TaxTMI Updates e-Newsletter
Mar 30,2026

Cancellation of registration for non-filing of returns - Restoration of GST registration - Tax dues with interest and late fee - statutory scheme for issuance of a show-cause notice.

Cancellation of registration for non-filing of returns - HELD THAT:- It is seen that as per Section 29(2)(c) of the Act of 2017, an officer, duly empowered, may cancel the GST registration of a person from such date, including any retrospective date, as he deems fit, where any registered person, has not furnished returns for a continuous period of 6(six) months.

The Court noted that Section 29(2)(c) permits cancellation where returns are not furnished for a continuous period of six months, but the proviso to Rule 22(4) also enables the proper officer to drop such proceedings where the person furnishes all pending returns and makes full payment of tax dues along with applicable interest and late fee. Having regard to that statutory scheme and to the serious civil consequences flowing from cancellation of registration, the Court held that if the petitioners approach the empowered officer with the pending returns and requisite payments, their case for restoration must be considered in accordance with law. [Paras 8, 9, 10, 11, 12]

The respondent authorities were directed to consider the petitioners' application for restoration of GST registration, and upon compliance with the requirements of the proviso to Rule 22(4), to take necessary steps for restoration as expeditiously as possible.

Final Conclusion: The writ petition was disposed of with a direction to the authorities to consider restoration of the petitioners' GST registration if they submit the requisite application, file all pending returns and clear the outstanding statutory dues with applicable interest, penalty and late fee. The Court clarified that the delay in approaching it would not operate as a precedent.

Violation of Principles of natural justice - false averment that no personal hearing was granted - Clerical error -Exemplary costs.

Principles of natural justice - False statement before Court - HELD THAT: - On production of the original file, the Court found that the petitioner had been personally heard by the appellate authority and had signed the proceedings. The discrepancy in the date mentioned in the impugned order was traced to a clerical error, and the portal as well as the original order indicated the correct position. In these circumstances, the assertion in the writ petition that no hearing had been granted and that the order violated principles of natural justice was held to be false. Having found that the petitioner had made a false statement before the Court, the Court declined to entertain the writ petition and imposed exemplary costs. [Paras 2, 3, 4, 6]

The writ petition was rejected with exemplary costs, the allegation of breach of natural justice having been found to be factually false.

Final Conclusion: The Court rejected the writ petition after examining the original record and finding that the petitioner had in fact been granted personal hearing. Since the plea of violation of natural justice was found to be based on a false statement, exemplary costs were imposed.

Validity of the proceedings for breach of the statutory hearing requirement and natural justice - failure to grant the statutory opportunity of personal hearing mandated by Section 75(4) - Violation of Principles of natural justice.

Adequate opportunity of hearing - Natural justice - HELD THAT: - The Court held that the petitioner's indication in Form GST DRC-06 that no personal hearing was required could not override the statutory mandate of Section 75(4). Once the authority did not accept the petitioner's reply, it was bound to follow the statutory requirement of granting the prescribed opportunity of hearing and could not decide the matter on the very first date fixed for personal hearing. Since three opportunities of personal hearing as envisaged by the provision were admittedly not granted, the impugned order was found to be in breach of the statutory requirement and the principles of natural justice. [Paras 3, 4, 5]

The impugned order was quashed and the matter was remanded to the respondent authorities for fresh decision after affording the required opportunity of hearing, to be completed within 12 weeks.

Final Conclusion: The writ petition was allowed on the ground that the statutory requirement of personal hearing had not been complied with. The impugned order was set aside and the matter was remitted for fresh adjudication in accordance with law.

Breach of principles of natural justice for want of hearing - No Opportunity of hearing - Premature adjudication - Validity of the impugned order passed before the date fixed in the show cause notice for hearing and filing of representation.

Principles of natural justice - Opportunity of hearing - Premature adjudication - HELD THAT:- The Court found that the show cause notice itself required the petitioner to appear on a later specified date and to file its representation in the prescribed form with supporting evidence. Despite this, the authority passed the order before that scheduled date. The order was therefore made without granting the petitioner the opportunity to reply or to be heard, and was held to be in breach of principles of natural justice. [Paras 3, 4]

The impugned order was quashed on the limited ground of breach of natural justice, and the proceedings were remanded for fresh consideration in accordance with law after granting an opportunity of hearing.

Final Conclusion: The petition was allowed on the limited ground that the impugned order had been passed before the hearing date fixed in the notice and without permitting a reply. The matter was remanded to the authority for fresh disposal after hearing the petitioner, and any recovery based on the impugned order was held not to survive.

Validity of the appellate order rejecting the assessee's appeal without dealing with the grounds raised in the appeal memo - No effective consideration of the request for personal hearing - Violation of natural justice - requirement of hearing under Section 75(4) and the principles of natural justice.

Failure to consider grounds of appeal - Reasoned appellate order - Opportunity of hearing - HELD THAT:- The Court held that the petitioner had specifically raised in appeal the grounds of violation of natural justice, timely filing of replies to the notices, request for personal hearing, breach of Section 75(4), and prejudice caused by belated system-generated filing on account of administrative lapse. Those contentions were ignored by the Appellate Authority, which dismissed the appeal only because the petitioner did not remain personally present despite opportunity. The determinative principle applied was that an appellate authority is required to pass a reasoned order addressing the grounds urged in the appeal memo, and non-appearance of the party does not relieve it of that obligation. [Paras 3, 4]

The appellate order was quashed and the matter was remanded for fresh decision after giving an opportunity of hearing, with a direction that even in the event of the petitioner's non-appearance, the grounds raised in appeal must be considered and decided in accordance with law.

Final Conclusion: The writ petition was allowed to the extent of setting aside the appellate order for non-consideration of the grounds raised in appeal. The matter was remanded to the Appellate Authority for a fresh, reasoned decision after affording hearing to the petitioner.

Extinguishment of pre-CIRP tax demands - Binding effect of approved resolution plan - seeking extinguishment of demands against the Petitioner pertaining to the period prior to the initiation of the Corporate Insolvency Resolution Process ( ‘CIRP’) and deletion of such demand from the Income Tax and TDS Portals as appearing against the name of the Petitioner

Whether the Income Tax Department could have proceeded against the Petitioner after approval of Resolution Plan by the NCLT for enforcement of a demand pertaining to a period prior to approval of such Plan? - HELD THAT: - The law in this regard is settled by several judgements of the Hon’ble Supreme Court as well as this Court. A similar issue came up for consideration before this Court in Swan Defence and Heavy Industries Ltd [2025 (8) TMI 770 - BOMBAY HIGH COURT] following the ratio laid down in Ghanshyam Mishra & Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Ltd. & Ors. [2021 (4) TMI 613 - SUPREME COURT] and Vaibhav Goel & Another [2025 (3) TMI 1052 - SUPREME COURT] this Court held that once the Resolution Plan is approved by the Adjudicating Authority (under the IBC), no belated claim can be included therein. If one were to allow this, the Resolution Applicants would not be in a position to recommence the business of the Corporate Debtor with a clean slate.

Respondent No. 1 is directed to give effect to the NCLT’s Order and extinguish all the demands relating to the period prior to the Resolution Plan on the Income Tax Portal and re-compute the Petitioner’s liability and / or refund, if any within a period of four weeks from the date of uploading this order. Respondents are also directed to issue refunds due to the Petitioner, which may arise upon extinguishment of demands relating to the period prior to the Resolution Plan and adjustment of refunds, if any, as expeditiously as possible and in any event within eight weeks from the date of uploading this order. [Paras 13, 14]

Final Conclusion: The writ petition was allowed by directing the Revenue to delete all pre-resolution-plan demands surviving on the Income Tax Portal, recompute the petitioner's liability or refund accordingly, and issue any consequential refund within the time stipulated by the Court.

Validity of reopening of assessment on the ground of limitation - Limitation for reassessment after search - Computation of six and ten assessment years under Explanation 1 to Section 153A - two distinct and independent computational regimes -search action was carried out in the case of third party

HELD THAT: - The Court held that the statute prescribes two distinct computational regimes for the six-year block and the extended ten-year block. For six assessment years, the governing expression is "immediately preceding", which excludes the search assessment year. For the extended period, Explanation 1 to Section 153A adopts a different formula, namely computation "from the end of the assessment year" relevant to the previous year in which the search is conducted. That language was treated as deliberate and incapable of being collapsed into the six-year model. Consequently, the assessment year relevant to the previous year of search must be included as the first year in the ten-year reckoning. Since the search in the present case fell in Financial Year 2023-24, Assessment Year 2024-25 was the first year of the ten-year block and Assessment Year 2015-16 the tenth year. Assessment Year 2014-15, therefore, fell beyond the permissible ten-year period. The Court also followed its earlier view taking the same interpretation and rejected the Revenue's contention that the search year must be excluded while computing the ten-year period. [Paras 8, 9]

The impugned notice under Section 148 for Assessment Year 2014-15, and all consequential proceedings, were quashed as time-barred.

Final Conclusion: The Court held that, for computing the extended ten-year period in search-related reassessment, the search assessment year is to be included. On that interpretation, Assessment Year 2014-15 lay beyond the statutory limit, and the notice under Section 148 was quashed on the ground of limitation.

Permission to repatriate the amount of dividend which the petitioner-company is required to pay to its shareholders situate outside India - Interim protection against tax demand - Adjustment of refund against demand -- Balancing of equities by securing revenue

Petitioner is a company registered in India. Many of its shareholders are outside India and the ultimate parent/holding company is situated in China

Permission to repatriate dividend to its foreign shareholders despite pending tax demands and earlier restraint orders - HELD THAT: - The Court held that, although substantial demands had been raised, those demands were already under challenge and had been stayed by the High Court or the appellate authority without any condition requiring further security. In that situation, the continuing prohibition on dividend remittance could not be justified merely on a prior apprehension of revenue risk, especially when other payments and royalty remittances had already been permitted. The Court found that an indefinite embargo would unjustifiably curtail the rights of the petitioner and its shareholders, but considered it necessary to protect the revenue by directing that dividend remittance be permitted only upon furnishing an auto-renewable interest-bearing FDR of an equivalent amount, subject also to compliance with foreign remittance requirements and deduction of tax at source. Consequentially, the earlier lien on the existing FDRs of Rs. 200 crores was lifted. [Paras 21, 22, 23, 24, 26]

Dividend may be declared and repatriated in accordance with law, subject to applicable remittance guidelines, tax deduction at source, and furnishing of an equivalent auto-renewable interest-bearing FDR to secure the revenue.

Adjustment of refund against demand - Concession by counsel - HELD THAT: - The Court permitted adjustment of the refund for AY 2021-22 against the demand of AY 2018-19, while clarifying that, since such adjustment was allowed on the petitioner's concession, the Department could not be accused of contempt if the refund were adjusted against the outstanding demand of AY 2020-21. [Paras 25]

Adjustment of the refund was allowed on concession, with protection to the Department against any allegation of breach of the interim order in the event of such adjustment.

Final Conclusion: The Court allowed the petitioner to repatriate dividend to its foreign shareholders, but only upon furnishing an equivalent auto-renewable interest-bearing FDR and complying with applicable remittance and tax requirements. The existing lien over the earlier FDRs was lifted, and the refund for AY 2021-22 was permitted to be adjusted against the outstanding demand on the petitioner's concession.

Condonation of delay in filing Form 10-IC - Genuine hardship - “reasonable cause” behind “delay” of “53 days” in filing “Form 10-IC” before the “due-date” prescribed under “section 139(1)” - Rejection of the petitioner's application for condonation of delay in filing Form 10-IC for claiming the benefit under section 115BAA

HELD THAT: - As decided in BM MALANI [2008 (10) TMI 2 - SUPREME COURT] ingredients of genuine hardships must be determined keeping in view the dictionary meaning thereof and the legal conspectus attending thereto. For the said purpose, another well-known principle, namely, “a person cannot take advantage of his own wrong”, may also have to be borne in mind.

The Court found that the delay of 53 days occurred after the petitioner, having initially pursued certification as an eligible start-up, was informed that such certification had been refused and thereafter sought professional advice before opting for the alternative regime under section 115BAA and arranging funds for payment of self-assessment tax. On these undisputed facts, the delay was held not to be deliberate, concocted or tainted by mala fides.

