TaxTMI Updates e-Newsletter
Apr 01,2026

Release of goods under section 129(1)(a) in the absence of an e-way bill and other prescribed documents - Suspension of registration and prohibition on taxable supply - Validity of tax invoice during suspension of registration - Requirement to generate e-way bill by supplier/recipient/owner

Supreme Court dismissed the SLP of the assessee against the decision of High Court, wherein it was held that: "In absence of an e-way bill and of any genuine prescribed document, the petitioner was not entitled to release of the goods under section 129(1)(a); impugned orders upholding detention are maintained."

Violation of the principles of natural justice - relied upon documents (RUD) seized during inspection were not supplied by the adjudicating officer before arriving at a decision - denial of proper opportunity of hearing - Statutory Pre-deposit - Right to Reply - Seeking to challenge the legality and validity of the order-in-original of assessment passed by the authority concerned. - HELD THAT:- The petition was directed to be heard along with Writ Petition in Saurabh Agarwal vs. Union of India and Ors, and the Registry was directed to place the order before the Hon'ble the Chief Justice of India.

Validity of imposition of a bank guarantee as an additional condition of bail, despite the appellant having already furnished a personal bond with sureties - Onerous bail conditions.

Onerous bail conditions - Bank guarantee as condition of bail - HELD THAT: - The Court held that, in view of the law laid down in Saravanan vs. State represented by the Inspector of Police [2020 (10) TMI 1249 - SUPREME COURT] the requirement of furnishing a bank guarantee as a condition for bail could not be sustained where the appellant had already furnished the personal bond and sureties directed at the time of grant of bail. The determinative consideration was that the additional requirement of bank guarantee operated as an onerous condition beyond the bail security already furnished. [Paras 8, 9]

The condition requiring furnishing of bank guarantee for bail was set aside.

Final Conclusion: The appeal was allowed and the condition requiring the appellant to furnish a bank guarantee as part of the bail terms was set aside. The Court held that such additional requirement could not be legally sustained in the circumstances.

Prima facie absence of jurisdiction to retrospectively levy tax - interim protection against retrospective GST demand

Prima facie absence of jurisdiction to retrospectively levy tax - zero-rated supply to SEZ units - prospective operation of amendment - Interim protection was warranted against the demand seeking to tax, with retrospective effect, insurance policies subscribed by SEZ units for the period prior to the amendment to section 16 coming into force. - HELD THAT: - The Court held that the petitions raised arguable issues requiring final consideration, particularly on the competence of the designated officer to retrospectively levy tax for the period prior to 01 October 2023 on supplies of insurance services made to SEZ units. Prima facie, the Court found substance in the contention that the amendment inserting the words "for authorised operations" could not be used to retrospectively tax supplies which had earlier been treated as zero-rated. The Court also noted the statutory definition of recipient under section 2(93) of the CGST Act and observed that, in the present case, the SEZ units had subscribed to the policies and paid consideration, even if the cover was for the benefit of employees. [Paras 8, 11, 12]

Pending final hearing, the impugned orders arising from the show cause notices were stayed.

Final Conclusion: The Court found that the challenge to the retrospective GST demand raised substantial and arguable questions on jurisdiction and the effect of the amendment to section 16 of the IGST Act. Rule was issued and, pending final disposal of the petitions, the impugned orders were stayed.

Premature recovery proceedings - re-credit of electronic credit ledger - statutory period under Section 78 - interim protection on parity

Premature recovery proceedings - re-credit of electronic credit ledger - statutory period under Section 78 - Interim relief was warranted against recovery and for restoration of credit where the electronic credit ledger had been debited before expiry of the appeal period and without any reasons being shown for curtailing the statutory period under Section 78 of the CGST Act. - HELD THAT: - The Court held that the petition raised a challenge similar to that already entertained in earlier petitions before the Court and, therefore, comparable interim protection ought to follow. Independently, the Court accepted the petitioner's contention that debit of the electronic credit ledger could not have been effected when the period for filing appeal had not expired in view of the notification fixing the outer date for appeals to the Appellate Tribunal. The Court further noted that Section 78 contemplates a period of three months from service of the order before recovery can begin, and no reasons under the proviso to Section 78 were shown to justify departure from that statutory period. On that basis, interim relief including re-credit and restraint on recovery was found justified. [Paras 10, 11]

The impugned appellate order was stayed pending the petition, and interim relief was granted directing re-credit of the debited amount and restraining further recovery.

Final Conclusion: The Court granted interim protection by staying the impugned appellate order, directing re-credit of the amount debited from the petitioner's electronic credit ledger, and restraining recovery, holding that such recovery action could not be taken before expiry of the statutory appeal and recovery period in the absence of recorded reasons.

Time limit for blocking electronic credit ledger - Cessation of restriction by operation of law

Rule 86A(3) - Electronic credit ledger blocking - Statutory cessation of restriction - Blocking of the petitioner's electronic credit ledger could not continue beyond one year from the date of imposition under Rule 86A(3) of the CGST Rules, 2017. - HELD THAT: - The Court held that Rule 86A(3) clearly limits the life of a restriction on the electronic credit ledger to one year from the date of its imposition. Since the blocking was imposed on 16th February 2024, it ceased to have effect on expiry of one year and the credit was required to be unblocked by operation of law. The Department itself acknowledged this position in its affidavit. The Court further held that the petitioner did not require any separate declaration for such relief, and the Department's contention based on cancellation of registration or possible future proceedings could not justify continuation of the expired restriction. Questions regarding any other legal consequences, including eligibility or utilisation of credit, were left to be dealt with independently in accordance with law. [Paras 7, 8, 9, 10, 11]

The impugned blocking of credit was held to have ceased to operate on expiry of the statutory period of one year, and was accordingly set aside, with all other contentions kept open.

Final Conclusion: The petition was disposed of on the sole ground that the blocking of the electronic credit ledger had lapsed by operation of Rule 86A(3) after one year. The impugned blocking was set aside, while all other issues, including those relating to ITC and other proceedings under the Act and Rules, were expressly kept open.

Writ maintainability in contractual matters - Applicability of State contract conditions to Government undertaking - Equitable adjustment on revision of GST rate - Article 14 in State contracts

Writ maintainability - Alternative remedy - Contractual disputes involving State instrumentality - The writ petition was maintainable notwithstanding the contractual nature of the dispute and the existence of a contractual dispute redressal mechanism. - HELD THAT: - The Court held that the objection as to alternative remedy did not bar invocation of writ jurisdiction where the controversy turned on the applicability and interpretation of a provision inserted in the Public Works Financial & Accounts Rules by a State order. Since the respondent corporation was a State instrumentality and the challenge involved alleged arbitrariness and denial of a benefit arising from a binding governmental order, the matter was not liable to be excluded from writ scrutiny merely because the contract contained a dispute resolution clause. [Paras 13, 14]

The objection to maintainability was rejected and the writ petition was held maintainable.

Government undertaking as State instrumentality - Applicability of Public Works Financial & Accounts Rules - Revision of GST during contract period - Discriminatory denial of contractual benefit - Estoppel against statutory benefit - The order inserting Clause 36E in the Public Works Financial & Accounts Rules applied to the respondent corporation, and the petitioner was entitled to refund of the differential GST arising from enhancement of the tax rate during execution of the contract. - HELD THAT: - The Court found that the respondent corporation was a Government of Rajasthan undertaking under financial and administrative control of the State, funded from the State budget for the project in question, and itself governed by contractual conditions incorporating Finance Department circulars and other PWD directions. In the absence of any separately framed contractual regime, the corporation was bound by the State orders and rules issued in the name of the Governor, including the amendment inserting Clause 36E. That clause expressly provided for an equitable adjustment of the contract price where tax rates are increased or decreased during performance of the contract. Clause 45.1 of the agreement, which treated quoted rates as inclusive of GST, did not address revision of tax rates during the currency of the work and could not override the later applicable adjustment mechanism. The Court further held that when other State bodies were extending the same benefit under the order dated 07.01.2021, denial of that benefit by the respondent corporation to the petitioner was illegal, arbitrary, discriminatory and violative of Article 14. The plea of estoppel was rejected, since a right created under the governing rules could still be claimed within reasonable time. [Paras 32, 33, 36, 37, 38]

The petitioner was held entitled to refund of the differential 6% GST with interest, and the rejection letter was quashed.

Final Conclusion: The writ petition was allowed. The Court held that the respondent corporation was bound by the State amendment providing equitable adjustment on change in tax rates during performance of the contract, and accordingly directed refund of the differential GST with interest.

Validity of arrest on recorded grounds - violation of Article 22(2) of the Constitution of India - authorisation of arrest and production occurred beyond 24 hours - Economic offences - Reason to believe - tax evasion attracting the cognizable and non-bailable offences under the CGST Act, 2017 - non-functioning and dummy program managers/ resellers - company routed funds to a large number of shell entities of online gaming without payment of appropriate GST.

Article 22(2) - Transit remand - Custody - HELD THAT: - The Court found from the pleadings and record that the search at the company premises concluded in the early hours of 27.02.2026, the petitioner's statement continued till about 3.48 am, and the arrest was thereafter effected at 5.50 am, as reflected in the arrest memo signed by the petitioner. The contention that custody began when officers entered the premises and restricted his movement during the search was rejected, since the officials were acting under a search authorisation and summons, and the petitioner himself pleaded that the grounds of arrest were handed over only after completion of the statement. On that basis, production before the Additional Chief Judicial Magistrate, Esplanade, Mumbai at 8.30 pm on 27.02.2026 for transit remand was held to be within the constitutional requirement of 24 hours, and even inclusion of the period of medical examination did not alter that position. [Paras 10, 14]

No violation of Article 22(2) was made out, and the challenge to the arrest on that ground failed.

Grounds of arrest - Reasons to believe - Cognizable and non-bailable offence - HELD THAT: - The Court held that the authorisation of arrest and the communicated grounds of arrest disclosed material gathered during investigation showing the petitioner's involvement as one of the masterminds in an organised online gaming syndicate operating through associated entities and shell structures, resulting in alleged GST evasion attracting Sections 132(1)(a) and 132(1)(i). The record also showed prior letters, summons, search authorisation, search proceedings, and the allegation of non-cooperation, none of which was effectively traversed by reply affidavit. Referring to Section 14A of the CGST Act, the Court noted the respondents' case that the company would be treated as service provider for persons located outside India, and further observed, relying on V. Senthil Balaji [2023 (8) TMI 410 - SUPREME COURT] that the protection contemplated for certain cases of arrest was not intended to apply to economic offences, and the same principle would extend to Section 35(3) of the BNSS, 2023 in a case of the present nature. [Paras 11, 12, 13, 14]

The Court found the arrest to be founded on sufficient material and declined to interfere with it.

Final Conclusion: The Court dismissed the writ petition, holding that the petitioner's production after arrest was within the constitutional time limit and that the arrest was backed by sufficient material recorded in the grounds of arrest. No case for declaration of illegality of arrest, interference with remand, or grant of relief in writ jurisdiction was made out.

