant. On that basis, the Court disagreed with APERC's treatment of the GBI and held that the benefit was intended to be disbursed to generating companies over and above tariff. [Paras 42, 43, 44, 45, 46]
The Generation Based Incentive had to be applied in furtherance of its design as an incentive to renewable generators and not by way of deduction from the tariff payable to them.
Final Conclusion: The appeal was dismissed. The Court held that while the Regulatory Commission has exclusive and plenary power to determine tariff and may consider Union incentives in that process, the Generation Based Incentive in the present case was intended to remain a benefit to renewable generators over and above tariff.
Issues: Whether a non-executive Independent Director, who was not a signatory to the dishonoured cheques, could be vicariously liable under Section 141 of the Negotiable Instruments Act, 1881 in the absence of specific averments in the complaint showing that he was in charge of and responsible for the conduct of the company's business at the relevant time.
Analysis: Vicarious liability under Section 141 is penal in nature and must be strictly construed. The complaint must contain clear and unambiguous averments as to how the director was in charge of and responsible for the conduct of the business of the company at the time of the offence. Mere designation as a director is insufficient. Where the accused is a non-executive or Independent Director, liability cannot be fastened unless the complaint specifically alleges direct involvement in the company's business or in the transaction in question. On the pleadings here, the complaints made only general assertions that the petitioner was responsible for day-to-day management, while the record showed that he was an Independent Director, was not a cheque signatory, and had no specific role pleaded in the impugned transactions.
Conclusion: The petitioner could not be prosecuted with the aid of Section 141 of the Negotiable Instruments Act, 1881, and the summoning orders and consequent criminal proceedings were liable to be quashed qua him.
Negotiable Instruments Act - Dishonour of cheques - Interpretation of Section 141 - Vicarious liability of directors - Independent Director - Specific averments against non-executive independent directors.
Vicarious liability - Independent director - HELD THAT:- The Court held that liability under Section 141 is not attracted merely because a person is described as a director. For fastening vicarious liability, the complaint must contain specific averments showing how and in what manner the accused was in charge of, and responsible for, the conduct of the company's business at the relevant time. The complaints in the present case only stated in general terms that the directors were responsible for the day-to-day management and affairs of the company, without any particularised allegation regarding the petitioner's role. The record, on the other hand, showed that the petitioner was serving as a non-executive independent director, was not a signatory to the dishonoured cheques, and had no direct nexus disclosed in the complaints with the financial transactions in question. In these circumstances, the statutory requirements for invoking vicarious liability under Section 141 were held not to be satisfied. [Paras 11, 12, 13, 14, 15]
The summoning orders and the criminal proceedings were quashed qua the petitioner.
Final Conclusion: The Court held that the complaints lacked the specific foundational averments required to fasten vicarious liability on the petitioner under Section 141 of the Negotiable Instruments Act. The impugned summoning orders and the criminal proceedings were therefore quashed qua the petitioner.
Issues: Whether the arbitral award suffered from patent illegality or perversity under Section 34 of the Arbitration and Conciliation Act, 1996 on the finding that the petitioner had not taken steps to avail input tax credit and that the documents furnished were sufficient.
Analysis: The challenge was confined to the narrow jurisdiction under Section 34 of the 1996 Act. The Court reiterated that an arbitral award may be interfered with only on limited grounds, including conflict with the public policy of India, patent illegality, or perversity, and that the Court does not sit in appeal over the award. The Majority Arbitral Tribunal had recorded a categorical finding that the petitioner had not made any effort to avail the input tax credit, including by approaching the concerned authorities, and had also noted that the respondent had furnished the relevant documents and that the petitioner had reimbursed amounts towards CENVAT and VAT. On that basis, the Tribunal rejected the claim of shortfall. The Court held that this was a plausible and reasonable view on the material before the Tribunal, and that the objections raised amounted only to an impermissible request for reappreciation of evidence.
Conclusion: The award did not suffer from patent illegality or perversity, and no ground for interference under Section 34 was made out.
Scope of interference with an arbitral award -Patent illegality and perversity in arbitral award - Input tax credit obligations under contract - Challenged the award on the footing that the respondent had not furnished sufficient documents to enable availment of CENVAT/input tax credit did not disclose any ground for interference under Section 34.
Limited scope of interference under Section 34 - HELD THAT: - The Court held that in proceedings under Section 34 it does not sit in appeal over the arbitral award, and interference is confined to the statutorily limited grounds of patent illegality, perversity, or conflict with public policy. On the record, the Majority Arbitral Tribunal had returned a categorical finding that the petitioner had not taken any steps to avail the input tax credit, including by approaching the concerned authorities, and had also failed to establish what documents were not supplied by the respondent. The Tribunal had further noticed that the petitioner had reimbursed the respondent towards the taxes paid, supporting the conclusion that the documents furnished had been acted upon. In that view, the objection regarding insufficiency of documents was rendered inconsequential, and the award represented a plausible and reasonable view based on the material before the Tribunal, not open to reappreciation in a Section 34 challenge. [Paras 7, 8, 9, 10, 11]
No perversity or patent illegality was found in the impugned award, and the petition was dismissed.
Final Conclusion: The Court declined to interfere with the arbitral award, holding that the petition sought a reappreciation of factual findings which was impermissible under Section 34. The dismissal of the petition was followed by a direction for release of the bank guarantee in favour of the respondent.
TaxTMI 