Applying the principle that the expression genuine hardship in section 119(2)(b) must receive a liberal construction, the Court held that refusal to condone the delay would deprive the petitioner of the benefit under section 115BAA despite its otherwise admitted eligibility and would expose it to substantial additional tax liability, thereby causing genuine financial hardship. The authority was therefore required to exercise its power judiciously to advance substantial justice. [Paras 14, 15, 16, 17, 18]

The impugned order rejecting condonation was quashed, and the matter was remanded with a direction to the competent authority to accept the Form 10-IC filed for Assessment Year 2022-23.

Final Conclusion: The Court held that the petitioner had shown bona fide reasons constituting genuine hardship for the delayed filing of Form 10-IC. The rejection of condonation was set aside, and the competent authority was directed to accept the form for Assessment Year 2022-23.

Reassessment after scrutiny assessment - Change of opinion - Power to reassess v/s review - live link or nexus between the material before the Assessing Officer and the belief formed regarding escapement of income

HELD THAT: - The Court found from the assessee's reply in the original assessment proceedings that the very transaction now relied upon for reopening had already been specifically called for and explained, along with the supporting tax audit report, computation and financial statements.

Since the material relied upon in the order under Section 148A(d) had already been considered in the original assessment, the reopening amounted only to a change of opinion. AO has no power to review the earlier assessment and cannot reopen merely to take a fresh look at documents already produced and examined. Applying the settled principle that reassessment cannot be used as a substitute for review, the Court held the impugned action to be without authority. [Paras 8, 9]

Final Conclusion: The writ petition was allowed. The Court held that the reassessment proceedings for Assessment Year 2016-17 were founded on a mere change of opinion on material already examined in the original scrutiny assessment, and accordingly quashed the order under Section 148A(d) and the notice under Section 148.

Overriding effect of the MPID Act - Jurisdiction of the Special Court over seized assets - Protection of depositors through release of funds to escrow - Conflict between special statutes - whether the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 had overriding effect over the Income-tax Act, 1961 and the Prevention of Money Laundering Act to decide release of the seized amount?

HELD THAT: - The Court proceeded on the undisputed position that the subject money represented funds received from NSEL and therefore bore a direct nexus with the claims of investors. Applying the principle that the MPID Act is a valid State legislation enacted to protect depositors and that such legislation cannot be denuded of effect by resort to other enactments operating in a different field, the Court held that the MPID Act would prevail in the present controversy. On that basis, it affirmed that the Special Court was competent to decide the question of release of the money even though the amount had been seized under the provisions of the Income-tax Act and objections were also raised with reference to the PMLA Act. [Paras 12, 13]

The objection to the Special Court's jurisdiction was rejected and the overriding effect of the MPID Act was upheld.

Protection of depositors through release of funds to escrow - Lawful settlement - HELD THAT: - The Court noted that the settlement between NSEL, Respondent Nos. 1 to 3 and other parties contemplated payment through an escrow mechanism for the benefit of investors, and that the money in question was sought to be credited to that account. Since the funds had been received through unlawful and dishonest means and the release was intended to facilitate restitution to investors, the reasons which weighed with the trial Court in allowing the application were held to be justified in the facts and circumstances of the case. [Paras 14, 16]

The order directing release of the money to the escrow mechanism for the benefit of depositors was sustained.

Final Conclusion: The appeal was dismissed. The High Court affirmed the Special Court's order, holding that the MPID Act governed the controversy and that release of the seized money for credit to the escrow account towards satisfaction of investors' claims was lawful.

Validity of assessment u/s 153A - Statement u/s 132(4) - Opening balance creditors and section 68 - Explained source of capital introduction - Section 69C and source recorded in books - Disallowance under section 40A(3)

Assessment u/s 153A - incriminating document found during search or not? HELD THAT:- As there was no incriminate document found during the course of search and hence, no addition can be made in view of the decision of the Hon’ble Supreme Court in the case of Principal CIT vs. Abhisar Bhuildwell P. Ltd. [2023 (4) TMI 1056 - SUPREME COURT]

Addition on account of unexplained expenditure u/s 69C for shortage of cash at business premises and unexplained and unaccounted cash found at his residential premises during the search u/s 69A and invoked the provision of Section 115BBE - CIT(A) deleted addition - AO has made two contradictory observations that on the one hand he has accepted the statement recorded during the course of search at residence but on the other hand he has not accepted statement recorded during the search at the business premises. CIT(A) observation that the assessee did not mention in statement recorded at residence, what he stated in the statement at business, at the case of repetition would not justify the action of the AO in treating the cash as unaccounted when during the search itself it was admitted that the cash belonging to the business.

Meaning thereby the expenditure was made out of cash book at the business premises of the assessee found during the course of search where search team found shortage of the cash at the business premises as rightly explained towards the expenditure incurred by the assessee which were yet to be accounted for in the books of accounts and the expenses were not subject to TDS provision and that balance cash found and seized from residence. Further, no adverse observation has been made by the AO.

In our view, the Ld. CIT appeal’s decision is justified in deleting the addition made by the AO on account of shortage of cash at business and unexplained cash from the residence respectively.

Addition on account of sundry creditors shown in the balance sheet as opening balance u/s 68 - AO has stated that assessee himself made disclosure during the search - HELD THAT:- Appellant has established the Identity, Creditworthiness & the genuineness of the loan/creditors and therefore, the onus casted upon assessee has been discharged by the appellant. It is noted that the AO has not specifically mentioned in the assessment order that what details were not furnished by the assessee which were required to be furnished.

Unexplained expenditure in the form of wages - Addition u/s 69C - HELD THAT:- CIT (A) has appreciated the fact by observing that the AO has not established the facts regarding the source of expenditure was outside the books or the disputed expenditure was not recorded in the books of accounts by the assessee. Therefore, in our considered view, the section 69C would not be applicable for making the said alleged addition.

Addition on account of unexplained expenditure in the form of introduction of capital u/s Section 69 - AO has discussed that assessee has made huge investment in UNS every year which is not commensurate to his income - HELD THAT:- Details submitted by the appellant provide sufficient evidence to establish the contention of the appellant to explain the source of the investment in UNS. The observation of the AO that assessee has made huge investment in UNS which is not commensurate to his income is factually incorrect with respect to the assessment year under consideration. Hence, investment made in UNS stands explained by the appellant with reference to the books of account of the appellant. Since, the appellant has explained the source of capital introduced, the addition made by the AO is not found to be sustainable.

Addition u/s 69A - unexplained and unaccounted cash found from the safe of the Shri Dharmveer Singh Kanda during the search - CIT(A) deleted addition - HELD THAT:- CIT(A) in accepting the contentions of the appellant are found to be justified because the AO has not brought any evidence on record to prove his contention that cash found at the residence was not related to the business firm of the assessee. Accordingly, this ground of appeal of the department stands rejected.

Unexplained investment in stock under section 69 - books of account were not held as maintained properly by the AO, as some of the purchase vouchers were yet to be accounted for - HELD THAT:- Only recording of statement at the time of search that some of the bills were not recorded do not prove that the books of accounts are not authentic or genuine. The lack of proper maintenance of books of accounts can be there if the books are not updated on daily basis. Thus, only reason that books are not found to be updated on the date of search cannot be a ground for treating the same as non genuine. Since the AO has not mentioned any other defect to establish that the books of accounts are not genuine, the addition made by the AO is not found to be sustainable and rightly deleted by the Ld. CIT (A). Further the taxation u/s section 115BBE, prescribed in the Act for addition made u/s 69 of the Income Tax Act and since the addition made u/s 69 is deleted hence applicability the charging of tax at higher rate u/s 115BBE is also rejected.

Unaccounted expenditure on account of creditors paid off, made on account of creditors paid off out of unaccounted income and made on account of bogus cash creditors as unexplained credits - CIT(A) has deleted the said addition - HELD THAT:- AO has not brought any evidence to establish that any of the creditor were bogus or amount incurred from unaccounted sources being used to pay off these creditors. It is noted that the AO has not brought any material on record that these are not business creditors. From the record, it is admitted facts that these were opening balances of the current Assessment Year and not a new creditors of the assessment year under consideration.

Thus, the Section 68 would not be applicable on such opening balances. This view is fortified by the decision of Usha Stud Agrl. Farms Ltd. [2008 (3) TMI 91 - DELHI HIGH COURT] as rightly relied by the Ld. CIT (A). Again, the three unsecured loans amounting to Rs. 39,05,000/-, were opening balances as these unsecured loans were received by the assessee during the financial year 2012-13 through banking channel. Necessary documents were submitted by the assessee proving the genuineness of the transaction, identity of the lender and their creditworthiness at the time of assessment. Thus, the creditors stand explained.

Addition u/s 69 as unexplained investment and on account of cash deposited in the bank account of Gurpreet Kaur rejecting the explanation that the said account was received from late Shri Kanwal Nain Singh on account of sale agreement of property - HELD THAT:- It is seen from the record that the same income has been subject to double taxation. After completing the assessment of the assessee and the group, the department has taxed the same income in the hands of Late Sh. Kawal Nain Singh by passing the assessment order in his hands of the same income. It is settled legal position that no income can be taxed twice i.e. once in the hands of the appellant and again in the hands of Late Sh. Kanwal Nain Singh.

It is pertinent to mention that on parity of facts, the Ld. CIT(A) has deleted the similar addition in the hands of Smt. Gurpreet Kaur. According to the principle of consistency, he cannot confirm the addition in the hands of the assessee, which is deleted on parity of facts in another case as illegal in the eyes of laws. Further, the aforesaid addition tantamount to double taxation of the same income in two hands which is not permissible in the eyes of laws. We, therefore, hold that the decision of the ld. CIT (A) in confirming the addition in the hands of the assessee is perverse to the facts on record and as such, the addition would be liable to be deleted in the hands of assessee.

Addition on account of foreign currency - HELD THAT:- We find that the alleged foreign currency was purchased out of withdrawals made during the year which is evidently proved from the financial statement of the assessee submitted before Ld. AO. The assessee has withdrawn Rs. 11,16,362/- during the year under consideration. It is relevant to mention here that a fire accident was occurred on dated 19.07.2014 at the business premises of Shri Dharamveer Singh Kanda and all the relevant records relating to purchase of above foreign currency were got burn as a consequence the appellant could not produce the relevant document before the authorities below. It is seen that the assessee has made sufficient withdrawals to purchase the foreign currency, therefore, addition on account of foreign currency.

House construction and renovation - Unexplained investment - Withdrawals from proprietorship concerns - HELD THAT: - The Tribunal found from the capital accounts and material on record that both the assessee and his son had made withdrawals from their proprietorship concerns over the relevant financial years and that these withdrawals explained the expenditure on construction and renovation. Since the source of funds stood established from the record, the addition could not be maintained.

Section 40A(3) - Accepted genuineness of expenditure - Rule 6DD - Disallowance of wages expenditure under section 40A(3) could not be sustained. - HELD THAT: - The Tribunal held that once the expenditure itself had been accepted, disallowance under section 40A(3) could not be made without identifying specific cash payments exceeding the prescribed limit and without showing why the case did not fall within the permissible exceptions. It also noted that the authorities had not rejected the books and had not pointed out any precise offending payment or established any contravention of rule 6DD.

Final Conclusion: The departmental appeals were rejected, including two appeals dismissed on low tax effect and the remaining appeals on merits. The assessees' cross appeals were allowed to the extent of the additions sustained by the Commissioner (Appeals), the Tribunal holding that the impugned additions were either unsupported by incriminating material, based on opening balances or explained entries, or otherwise contrary to the statutory requirements of the provisions invoked

Reopening beyond four years - change of opinion - increase disallowance u/s. 14A r.w.r. 8D - CIT(A) upholding the reopening of the assessment merely on the ground that the appellant did not maintain separate books of account for its investment activity - HELD THAT:- The Tribunal found that the original assessments had already made disallowance u/s 14A and that issue had also been carried in appeal and confirmed by the Commissioner (Appeals). The subsequent notices sought only to recompute the same disallowance on the basis of short deduction under Rule 8D, without any fresh material. Since the notices were issued beyond four years and there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, the jurisdictional condition for reopening was not satisfied. The Tribunal further held that, once the original assessment on that issue had merged with the appellate order, reopening on the very same ground was impermissible and amounted merely to a change of opinion. [Paras 5, 8]

Final Conclusion: The assessee's appeals were allowed and the Revenue's appeals were dismissed. The reassessment proceedings for AY 2014-15 and 2015-16 having been held invalid in law, the additions made therein did not survive for consideration on merits.