Negative blocking of input tax credit - Scope of Rule 86A - Electronic Credit Ledger - Strict interpretation of taxing provisions

Negative blocking of input tax credit - Availability of credit in Electronic Credit Ledger - Scope of Rule 86A - Rule 86A could be invoked only to the extent input tax credit was actually available in the Electronic Credit Ledger on the date of blocking, and could not be used to create or sustain a negative balance for the excess amount. - HELD THAT: - The Court held that Rule 86A predicates the exercise of power on the existence of credit in the Electronic Credit Ledger capable of being blocked. Where no balance is available, or the ledger already reflects a negative balance, there is no jurisdiction to block any further amount under the Rule. Applying that principle, the Court accepted that the impugned action was contrary to law to the extent it purported to block credit beyond the amount actually available; however, since a positive balance of Rs. 43,19,259/- was available in the ledger, the blocking was valid to that extent. For the remaining disputed amount, the Department was left to proceed through adjudicatory proceedings after issuance of a show-cause notice. [Paras 7, 8]

The impugned order was sustained only to the extent of the credit actually available in the ledger, and the balance negative blocking was quashed, leaving the Department free to adjudicate the remaining claim through a fresh show-cause notice.

Final Conclusion: The Court held that Rule 86A does not permit negative blocking of input tax credit and can operate only against credit actually available in the Electronic Credit Ledger. Accordingly, the blocking was upheld only to the extent of the available balance, while the excess blocked amount was set aside with liberty to the Department to issue a show-cause notice and proceed to adjudication.

Refund rejection without compliance with Rule 92(3) - Opportunity of hearing in refund proceedings

Rule 92(3) compliance - statutory period to reply - personal hearing before refund rejection - Rejection of the refund claim without granting the statutory period to reply and without affording an opportunity of hearing was contrary to Rule 92(3) of the CGST Rules. - HELD THAT: - The Court held that Rule 92(3) mandates issuance of notice in Form GST RFD-08, grant of fifteen days to furnish a reply in Form GST RFD-09, and consideration of such reply before passing an order in Form GST RFD-06; the proviso further prohibits rejection of a refund application without giving the applicant an opportunity of being heard. In the present case, the proper officer curtailed the statutory period by requiring a reply within seven days and proceeded to reject the claim on the next day without granting any hearing. The Court also found that the officer failed to verify the petitioner's e-mail response in the existing correspondence trail and could not justify dispensing with a hearing on the ground that no reply was filed on the portal. The notice granting seven days was therefore illegal, and the rejection order was held to be in the teeth of Rule 92(3). [Paras 8, 9, 10, 11]

The impugned refund rejection order was quashed, and the proper officer was directed to issue a fresh notice in conformity with Rule 92(3), consider the reply, grant a hearing, and pass a fresh order in accordance with law.

Final Conclusion: The petition was allowed. The Court set aside the refund rejection order for breach of the mandatory procedure under Rule 92(3) of the CGST Rules and directed fresh proceedings after issuing proper notice, considering the reply, and granting an opportunity of hearing.

Special audit under Section 66 - Supplementary audit report - Infructuous challenge to provisional attachment

Special audit under Section 66 - Supplementary audit report - A further report from the Chartered Accountant could not be directed after completion of the special audit already undertaken under Section 66 of the CGST Act. - HELD THAT: - The Court held that, on a plain reading of Section 66, a special audit is contemplated where the case is complex and the competent officer forms the requisite opinion in the interest of revenue. Once such special audit is conducted and the auditor submits the report in accordance with the statutory mandate, permitting a supplementary or additional report would amount to reopening an exercise already completed. The Court also accepted that the audit had been undertaken to form a prima facie picture on a cooperative basis and for the purpose of the provisional attachment proceedings; therefore, calling for a further report after completion of that exercise would serve no purpose. [Paras 8, 9, 10, 11, 12]

The interim application seeking an additional report from the Chartered Accountant was dismissed.

Infructuous challenge to provisional attachment - Defreezing of bank accounts - The writ petition challenging the provisional attachment of the petitioner's bank accounts did not survive after the attachments were lifted and the accounts were defreezed. - HELD THAT: - The Court found that the writ petition was directed against the provisional attachment orders attaching the petitioner's bank accounts. Since the Department had already lifted those attachments and the accounts stood defreezed, the subject matter of challenge no longer survived. The Court further observed that the prayer for appointment of a Chartered Accountant had already worked itself out because a special audit had in fact been conducted and the report submitted. [Paras 10, 12, 13]

The writ petition was disposed of as infructuous.

Final Conclusion: The Court declined to direct any supplementary special audit under Section 66, holding that the completed audit could not be reopened by calling for an additional report. As the provisional attachment of the bank accounts had already been withdrawn and the accounts defreezed, the writ petition was held to have become infructuous.

Prematurity of writ challenge - Intimation under Section 74(5) - Alternative statutory remedy

Prematurity of writ challenge - Intimation under Section 74(5) - Alternative statutory remedy - Show cause adjudication - The challenge to the intimation of tax ascertained issued in Form GST DRC-01A under Section 74(5) read with Rule 142(1A) was not liable to be entertained in writ jurisdiction at that stage. - HELD THAT: - The Court held that the impugned intimation was only a pre-adjudication step and that no adjudication had taken place before its issuance. Since the dispute on the proposed demand involved a factual examination, including consideration of the special audit report already obtained, such exercise was not appropriate in writ proceedings. The proper course was for the department to issue a show cause notice, grant hearing, and pass a reasoned order, after which the petitioner could pursue the statutory appellate remedy under Section 107 against the adjudicatory order. [Paras 7, 8, 9]

The writ petition was disposed of without interference with the intimation, with directions for issuance of show cause notice, grant of hearing, and passing of a reasoned order, leaving all contentions open for adjudication and subsequent appeal.

Final Conclusion: The Court declined to entertain the writ petition against the DRC-01A intimation as premature, holding that the matter must first proceed through show cause adjudication. The department was directed to issue notice, grant hearing, and pass a speaking order, after which the petitioner could avail the statutory appellate remedy.

Reading down of ITC conditions - bona fide recipient of input tax credit - impossibility of compliance - supplier's tax default and denial of ITC - constitutional validity of input tax credit restrictions

Reading down of ITC conditions - bona fide recipient of input tax credit - supplier's tax default and denial of ITC - impossibility of compliance - Section 16(2)(c) of the CGST/KGST Act and Rule 36(4) of the CGST/KGST Rules were not struck down, but were read down so that ITC is not denied to a bona fide recipient who has complied with the other statutory conditions merely because the supplier failed to remit tax to the Government. - HELD THAT: - The Court accepted the line of authority holding that a purchasing dealer or recipient who has entered into a bona fide transaction and satisfied the statutory requirements within its control cannot be compelled to ensure that the supplier actually deposits the tax. Such an interpretation would cast an impossible burden upon the recipient and visit it with consequences for the default of another. Agreeing with the view adopted by the Gauhati High Court and the Tripura High Court, and noticing the earlier decisions under analogous VAT provisions, the Court held that the impugned provisions must be construed so as to permit ITC to bona fide recipients, and to apply against cases involving non-bona fide, collusive or fraudulent transactions rather than against genuine recipients affected only by supplier default. [Paras 17, 18]

The challenge to the vires was not accepted in the sense of invalidation; instead, Section 16(2)(c) and Rule 36(4) were read down to preserve ITC in favour of bona fide recipients despite supplier non-payment of tax.

Final Conclusion: The petition was disposed of by reading down Section 16(2)(c) of the CGST/KGST Act and Rule 36(4) of the CGST/KGST Rules. The Court held that ITC cannot be denied to a bona fide recipient who has complied with the other conditions merely because the supplier failed to pay the tax, the provision being applicable only in cases lacking bona fides or involving collusion or fraud.

Determination of the liability to pay tax on any goods or services or both - Operating and managing Government Urban Health & Wellness Centres (UHWCs) and Polyclinics - exemption under “healthcare services by a clinical establishment” under Entry 74 of Notification No. 12/2017-Central Tax (Rate) - Consideration vis-a-vis Government grant or subsidy - Strict construction of exemption notifications.

Whether the operation and management of Government Urban Health & Wellness Centres (UHWCs) / Ayushman Arogya Mandirs and Polyclinics by the Applicant under identical Operation & Management Agreements with Braithwaite & Co. Ltd. (PSU-executing agency), funded exclusively through 15th Finance Commission health grants routed via Braithwaite and Company Limited and providing healthcare services to citizens free of cost, constitutes exempt “healthcare services by a clinical establishment” under Entry 74 of Notification No. 12/2017-Central Tax (Rate)? - HELD THAT: - The Authority held that Entry 74 requires the supplier itself to provide healthcare services as a clinical establishment. On the agreements and bid documents, the applicant was found to be engaged under a contractual arrangement for operation, management, manpower, infrastructure and related administrative responsibilities for Braithwaite & Co. Ltd., which was the person liable to pay consideration. The payments were structured as operational payments per centre and were not linked to diagnosis or treatment rendered to patients. The exemption, being subject to strict construction, could not be extended merely because healthcare was ultimately delivered through the centres or because some centres were registered as clinical establishments. [Paras 8]

Exemption under Entry 74 was denied, and the applicant's supply was treated as contractual operational and managerial services to Braithwaite & Co. Ltd.

Whether, in the alternative, the said activities qualify as “pure services” provided to the State Government (through its designated PSU executing agency under formal MoU) in relation to Article 243W functions (public health, hospitals, dispensaries-Twelfth Schedule Entries 6, 8, 23), and are therefore exempt under Entry 3 of Notification No. 12/2017-Central Tax (Rate)? - HELD THAT: - The Authority held that the relevant supply was made by the applicant to Braithwaite & Co. Ltd. under their contract, and not directly to the State Government or a qualifying authority contemplated by Entry 3. It treated the arrangement as involving two distinct supplies, one by the applicant to Braithwaite & Co. Ltd. and another by Braithwaite & Co. Ltd. to the Urban Development Directorate. The memorandum permitting engagement of a third party showed the applicant to be a sub-contractor. The Authority further found that the applicant's obligations extended to ensuring infrastructure, manpower and operational support at each centre, so the supply was not one of pure services alone but bore the character of a composite supply. The fact that healthcare was provided free to the public was held irrelevant to the taxability of the applicant's contractual supply. [Paras 8]

Exemption under Entry 3 was held unavailable because the applicant was a sub-contractor supplying to Braithwaite & Co. Ltd., and the supply was not pure services provided directly to Government.

The Authority rejected the applicant's contention that the receipts were grant-in-aid. It found that payments were made by Braithwaite & Co. Ltd. pursuant to enforceable contractual obligations, thereby satisfying the statutory concept of consideration. The circular relied upon by the applicant was distinguished on the footing that, in that instance, the payment was directly made by Government under an incentive scheme, whereas in the present matter there was no direct payment by the State Government to the applicant. The amounts were therefore not treated as subsidy or grant excluded from consideration. [Paras 8]

The receipts were held taxable as consideration for the applicant's supply.