Revisionary jurisdiction u/s 263 - treatment of CSR expenditure in computation of book profit under section 115JB - Disallowance u/s 14A read with Rule 8D

MAT book profit adjustment on CSR expenditure - HELD THAT:- Tribunal held that the assessee had already added the CSR amount in the normal computation and only the deduction claimed under section 80G had been disallowed by the Assessing Officer. The sole basis adopted in revision was that the same amount should also have been adjusted in the MAT computation. The Tribunal found that adjustment to book profit can be made only in accordance with the Explanation to section 115JB, and CSR expenditure is not one of the permissible items for such adjustment. Since the Assessing Officer had no authority to alter the audited profit and loss account beyond the statutory adjustments allowed under the MAT provision, failure to add back the CSR expenditure to book profit did not render the assessment order erroneous and prejudicial to the interests of the Revenue. [Paras 7, 8]

Disallowance under section 14A read with Rule 8D - MAT book profit adjustment - HELD THAT: - The Tribunal noted that, although the Assessing Officer had not examined disallowance under section 14A read with Rule 8D, the assessee's tax liability for the relevant year was admittedly under section 115JB. It held that a disallowance computed under section 14A cannot be imported into the computation of book profit. In that situation, even if Rule 8D had been invoked, it would not have affected the taxable book profit. Therefore, the omission to examine that issue could not be treated as prejudicial to the interests of the Revenue, and the foundational condition for exercise of revisionary power failed. [Paras 9]

Final Conclusion: The Tribunal held that neither of the two grounds invoked in revision satisfied the statutory requirement that the assessment order be both erroneous and prejudicial to the interests of the Revenue. The order passed under section 263 was therefore quashed and the assessee's appeal was allowed.

Rectification of mistake u/s 154 - Mistake apparent from record - addition under section 69A by applying the amended rate u/s 115BBE for Assessment Year 2017-18 - applicability of amended provisions of section 115BBE - while completing the assessment, the tax had been computed at 30% whereas as per the amended provisions applicable for Assessment Year 2017-18, the correct rate was 60%.

HELD THAT: - The Tribunal held that the very basis of the rectification was the applicability of the amended provision enhancing the rate from 30% to 60%, and that question was not a patent error but one requiring interpretation of law.

Hon’ble Madras High Court in the case of S.M.I.L.E Microfinance Ltd. v. ACIT [2024 (11) TMI 1444 - MADRAS HIGH COURT] has clearly held that the amendment increasing the rate of tax from 30% to 60% under section 115BBE is prospective in nature and is applicable only to transactions on or after 01.04.2017 and not to transactions prior thereto.

Judicial precedent had consistently treated the amendment as prospective, applicable only from 01.04.2017 onwards and not to earlier transactions; therefore, for the year in question, the enhanced rate was held inapplicable on merits. Since a matter on which two views are possible, and which stands governed by judicial interpretation, cannot be treated as a mistake apparent from record, recourse to section 154 was unavailable. [Paras 16, 17, 18, 19, 20]

Final Conclusion: The Tribunal dismissed the Department's appeal and upheld the quashing of the section 154 rectification order. It held that, for A.Y. 2017-18, the enhanced rate under section 115BBE was not applicable and, in any event, the issue being debatable lay outside the scope of rectification.

TDS u/s 192 - Tax deduction at source on leave fare concession payments - assessee is a branch of State Bank of India which had provided Leave Fare Concession (LFC) to its employees and had treated the same as exempt under section 10(5) - assessee in default u/s 201(1) and interest u/s 201(1A) - AO noticed that certain employees had undertaken journeys involving a foreign leg and the assessee had not deducted tax at source on such payments

HELD THAT: - The Tribunal held that, although the question on the merits of exemption under section 10(5) stood concluded against the assessee, the determinative issue was whether default under section 201(1) could be fastened for the relevant period. It found that the interim directions of the Madras High Court were in force and specifically governed the assessee's conduct regarding deduction of tax on LFC payments.

We further find that an identical issue has been considered by the Co-ordinate Bench of the Tribunal in the case of State Bank of India [2025 (4) TMI 44 - ITAT AGRA], wherein after considering the decision of the Hon’ble Supreme Court as well as the interim orders of the Hon’ble Madras High Court, ITAT held that the assessee bank could not be treated as an assessee in default since it was bound to follow the interim directions of the Hon’ble High Court. The Tribunal categorically observed that the assessee had no option but to comply with the orders of the Hon’ble High Court and non-deduction of tax in such circumstances could not invite the rigours of section 201(1) and 201(1A) of the Act.

Hon’ble Kerala High Court [2025 (11) TMI 1773 - KERALA HIGH COURT] has examined this issue in detail and has held in favour of the assessee.

Since the assessee was bound to obey those judicial directions, the obligation to deduct tax under section 192 could not be enforced in isolation. A default under section 201 presupposes an existing legal obligation to deduct tax; where that obligation stood displaced for the relevant period by binding court orders, non-deduction could not attract treatment as an assessee in default. The subsequent Supreme Court decision settling the substantive exemption issue could not retrospectively create liability under section 201(1) for a period in which the assessee had acted in compliance with the court's interim orders. [Paras 14, 18, 19, 20]

The demand under section 201(1) and the consequential interest under section 201(1A) were directed to be deleted.

Final Conclusion: The Tribunal allowed both appeals and held that the assessee, having acted in conformity with binding interim directions of the High Court, could not be treated as an assessee in default for the relevant period. The demand and consequential interest were deleted.

Determination of Nature of Property - Rural agricultural land - Applicability of tax deduction at source on transfer of immovable property - Admission of additional evidence

Admission of additional evidence - Rule 46A - Official documents - Admission of official certificates and revenue documents by the first appellate authority without calling for a remand report - HELD THAT: - The Tribunal held that the material relied upon by the appellate authority consisted of official documents issued by competent authorities and went to the root of the controversy regarding the nature and location of the land. In the absence of any specific prejudice shown by the Revenue from their admission, and since the dispute could be decided on the basis of the material already on record, restoration on this procedural ground was not considered necessary. [Paras 6]

Nature of land - Rural agricultural land orCapital asset - CIT(A) treating the land as agricultural land putting reliance on certificates issued by the Gandhinagar Urban Development Authority, revenue records and census data - HELD THAT: - The Tribunal accepted the factual finding recorded by the appellate authority on the basis of certificates issued by the Gandhinagar Urban Development Authority, revenue records and census data showing that the lands were beyond the prescribed distance from the municipal limits.

Assessing Officer has not carried out any independent verification nor brought any conclusive evidence on record to establish that the lands fall within the specified distance. The reliance placed by the Revenue on another communication is not sufficient to dislodge the factual finding recorded by the Ld. CIT(A), particularly in absence of proper verification or corroborative evidence. In such circumstances, we find no reason to interfere with the finding that the lands are agricultural in nature and not capital assets within the meaning of section 2(14) of the Act.

Rural agricultural land falling outside the scope of section 194-IA - Consideration of Government Notifications etc - HELD THAT:- AO has not brought any material evidence on record to demonstrate that the lands fall within the prescribed distance when measured from the nearest municipal limits as per the relevant notifications. The contention of the Revenue remains unsupported by any authenticated distance measurement or certificate. Therefore, in absence of any contrary evidence, the factual finding recorded by the CIT(A) that the lands are situated beyond the prescribed limits cannot be disturbed. Consequently, the lands qualify as rural agricultural land and fall outside the scope of section 194-IA.

Since the lands in question are held to be agricultural and outside the scope of section 194-IA, the assessee cannot be treated as an assessee in default u/s 201(1) of the Act and the interest charged u/s 201(1A) is also therefore not sustainable.

Final Conclusion: The Tribunal dismissed the Revenue's appeal. It upheld the appellate order holding that the procedural objection to admission of official documents had caused no prejudice and that the lands in question were rural agricultural lands outside the ambit of section 194-IA, with the result that the assessee could not be treated as an assessee in default.

Unexplained income from deposits in the assessee's NRI bank account - Source of remittance - Unexplained bank deposit

HELD THAT: - The Tribunal found from the material on record that the assessee's business account in UAE with Bank of Baroda reflected withdrawal of 150,000 AED on 27/09/2014 and that the same amount was remitted through AL Rostamani International Exchange LLC and credited in the assessee's Bank of Baroda account in India on the same date. On that factual verification, the Tribunal held that the source of cash stood proved and the amount credited in the NRI account could not be treated as unexplained income. [Paras 8]

Final Conclusion: The Tribunal allowed the appeal and deleted the addition, holding that the assessee had satisfactorily proved the source of the remittance credited to the NRI account. The reassessment addition treating the deposit as unexplained income was therefore unsustainable.

Penalty u/s 271(1)(c) - quantum addition made on account of alleged bogus purchases -HELD THAT: - The Tribunal found that the purchases were recorded in the books, supported by bills and ledger accounts, and payments had been made through banking channels. The quantum addition was not sustained in full; it was restricted by estimating the profit element embedded in the purchases at 12.5%.

On that basis, the Tribunal held that the addition rested on estimation and not on any definite finding of concealment of income or furnishing of inaccurate particulars. Since the assessee's explanation supported by documents was not found to be false and the sustained addition merely accounted for possible inflation of purchase price or suppression of profit, the statutory conditions for penalty were not satisfied. [Paras 3, 4, 5, 6]

Final Conclusion: The Tribunal allowed the assessee's appeal and deleted the penalty. It held that an addition sustained only on estimated profit from recorded purchases could not, by itself, justify penalty for concealment or furnishing inaccurate particulars.

TDS credit in hands of estate - TDS credit on dividend income arising from the deceased's assets - Post-death income of deceased's assets - Appellate power to remand u/s 251 - Allowability of TDS credit claimed by the estate depended on whether the dividend income from the deceased's assets related wholly to the post-death period - HELD THAT: - The Tribunal held that once an individual dies leaving a valid will, the estate is assessable u/s 168 and income accruing from the estate's assets after death is taxable in the hands of the executor filing a separate return for the estate. It found that the legal position was not in dispute, but the record did not contain the necessary factual material to determine whether the income from the deceased's assets pertained entirely to the post-death period.

That verification was material because only such post-death income would be taxable in the estate's hands, whereas income relating to the pre-death period would have to be declared in the hands of the legal heir. Tribunal further held that under section 251, the Addl./Joint CIT(A) could not restore the matter to the Assessing Officer, except in the limited statutory situation not attracted here. While disapproving that remand by the appellate authority, Tribunal nevertheless directed the Assessing Officer to verify the period to which the income related and to allow TDS credit to the estate in accordance with law if the income pertained to the post-death period. [Paras 8, 9]

Final Conclusion: The appeal was partly allowed for statistical purposes. The Tribunal held that the Addl./Joint CIT(A) could not remand the matter to the Assessing Officer under section 251, but directed the Assessing Officer to verify whether the income from the deceased's assets related to the post-death period and to grant TDS credit to the estate accordingly; the remaining grounds were dismissed as premature.

Entitlement to claim the benefit of Notification No. 21/2022-Cus dated 13.04.2022 for the imported cotton - Date for determination of rate of duty - substitution of the bills of entry from home consumption to warehousing.

Date for determination of rate of duty - Availability of exemption notification - Beneficial exemption - HELD THAT:- The Tribunal held that, under Section 15(1)(a), the relevant date for determination of duty was the date of filing of the bills of entry, since all the bills of entry had been filed after the date of entry inwards of the vessels and were not advance bills of entry. As Notification No.21/2022-Cus. became effective only thereafter, it was not available on the dates when the bills of entry were filed. The plea that the importer could opt for the more beneficial exemption was rejected, since such option could arise only among notifications in existence on the relevant date. The proviso relating to bills of entry presented before entry inwards was held inapplicable on the facts. [Paras 7, 10, 12, 13]

Benefit of Notification No.21/2022-Cus. was rightly denied.

The Tribunal held that Section 46(5) confers a discretionary power on the proper officer to permit substitution only where the interests of revenue are not prejudicially affected. On the facts, the authorities were justified in treating the substitution request as an attempt to secure the benefit of a notification that was not in existence when the bills of entry were filed. Since the statute uses the expression "may permit", the officer was not bound to allow substitution, and no arbitrariness or unfair exercise of discretion was shown. [Paras 9]

The refusal to permit substitution of the bills of entry called for no interference.

Final Conclusion: The Tribunal upheld the impugned order and held that the appellant could not claim the later exemption notification in respect of bills of entry already filed, nor compel substitution of those bills of entry into warehousing bills. The appeal was dismissed.

Rejection of conversion of drawback shipping bills into drawback shipping bills with EPCG authorization, on the sole ground that the consignments had not undergone the examination normally applicable to EPCG shipping bills -Contemporaneous Evidence - Amendment under Section 149 - Procedural non-examination of export consignments - Third party exports under EPCG scheme

Conversion of shipping bills - HELD THAT:- The Tribunal found that the Commissioner had rejected the request only because the shipping bills, not having been filed under the EPCG scheme at the time of export, were not subjected to the scrutiny and examination ordinarily triggered by RMS for such exports. It held that this reasoning could not defeat the claim when the applicable circulars permit conversion from one export promotion scheme to another, and it was not the Revenue's case that the appellant failed to satisfy the requirements of those circulars. The Tribunal also noted that the appellant was not responsible for the absence of physical examination, since such selection was made by RMS and lay beyond its control. Further, the Commissioner had not examined the appellant's contemporaneous material, including the endorsement and no-objection from the third party exporter and the plea that conversion had no duty impact. A mere procedural lapse in examination, not attributable to the exporter, could not be treated as fatal to a bona fide claim for conversion. [Paras 6, 7, 8, 9]

The impugned order was set aside and the appeal was allowed.

Final Conclusion: The Tribunal held that denial of conversion could not be sustained merely because the export consignments were not examined under the EPCG protocol when such non-examination was not attributable to the appellant. The order rejecting amendment/conversion was therefore set aside and the appeal was allowed.

Validity of pre-shipment certificate - Imposition of Penalty under Section 112 of the Customs Act - import on the basis of the pre-shipment certificate - clearance of goods - Absence of Corroborative evidence - Burden of proof.

Validity of pre-shipment certificate - Penalty under Section 112 of the Customs Act - HELD THAT: - The Tribunal found that the goods had originally been assessed and cleared by Customs on the strength of the pre-shipment certificate, without any objection at the time of assessment. It further noted the letter of the Deputy High Commission of the People's Republic of Bangladesh certifying that the College of Textile Technology, now Bangladesh University of Textiles, was a government organisation authorised to issue certificates regarding AZO and hazardous dyes. In the absence of any corroborative evidence from the Revenue to dislodge that position, the certificate was held to be a valid document. On that basis, the earlier clearance was found proper and no offence justifying penalty under Section 112 was made out. [Paras 10, 11]

The penalty was set aside as no contravention warranting action under Section 112 was established.

Final Conclusion: The Tribunal held that the pre-shipment certificate issued by Bangladesh University of Textiles was valid and that the Revenue had produced no material to prove otherwise. Consequently, the penalty imposed on the appellant was set aside and the appeal was allowed.

Maintainability of cross-objections - legality of the order of absolute confiscation of the imported vehicle - imported vehicle, declared as used but found to be new and imported without compliance with import-policy and vehicle-law requirements - Redemption fine in lieu of absolute confiscation.

Whether the cross-objections filed by the respondent are maintainable for consideration on merits after the withdrawal of the departmental appeal on account of the Government Litigation Policy relating to monetary limits. - HELD THAT:- Section 129A (4) of the Customs Act provides that a respondent, though he may not have filed an appeal, may file cross-objections against any part of the order appealed against and such cross-objections shall be disposed of by the Tribunal as if they were an appeal presented within the time specified. Thus, the statutory scheme clearly contemplates that cross-objections may be treated as an independent proceeding once they are filed. The legal position is well settled that the withdrawal or dismissal of the main appeal does not automatically render the cross-objections infructuous where the cross-objector seeks independent relief against the impugned order.

The Tribunal held that under Section 129A(4), cross-objections, once filed, are to be treated as if they were an appeal presented within time. On that statutory scheme, withdrawal of the main appeal does not by itself render the cross-objections infructuous where the respondent seeks independent relief against the impugned order. Since the respondent had challenged the legality of absolute confiscation, the cross-objections raised a substantive controversy requiring adjudication on merits. [Paras 8]

The cross-objections were held maintainable and were taken up for decision on merits notwithstanding withdrawal of the Revenue appeal.

Whether the imported vehicle is liable for confiscation under Section 111(d) of the Customs Act, 1962 and whether the adjudicating authority was justified in ordering absolute confiscation of the vehicle.- HELD THAT:- The facts of the case indicate that the imported goods consist of a Toyota Land Cruiser Prado TZ-G Right-Hand Drive vehicle imported under Import General Manifest dated 02.10.2018 and declared as a used vehicle in the import documents. The consignment remained uncleared for a considerable period as no Bill of Entry was filed by the importer. Subsequently, the vehicle was examined and referred to the Automobile Association of Southern India (AASI) for valuation and certification.

The AASI report dated 11.03.2021 certified that the vehicle was brand new and unused, having an odometer reading of only 8 kilometres. Based on the said report, the department concluded that the vehicle had been mis-declared as used instead of new and that the conditions prescribed under Chapter 87 of the Import Policy read with the Motor Vehicles Act, 1988 and the Central Motor Vehicles Rules, 1989 had not been complied with. On this basis, the adjudicating authority ordered absolute confiscation of the vehicle under Section 111(d) of the Customs Act, 1962.

The Tribunal accepted that the vehicle had been declared as used but was found to be brand new, and that the prescribed conditions under the import policy and allied motor vehicle law had not been complied with; on that basis, confiscation under Section 111(d) was sustainable. However, it held that the vehicle was not absolutely prohibited goods but goods imported in breach of regulatory conditions. Applying the principle stated in Union of India vs Sampat Raj Dugar [1992 (1) TMI 103 - SUPREME COURT], Commissioner of Customs vs Atul Automations Pvt. Ltd. [2019 (1) TMI 1324 - SUPREME COURT], Union of India vs Raj Grow Impex LLP [2021 (6) TMI 778 - SUPREME COURT], PNP Polytex Pvt. Ltd. vs Commissioner of Customs [2013 (10) TMI 809 - CESTAT MUMBAI], Kemper System (India) Pvt. Ltd. vs Commissioner of Customs [2014 (5) TMI 407 - CESTAT MUMBAI] and Consolidated Manufacturing & Marketing Co. vs Commissioner of Customs [2008 (7) TMI 366 - CESTAT, NEW DELHI], the Tribunal held that such breach may justify confiscation but does not ordinarily warrant denial of redemption in the absence of exceptional reasons. The order of absolute confiscation was therefore found excessive and disproportionate, and was modified by granting redemption on payment of redemption fine together with applicable duty and interest, while leaving the reduced penalty undisturbed. [Paras 9, 10]

Confiscation under Section 111(d) was upheld, but the order of absolute confiscation was set aside and substituted with release on payment of redemption fine, applicable customs duties and interest.

Final Conclusion: The Tribunal held that the respondent's cross-objections were maintainable despite withdrawal of the departmental appeal. While sustaining confiscation of the imported vehicle under Section 111(d), it set aside absolute confiscation and directed release on payment of redemption fine, along with applicable duty and interest, without disturbing the reduced penalty.

Validity of Late fee on the supplementary Bills of Entry - sufficient cause - bona fide conduct - Judicious exercise of discretion under Section 46(3) - non-mechanical imposition of late fee.

Waiver of late fee for delayed Bill of Entry - HELD THAT: - The Tribunal held that the second proviso to Section 46(3) confers discretion on the proper officer in the matter of late charges and does not mandate routine levy in every case of delayed presentation. On the facts found, the appellant had already filed the original Bills of Entry within the stipulated time and the excess cargo detected later formed part of the same consignments. Since the delay in filing the supplementary Bills of Entry was not due to any act or fault of the appellant, the case was held to be fit for waiver. The Board circular and the departmental SOP were also noticed as indicating that such charges, fines or penalties are to be imposed judiciously and not mechanically. The Tribunal found the principle in Blueleaf Trading Company [2019 (5) TMI 672 - CESTAT CHENNAI] squarely applicable. [Paras 8, 9, 10, 11]

The late fee imposed on the appellant was waived and the impugned orders were set aside to that extent.

Final Conclusion: The Tribunal held that late fee could not be mechanically levied on the supplementary Bills of Entry in the facts of the case, as the delay was not attributable to the appellant and the statute permitted waiver in deserving cases. The impugned orders were set aside qua imposition of late fee and the appeals were allowed with consequential relief.

Seeking request to amend the shipping bills by converting the scheme code from Drawback to Drawback - RoSCTL under Section 149 - Conversion of export promotion scheme - time-limit-based restriction - Whether, the request made by the exporter for amendment in the Shipping Bills for conversion of export promotion scheme i.e., from the ‘Drawback’ scheme having Scheme code No. “19” to other scheme of ‘Drawback & RoSCTL’ having Scheme code No. “60”, is permissible under the provisions of Section 149 of the Customs Act, 1962.

Amendment of shipping bills - Conversion of export promotion scheme - RoSCTL benefits - HELD THAT:- The Tribunal held that for the shipping bills in question, the restrictions and time limits introduced later through the 2022 Regulations were inapplicable, since the let export orders had been granted prior to those Regulations coming into force. It found that the rejection based on a supposed shift from a less rigorous to a more rigorous examination scheme was unsupported, as the record itself showed examination instructions had been issued by Customs and no material was produced to establish any different examination norm for the claimed conversion during the relevant period. The Commissioner had also recorded that the exported goods were covered under Chapter 63 and eligible for RoSCTL, that there was no adverse comment in the examination reports, and that nothing adverse existed against the shipping bills. In that background, the mere incorrect mention of the scheme code in the shipping bills was treated as an inadvertent procedural error, especially in view of the transition from RoSL to RoSCTL and the scheme-code changes in the electronic system. The Tribunal further held that the apprehension regarding possible availment of MEIS benefit was contrary to the governing circulars and the DGFT procedure, which itself contained checks for transmission of data and adjustment of benefits. Relying on Man Industries (India) Limited Vs. Commissioner of Customs, (EP) [2006 (3) TMI 513 - CESTAT, MUMBAI] and following Lovy International Vs. Commissioner of Customs (Export) ICD, Tughlakabad [2024 (2) TMI 1267 - CESTAT NEW DELHI] it held that the statutory power to amend documents under Section 149 cannot be curtailed by circulars and that a substantive export incentive otherwise admissible cannot be denied for such procedural lapse. [Paras 6, 8, 9, 10]

The impugned order rejecting conversion of the shipping bills was set aside and the appeal was allowed.

Final Conclusion: The Tribunal held that the exporter was entitled to seek amendment of the shipping bills for conversion from drawback code "19" to drawback and RoSCTL code "60", and that the rejection on the grounds stated in the impugned order was legally unsustainable. The impugned order was accordingly set aside and the appeal was allowed.

Validity of the penalty under Section 112 of the Customs Act after the underlying import-related matter had been settled under the settlement mechanism - Conclusive effect of settlement order - Maintainability below monetary threshold on principle of law.

Maintainability below monetary threshold - Principle of law exception - HELD THAT: - The Tribunal held that, although the penalty confirmed against the appellant was Rs. 1,00,000/-, the appellant was entitled to urge a question founded on the legal effect of the settlement order. Since Section 127J gives conclusiveness to matters settled and bars reopening of matters covered by such order, the appeal involved a principle of law and was therefore admitted for hearing. [Paras 4]

The objection to entertainability on the ground of monetary threshold was rejected and the appeal was admitted.

Conclusive effect of settlement order - Penalty on co-noticee - Nullity of penalty after settlement - HELD THAT: - The Tribunal accepted that the penalty under Section 112 had been imposed on the footing that the goods were liable to confiscation under Section 111. Once the show-cause notice invoking Section 111 in respect of the imported goods stood settled, Section 127J attached conclusiveness to that settlement and precluded reopening of the covered matter. As further confiscation could not continue after such settlement, the consequential penalty under Section 112 against the appellant also became unsustainable and was treated as a nullity. [Paras 5]

The penalty was held unsustainable and the appellate order affirming it was set aside.

Final Conclusion: The Tribunal entertained the appeal despite the low penalty amount, holding that it raised a legal question on the effect of settlement. It further held that, once the matter under the show-cause notice stood settled, the penalty on the co-noticee under Section 112 could not survive, and accordingly allowed the appeal with consequential relief.