Final Conclusion: The Authority ruled that the applicant's services of operating and managing the health centres and polyclinics were taxable supplies made to Braithwaite & Co. Ltd. and were not eligible for exemption either as healthcare services by a clinical establishment under Entry 74 or as pure services under Entry 3. The amounts received were held to be contractual consideration and not non-taxable Government grant or subsidy.

Taxability of canteen recoveries from employees - perquisites under employment contract - input tax credit on statutory canteen facility - notice pay recovery

Supply of canteen service - consideration - course or furtherance of business - employee perquisite - Recovery of a nominal amount from employees towards canteen facility constituted a supply of service by the applicant, and GST was payable on the amount so recovered. - HELD THAT: - The Authority held that provision of canteen facility to workers was connected with and ancillary to the applicant's manufacturing activity and therefore fell within the ambit of business. Since the applicant engaged the canteen contractor, paid the contractor, and thereafter recovered a portion of the cost from employees through salary deduction, there were two distinct supplies: one by the contractor to the applicant and another by the applicant to its employees. The amount deducted from salary answered the definition of consideration. The Circular on perquisites was applied only to the extent of the concession borne by the employer; the part recovered from employees was not treated as a non-taxable perquisite and remained taxable as consideration for canteen service. [Paras 5]

The salary deduction towards canteen facility was held taxable, and GST was held leviable on the recovered amount.

Blocked credit - statutory canteen obligation - restaurant service - mandatory rate without input tax credit - Input tax credit on GST charged by the canteen service provider was not available to the applicant. - HELD THAT: - The Authority accepted that, by virtue of the proviso to section 17(5)(b) as clarified in Circular No. 172/04/2022-GST, the statutory obligation to maintain a canteen meant that credit was not barred merely under section 17(5). However, it held that the actual inward supply received from the contractor was restaurant service chargeable at the notified concessional rate of 5% without input tax credit under Notification No. 11/2017-Central Tax (Rate), as amended by Notification No. 20/2019-C.T. (Rate). The legal principle applied was that where such service is compulsorily taxable under a notification prescribing a rate without credit, the availability contemplated under section 17(5) cannot override that specific restriction. On that basis, ITC was denied in full. [Paras 5]

Notwithstanding the statutory requirement to provide canteen facility, ITC on GST charged by the canteen contractor was held unavailable.

Notice pay recovery - consideration for tolerating an act - Recovery of notice pay from employees leaving without serving the stipulated notice period was not liable to GST. - HELD THAT: - Relying on Circular No. 178/10/2022-GST, the Authority held that notice pay recovery is in the nature of a deterrent or penalty to discourage premature exit and not a consideration for any service of agreeing to tolerate an act. Since the employee receives nothing in return for such recovery, the amount does not assume the character of taxable consideration. [Paras 5]

GST was held not leviable on notice pay recoveries.

Final Conclusion: The Authority held that the applicant's recovery from employees towards canteen facility amounted to a taxable supply, with GST payable on the amount recovered. It further ruled that no input tax credit was available on GST charged by the canteen service provider, while notice pay recoveries were held not liable to GST.

Unaccounted sales based on an estimated production yield of 89% in the Steel Melting Shop (SMS) Division of the assessee - suspicion or guesswork - rejection of books of accounts - HC [2025 (9) TMI 1771 - CHHATTISGARH HIGH COURT] held while making an assessment on estimation, the Assessing Officer cannot proceed on bare suspicion or pure guesswork unsupported by evidence. There was complete absence of adverse material to support the allegation of suppressed production, that no defect or irregularity in the books had been established, and that the addition had been founded only on an assumed industry yield carried over from earlier proceedings

HELD THAT:- Special Leave Petition was dismissed as the Court was not inclined to interfere with the impugned judgment/order(s).

Rejection of application for a nil withholding tax certificate u/s 197 - services rendered through e-mail, video conferencing and conference calls -Rule 28AA and prior assessed tax liability - treaty-based non-taxability issue

Virtual rendition of services or Physical rendition in India - whether the services rendered through e-mail, video conferencing and conference calls could be treated as physically rendered in India for the purpose of tax withholding? - HELD THAT: - The Court held that the respondents' contention equating virtual performance of services with their physical rendition in India was too broad to be accepted in the absence of any specific provision in law or in the DTAA. The decisions relied upon in support of that contention only recognized technological presence or procedural acceptability of video conferencing in their own contexts, but did not establish that services rendered virtually must, for tax purposes, be deemed to have been physically rendered in India. [Paras 47, 48, 49, 50, 51]

The respondents' contention that virtual delivery of services amounted to physical rendition of services in India was rejected.

Section 197 certificate - Existing and estimated tax liability - Rule 28AA - Consistency with prior years - whether the Assessing Officer correctly rejected the application filed by the Petitioner under Section 197 of the IT Act for the issuance of a “NIL withholding tax” Certificate? - HELD THAT: - The Court held that Section 197, read with Rule 28AA, requires the Assessing Officer to consider the recipient's existing and estimated tax liability, including the tax payable on assessed or returned income of the preceding years. In the petitioner's own case, for earlier assessment years, the authorities higher than the Assessing Officer had already held that payments received for the same services were taxable in India, and those determinations were still pending before the appellate forum without having been set aside. In that situation, the Assessing Officer could not issue a nil withholding certificate on the footing that no tax was payable in India, as that would run contrary to subsisting orders in the petitioner's own case. [Paras 60, 61, 63, 64, 65]

The rejection of the petitioner's request for a nil withholding tax certificate was upheld and no interference under Article 226 was warranted.

Declaration sought by the Petitioner that the consideration received/receivable by the Petitioner from Benteler India pursuant to the service agreement (Exhibit ‘B’ to the Petition) is not taxable in India -HELD THAT: - The Court declined to pronounce upon the interpretation of the India-China DTAA or the taxability of the receipts on merits because the same issue was already pending in the petitioner's own case before the ITAT for earlier assessment years. The Court held that any declaration on that question would directly affect those pending appeals, and therefore it was not a fit case for exercise of writ jurisdiction on that aspect. All treaty interpretation contentions were left open to be urged before the ITAT. [Paras 66, 67, 68]

The prayer for a declaration on non-taxability was declined, leaving the issue to be decided in the pending appellate proceedings.

Final Conclusion: The Court upheld the rejection of the petitioner's application for a nil withholding tax certificate under Section 197, holding that the Assessing Officer was justified in view of Rule 28AA and the subsisting adverse determinations in the petitioner's own case for earlier years. It declined to adjudicate the treaty-based non-taxability issue in writ jurisdiction, leaving that controversy to the ITAT in the pending appeals.

Penalty u/s 271(1)(c) - Estimation of income on bogus purchases - non mentioning the charge under which the said notice was issued as whether it was towards "Concealment of income" or "furnishing of inaccurate particulars" - non striking off the irrelevant matter in notice

HELD THAT: - The case of the assessee is squarely covered by the decision of Mohd. Farhan A. Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] wherein as held that the defect in notice by not striking off the irrelevant matter would vitiate the penalty proceedings.

Estimation of income - As evident from the record that the AO made the addition on account of bogus purchases on an estimated basis of 12.5%, which was affirmed by the learned CIT(A) in quantum appellate proceedings. Therefore, the entire addition for the year under consideration has been made solely on the basis of estimates.

We find that in CIT v/s Krishi Tyre Retreading and Rubber Industries [2014 (2) TMI 21 - RAJASTHAN HIGH COURT] held that where an addition is made purely on an estimate basis, no penalty under section 271(1)(c) of the Act is leviable.

Similar view has been expressed in CIT v/s Sangrur Vanaspati Mills Ltd.[2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT] wherein held that when the addition has been made on the basis of estimate and not on any concrete evidence of concealment, penalty under section 271(1)(c) of the Act is not leviable. Therefore, it is evident that the issue of the justification for imposing a penalty when the addition is based on an estimate is no longer res integra

Final Conclusion: The Tribunal held that the penalty under section 271(1)(c) was unsustainable both because the notice failed to specify the precise charge and because the underlying addition had been made purely on estimate. The penalty order was therefore quashed and the assessee's appeal was allowed.

Estimation of profit on unaccounted sales - Unexplained income from bogus trade payables and related party liabilities

Estimation of profit on unaccounted sales - Genuineness of purchases and sales - HELD THAT: - The Tribunal noted that the Assessing Officer had acted on specific information indicating mismatch between the income shown by the assessee and the purchases and sales claimed by it. Though partial details were furnished in assessment, no material was produced before the first appellate authority or the Tribunal to establish the genuineness of the sales or to dislodge the finding that the sales were out of books. In the absence of any cogent documentary evidence from the assessee, there was no basis to interfere with the estimation made by the Assessing Officer and affirmed by the appellate authority. [Paras 8]

The order sustaining estimation of profit on unaccounted sales for A.Y. 2021-22 was upheld.

Unexplained income - Bogus trade payables and related party liabilities - assessee has availed credit facility from related parties to create liability which generates source of capital for them to transact in money - HELD THAT: - The Tribunal recorded that the Assessing Officer had returned a categorical finding that the assessee created liabilities by availing credit facilities from related parties so as to generate capital for them. Since the assessee failed to place any substantive material either before the first appellate authority or before the Tribunal to controvert that finding, the Tribunal held that, for want of proper representation and documentary evidence, the assessment finding could not be disturbed. [Paras 9]

The addition relating to bogus trade payables and related party liabilities for A.Y. 2022-23 was upheld.

Final Conclusion: The Tribunal dismissed both appeals. It affirmed the appellate orders sustaining, for A.Y. 2021-22, the profit estimation on unaccounted sales and, for A.Y. 2022-23, the addition on account of bogus trade payables and related party liabilities, as the assessee produced no material to rebut the assessment findings.

Ad hoc disallowance of expenditure - Allowability of licence fee - Addition of incentive income already accounted

Ad hoc disallowance of expenditure - Non-rejection of books of account - as alleged assessee has not furnished supporting bills and vouchers - 50% ad hoc disallowance of depot transport, hamali charges, change commission, salary expenses and repairs and maintenance - HELD THAT: - The Tribunal found that the expenditure under the disputed heads was minimal when compared with the assessee's business turnover and largely comprised day-to-day business outgoings. It further held that the Assessing Officer had neither pointed out any discrepancy in the books of account nor rejected them. In the absence of any finding as to incorrectness of the books, ad hoc disallowance could not be made merely because supporting bills and vouchers were not furnished for such expenses. [Paras 8]

The addition made by way of 50% ad hoc disallowance of the various expenses was directed to be deleted.