Transaction value of imported goods - Enhancement of the value of the imported goods solely on the basis of NIDB data, without first rejecting the declared transaction value - Reason to doubt under Rule 12 of the Customs Valuation Rules, 2007 - Use of NIDB data for customs valuation - Sequential application of valuation rules.

Transaction value of imported goods - HELD THAT:- As per Section 14(1) of the Customs Act, 1962, the value of imported goods shall be the ‘transaction value’, in the normal course even if the exporter and importer are related parties. There is no allegation to this effect in the present proceedings. In case this value is not found to be correct, the procedure specified under Customs Valuation (Determination of value of Import goods, 2007) (CVR, 2007 in short) Rules, is required to be followed, sequentially. Therefore, in order to invoke the other provisions of these Rules to determine the value, first of all, the Revenue is required to come out with proper plausible explanation as to why the transaction value is to be discarded. In the present proceedings, there is nothing to indicate that the Department has undertaken any investigation to show that the appellant was under- valuing the goods for which any extra amount was being sent by any other means.

The Tribunal held that under Section 14 and the 2007 Valuation Rules, the declared transaction value must be accepted in the first instance, and departure from it is permissible only after the proper officer records a reasonable doubt regarding its truth or accuracy and follows the procedure contemplated by Rule 12. Only thereafter can recourse be taken to the subsequent rules for re-determination of value in a sequential manner.

In the present case, there was nothing to show any investigation or material establishing undervaluation, nor any valid basis for discarding the invoice value before directly relying on NIDB data. Mere comparison with NIDB data could not, by itself, justify rejection of the declared value. Since the Department had not followed the statutory procedure, the valuation enhancement could not be sustained; consequently, the remand ordered by the Commissioner (Appeals) was also set aside and the appeal was allowed. [Paras 5, 6, 8, 10, 11]

The enhancement of assessable value and duty based only on NIDB data was held invalid, and the appeal was allowed by setting aside the impugned order.

Final Conclusion: The Tribunal held that the Department could not enhance the value of the imported goods merely on the basis of NIDB data without first lawfully rejecting the declared transaction value under the prescribed procedure. The impugned order was set aside and the appeal was allowed with consequential relief in accordance with law.

Eligibility for exemption from Special Additional Duty under Notification No. 45/2005-Customs - imported goods were stock transferred from a Free Trade Warehousing Zone to the importer's factory for blister packing before sale - Extended period of limitation - Suppression of facts - wilful misstatement.

Special Additional Duty exemption - Sale of such goods - Stock transfer - HELD THAT: - The Tribunal held that the notification makes sale of such goods on payment of Sales Tax/VAT the condition precedent for the exemption. Since the imported bulk tablets were moved from the FTWZ to the appellants' factory by way of stock transfer, without any element of sale, that condition was not satisfied. The subsequent blister packing and sale of the repacked medicaments could not meet the requirement in respect of the goods at the stage at which they were cleared from the FTWZ. The decisions cited on behalf of the appellants were found distinguishable because those cases did not involve stock transfer followed by manufacturing activity. [Paras 5]

On merits, the claim to exemption under Notification No. 45/2005-Customs was held to be untenable.

Normal period of limitation - Extended period of limitation - Willful mis-statement and suppression - HELD THAT: - The Tribunal held that issuance of notice within the normal period is the rule, while recourse to the extended period is an exception requiring proof of the statutory ingredients. The record showed that the appellants had disclosed, through prior correspondence with the jurisdictional customs authorities, the nature of their activity and their understanding that the blister-packed goods would be sold on payment of VAT. The Tribunal also noted the contemporaneous representations and correspondence involving FTWZ units, the Development Commissioner and the Ministry regarding ambiguity in availing the notification benefit. In that background, non-payment of duty could not be attributed to suppression, willful mis-statement or like conduct so as to attract the extended period. As the entire period covered by the notice was beyond the normal period, the proceedings were unsustainable on limitation. The Tribunal followed the coordinate bench view in Baccarose Perfumes & Beauty Products [14 (6) TMI 122 - CESTAT AHMEDABAD] which had also been upheld by the Gujarat High Court [2013 (10) TMI 1318 - GUJARAT HIGH COURT] [Paras 6, 7]

The demand and connected proceedings were set aside as time-barred, and the appeals were allowed solely on the ground of limitation.

Final Conclusion: The Tribunal held against the appellants on the merits of the exemption claim under Notification No. 45/2005-Customs, but nevertheless allowed the appeals because the show cause proceedings were beyond the normal period and the extended period under Section 28 was not invocable. The impugned order was therefore set aside solely on limitation, with consequential relief.

Classification of goods - import of High Speed PVC Four Pipe Extrusion Line with Accessories - classifiable as an extruder under tariff item 8477 20 00, or as an injection moulding machine or otherwise under a different tariff heading - Tariff classification of extruders - Composite machines - Functional unit principle.

Tariff classification of extruders - Composite machines - Functional unit principle - Principal function test - HELD THAT:- Applying Rule 1 read with Notes 3 and 4 to Section XVI, the Authority held that the imported system is machinery for working plastics and squarely falls within Heading 8477. On the technical material placed on record, the process was found to be continuous extrusion through a die, without any clamping unit or mould cavity, and producing continuous pipe profiles; these features excluded classification as an injection moulding machine. The various components such as the extruder, die-head, calibration and cooling tanks, haul-off unit, cutter and control systems were found to be interconnected, functionally interdependent and intended to achieve the single clearly defined function of manufacturing PVC/CPVC pipes. The extruder performed the dominant function, while the remaining units were only auxiliary to that process. Hence, the system was classifiable as a composite and functional unit according to its principal function, and the objection that downstream equipment might require separate classification was rejected on the facts of the case. [Paras 9]

The goods were ruled classifiable under tariff item 8477 20 00 as extruders.

Final Conclusion: The Authority held that the proposed PVC four pipe extrusion line with accessories is an integrated extrusion system for working plastics and is not an injection moulding machine. The complete assembly was accordingly ruled classifiable under Customs Tariff Heading 8477 20 00.

Violation of Principles of natural justice in withdrawal of CIRP - Maintainability of writ petition despite alternative appellate remedy - Withdrawal of CIRP through interim resolution professional - non compliance withmandatory procedural requirements as per the Insolvency and Bankruptcy Code, 2016 (IBC) as also the Rules and Regulations framed therein.

Withdrawal of CIRP through interim resolution professional - Alternative appellate remedy - HELD THAT: - The Court held that once the section 7 application had been admitted and the IRP appointed, the insolvency process became a proceeding in rem and the management and representation of the corporate debtor vested in the IRP. Under section 12-A read with Regulation 30-A, before constitution of the CoC, a withdrawal application could be made only by the applicant through the IRP; neither the original financial creditor nor the suspended director could independently pursue such withdrawal before the NCLT. In that statutory setting, the relevant stakeholders for consideration of the withdrawal application were the corporate debtor acting through the IRP and the objecting financial creditors. Since the intervention applications were served on the IRP, notice was given in accordance with the NCLT Rules, and the IRP as well as the objecting banks were heard, the requirement of hearing the parties concerned stood satisfied. The Court further held that the petitioners' reliance on the expression 'any person aggrieved' was misplaced, because the breadth of appellate locus did not enlarge the class of persons required to be heard by the NCLT at the stage of deciding a withdrawal application. The judgment in Glas Trust Company LLC vs. Byju Raveendran and others [2024 (10) TMI 1185 - SUPREME COURT (LB)] was read as requiring notice to other creditors whose interests would be affected by a settlement, not as conferring an independent right of hearing on the erstwhile management outside the statutory role of the IRP. Kamal K. Singh vs. Union of India [2019 (12) TMI 193 - BOMBAY HIGH COURT], Through the Ministry of Corporate Affairs and others was distinguished, as that case involved a gross procedural irregularity of a different kind. As no exceptional case of breach of natural justice was made out, the Court declined to entertain the writ petitions in the face of the alternative remedy of appeal under the IBC. [Paras 45, 46, 47, 48, 49]

The challenge on the ground of violation of natural justice failed, and the petitioners were relegated to the appellate remedy.

Final Conclusion: The writ petitions were dismissed on the ground that no breach of natural justice was established and the petitioners had an effective statutory appeal before the NCLAT. The interim order was vacated, and it was observed that any further attempt to seek withdrawal of CIRP, after constitution of the CoC, must be in accordance with the governing IBC framework.

Related party transaction - Preferential transaction - square-off and offsetting entries - violation of Section 43 of the Code - Look-back period - appointment of Transaction Auditor bad in law as it surpassed the look back period - "Related party" under Section 5(24) - transaction bypassed banking channels, lacked corporate authorisation - absence of physical movement of funds - Ordinary course of business - proof beyond a reasonable doubt - director and key managerial personnel of the corporate debtor.

Related party transaction - Look-back period - HELD THAT:- The Appellate Tribunal found that the first appellant was the director and key managerial person of the corporate debtor, exercised control over Wholesale Hub LLP, and was also the sole proprietor of the concern in whose favour the adjustment was made. On that basis, Wholesale Hub LLP and the appellant's proprietorship were treated as related parties. On the material in the ledger accounts, books of account and the forensic audit, the Tribunal found that the impugned offsetting entry was effected on 30.06.2019. Since the insolvency commencement date was 01.02.2021, the transaction fell within two years preceding that date and was therefore within the relevant period for related party preferences. The plea that the transaction was outside the permissible look-back period was accordingly rejected. [Paras 50, 55, 56, 57]

The objection founded on limitation and the look-back period failed, and the transaction was treated as one with related parties within Section 43.

Preferential transaction - Transfer of property through accounting entries - Beneficial position in liquidation - HELD THAT: - The Appellate Tribunal held that the receivable due to the corporate debtor from Wholesale Hub LLP was a valuable property interest. Its diversion and adjustment through book entries in favour of the appellant's proprietorship extinguished the corporate debtor's enforceable right to recover that amount. The Tribunal expressly held that a transfer under Section 43 is not confined to physical movement of funds; extinguishment, relinquishment or reduction of a receivable through accounting entries also constitutes transfer of property or an interest therein. It further found that the adjustment was in respect of antecedent liability and had the effect of satisfying the appellant's dues, reducing the corporate debtor's asset pool, and placing the appellant in a more beneficial position than other creditors in the event of distribution. On that reasoning, both limbs of Section 43(2) stood satisfied. [Paras 59, 60, 61, 62, 66]

The square-off entry was rightly treated as a preferential transaction liable to be avoided.

Ordinary course of business - Selective adjustment of receivables - HELD THAT: - The Appellate Tribunal rejected the appellants' reliance on ordinary course of business. It found that the transaction was between related parties under common control, bypassed the corporate debtor's banking channels, lacked corporate authorisation, and resulted in extinguishment of recoverable receivables. The record also showed that, while several creditors remained unpaid, the appellant's dues alone stood settled by the impugned set-off. Such selective adjustment, in the presence of outstanding creditor claims, was held not to be routine business dealing but a transaction conferring an undue advantage on the appellant. [Paras 63, 64, 65]

The exclusion for transactions in the ordinary course of business was held inapplicable.

Final Conclusion: The Appellate Tribunal upheld the finding that the impugned square-off of receivables in favour of the appellant was a related party preferential transaction within the statutory look-back period and not one in the ordinary course of business. Finding no infirmity in the impugned order on that issue, the appeal was dismissed.

Maintainability of the Company Appeal -Condonation of delay - Limitation for appeal under section 61 of the Insolvency and Bankruptcy Code - statutory period of limitation of 30 days for filing of Appeal against orders of Ld. Adjudicating Authority - barred by limitation - Certified copy requirement - prescribed limitation period - Scope of section 4 of the Limitation Act.

Limitation - Prescribed period - Condonable period - Certified copy -HELD THAT:- The Hon’ble Apex Court in Tata Steel V. Raj Kumar Banerjee [2025 (5) TMI 661 - SUPREME COURT] has explained as to how would the term “prescribed period” of limitation, as defined under Section 2(j) of the Limitation Act, 1963, is to be considered in the context of provisions contained under Section 4 of the Limitation Act, 1963, which provides for the extension of the limitation period till re-opening of the Court, if the prescribed period of limitation expires on a day when the Court is closed. In Para 10.1, it has been held that the prescribed period under Section 4 of the Limitation Act, will have to be read with Section 2(j) which defines the “period of limitation”, and the “prescribed period”, and that the benefit of limitation under Section 4 of Limitation Act, 1963, will only be available to the period of limitation as contemplated under the statute, and not to the period which may be granted at the discretion of the Court.

Hon’ble Apex Court has categorically laid down that the “prescribed period” and “condonable period” are 30 days and 15 days respectively under Section 61(2) of I & B Code, 2016, and the Tribunals, must operate within the bounds of the Code, in the light of the Judgment of Mobilox Innovations Private Limited V. Kirusa Software Private Limited [2017 (9) TMI 1270 - SUPREME COURT]

The Appellate Tribunal held that under section 61(2) of the Code, the prescribed period for filing an appeal is 30 days and the further period of 15 days is only a condonable period available in the Tribunal's discretion, and not part of the period of limitation. Consequently, section 4 of the Limitation Act can extend time only where the prescribed 30-day period expires during court closure, and not where only the condonable period overlaps with vacation. On the dates recorded in the order, the prescribed period had expired before commencement of vacation and the appeal was e-filed on the 46th day. The Tribunal further noted that no date of application for a certified copy had been disclosed and, in fact, no certified copy had been applied for, so no exclusion of time could be claimed on that basis. Hence, the appeal was beyond the outer limit of 30 days plus 15 days and was not maintainable. [Paras 15, 16, 17]

The delay could not be condoned beyond the statutory outer limit, and the appeal was dismissed as time-barred.

Final Conclusion: The Appellate Tribunal held that the appeal had been filed beyond the maximum period permissible under section 61(2) of the Code. As the prescribed 30-day limitation had expired before the vacation began, section 4 of the Limitation Act afforded no benefit, and the appeal along with pending applications was dismissed.

Maintainability of application filed under section 95 -Prior invocation of personal guarantee - Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) - Pleading and reliance on invocation notice.

Prior invocation of personal guarantee - Demand notice in Form B - Maintainability of Section 95 application -HELD THAT:- The Appellate Tribunal held that the Adjudicating Authority proceeded on an incorrect legal basis in treating the Rule 7 demand notice as the very act of invocation. Following its earlier decisions in State Bank of India vs. Deepak Kumar Singhania [2025 (4) TMI 455 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] and Mukul Somany vs. DBS Bank Ltd. & Anr. [2026 (2) TMI 537 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] it held that the legislative scheme requires the guarantor's liability to have arisen before issuance of the demand notice in Form B. Under the deed of guarantee, the personal guarantor became liable only upon demand, and therefore prior invocation was mandatory. Since the application rested only on the Form B notice and not on any prior invocation notice, the foundational requirement for maintaining proceedings under Section 95 was absent. [Paras 11, 13, 17]

The admission of the Section 95 application was unsustainable because the personal guarantee had not been shown to have been invoked before issuance of the Form B demand notice.

Pleading and reliance on invocation notice - Unpleaded document - Abandonment of reliance -HELD THAT:- The Appellate Tribunal rejected the creditor's attempt to place reliance on the alleged notice dated 11.06.2019 for two reasons. First, the Section 95 application itself did not set up any case of prior invocation apart from the Form B notice, and the list of supporting documents also referred only to that notice. Secondly, when the creditor and the Resolution Professional sought to place the alleged recall notice on record before the Adjudicating Authority, both expressly stated that they would not rely on it. Having abandoned reliance on that document before the Adjudicating Authority, they could not be permitted to revive it in appeal. The Tribunal further held that the subsequent declaration of law in State Bank of India vs. Deepak Kumar Singhania did not assist the creditor, since all material facts and documents necessary for a Section 95 application had to be pleaded from the outset. [Paras 14, 15, 17]

The application to rely on the alleged earlier invocation notice was rejected, and the Section 95 proceedings could not be sustained on the basis of that document.

Final Conclusion: The Appellate Tribunal allowed the appeal and set aside the order admitting the Section 95 application. It held that, in the absence of prior invocation of the personal guarantee and in the absence of any pleaded and sustainable reliance on an earlier invocation notice, the company petition was liable to be dismissed, while leaving it open to the financial creditor to take such other measures as are permissible in law.

Territorial jurisdiction of the High Court - doctrine of forum conveniens - Cause of action - Essential and Integral Facts - substantial part of the underlying cause of action for the petition has arisen outside the jurisdiction of this Court.

Territorial jurisdiction - Forum conveniens - Part of cause of action - The petition was not entertained by the Delhi High Court merely because the Head Office of the Enforcement Directorate was situated in Delhi and had approved the impugned communication, when the material and foundational facts of the controversy arose in Punjab. - HELD THAT:- The Supreme Court in the case of Kusum Ingots & Alloys Ltd. v. Union of India and Anr. [2004 (4) TMI 342 - SUPREME COURT (LB)] has held that even if a small part of cause of action arises within the territorial jurisdiction of the High Court, the same by itself may not be considered to be a determinative factor compelling the High Court to decide the matter on merit. In appropriate cases, the Court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum conveniens.

The Court held that the location of the Head Office of the authority in Delhi, or the fact that approval for the impugned communication emanated from Delhi, was not by itself determinative of territorial jurisdiction. The summons was issued in connection with an investigation arising from an ECIR registered at Jalandhar and an FIR registered at Bathinda, and the petitioner had been summoned to appear before the authority situated in Jalandhar. These facts showed that the genesis and substantial part of the cause of action lay outside Delhi. Even assuming that a part of the cause of action arose within Delhi, the Court held that such fact did not compel it to entertain the writ petition on merits, and it could decline to exercise jurisdiction on the principle of forum conveniens where the dominant and integral facts arose elsewhere. [Paras 3, 4, 5, 6, 7]

The writ petition was dismissed with liberty to the petitioner to approach the jurisdictional High Court, and all rights and contentions were left open.

Final Conclusion: The Court declined to entertain the writ petition on the ground that the dominant and material facts giving rise to the dispute were located outside Delhi. The petition was accordingly dismissed, with liberty to approach the jurisdictional High Court.

Money Laundering - Validity of the provisional attachment even though the appellants were not named as accused in the FIR or charge-sheet - Burden to prove - lawful source for the remittances and property purchases - non-submission of any documentary evidence about the source of income in respect of more than Rs. 10.00 Crore sent through banking channels from Dubai and its subsequent investment in the properties gives to reasonable belief that the money used for purchase of the property - Proceeds of crime - Equivalent value attachment - relevance of SMS, data extracted by the CFSL from the mobile handsets.

Attachment of property held by non-accused persons - Proceeds of crime - HELD THAT: - The Tribunal held that provisional attachment under the 2002 Act is not confined to persons named as accused in the FIR or chargesheet. The determinative test is whether the property is linked to proceeds of crime and whether the person concerned is involved in holding or receiving such proceeds. Since the case of the respondent was that the appellants were recipients of the crime money, the objection founded solely on their non-inclusion as accused in the predicate offence was rejected. [Paras 20, 22]

The challenge to attachment on the ground that the appellants were not accused in the scheduled offence was rejected.

Burden to prove lawful source of funds - Equivalent value attachment - Proceeds of crime - HELD THAT:- It was necessary to prove the source of sum of Rs. 10 crores for his transmission to India which appellant utterly failed and therefore the argument that the transfer of the amount was out of the income cannot be accepted.

The Tribunal found that the appellants rested their case on assertions that the remitted funds were business earnings of Lawrence Paul from Dubai, but produced no documentary material to substantiate such earnings or the source of the large remittances and cash components used for acquisition of the properties. The Tribunal further held that the contemporaneous SMS reference and purchase of property on the same day could not be treated as a mere coincidence. On that basis, and in the absence of proof of legitimate source, the explanation of lawful remittance was not accepted. The contention that some properties had been acquired prior to the date of the murder was also rejected, the Tribunal holding that the money trail was connected with the criminal activity and, in any event, property of equivalent value could be attached within the meaning of proceeds of crime. [Paras 25, 26, 27, 29, 30]

The Tribunal upheld the attachment, holding that the appellants had failed to prove lawful source of funds and that the plea based on prior acquisition of some properties did not defeat attachment.

Final Conclusion: The Tribunal found no infirmity in the confirmation of the provisional attachment. Holding that the appellants could be proceeded against as recipients of proceeds of crime and that they had failed to prove any lawful source for the funds used for acquisition of the properties, the appeals were dismissed.

Classification of service - Transportation of tractors by road - Manpower recruitment or supply agency service - Penalty for failure to obtain registration and file returns.

Classification of service - Transportation contract - Manpower recruitment or supply agency service - HELD THAT:- The Tribunal held that the controversy was already covered by its earlier decision in the appellants' own case, M/s Syal & Associates and M/s Kamaldeep Enterprises vs. CCE & ST, Chandigarh - [2023 (4) TMI 715 - CESTAT CHANDIGARH], and followed that ratio. On that basis, it accepted that the arrangement was a transportation contract in which consideration was linked to the job performed and not to supply of personnel, and that the appellants undertook responsibility for delivery and allied obligations under the contract. Since the activity was not manpower recruitment or supply agency service, the service tax demand under that category could not be sustained; with the demand set aside, interest did not survive. [Paras 6]

The demand of service tax under manpower recruitment or supply agency service was set aside, and the consequential liability to interest did not survive.

Failure to obtain registration - Failure to file returns - Statutory penalty - HELD THAT:- The Tribunal separately found that, even on the footing that the appellants were rendering transportation service, they were required to get themselves registered and file returns, which they had not done. Treating this omission as violation of Section 70 of the Finance Act, 1994, it held that penalty under Section 77 was attracted notwithstanding the setting aside of the tax demand under the wrong classification. [Paras 7]

Penalty under Section 77 was imposed on each appellant for failure to obtain registration and file returns.

Final Conclusion: The Tribunal held that the appellants' activity of transporting tractors by road was not taxable as manpower recruitment or supply agency service and accordingly set aside the service tax demand with consequential interest. However, for failure to obtain registration and file returns, penalty under Section 77 was sustained against each appellant, and the appeals were therefore partly allowed.

Demand of service tax on advances received for construction services - barred by limitation - Denial of CENVAT credit, solely because it was not reflected in the ST-3 returns and was taken beyond the procedural time limit - Extended period of limitation - Suppression of Facts - imposition of penalty under Section 78 - Interest on delayed tax payment.

Extended period of limitation - Suppression of facts - Demand on advances - HELD THAT: - The Tribunal found that the appellant was registered, had been filing ST-3 returns, and the demand itself arose from scrutiny of the appellant's balance sheets, profit and loss accounts and other statutory records produced during audit. Since the entire basis of the demand came from disclosed records and the Revenue failed to bring any material showing fraud, collusion, wilful misstatement or suppression with intent to evade tax, the essential conditions for invoking the extended period were absent. On that reasoning, the demand on advances, along with interest relatable thereto, was held to be time-barred. [Paras 12]

The service tax demand of Rs.14,22,561/-, along with interest thereon, was set aside as barred by limitation.

CENVAT credit as substantive benefit - Procedural lapse - Non-reflection in ST-3 returns - HELD THAT: - The Tribunal held that the appellant had paid service tax on subcontracted construction services and that such payment, and the underlying transaction, were not in dispute. In those circumstances, the corresponding CENVAT credit was a substantive benefit otherwise available to the appellant. Its denial solely because the credit was not shown in the returns, or was sought to be availed beyond the prescribed period, was treated as an unjustified rejection based on procedural lapse rather than ineligibility on merits. Though the Tribunal accepted that the available credit would have been sufficient to meet the disputed service tax liability, it declined appropriation only because the principal demand had already been set aside on limitation. [Paras 13]

The denial of the claimed CENVAT credit on procedural grounds was held unsustainable, though no adjustment was directed since the underlying demand itself stood set aside.

Penalty under Section 78 - Mens rea - Wilful suppression - HELD THAT: - The Tribunal found that the appellant was registered, maintained proper records, and the case arose out of scrutiny of those very records. It also noted that the Revenue had not produced cogent evidence of any mala fide intent or deliberate suppression. Since the factual foundation necessary for invoking the extended period was itself absent on the same set of facts, the penal ingredients required under Section 78 were also not established. The penalty was therefore held unsustainable in law and on facts. [Paras 15]

The penalty imposed under Section 78 was set aside in toto.