Allowability of licence fee - Year of deduction - A.O. disallowed licence fee charges on the ground that payment made on 18.03.2021 pertains to financial year 2020-21 - HELD THAT: - On examining the licence and challans, the Tribunal held that the licence covered the period from 01.11.2019 to 31.10.2021 and that the payment made on 18.03.2021 related to the quarter from 01.04.2021 to 30.06.2021. Since that period fell in Financial Year 2021-22 relevant to AY 2022-23, the deduction had been rightly claimed for the year under consideration. The disallowance was held to have been made without proper appreciation of the material evidencing the period to which the payment related. [Paras 10, 12]

The disallowance of the licence fee was deleted.

Disallowance under the head business and profession - incentives received by the assessee from certain parties for displaying various brands in front of its shop - addition on the ground that the assessee has received incentives on which TDS u/s 194C has been deducted and the same has not been accounted in the books of accounts of the assessee - as argued incentives received by the assessee has been accounted in the books of accounts under the head “Sales and Incentives” and the same has been offered to tax and further, the assessee has already claimed deduction for TDS deducted by the payer - HELD THAT: - The Tribunal recorded that the assessee had produced the sales registers for the relevant period showing that the incentives formed part of the head "Sales and Incentives". It also noted that the TDS deducted u/s 194C on those receipts had been considered in the return of income for the assessment year under consideration. Since the incentive receipts had already been taken into account, a further addition of the same amount under business income could not be sustained. [Paras 15]

The addition made towards incentives under the head business and profession was directed to be deleted.

Final Conclusion: The Tribunal allowed the assessee's appeal in full. It deleted the ad hoc disallowance of expenses, the disallowance of licence fee, and the addition made towards incentive income already accounted for in the books.

Validity of assessment order as being barred by limitation prescribed u/s 153B r.w.s. 153A - Limitation for search assessments under joint warrant - Person-specific execution of authorisation and panchanama - Addition on third-party electronic material - Corroborative evidence and nexus with assessee - Deduction under Section 80IA(4) to sub-contractor executing infrastructure projects

Limitation under Section 153B - Joint warrant of authorisation - Separate assessment of each person - computing limitation for assessment under section 153A where search was conducted under a joint warrant - HELD THAT: - The Tribunal held that section 153B has to be read with section 292CC. Though a joint warrant may validly name more than one person, assessment or reassessment has to be made separately in the name of each such person. Consequently, for limitation purposes, execution of authorisation and the last panchanama must be examined person-wise. Since a separate panchanama in the assessee's case recorded that search was finally concluded on 12.02.2020, limitation had to be reckoned from that date and could not be extended by the later revocation of restraint order and panchanama drawn at the residence of another person named in the joint warrant. The Tribunal further held that the extension granted by the Supreme Court in In Re: Cognizance for Extension of Limitation [2022 (1) TMI 385 - SC ORDER] applied to institution of judicial or quasi-judicial proceedings and not to completion of assessments governed by the specific statutory scheme read with TOLA. On that basis, the assessments completed on 31.03.2022 were beyond time. [Paras 18, 19, 20, 21]

The assessments for A.Ys. 2014-15 to 2020-21 were held barred by limitation and were quashed.

Addition made towards cash sheets found in the email account of third party - reliability on Third-party email material - Absence of nexus with assessee - Uncorroborated notings - HELD THAT: - The Tribunal found that the impugned notings were recovered from the personal email account of Shri P. Anil Kumar, who was independently engaged in contract business and had joined the assessee only from 01.12.2016. The assessee consistently denied ownership of those notings and asserted that they pertained to his individual affairs. The AO, despite being aware of these facts, conducted no independent enquiry and brought no corroborative material to show that the entries belonged to or represented income of the assessee. The Tribunal held that addition cannot rest merely on third-party notings without proof of ownership and nexus. [Paras 28]

The additions made on this basis for A.Ys. 2014-15, 2015-16 and 2016-17 were deleted.

Addition towards alleged cash transactions -Loose sheet as third-party document - loose sheet found as an attachment in the email account​ -​​​​​​ Corroborative evidence - Nexus with assessee - HELD THAT: - The Tribunal noted that the loose sheet headed 'C. Krishna Reddy' was retrieved from Shri P. Anil Kumar's personal email account and not from the assessee's premises or records. It also found that the transactions recorded therein related to a period prior to his joining the assessee. The assessee had specifically denied any dealing with Sri Krishna Reddy and pointed out that no such account existed in its books. The Assessing Officer made the addition without any independent enquiry, verification, or evidence of fund flow, and the CIT(A)'s reliance on the email address used for transmission was held insufficient to attribute the document to the assessee. The Tribunal reiterated that additions cannot be made merely on loose sheets or third-party documents without corroborative evidence. [Paras 35, 36]

The additions for A.Ys. 2014-15, 2015-16, 2016-17 and 2017-18 were directed to be deleted.

Cash transactions based on so-called “cash scrolls” found as attachments in the email account- Arbitrary computation - Identification of assessee-related entries - HELD THAT: - The Tribunal held that once the appellate authority itself recorded that several entries in the cash scrolls were personal in nature or pertained to Shri P. Anil Kumar's independent business activities, the additions could not continue in the assessee's hands unless specific entries relatable to the assessee were identified. AO had conducted no independent enquiry and adopted an arbitrary method by taking the higher of debit or credit entries. The Tribunal found the documents to be non-speaking and unverified, with no material showing nexus to the assessee. It therefore rejected the approach of sustaining the addition while directing later identification of entries. [Paras 43]

The additions made on this account for A.Ys. 2015-16 to 2020-21 were deleted.

Addition made towards alleged out of book cash transactions relating to “BC Soil Land” on the basis of an Excel sheet found as an attachment in the email account of third party - Preliminary working document - Absence of proof of actual payment - Need for corroboration - HELD THAT: - The Tribunal accepted the assessee's explanation that the Excel sheet was only a preliminary projection or working document. It noted inconsistencies between the entries in the sheet and the actual transactions recorded in the books, including lands not purchased, lands taken on lease, and variations in extent and consideration. In the absence of corroborative evidence that the amounts shown under the 'Cash' column were actually paid, the Tribunal held that such a proposal document could not constitute the basis of addition. [Paras 50]

The addition for A.Y. 2017-18 was deleted.

Addition based on Milestone-based Excel sheet - Third-party mailbox material - Proof of actual expenditure - HELD THAT: - The Tribunal found that the Excel sheet was recovered from Shri P. Anil Kumar's personal email account and not from the assessee. It also noted that Shri P. Anil Kumar was independently engaged in civil contract business through Avaya Construction Company. In these circumstances, milestone-based workings or commission-related calculations found in his mailbox could not, without cogent evidence, be attributed to the assessee. As no corroborative material, nexus, or proof of actual payment was brought on record, and part of the addition was overlapping, the addition was held unsustainable. [Paras 57]

The additions for A.Ys. 2018-19 and 2019-20 were deleted.

Addition based on WhatsApp messages as evidence - Authentication of electronic records - Uncorroborated digital communication - HELD THAT: - The Tribunal found that the WhatsApp messages did not refer to the assessee and that no enquiry had been made to examine Shri P. Anil Kumar or to verify the nature and authenticity of the messages. No evidence of actual flow of funds was brought on record. It held that uncorroborated WhatsApp chats, without proper authentication and supporting material, cannot by themselves constitute admissible evidence for making an addition, and relied on ACIT Vs. Manchukonda Shyam and Gavireddygari Aparna Kalyani [2020 (12) TMI 653 - ITAT VISAKHAPATNAM] in that regard. In the absence of nexus and supporting evidence, the addition was held unsustainable. [Paras 64]

The addition for A.Y. 2020-21 was deleted.

Estimated commission on alleged bogus sub-contracts - Uncorroborated statements - Presumption without fund-flow evidence - Estimated 1% commission income on the footing that various sub-contracts were accommodative - HELD THAT: - The Tribunal held that the AO proceeded on assumptions drawn from search statements of some sub-contractors without independent corroborative evidence. Against that, the assessee had produced work orders, bills, bank statements and confirmations showing execution of work, and most sub-contractors later confirmed the work in response to statutory notices and summons. The Tribunal held that factors such as engagement of known persons or employees, perceived deficiencies in documentation, audit remarks, or common IP addresses were insufficient by themselves to brand all contracts as non-genuine. Since payments were through banking channels with tax deduction at source, no material showed that funds returned to the assessee, and the assessee had already offered income from such contracts in its books, the ad hoc estimation of commission was held to be based on presumption alone. [Paras 73, 74, 75]

The additions towards alleged 1% commission income were deleted for the years in which they were made.

Cash returned to the management of the assessee in the context of works awarded - Addition based on third-party statement - Right of cross-examination - Proof of cash circulation - HELD THAT: - The Tribunal noted that the assessee had produced documentary evidence showing execution of Government work, release of contract payments after due verification, and payment to the subcontractor through banking channels with deduction of tax at source. The books of both parties were audited and no defect was pointed out. No evidence of cash circulation or fund flow back to the assessee was found despite search. The statement relied on by the Assessing Officer had not been subjected to cross-examination and remained uncorroborated. The Tribunal therefore held that, once the assessee discharged its initial burden through documentary evidence, the Department had to establish falsity of the transactions with cogent material, which it failed to do. [Paras 83, 84]

The additions for A.Ys. 2018-19 and 2019-20 were deleted.

Unreliable search statement - Burden after documentary proof - Absence of corroborative evidence - Alleged cash returned to the assessee from payments made to Avexa Corporation Private Limited - HELD THAT: - The Tribunal found that the addition was founded primarily on the statement of Sri K.J. Rao, who himself admitted that he was not involved in execution of the contract during the relevant period. His statement was held inconsistent and lacking credibility, as he could not correctly identify the project, amounts, or persons involved. In contrast, the assessee produced documentary evidence of execution of work, Government verification, and payments through banking channels with deduction of tax at source, all reflected in audited books. Since no evidence of cash circulation or return of funds to the assessee was found and cross-examination was not afforded, the Tribunal held that the Department had failed to dislodge the genuineness shown by the assessee. [Paras 92, 93]

The additions for A.Ys. 2019-20 and 2020-21 were deleted.

Unexplained cash found at the registered office of the assessee at “Prathima” - Cash found in common premises - assessee submitted that, the premises “Prathima” houses multiple companies and the cash found during the course of search cannot be attributed entirely to the assessee - HELD THAT: - The Tribunal found that the premises where cash was found housed multiple entities and not the assessee alone. The assessee furnished details of cash balances of various entities supported by records, and the appellate authority had already accepted the explanation in respect of other entities. It was further noted that verification directed from the seized books could not be carried out because the Assessing Officer stated that the seized data could not be accessed. In these circumstances, the cash balance reflected in the audited books, which had not been rejected, could not be disregarded. The Tribunal held that the Department had failed to discharge the burden of proving that the balance sustained represented unexplained income of the assessee. [Paras 101]

The addition for A.Y. 2020-21 was deleted.

Revenue appeal on unexplained income additions - Earlier findings applied - Revenue's challenge to deletion of additions based on loose sheets and email data of Shri P. Anil Kumar failed because the same issue had already been decided against the Revenue in the assessee's appeals - HELD THAT: - The Tribunal held that the Revenue's grounds on unexplained income for the relevant years were identical to the issues already adjudicated in the assessee's appeals. Having held that additions based on loose sheets and email data of Shri P. Anil Kumar, without corroborative evidence and nexus with the assessee, were unsustainable, the Tribunal found no error in the CIT(A)'s deletion of similar additions in the Revenue's appeals. [Paras 105]

The Revenue's grounds on deletion of unexplained income additions were dismissed.

Deduction under Section 80IA(4) - Sub-contractor executing infrastructure projects - Binding precedent - Deduction under section 80IA(4) was allowable to the assessee, though a sub-contractor, because the issue stood covered by binding jurisdictional Tribunal precedent in the assessee's own case and the facts of Celebi Delhi Cargo Terminal Management India Pvt. Ltd. Vs. Union of India were distinguishable. - HELD THAT: - The Tribunal held that the issue was squarely covered by the jurisdictional Tribunal's earlier decision in the assessee's own case, which recognised eligibility under section 80IA(4) even to a sub-contractor engaged in execution of infrastructure development projects. It further held that mere pendency of the Department's appeal before the High Court did not permit departure from binding precedent. The Revenue's reliance on Celebi Delhi Cargo Terminal Management India Pvt. Ltd. Vs. Union of India [2019 (2) TMI 1429 - ITAT DELHI] was rejected because that decision turned on absence of an agreement with the Government or specified authority on materially different facts, whereas the present case concerned execution of infrastructure work by a constituent partner/sub-contractor under the arrangement accepted in the earlier binding decision. [Paras 112, 113, 114]

The order allowing deduction under section 80IA(4) for A.Ys. 2016-17, 2018-19, 2019-20 and 2020-21 was upheld and the Revenue's grounds were dismissed.

Final Conclusion: The assessee's appeals were allowed and the assessments for A.Ys. 2014-15 to 2020-21 were held time-barred; the Tribunal also deleted the impugned additions on merits for want of nexus and corroborative material. The Revenue's appeals were dismissed, including its challenge to the deletion of additions and to the allowance of deduction under section 80IA(4).

Depreciation on right to collect toll - Subsidy reducing actual cost of asset - Provision for resurfacing expenses - Capitalization of negative grant liability - Enhanced deduction u/s 80IA on business additions - Chargeability of interest u/s 234A, 234B, 234C and 234D - Penalty u/s 271(1)(c) for disallowance of claim

Depreciation on right to collect toll - Intangible asset - @ 25% or 10% - HELD THAT: - The Tribunal held that the controversy was covered by ACIT vs Progressive Construction [2017 (3) TMI 1167 - ITAT HYDERABAD]wherein the right to collect toll was treated as falling within the ambit of intangible assets. Following that decision, the restriction of depreciation to 10% by treating the asset as a road under the block of building was rejected. [Paras 4, 21]

Depreciation on the right to collect toll was allowable at 25%, and the consequential claim of additional depreciation was allowed for both years.

Adjustment on account of subsidy from NHAI - Subsidy reducing actual cost of asset - Explanation 10 to section 43(1) - HELD THAT: - The Tribunal found that the subsidy was admittedly paid for meeting the capital cost of the project. In such a case, Explanation 10 to section 43(1) required exclusion of the relatable amount from the actual cost of the asset. Since the assessee had not reduced the subsidy from the project cost and had nevertheless claimed depreciation on the full amount, the excess depreciation was rightly disallowed. [Paras 8, 15]

The disallowance of depreciation relatable to the NHAI subsidy was upheld for assessment year 2011-12, and the same view was applied mutatis mutandis for assessment year 2012-13.

Provision for resurfacing expenses - AO simply disallowed the said provision for resurfacing expenses on the ground that it is not actually incurred and it is merely a provision and completed the assessment - HELD THAT: - The Tribunal accepted the finding that the assessee's computation was not based on a scientific and rational method. The provision had been estimated from the construction period, even though periodic maintenance under the concession agreement was to arise only from the commercial operation date and thereafter at the prescribed interval. The liability was therefore uncertain and contingent, and the deduction could not be allowed merely on the basis of an estimated provision. [Paras 11, 14]

The provision for resurfacing expenses was held to be inadmissible and the disallowance was sustained for both years.

Depreciation on capitalization of carriageway - Capitalization of negative grant liability - Depreciation on unascertained liability - HELD THAT: - The Tribunal upheld the finding that the liability for the negative grant payable in later years was not shown to be an ascertained liability fit for capitalization in the manner adopted by the assessee. It also accepted the appellate finding that AS-29 neither mandated such capitalization nor applied in the manner suggested by the assessee to the executory contract in question, and that future operating costs were not to be recognized as capitalized cost for depreciation. [Paras 18]

The capitalization of the negative grant was rejected and the disallowance of depreciation thereon was sustained.

Enhanced deduction u/s 80IA on business additions - single infrastructure activity carried out by the assessee company - HELD THAT: - The Tribunal held that since the disputed disallowances and additions arose from the same eligible infrastructure business activity, they would consequentially increase the business profits qualifying for deduction under section 80IA. The direction was issued on that basis, relying on the CBDT circular referred to in the order. [Paras 22]

The assessee's alternative claim for consequential enhancement of deduction under section 80IA was allowed.

Chargeability of interest u/s 234A, 234B, 234C and 234D - HELD THAT:- AO is directed to verify the fact as to whether the return of income has been filed by the assessee company within the due date or such other extended due date prescribed under section 139(1) of the Act and decide the chargeability of interest under section 234A of the Act accordingly.

Chargeability of interest under Section 234 B of the Act is consequential in nature.

Section 234C law is very well settled that interest under shall be charged only on the returned income and not on the assessed income. If assessee has been actually granted refund for the year under consideration while processing the return or otherwise or the said refund is adjusted actually with the arrears of some other assessment years of the assessee, then interest under Section 234D of the Act shall become chargeable on the assessee if there is a demand pursuant to the giving effect order to the tribunal. Accordingly, the learned AO is directed to determine the interest under Section 234D of the Act in the above mentioned terms.

Penalty u/s 271(1)(c)for disallowance of claim - HELD THAT: - The Tribunal applied CIT vs Reliance Petroproducts Ltd and held that mere rejection or disallowance of a claim does not by itself amount to furnishing inaccurate particulars so as to attract penalty. Since the penalty rested on disallowance of claims made by the assessee, the levy was unsustainable. [Paras 26]

The entire penalty under section 271(1)(c) for assessment year 2012-13 was directed to be deleted; the assessee's penalty appeal was allowed and the revenue's penalty appeal was dismissed.

Final Conclusion: The assessee's quantum appeals for assessment years 2011-12 and 2012-13 were partly allowed. The revenue's penalty appeal for assessment year 2012-13 was dismissed, and the assessee's penalty appeal for that year was allowed with a direction to delete the penalty.

Penalty u/s 271(1)(c) - conditions for invoking the provision relating to concealment of income or furnishing of inaccurate particulars of income -Specific charge u/s 271(1)(c) - Non-specification of limbunder which notice issued

HELD THAT: - The Tribunal found that in the assessment order as well as in the notice initiating penalty, the AO referred to both limbs of section 271(1)(c) without striking off the inapplicable one. It further noticed that even in the penalty order the AO used inconsistent expressions, referring to furnishing inaccurate particulars while imposing penalty for concealment of income. The determinative principle applied was that the AO must record clear satisfaction and specify the exact charge at the stage of initiation; an initiation mentioning both limbs without a definite charge is invalid. On that basis, following the decision in CIT vs. Unitech Reliable Projects Pvt. Ltd.[2023 (6) TMI 1219 - DELHI HIGH COURT] the penalty order was held unsustainable. [Paras 4]

The penalty order was quashed and the assessee's legal ground was allowed.

Final Conclusion: The Tribunal allowed the appeal and quashed the penalty u/s 271(1)(c) on the ground that the AO had not specified the exact limb on which penalty was initiated. The remaining grounds were treated as academic.

Validity of reopening of assessment - Change of opinion in reassessment - disallow the interest u/s 36(1)(iii) on loans/advances - Presumption as to utilisation of interest-free funds - Disallowance of interest on non-business advances

Change of opinion in reassessment - Audit objection as basis for reopening - Review under guise of reassessment - disallowance of interest u/s 36(1)(iii) - HELD THAT: - The Tribunal found that in the original assessment completed under section 143(3), the Assessing Officer had specifically called for and examined the details of loans, advances and available interest-free funds, and had already made a disallowance under section 36(1)(iii) on that very issue. The subsequent reopening, founded on the same material and the audit objection seeking a higher disallowance, was held to be only a change of opinion. The Tribunal applied the settled principle that reassessment cannot be used to review an issue already examined in the original proceedings, even if the reopening is triggered by an audit objection. [Paras 28, 29, 30, 31, 32]

The notice issued u/s 148 and the reassessment founded on it were rightly quashed, and the Revenue's challenge to that finding failed.

Presumption as to utilisation of interest-free funds - Disallowance of interest on non-business advances - Sufficiency of own funds - HELD THAT: - On merits, the Tribunal accepted the finding that after excluding advances on which interest had been charged, the balance interest-free advances were lower than the assessee's own capital, reserves and other non-interest-bearing funds. Applying the principle in CIT vs. Reliance Utilities & Power Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] it held that where sufficient interest-free funds are available, a presumption arises that the advances were made out of such funds and not from borrowed funds. In the absence of any distinguishing feature shown by the Revenue, no further disallowance under section 36(1)(iii) could be sustained. [Paras 33, 34, 35]

Deletion of the disallowance on merits was upheld.

Final Conclusion: The Tribunal upheld the order of the CIT(A) quashing the reassessment for AY 2017-18 as a mere change of opinion based on material already examined in the original assessment. It also affirmed deletion of the disallowance under section 36(1)(iii), holding that the assessee's interest-free funds were sufficient to cover the advances.

Addition u/s 68 - cash deposited during demonetization period is unexplained - CIT(A) has enhanced the income of the assessee - double addition - HELD THAT: - The Tribunal found from the assessment order that the Assessing Officer had not doubted the income declared in the return and had accepted the returned income on which due taxes were paid. Once such income stood accepted, the cash receipts declared as professional receipts could not again be questioned as unexplained cash credit under section 68. The Tribunal further held that treating the very receipts already offered as income as unexplained cash credit would result in a double addition. It also held that the Commissioner (Appeals) had enhanced the income without issuing any show cause notice, which was not permissible. [Paras 6, 7]

Final Conclusion: The Tribunal allowed the appeal and deleted the addition sustained and enhanced by the Commissioner (Appeals), holding that receipts already accepted as returned income could not be recharacterised as unexplained cash credit and that the enhancement was also vitiated for want of show cause notice.