Interest on delayed tax payment - Delayed discharge of service tax - HELD THAT: - The Tribunal observed that there had been delay in payment of the service tax amounts already discharged by the appellant in respect of the two heads referred to in the order. Since interest follows delayed payment of tax, and the appellant had also not disputed such liability, there was no ground to interfere with the interest demand on those delayed payments. [Paras 16]

The interest demand on the belatedly paid service tax amounts of Rs.64,909/- and Rs.48,775/- was upheld.

Final Conclusion: The Tribunal set aside the disputed demand on advances, with corresponding interest, as time-barred, and also deleted the penalty under Section 78. It further held that otherwise eligible CENVAT credit could not be denied on mere procedural grounds, while upholding the interest liability on the admittedly delayed tax payments and leaving the uncontested balance demand undisturbed.

Service tax demand based solely on Form 26AS and income-tax data- without any independent verification or corroborative evidence of taxable services - Negative List regime - Extended Period of Limitation.

Service tax demand based solely on Form 26AS and income-tax data - Independent verification of taxable services - HELD THAT: - The Tribunal found that the show cause notice was founded only on scrutiny of third-party income-tax data and the appellant's financial statements. No independent enquiry was conducted by the Department to ascertain what service had actually been rendered, whether such activity was taxable, or whether any corroborative evidence existed to support the proposed levy. The quantification itself was based on figures taken from those records on a gross basis. On that basis of decision of this Bench in the case of M/s. Nanu Shome & Co. [2026 (1) TMI 1015 - CESTAT KOLKATA], the Tribunal held that mere reliance on CBDT data or Form 26AS, without establishing the rendition and taxability of the service through independent verification, cannot sustain a demand under the Finance Act, 1994. [Paras 7]

The demand was set aside on the ground that it had been raised solely on the basis of income-tax data and financial statements without independent verification.

Negative List regime - Invocation of correct charging provisions - HELD THAT: - The Tribunal held that after 30.06.2012, service tax liability had to be examined under the statutory scheme applicable to the Negative List regime, and the demand for the relevant period had to be founded on the provisions governing levy in that regime. Since the show cause notice and the impugned order proceeded by classifying the activity under the erstwhile definition of business auxiliary service and did not invoke the provisions applicable after 30.06.2012, the notice suffered from a foundational legal defect. The demand for the disputed period was therefore unsustainable on this independent ground as well. [Paras 8]

The demand was also set aside because the notice invoked inapplicable erstwhile provisions instead of the statutory provisions governing the post-30.06.2012 period.

Final Conclusion: The Tribunal held that the impugned service tax demand for the period in dispute was legally unsustainable both because it was founded solely on income-tax/Form 26AS data without independent verification and because it invoked inapplicable pre-30.06.2012 provisions. Consequently, the demand, interest and penalties were set aside and the appeal was allowed.

Business support service - Consideration and reimbursement - Deduction from the bills of sub-contractors as “administration charges” - Extended period of limitation - Suppression of Facts - Burden of Proof - Preponderance of Probability - Double Taxation - Corporate Social Responsibility - Shifting Onus.

Business support service - Consideration and reimbursement - CSR-related recoveries - The deduction of 0.5% from sub-contractors' bills was taxable as consideration for administrative and operational support rendered by the appellant, and not a mere reimbursement of labour welfare or CSR expenses. - HELD THAT: - The Tribunal held that service tax is attracted where an activity is carried out for consideration and that, after 01.07.2012, any activity for consideration is taxable unless excluded or exempt, which was not the appellant's case. The appellant produced no material to establish that the recoveries represented CSR expenditure actually incurred on behalf of the contractors' workmen or that they were pure reimbursements. The recovery was made at a uniform percentage of bill value, which was variable and value-linked, whereas the claimed welfare facilities were stated to involve fixed costs. The change in nomenclature from "administrative charges" to "rebate/discount" did not alter the substance of the transaction, particularly when the contractors' invoices did not reflect any discount or rebate. In these circumstances, the amount recovered bore the character of quid pro quo for administrative and operational assistance and fell within taxable business support service for the pre-negative-list period, and as consideration for a taxable service thereafter. The ruling in UOI Vs Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT] was held inapplicable because the factual foundation for reimbursement was not established. [Paras 7, 8, 10, 11, 12]

The demand on the amounts recovered from sub-contractors was sustained on the footing that they were consideration for taxable services and not reimbursements.

Double taxation - Distinct taxable services - HELD THAT: - The Tribunal held that double taxation in the strict sense arises only when the same subject matter is taxed twice for the same purpose and period. Here, the tax paid by the sub-contractors was on the construction services provided by them to the appellant, whereas the present levy concerned separate administrative and operational support said to have been provided by the appellant to those contractors. Since service tax is a value-added levy imposed each time a distinct service is rendered, the existence of separate service activities ruled out the appellant's objection. [Paras 13]

The contention of double taxation failed.

Extended period of limitation - Suppression of facts - HELD THAT: - The Tribunal noted that the appellant had not produced the material within its possession to substantiate its defence even after the show cause proceedings. It accepted the finding that the recoveries were not declared in the statutory returns and that the nomenclature was changed after audit pointed out taxability. On these facts, the Tribunal found sufficient basis to uphold the conclusion that the appellant had suppressed material facts with intent to evade tax, and therefore the extended period had been rightly invoked. Finding no illegality, arbitrariness or perversity in the adjudicating authority's exercise of discretion, the appellate order upholding the original order, except to the extent of relief already granted on penalty under Section 77, was held not to call for interference. [Paras 14]

The plea of limitation was rejected and the impugned order upholding the demand and consequential liabilities, save the relief already granted on penalty under Section 77, was affirmed.

Final Conclusion: The Tribunal upheld the service tax demand on the deductions made from sub-contractors' bills, holding that the amounts represented consideration for taxable support services and not reimbursements. The pleas of double taxation and limitation were rejected, and the appeal was dismissed with no interference in the impugned order beyond the relief already granted on penalty under Section 77.

Taxability of freight margin - short payment of service tax - Exchange fluctuation gain - non-payment of service tax on the excess amount collected as freight and other charges - SEZ service tax exemption - Reimbursable expenses in taxable value - Extended period of limitation.

Taxability of freight margin - Exchange fluctuation gain - HELD THAT:- The Tribunal held that these issues stood covered by its earlier decisions in the appellant's own case [2024 (9) TMI 1492 - CESTAT BANGALORE] On that basis, the freight margin and the gain arising from forex conversion could not be sustained as taxable consideration under the impugned demands. [Paras 12]

The demands in Appeal No. ST/20233/2017 and Appeal No. ST/20234/2017 were set aside.

SEZ service tax exemption - HELD THAT: - The Tribunal found that, in reply to the show cause notice, the appellant had produced the order and the attached list of authorised operations for Suzlon, and that the CHA activity was covered therein. Since services to the SEZ unit for authorised operations were exempt, the demand on that count could not survive. [Paras 14]

The service tax demand relating to services provided to the SEZ unit was deleted.

Extended period of limitation - Reimbursable expenses in taxable value - HELD THAT: - The Tribunal found that the appellant had been regularly paying service tax on transportation charges and filing ST-3 returns, and therefore suppression of facts was absent. On the same reasoning, the differential demands under CHA and C&F services could not be sustained beyond the normal period. The Tribunal further held that the differential tax had been demanded on amounts treated as reimbursable expenses by invoking Rule 5 of the Service Tax (Determination of Value) Rules, 2006; following M/s. Intercontinental Consultants and Technocrats Pvt. Ltd [2018 (3) TMI 357 - SUPREME COURT] demands founded on that rule could not be sustained. [Paras 15]

The demands based on Rule 5 and the extended period, in relation to GTA, CHA and C&F services, were held unsustainable.

Demand for Business Auxiliary Service - HELD THAT: - The Tribunal found no finding that the appellant was acting as an agent or promoting anyone's business so as to attract Business Auxiliary Service. It held that the activities were carried out on a principal-to-principal basis and, applying Karam Freight Movers, the demand could not be confirmed. [Paras 16]

The BAS demand for the period 2010-11 was set aside.

Remand for verification of tax liability - HELD THAT: - The Tribunal noted that, although the Commissioner had proceeded on the basis that the allegation was not contested, the appellant had argued that the demand was founded on trial balance entries and that, during the disputed period, tax had been discharged on the relevant basis, leaving no differential liability. As this contention had not been dealt with in the impugned order, the matter required verification. [Paras 17]

The demand on this count was remanded to the Commissioner for necessary verification without final adjudication on merits.

Final Conclusion: The Tribunal allowed the two appeals concerning freight margin and exchange fluctuation gain, and partly allowed the remaining appeal. The demands relating to SEZ services, reimbursable expenses, limitation, and BAS were set aside, while the issue concerning the alleged excess service tax collection reflected in the trial balance was remanded for verification.

Taxability of transportation carried out by Appellant’s own trucks - issuance of consignment notes - Goods Transport Agency service - Extended period of limitation - Pre-show Cause Consultation - Suppression of Facts - Third-party income-tax data - Consignment note as sine qua non for GTA - Bona fide belief that the service of ‘Transport of Goods by Road’ provided by them were exempted from levy of Service Tax as per Clause (p) of Section 66D of the Finance Act, 1994 i.e., Negative List as well as Service Tax on ‘Goods Transport Agency’ is payable under Reverse Charge Mechanism [RCM].

Extended period of limitation - Suppression with intent to evade - HELD THAT:- The Tribunal held that a show cause notice issued on 23.12.2020 could not validly demand tax for the period prior to October 2015, as that part of the period was beyond five years. For the remaining period from October 2015 to March 2016, the record disclosed only general allegations and no positive evidence of fraud, wilful misstatement or suppression of facts with intent to evade payment of service tax. In the absence of such material, invocation of the extended period was held impermissible. [Paras 22, 23, 32, 33]

The demand was held unsustainable on limitation, and the consequential interest and penalty also could not survive.

Third-party income-tax data - Admissible evidence - Chartered Accountant certificate - HELD THAT: - The Tribunal found that the show cause notice and the adjudication rested only on information obtained from the Income Tax Department and that no other records of the appellant were examined to determine taxable value. It further noted that the appellant had produced a detailed breakup of the receipts reflected in the income-tax return, along with Chartered Accountant certificates and an affidavit explaining that receipts relating to transportation by road through own vehicles were in the negative list and that, in cases of GTA, tax was payable by the recipient under reverse charge. The Commissioner (Appeals) had brushed aside this material under the guise of burden of proof. Following the principle accepted in Sharma Fabricators & Erectors Pvt. Ltd [2017 (7) TMI 168 - CESTAT ALLAHABAD] and the view in M/s. Sriram Insight Share Brokers Ltd. [2022 (6) TMI 307 - CESTAT KOLKATA] that a CA certificate cannot be rejected without reasons, the Tribunal held the demand to be substantively unsustainable. [Paras 25, 26, 27, 32]

The demand, having been raised on presumptive third-party data without proper evidentiary scrutiny and by unjustified rejection of supporting material, was held not sustainable on merits.

Consignment note as sine qua non for GTA - Negative list - Reverse charge on goods transport agency service - HELD THAT: - The Tribunal held that issuance of a consignment note is the statutory sine qua non for classification as a goods transport agency. Since it was an admitted finding that the appellant owned 31 trucks and did not issue consignment notes when transportation was undertaken through its own vehicles, such activity did not amount to GTA service and fell outside the taxable ambit, being covered by the negative list. In respect of cases where GRs were issued, the Tribunal examined sample GRs showing a clear endorsement that service tax was to be paid by the consignor or consignee, and noted that the Revenue had produced no evidence to show that the recipients were outside the specified categories or that reverse charge was inapplicable. [Paras 29, 30, 31, 32, 33]

Receipts from transportation through own vehicles without consignment notes were not taxable, and in the remaining cases the tax liability was held to fall on the service recipient under reverse charge.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal. It held that the demand was unsustainable both on limitation and on merits, with the result that the interest and penalty also failed.

Entitlement to refund under the retrospective exemption introduced by Notification No. 09/2016-ST and Section 102 of the Finance Act, 1994 - construction services provided to Military Engineering Services for government buildings - Refund of service tax under retrospective exemption - Unjust enrichment in service tax refund.