Denial of deduction u/s 80-IA - non-furnishing of audit report alongwith the Form 10CCB - revised return of income was filed and the said Form 10CCB was accompanied with both the returns in order to claim deduction u/s. 80IA - CIT(A) allowed deduction

HELD THAT: - The Tribunal found that the screenshot reproduced in the assessment order itself showed filing of Form 10CCB on the relevant two dates corresponding to the original and revised returns. Since the very basis of the disallowance stood contradicted by the record, the deletion of the disallowance was rightly upheld. [Paras 5]

The Revenue's objection to allowance of the deduction failed, and the order deleting the disallowance under section 80-IA was upheld.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and affirmed the allowance of deduction under section 80-IA, holding that the disallowance based on alleged non-furnishing of Form 10CCB was unsustainable on the record.

Employers' contribution under section 43B- Refund of excess Dividend Distribution Tax (DDT)

Employers' contribution - Deduction on payment before return filing due date - Distinction from employees' contribution to PF/ESI and the employees’ contribution towards the same - HELD THAT: - The Tribunal held that Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT (LB)] drew a distinction between employees' contribution governed by section 36(1)(va) and employer's contribution governed by section 43B. In the case of employer's contribution, deduction remains available if the payment is made before the due date of filing the return. Since the impugned disallowance related to employer's contribution, the Assessing Officer was directed to verify the date of deposit and allow the deduction if the payment had been made within the time contemplated by section 43B. [Paras 4]

The issue was decided in favour of the assessee subject to verification of the date of payment by the Assessing Officer.

Refund of excess Dividend Distribution Tax - Treaty benefit over domestic rate - India-Japan DTAA - HELD THAT: - The Tribunal accepted the assessee's claim by following Intertek India Private Limited [2026 (1) TMI 1411 - ITAT DELHI] and held that the excess DDT paid was refundable. The determinative principle applied was that where the treaty provided a more beneficial rate in respect of dividend paid to a non-resident shareholder, the tax burden had to be restricted accordingly, and any excess paid under the domestic rate was liable to be refunded. The quantification of the refundable amount was left to be worked out by the Assessing Officer with the assistance of the assessee. [Paras 4]

The Assessing Officer was directed to grant refund of the excess DDT after working out the correct amount.

Final Conclusion: The appeal was partly allowed. The disallowance relating to employer's PF/ESI contribution was directed to be examined u/s 43B on the basis of the actual date of payment, and the claim for refund of excess DDT was accepted with a direction to compute and grant the refundable amount.

Ad hoc disallowance of depreciation - disallowance of donation expenses -Binding nature of CBDT circulars - Verification of allowability u/s 37(1) - disallowance on account of fine and penalty

Ad hoc disallowance of depreciation - Personal use of vehicles and non-maintenance of log book -Burden to support disallowance - HELD THAT: - Tribunal held that the assessee's broad contention that a company can never face such an enquiry merely because it is a company could not be accepted. At the same time, the determinative finding was that the assessee had asserted maintenance of log books and proper audit and voucher controls, and the Department failed to place any contrary material or specific reasons justifying the disallowance. In the absence of adverse material and with the disallowance resting on no established factual basis, the disallowance was treated as arbitrary and bad in law. [Paras 4, 5]

The disallowance of depreciation was directed to be deleted.

Allowability of donation for festivities - Binding nature of CBDT circulars - HELD THAT: - The Tribunal accepted that the Board circulars referred to by the assessee directed that donations made for festivities were allowable. Since such circulars are binding on the Revenue authorities, and the donations in question were found to be within their ambit, the AO had no valid authority to make the disallowance. Department did not rebut this position on record. [Paras 6, 7, 8]

The addition on account of donation expenses was directed to be deleted.

Disallowance on account of fine and penalty -allowability u/s 37(1) -HELD THAT: - Tribunal found lack of factual clarity in the impugned order on whether the items claimed as fine and penalty would fall within the disallowance contemplated u/s 37(1). Since the appellate authority had already restored the matter to the Assessing Officer for verification, and no infirmity was shown in that course, the Tribunal declined to interfere on merits. [Paras 9]

The remand to the AO for verification was upheld and the assessee's ground was dismissed.

Final Conclusion: The appeal was partly allowed. The disallowances relating to depreciation on vehicles and donation expenses were deleted, while the remand on the question of fine and penalty expenditure under section 37(1) was upheld.

Unaccounted interest income - Hypothetical enhancement of diary entries - presumption of deficiency of two zeros

HELD THAT: - The Tribunal followed its decision in the connected case of the assessee-group [2026 (3) TMI 551 - ITAT CHANDIGARH] and held that, once the seized diary was to be read as containing true contents, the Assessing Officer could not alter the recorded figures on a mere assumption that two zeros were missing. The impugned estimation of loan amount and consequential interest was thus based on hypothesis and not on concrete material. On that reasoning, the additions of unaccounted interest income made for all the years were not sustainable.

The additions of interest income for all the years were deleted and the assessee succeeded on merits on this issue.

Final Conclusion: Following the view taken in the connected lead case on identical facts, the Tribunal deleted the additions made towards unaccounted interest income for AY 2013-14 to 2017-18. The appeals were allowed on merits to that extent, and the remaining legal grounds were treated as academic.

Deduction u/s 80IA - entitlement to tax holiday - profits derived from telecommunication services -services provided pursuant to ILD/ NLD license - TDS u/s 195 on telecom charges paid to non-resident telecom operators -TDS u/s 194C on expenditure had already been disallowed by the assessee suo moto

Deduction u/s 80IA - entitlement to tax holiday - profits derived from telecommunication services -services provided pursuant to ILD/ NLD license - other services income received - As per revenue assessee did not furnish segment-wise income and expenditure details for NLD and ILD services, the Assessing Officer made a proportionate disallowance on the basis of revenue of each segment - HELD THAT:- As relying on assessee own case [2021 (11) TMI 36 - ITAT DELHI] we direct the Assessing Officer to delete the proportionate disallowance made under section 80IA of the Act.

TDS u/s 195 - disallowance under section 40(a)(i) - non deduction of TDS on telecom charges paid to non-resident telecom operators - Assessee submitted payments made to non-resident telecom operators were not in the nature of royalty under the provisions of section 9(1)(vi) of the Act read with the relevant provisions of the India-USA Double Taxation Avoidance Agreement (DTAA) - HELD THAT:-Hon’ble Delhi High Court in the assessee’s own case [2023 (12) TMI 347 - DELHI HIGH COURT] held that the disallowance made under section 40(a)(i) of the Act is not sustainable as held that data transmission services could not qualify as royalty in order to be taxed under the Act. Their Lordships have further held that the amendment brought in the Act with retrospective effect or prospective cannot be read in the DAA. Thus, even if there is an amendment brought in the statute, the same cannot be read into the treaty with respective countries where foreign telecom operators are providing data transmission services outside India.

TDS u/s 194C - expenditure had already been disallowed by the assessee suo moto in its computation of income - HELD THAT:- We observe that the assessee has already disallowed the aforesaid amount under section 40(a)(ia) of the Act suo motu, and it was submitted before us that the AO has made the disallowance once again. In the interest of justice, we deem it appropriate to restore this issue to the file of the Assessing Officer for verification of the assessee’s claim and found proper same may be allowed in accordance with law.

TP Adjustment - selection of MAM - TPO has rejected the benchmarking analysis adopted by the assessee on the basis of TNMM adopted as the most appropriate method considering the Limited Risk Method [LRM] - HELD THAT:- We observed that 14% on VAE and 11% on net sales are not same and gives completely different results, as discussed. In our view, the targeted margin offered to the OpCos are growth oriented and further we observed that the LRM method was adopted by the assessee/group consistently and it was accepted by the TPO in all the previous years, where the LRM was effective in the assessee’s own case and there being no change in the facts and circumstances, why the same should not be accepted in the year under consideration.

As held in the case of Radhaswami Satsang [1991 (11) TMI 2 - SUPREME COURT] where a fundamental aspect permeating through the different assessment years have been found as a fact one way or other, and the parties have allowed the position to be sustained by not challenging the order, it is not allowed to change the position in any subsequent year. Hence, in our view the consistent result has to be applied in the given case also, it cannot be a situation where the revenue cherry picks the results.

We observed that the LRM is not only been accepted and adopted by Verizon group in India as well as across the globe, all the OpCos are remunerated similarly and the same is accepted in their respective tax jurisdictions. Therefore, we should accept the uniform method adopted by the group across the globe and as discussed above, the compensation is growth oriented and not restrictive, it may give different results depending upon the performance of each year, the same is business risk comes along with the peculiar business model. Therefore, we are inclined to accept the submissions of the assessee in this regard and except the method of calculation of targeted margin adopted in the year under consideration.

Final Conclusion: The appeal was allowed in substantial part. The disallowances under section 80IA and section 40(a)(i) were deleted, the issue under section 40(a)(ia) was restored for verification, and the transfer pricing adjustment was sustained only to the limited extent of the shortfall in compensation under the agreed limited risk model.

Additional duty of customs - Rubber cess - Binding precedent

Additional duty of customs - Rubber cess - Coordinate Bench precedent - Levy of additional duty of customs under section 3(1) of the Customs Tariff Act equivalent to rubber cess under section 12 of the Rubber Act on imported natural rubber was held to be legally sustainable. - HELD THAT: - The Tribunal noted that both sides relied on competing decisions, but found that in the appellant's own case the Bangalore Bench had recently rejected the same challenge for an earlier period after relying on the Larger Bench ruling in TTK-LIG Ltd. [2005 (12) TMI 300 - CESTAT, NEW DELHI-LB] It further recorded that, although the appeal against the Chennai Bench decision in TTK-LIG Ltd. had been dismissed by the Supreme Court with the question of law kept open, there was no stay or interim order in any admitted appeal. In the absence of any distinguishing facts, the Tribunal followed the coordinate Bench decision in the appellant's own case and declined to take a different view. [Paras 12]

The challenge to the levy failed and the demand was sustained.

Final Conclusion: Following the coordinate Bench decision in the appellant's own case and finding no distinguishing feature or operative stay from the Supreme Court, the Tribunal upheld the levy of additional duty equivalent to rubber cess on the imported goods. The appeal was accordingly dismissed.

Exemption notification - Strict compliance with conditional exemption - Additional evidence before Tribunal - Limitation under demand notice

Exemption notification - Exclusion by annexure - The imported goods classified under sub-heading 16010000 were not entitled to the benefit of Notification No.125/2011-Cus. dated 30.12.2011. - HELD THAT: - The Tribunal held that although the notification prescribed an effective rate for goods of Chapter 16, Note 2 expressly excluded the goods specified in the Annexure. Since Sl. No.233 of the Annexure covered heading/sub-heading 160100, goods falling under sub-heading 16010000 stood outside the notification itself. In view of this express exclusion, the original claim for exemption was not maintainable. [Paras 5, 7]

The claim for benefit under Notification No.125/2011-Cus. was rightly denied.

Strict compliance with conditional exemption - Additional evidence before Tribunal - The appellant's alternate claim under Notification No.26/2000-Cus. could not be entertained in the absence of supporting documents and could not be supported for the first time before the Tribunal without complying with the prescribed procedure for additional evidence. - HELD THAT: - The Tribunal found that the alternate exemption was a conditional one and therefore required fulfilment of the prescribed conditions along with production of supporting material. Since the claim before the appellate authority was unsupported by documents, its rejection was justified. The Tribunal further held that factual verification of such a claim could not be undertaken on the basis of documents produced for the first time in appeal, particularly when the procedure under Rule 23 of the CESTAT (Procedure) Rules, 1982 had not been followed and no satisfactory explanation was given for earlier non-production. The principle of strict construction of exemption notifications governed the matter. [Paras 7, 8]

The alternate exemption claim and the application to place additional material on record were rightly rejected.

Limitation under demand notice - The demand notice was within time under Section 28 of the Customs Act, 1962. - HELD THAT: - The Tribunal held that the period of one year was to be reckoned from the end of the month in which the bill of entry was filed and would expire at the end of the corresponding month in the following year. On that reckoning, the demand notice was not barred by limitation. [Paras 9]

The plea of limitation was rejected.

Final Conclusion: The Tribunal upheld the denial of the claimed exemption, refused to entertain the unsupported alternate exemption claim and rejected the limitation objection. The appeal was consequently dismissed and the miscellaneous application was also rejected.

Redemption fine - Penalty for misdeclaration - Bona fide discrepancy in imported goods weight

Redemption fine - Penalty for misdeclaration - Bona fide discrepancy in imported goods weight - Imposition of redemption fine and penalty for the excess weight found in the imported goods was upheld in principle, but the quantum required reduction. - HELD THAT: - The Tribunal found that the discrepancy in the weight of the imported goods was not in dispute, and the appellant also did not contest the consequential differential duty. However, the invoice and packing list issued by the foreign supplier showed the same weight as declared in the Bill of Entry, and the excess quantity came to light only on physical verification after arrival. Since the Revenue could not attribute any specific role to the appellant in the excess weight and the appellant's bona fides were not doubted, liability under the statute could still follow for the mismatch, but the redemption fine and penalty imposed were considered excessive in the peculiar facts of the case. [Paras 5]

The redemption fine and penalty were sustained but reduced.

Final Conclusion: The appeal was partly allowed. While the mismatch in weight and consequential liability were not disturbed, the redemption fine and penalty were reduced in view of the appellant's bona fides and the absence of any established specific role in the misdeclaration.

Customs tariff classification - Classification of Electronic Power Steering ECU - Precedential discipline

Customs tariff classification - Electronic Power Steering ECU - Binding coordinate bench decision - Classification of the imported EPS-ECU under CTI 8708 94 00 or CTI 9032 90 00 stood concluded against the appellant by the Tribunal's earlier decision in the appellant's own case. - HELD THAT: - The Tribunal found that the goods in the present appeals were identical to the EPS-ECU considered in its earlier final order concerning the same appellant. It examined the later Chennai Bench decision in Hyundai Motors and noted that, although that order treated classification of each ECU as dependent on its own merits, it had distinguished Continental Automotive on facts and had not considered the earlier order passed in the appellant's own case. Since the present goods were the same as those covered by the earlier order, and that order had not been stayed despite challenge before the Supreme Court, the Tribunal held that the earlier decision continued to govern the classification dispute. On that basis, EPS-ECU remained classifiable under CTI 8708 94 00 and not under CTI 9032 90 00. [Paras 6, 8, 9, 10]

The classification adopted in the impugned order under CTI 8708 94 00 was upheld and all the appeals were dismissed.

Final Conclusion: Following its earlier order in the appellant's own case on identical goods, the Tribunal held that EPS-ECU was correctly classifiable under CTI 8708 94 00. The impugned appellate order was upheld and all 196 appeals were dismissed.

Rejection of transaction value - Failure to examine material evidence - Abnormal discount

Rejection of transaction value - Abnormal discount - Failure to examine material evidence - The rejection of the declared transaction value on the ground of abnormal discount could not be sustained without examining the documentary material produced by the importer and the comparative material relied upon by the Revenue. - HELD THAT: - The Tribunal found that there was no allegation of relationship between the appellant and its supplier, nor any allegation of payment over and above the invoice price. The dispute rested on the department's view that the discount flowing from Cisco through the channel partner was abnormal. On the record, however, the purchase orders placed by the channel partner on Cisco specifically mentioned the appellant as end-user, and the communication issued on behalf of Cisco stated that higher discounts could be extended for particular strategic projects and that such higher discount had in fact been extended in the present case. The appellant had also placed invoices and a price chart showing the price charged by Cisco to the channel partner and the price charged by the channel partner to the appellant. The Tribunal held that, in these circumstances, the view that no supporting documents had been produced was not acceptable. It further noticed that the comparative chart relied upon by the Revenue regarding discounts allegedly extended to Bharti Comtel had also not been examined, and there was no specific finding whether those imports were comparable in period, project or volume. Since the relevant evidence on both sides had not been examined, the matter required fresh consideration on the admissibility of the higher discount and the consequential assessable value. [Paras 20, 21, 22, 23, 24]

The impugned order was set aside and the matter was remanded to the adjudicating authority for fresh examination of the evidences and redetermination of the assessable value.

Final Conclusion: The Tribunal held that the authorities had not properly examined the documentary material produced by the appellant or the comparative material relied upon by the Revenue before rejecting the declared value. The order was therefore set aside and the matter remanded for fresh decision on the admissibility of the higher discount and the assessable value.

Liability of subsequent purchaser for customs duty - Joint and several demand of differential duty - Penalty consequential to unsustainable duty demand

Liability of subsequent purchaser for customs duty - Joint and several demand of differential duty - Definition of importer - Differential duty arising from alleged misdeclaration of year of manufacture in imported vehicles could not be fastened on subsequent purchasers, nor could such demand be sustained when confirmed jointly and severally on importers and purchasers. - HELD THAT: - The Tribunal held that the controversy stood covered by Nalin Choksey Vs. CC, Kochi, wherein the Supreme Court, after examining the definition of importer, held that a subsequent purchaser who was not involved in the importation cannot be treated as importer for recovery of duty under Section 28. In the present matters, the purchasers had acquired the vehicles in the ordinary course after import, and the show-cause notices sought to recover differential duty from importers and purchasers jointly and severally. Following the Supreme Court decision, such proceedings against the purchasers were held to be unsustainable. The Tribunal further held that, since the differential duty had been confirmed jointly and severally against importers and purchasers, the demand itself could not be sustained in view of Rimjhim Ispat Lt. Vs. CCE, Kanpur . [Paras 10, 11, 12]

The differential duty demands against the purchaser-appellants were set aside, and the jointly and severally confirmed demands were held unsustainable.

Penalty consequential to unsustainable duty demand - Penalties imposed on the appellants could not survive once the differential duty demands were found unsustainable. - HELD THAT: - The Tribunal treated the penalties as consequential to the duty demands and held that, once the demands themselves failed, the penalties imposed on the appellants could not be maintained. [Paras 12]

The penalties imposed on the appellants were set aside.

Final Conclusion: The Tribunal set aside the impugned orders and allowed all the appeals with consequential relief. It held that subsequent purchasers of the imported vehicles were not liable for the differential duty, and the penalties also could not survive.

Composite scheme of arrangement - Legality of the Tribunal Order in directing to file a separate application for the demerger component of the composite scheme - modifying the scheme by limiting approval to amalgamation alone - Amalgamation and demerger - Commercial wisdom of shareholders and creditors.

Composite scheme of arrangement - Amalgamation and demerger - Demerged undertaking - HELD THAT: - The Appellate Tribunal held that Clauses 1.1, 1.2 and 5.1(p) of the scheme expressly identified the Amalgamated Company, the Demerged Company upon amalgamation, the Resulting Company, and the Demerged Undertaking with sufficient specificity. The finding in the impugned order that the demerger related to an unspecified entity or undertaking was contrary to the scheme record and amounted to a perverse interpretation. Since the scheme was presented and approved as a composite scheme, and no statutory authority had suggested that demerger be considered separately, the direction to file an independent application for demerger improperly altered the scheme and was unwarranted. The Tribunal further held that a scheme including demerger could be sanctioned within the powers under Sections 230 to 232, and no separate process was required merely because demerger was to follow amalgamation under the same scheme. [Paras 31, 32, 33, 35, 38]

The direction requiring a separate application for demerger was set aside, and it was held that the demerger would follow as a consequence of the sanctioned composite scheme without any independent application.

Commercial wisdom of stakeholders - Terms of sanctioned scheme - Factual errors in sanction order - HELD THAT: - Relying on Miheer H. Mafatlal v. Mafatlal Industries Ltd. [1996 (9) TMI 488 - SUPREME COURT] the Appellate Tribunal held that once the board, shareholders and creditors had approved the scheme in their commercial wisdom, the Tribunal ought not to modify its structure or material terms. On that principle, the impugned order was found erroneous in recording that amalgamation would be effective from the date of the order despite the scheme defining its own effective date, and in describing Petitioner Company-3 as if it would come into existence through the amalgamation although it already existed as the Resulting Company. The further rider making approval subject to the outcome of an unadmitted petition was also held unnecessary, especially when the impugned order itself recorded that the petition had not been admitted. [Paras 34, 36]

The challenged portions of the impugned order in paragraph 26(i), 26(ii) and 26(viii) were held liable to be deleted or set aside to the extent they departed from the approved scheme.

While allowing the appeal on the scheme issue, the Appellate Tribunal clarified that its decision would not operate as an exception or exemption from liability to pay stamp duty, taxes, other statutory charges, or to obtain permissions and fulfil compliances required by law. Those obligations were expressly preserved against the Demerged Company and the Resulting Company. [Paras 37, 39]

The appeal was allowed subject to the continued liability of the concerned companies to discharge all statutory dues and compliances in accordance with law.

Final Conclusion: The appeal was allowed to the limited extent challenged. The Appellate Tribunal held that the demerger formed an integral and consequential part of the sanctioned composite scheme and did not require a separate application, while preserving all liabilities for taxes, stamp duty and other statutory compliances.

Fraudulent trading in illiquid scrip - Promoter group - Minimum public shareholding (MPS) norms - proportionality of debarment - The Tribunal upheld the findings that Riddhi Siddhi had failed to maintain minimum public shareholding and that the connected appellants had engaged in fraudulent trading to project liquidity in the scrip for delisting purposes. The penalty order in one appeal was sustained, the principal directions of the WTM were maintained, and only the period of debarment was reduced for specified appellants on proportionality.

HELD THAT:- Having heard both the learned senior counsel appearing for the appellants and the learned senior counsel appearing for the Securities and Exchange Board of India, the respondent, we find no reason whatsoever to interfere with the impugned final order [2026 (3) TMI 1255 - SECURITIES APPELLATE TRIBUNAL AT MUMBAI] No substantial question of law arises for consideration in our opinion.

The appeals are, accordingly, dismissed.