Construction services to Military Engineering Services -HELD THAT:- The issue of entitlement to refund by virtue of the provisions of Clause 12A under Notification No.9/2016 dated March 1, 2016 read with Section 102 in the Finance Act 1996 with retrospective effect from April 1, 2015 is no more res-integra and has been decided in series of decisions. Reference is invited to the decision of the Gujarat High Court in Ranjeet Singh Chaudhary versus Union of India [2018 (8) TMI 614 - GUJARAT HIGH COURT] where the Court noticed that the petitioner is squeezed between two Government Departments. The Service Tax Authority does not return the service tax to the petitioner apprehending that the petitioner will not return it to CPWD and will therefore be enriched unjustly. The CPWD recovered such amount from the petitioner but could not retrieve it from the Service Tax Department. In the process, the petitioner ended-up bearing the burden of service tax, which was not its liability.

The Tribunal held that it was undisputed that the appellant had rendered construction services to Military Engineering Services, a Government Department under the Ministry of Defence, and that the civil structures were not meant for commerce, industry, business or profession. Since such services stood covered by the exemption scheme as amended and read with Section 102, and earlier decisions had already taken the same view on identical statutory provisions, there was no reason to deny the benefit. The rejection of refund on the ground that the appellant had not proved provision of services to Government was therefore not sustainable. [Paras 10, 11, 14]

The appellant was held entitled in principle to refund of the service tax paid on the impugned services.

Unjust enrichment - Service recipient as proper claimant - Co-applicant in refund claim - HELD THAT: - Following the approach adopted in the decisions referred to, the Tribunal treated the case as one where the service recipient had borne the tax incidence and therefore the bar of unjust enrichment could not be applied in the ordinary manner against the appellant. At the same time, since Military Engineering Services was the entity that had reimbursed the tax and was the proper recipient of the refund, the matter required reconsideration by the Assistant Commissioner after giving an opportunity to implead Military Engineering Services as a co-applicant in the refund application. [Paras 10, 13, 14]

The impugned order was set aside, but the refund application was remanded to the Assistant Commissioner to be decided afresh after impleadment of Military Engineering Services as co-applicant.

Final Conclusion: The Tribunal held that the appellant's construction services to Military Engineering Services were covered by the retrospective exemption and that the refund could not be denied on the grounds adopted in the impugned order. The matter was nevertheless remanded for fresh decision on the refund claim after impleading Military Engineering Services as a co-applicant.

Eligibility of Cenvat credit on employee event celebration services and advertisement services as Input service credit - composite works contract - service taxability prior to 01.06.2007.

Input service credit - employee event - advertisement service - HELD THAT: - The Tribunal held that denial of credit on the event celebration service and advertisement service could not be sustained, as the issue stood covered by the binding judgment referred to before it. On that basis, the services in question were treated as eligible input services for the appellant. [Paras 5]

The demand for reversal of Cenvat credit on those input services was set aside.

Composite works contract - supply and installation - service taxability prior to 01.06.2007 - HELD THAT:- The appellant has provided material as well as installation service, which is a composite contract and be considered as works contract and not leviable to service tax up to 01.06.2007 in view of the judgment of the Hon’ble Supreme Court in the case of CCE vs. Larsen and Tourbo Limited CCE vs. Larsen and Tourbo Limited [2015 (8) TMI 749 - SUPREME COURT] and followed later in Total Environment Building Systems Pvt. Ltd.[2022 (8) TMI 168 - SUPREME COURT].

The service tax demand on the supply and installation contract was held unsustainable.

Final Conclusion: The Tribunal set aside the impugned order in full. It held that the disputed input service credit was admissible and that the composite supply-and-installation contract was not liable to service tax prior to 01.06.2007.

Service classification - manufacture of compressors and parts - Demand confirmed under ‘Technical Testing and Analysis service’ (TTA) - Failure to examine material documents - entitlement to be treated as export of service - definition of both the services viz., Consulting Engineer services as well as Technical Testing and Analysis service falling under Sec. 65(105)(g) and (105)(zzh) of Finance Act, 1994 - extended period of limitation - Whether the activities/services provided by the appellant would fall under ‘Consultant Engineer services’ (CES) or it would fall under ‘Technical Testing and Analysis service’ (TTA).

Failure to examine material documents - Service classification - Export of service - HELD THAT:- The Tribunal held that class0ification under Technical Testing and Analysis service required a proper determination that the activity related to testing or analysis of goods or material, while classification under Consulting Engineer service depended on the service being one of technical advice, consultancy or assistance. The adjudicating authority had rejected the assessee's stand on the basis of a limited scrutiny of a few invoices and purchase orders, without thoroughly examining the complete set of reports, contracts and supporting documents for the relevant period. The record also lacked clarity on the crucial factual aspect whether physical goods were actually received and tested in all cases, only in some cases, or whether the work was confined to simulated analysis based on drawings and data. The Tribunal further held that the services could not be conclusively placed under one head in a blanket manner, and that it was possible for some services to fall under consulting engineer service and others under technical testing and analysis service depending on the evidence. Since this classification would directly affect the taxability and the claim of export of service, including the plea that reports were delivered abroad and consideration was received in foreign exchange, the entire matter required fresh determination. The question of limitation was also kept open for reconsideration along with the merits. [Paras 16, 17, 18]

The impugned order was set aside and the matter was remanded to the original authority to re-determine classification, export eligibility, consequential demand and limitation after examining the necessary documents to be produced by the appellant.

Final Conclusion: The Tribunal did not finally decide the merits of classification, export eligibility or limitation. It found the adjudication to be factually incomplete, set aside the order, and remanded the matter for fresh determination on the basis of a fuller examination of the underlying documents and evidence.

Imposition of penalty - invoices without delivery of goods- Wrongful CENVAT credit - Proportionality of penalty.

Penalty for invoices without delivery of goods - Irregular availment of CENVAT credit - HELD THAT:- The Tribunal held that penalty under Rule 26 is attracted where it is established that invoices were issued without supply of the goods mentioned therein, and therefore rejected the appellant's preliminary objection to the very invocation of that provision. On the evidence, the Tribunal found that the appellant's godown measured only about 800 sq. ft., had no electricity connection, and could not support the claimed activity of cutting TMT bars. It also accepted the commercial improbability of converting prime TMT bars into lower-value scrap and relied on the vehicle verification conducted through the official transport portal to conclude that the appellant could not have actually undertaken the activity or supplied the raw material to the manufacturer. The fact that the manufacturer later opted for VCES and paid the amounts demanded was treated as supporting the Revenue's case of irregular availment of CENVAT credit. On that basis, the appellant was held liable to penalty for his role in the offence. [Paras 11, 12, 13, 14]

The appellant's liability to penalty under Rule 26 was upheld.

Proportionality of penalty - Limited role of noticee - HELD THAT:- While sustaining the penalty on merits, the Tribunal found that the material on record, though sufficient to establish the appellant's involvement, warranted moderation of the quantum. Taking into account the nature of the evidence and the limited role attributed to the appellant, it held that the penalty originally imposed was excessive and deserved reduction. [Paras 12, 14]

The penalty was reduced from Rs.10,00,000/- to Rs.1,00,000/-.

Final Conclusion: The Tribunal upheld the appellant's liability to penalty under Rule 26 on the finding that the invoices were not backed by actual supply of goods. However, considering the nature of the evidence and the appellant's limited role, the penalty was reduced to Rs.1,00,000/-.

Eligibility of CENVAT credit of service tax paid on GTA service used for outward transportation of goods up to the customer's premises - Place of removal - definition of input service under Rule 2(l) - FOR destination sales.

Place of removal - HELD THAT:- The definition of ‘input service’ u/r 2(l) of CENVAT Credit Rules, 2004 provides that this clause covers services used directly or indirectly in or in relation to manufacture or provision of output service and it includes certain services mentioned therein which are used in relation to activities connected with manufacture but it excludes few specified services from the ambit of input service. For a service to qualify, it must fall within either the means or inclusive part and must not be hit by the exclusion clause.

The Tribunal held that admissibility of credit on outward GTA service depends upon identification of the place of removal on the facts of each case. Following the Larger Bench decision in M/s Ramco Cements Ltd. [2023 (12) TMI 1332 - CESTAT CHENNAI-LB], it was held that where the sale is on FOR destination basis, the customer's premises can constitute the place of removal. The objection that no documentary evidence of FOR destination sale had been produced was rejected, since that was not the Revenue's case before the lower authorities and the purchase orders and invoices on record showed FOR door delivery terms. As the purchase orders further provided that payment would be made only on receipt of goods in proper condition at the buyer's premises, the sale stood completed only upon such delivery and acceptance. On these facts, the customer's premises was the place of removal, and outward transportation up to that point qualified as input service under Rule 2(l) of the CENVAT Credit Rules, 2004. [Paras 5, 6, 7, 8, 9]

The appellant was held entitled to CENVAT credit on the GTA service used for outward transportation up to the customers' premises, and the impugned order was set aside.

Final Conclusion: The Tribunal held that, on the terms of sale evidenced by the purchase orders and invoices, delivery was completed at the buyers' premises and those premises constituted the place of removal. CENVAT credit on outward GTA service up to that point was therefore admissible, and the appeal was allowed.

Demand of duty - clandestine removal of coke - barred by limitation - Extended period of limitation - Cenvat credit of CVD paid on imported coal - availment of the benefit of Notification No. 67/1995-CE.

Extended period of limitation - Knowledge of facts through ER-1 returns - Notification No. 67/95 exemption - HELD THAT:- The Tribunal held that the assessee had been regularly filing ER-1 returns and had disclosed therein its claim of exemption under Notification No. 67/1995-CE. Since the fact of availing that exemption was already within the knowledge of the Revenue, the extended period was not invokable. As the notice for the disputed period was founded on the extended period alone, the entire duty demand failed on limitation, and with it the penalty also could not survive. [Paras 13]

The duty demand on alleged clandestine removal was set aside as time-barred, and no penalty was imposable.

Prospective operation of amendment governing cenvatable invoices - Cenvat credit on importer-issued invoices - HELD THAT: - The Tribunal found that the Revenue's objection was based on Notification No. 8/2014 Central Ex. (NT), which required separate registration as an importer for issuing cenvatable invoices. That notification came into effect from 01.04.2014 and the entire disputed demand related to the period prior thereto. The amendment was therefore held to operate prospectively and not retrospectively, and on that basis the adjudicating authority was right in allowing the credit. [Paras 14, 15]

The Revenue's appeal was dismissed and the allowance of cenvat credit to the assessee was upheld.

Final Conclusion: The assessee's appeal was allowed on the ground that the duty demand founded on the extended period was barred by limitation. The Revenue's appeal was dismissed, the amendment requiring separate importer registration being held prospective and inapplicable to the period in dispute.

Arbitrability of contractual disputes - Excepted matters - wilful act of omission or negligence on the part of Manning Agent or his Personnel/Complement - Harmonious construction of contractual clauses - Agreements in restraint of legal proceedings - correctness of the judgment of the High Court at Calcutta (Circuit Bench at Port Blair) [2018 (7) TMI 2388 - CALCUTTA HIGH COURT] - Are the non-negotiable principles of Rule of Law alien to interpretation of contractual clauses, especially when the State and its instrumentalities are parties to the same?

Excepted matters - Arbitrability of disputed liability - Harmonious construction - Rule against a party being judge in its own cause - HELD THAT:- The Court held that clause 3.22 was couched in the widest terms and covered all disputes arising out of the agreement. On a true construction of clause 3.20, the administration could not, when liability itself was disputed, finally decide whether the appellant had committed wilful breach or negligence and simultaneously exclude challenge before both court and arbitral forum. Such an interpretation would offend the Rule of Law, since one party to the contract cannot adjudicate upon the alleged breach of the other, and would also create an impermissible vacuum in legal remedies. The clause was therefore construed narrowly: only in a case where liability was admitted could the administration's determination on quantification be treated as final; the present dispute, where liability was denied, remained arbitrable. On that basis, the arbitrator had jurisdiction, the High Court's view treating the matter as excluded from arbitration was erroneous, and there was no ground to interfere with the award on the footing of want of jurisdiction. [Paras 35, 37, 40, 41, 43]

The plea that the award dealt with an excepted matter was rejected, and the arbitral award was held to be within jurisdiction.

Final Conclusion: The Court allowed the appeals, set aside the High Court's judgment, and restored the arbitral award. It held that clause 3.20 did not exclude from arbitration a dispute where liability itself was contested.