Debt and default under debenture trust deed - acceleration of debenture liability - project-wise insolvency in real estate - project-specific security interest

Debt and default under debenture trust deed - acceleration of debenture liability - cure of default during pendency - The financial creditor had established default only to the extent of the unpaid quarterly interest demanded in the cure notice, and not the entire debenture amount including principal. - HELD THAT: - The Tribunal held that, under the debenture trust deed as extended, the principal amount had become payable only on 30.06.2024. The notice relied upon for filing the Section 7 application demanded payment of the overdue quarterly interest and gave a cure period of 15 days. Although the deed contemplated further remedies after expiry of the cure period, no subsequent step was taken requiring redemption of all outstanding debentures before filing the application. Consequently, inclusion of the principal amount in the default figure stated in Part IV of the application was contrary to the contractual scheme. Even so, non-payment of the interest amount demanded in the notice stood clearly proved, and that default was above the statutory threshold. The subsequent payments made during pendency of the Section 7 proceedings did not wipe out the subsisting default as on the date of filing and could not cure the default for purposes of admission. [Paras 18, 19, 20, 21]

Default stood proved in respect of the overdue interest demanded in the notice, but the claim treating the entire debenture liability including principal as due on the filing date was held to be incorrect.

Project-wise insolvency in real estate - project-wise resolution - The view that insolvency of a real estate company can never be confined project-wise and that only resolution can proceed project-wise was held to be erroneous in law. - HELD THAT: - The Tribunal held that the adjudicating authority failed to follow binding precedent governing insolvency in the real estate sector. Referring to the law earlier laid down by the Supreme Court and this Appellate Tribunal, it concluded that where insolvency proceedings are initiated in relation to one real estate project, the process should, as a rule, proceed on a project-specific basis and should not automatically envelop other distinct projects of the same corporate debtor unless circumstances justify otherwise. The adjudicating authority's contrary approach, despite noticing those authorities, was therefore disapproved. [Paras 34, 35, 36]

The finding that project-wise insolvency is impermissible was set aside as contrary to the law laid down for real estate insolvency.

Project-specific security interest - real estate project financing - The debenture funding and security structure under the debenture trust deed related to a specified project and property, and the CIRP in the facts of the case had to be confined to that project alone. - HELD THAT: - On construction of the debenture trust deed, the Tribunal found that the transaction was anchored to development of a defined project on identified land. The deed linked the business plan, receivables, escrow mechanism, mortgage, hypothecation, monitoring rights, internal audit rights and requirement of no-objection for sale of units to that project property. The material on record also showed that the respondent itself issued no-objection letters for sale of units in Project Aspirations, thereby treating that project as the charged project. The general clause concerning business activities and corporate purposes did not override the specific security and control provisions tied to the identified land and project. The Tribunal therefore concluded that the financing was project-specific and that the CIRP could not extend to the corporate debtor's other projects in Haryana or elsewhere. [Paras 56, 57, 63, 64, 65]

While admission of the Section 7 application was upheld, the CIRP was directed to remain confined to Project Aspirations on the identified land and not to the corporate debtor's other projects.

Final Conclusion: The appeal was partly allowed in the sense that admission of the Section 7 application was sustained on proof of debt and default, but the impugned order was modified to confine the CIRP only to Project Aspirations situated on the identified project land. The IRP was directed to continue the process accordingly, with liberty to creditors of other projects to pursue remedies available in law.

Jurisdiction of the Adjudicating Authority to direct recovery of assets of the corporate debtor - Proof of tenancy, lease or licence rights in corporate debtor's premises - Bar of civil court jurisdiction under the IBC

Jurisdiction under section 60(5) - Control and custody of corporate debtor's assets - Duties of resolution professional - The application filed by the Resolution Professional for eviction of the appellant from the corporate debtor's premises was maintainable before the Adjudicating Authority. - HELD THAT: - The Appellate Tribunal held that, once ownership of the premises by the corporate debtor was undisputed, the Resolution Professional was under a statutory obligation to take control, custody, preservation and protection of such asset. The relief sought had a direct nexus with the insolvency process because recovery of possession of the corporate debtor's own property formed part of the Resolution Professional's duties under the Code. The authorities relied on by the appellant were found inapplicable, while the principle recognised in the later decision of the Supreme Court supported the competence of the Adjudicating Authority to entertain proceedings for protecting or recovering possession of assets belonging to the corporate debtor. The earlier winding-up proceedings, in which the Official Liquidator had already taken symbolic possession steps, further reinforced that the property was an asset required to be brought under insolvency control. [Paras 16, 17, 18, 21, 22]

The objection to jurisdiction was rejected, and the Adjudicating Authority was held competent to entertain and decide the eviction application.

Oral tenancy - Permissive occupation - Absence of lease or licence - The appellant failed to establish any tenancy, leasehold or licence right in respect of the premises. - HELD THAT: - The only contemporaneous document relied on by the appellant merely showed that the corporate debtor had permitted it to stock marble at the premises. The Tribunal found no pleading or material showing the creation of a tenancy, payment and acceptance of rent, terms of lease, or any other indicia of a landlord-tenant relationship. The appellant's own case was that it continued in occupation because its supply dues remained unpaid and interest was to be adjusted, which was inconsistent with a claim of tenancy. Registrations obtained for carrying on business at the address were held incapable of conferring any proprietary or possessory right. At the highest, the appellant had permissive use for stocking goods, and in any event such permission could not survive the winding-up order, the possession steps taken by the Official Liquidator, and the subsequent notices issued by the Resolution Professional. [Paras 27, 28, 29, 30, 31]

The appellant was held to be in unlawful occupation, having failed to prove any tenancy, lease or licence in its favour.

Civil court jurisdiction bar - Due process of law - Effect of interim injunction - The interim order of the City Civil Court did not preclude the Adjudicating Authority from directing eviction. - HELD THAT: - The Tribunal held that the Code bars the jurisdiction of civil courts in matters over which the Adjudicating Authority or the Appellate Tribunal has jurisdiction. It further noticed that even the interim order of the City Civil Court protected possession only until disturbance otherwise than by due process of law. Since the Resolution Professional's application was maintainable and the direction for recovery of possession was made by the competent insolvency forum in accordance with law, the civil court's ad interim order did not operate as a restraint on the impugned order. [Paras 32, 33, 34]

The appellant could derive no protection from the interim civil court order, and the eviction direction remained unaffected.

Final Conclusion: The appeal was dismissed. The Appellate Tribunal upheld the Adjudicating Authority's order directing the appellant to vacate the corporate debtor's premises, and authorised the Resolution Professional to take possession with police assistance if possession was not handed over within the time granted.

Applications under Section 95 sub-section (1) - Maintainability of subsequent insolvency application against personal guarantor - failed to answer statutory notice, including invocation of guarantees, despite having been given ample opportunities - Proceedings initiated during subsisting moratorium - Whether due to withdrawal of Section 95 application by Canara Bank, the prohibition which triggered due to interim moratorium shall come to an end.

Interim moratorium - Subsequent section 95 application - Non est proceedings - HELD THAT: - The Appellate Tribunal held that, once an earlier application under section 95 had been filed, the interim moratorium under section 96 commenced from the date of that application and continued until the earlier application was withdrawn. During that statutory moratorium, creditors were barred from initiating legal proceedings in respect of any debt. Applying the principle recognised in Union Bank of India vs. P.K. Balasubramanian [2023 (3) TMI 1333 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI], Indian Bank vs. T Prabhakar [2025 (5) TMI 2003 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT CHENNAI] and Alchemist Asset Reconstruction Company Ltd. vs. M/s. Hotel Gaudavan Pvt. Ltd. & Ors. [2017 (12) TMI 1107 - SUPREME COURT], the Tribunal held that proceedings initiated in breach of such moratorium are non est from inception. The respondent's reliance on authorities dealing with the effect of withdrawal of civil suits was rejected as insufficient to validate a proceeding which was void when instituted. The later withdrawal of the earlier section 95 application only brought the moratorium to an end prospectively; it did not retrospectively legalise the respondent's application filed during the currency of that moratorium. The Adjudicating Authority therefore erred in admitting the application without giving effect to the statutory consequence of the subsisting interim moratorium. [Paras 22, 23, 24]

The admission order was unsustainable; the section 95 applications filed during the subsisting interim moratorium were dismissed, with liberty to the financial creditor to file fresh applications in accordance with law.

Final Conclusion: The appeals were allowed. The orders admitting the section 95 applications were set aside and those applications were dismissed, while reserving liberty to the financial creditor to institute fresh applications after cessation of the earlier interim moratorium.

Waiver of pre-deposit - Undue hardship - Supervisory jurisdiction under Article 227

Waiver of pre-deposit - Undue hardship - Prima facie case - Supervisory jurisdiction under Article 227 - The challenge to the Appellate Tribunal's order granting only partial waiver of pre-deposit under Section 19 of FEMA was decided by examining whether the condition requiring deposit could be interfered with in supervisory jurisdiction. - HELD THAT: - The Court held that under Section 19 of FEMA, deposit of the penalty is the rule, and dispensation is an exception exercisable in a particular case on satisfaction of undue hardship, subject to conditions considered fit to safeguard recovery. The Appellate Tribunal had already exercised that statutory discretion by granting substantial waiver and directing deposit of only a part of the penalty. On the petitioners' plea of a strong prima facie case, the Court noted that, on their own statements, they were aware that the amounts were to be remitted abroad and the relevant FEMA provisions could therefore stand attracted; hence, no clear prima facie case for total waiver was made out. On hardship, the Court found no material to show that the Tribunal's order suffered from perversity, unreasonableness or non-application of mind. It further held that, in proceedings under Article 227, the High Court does not act as an appellate forum to reappreciate the specialised tribunal's assessment. The decisions in Nimesh Suchde vs. Union of India (UOI) and Ors. and Priya Shah vs. Enforcement Directorate were held inapplicable on facts, since those cases did not concern a comparable exercise of discretion where substantial waiver had already been granted. [Paras 13, 14, 15, 16, 17]

No infirmity was found in the Tribunal's exercise of discretion; however, in the interest of justice, the condition was modified by reducing the cash pre-deposit from 10% to 5%, with the balance 5% to be secured by bank guarantee or surety to the satisfaction of the Appellate Tribunal.

Final Conclusion: The petitions were disposed of by upholding the Tribunal's order in principle and declining interference on merits under Article 227. The only modification made was to reduce the immediate pre-deposit requirement to 5% and permit the remaining 5% to be secured by bank guarantee or surety, leaving the merits of the penalty appeals open before the Appellate Tribunal.

Provisional attachment - definition of the term ‘proceeds of crime’ - “Scheduled Offence” is defined in Section 2(y) - reason to believe - commission of the offence - Possession of unaccounted property acquired by legal means may be actionable as a tax violation - Nexus with scheduled offence - Pre-offence property attachment - Supplementation of reasons.

Supplementation of reasons - Provisional attachment order -HELD THAT: - The Court found that the provisional attachment order itself expressly recorded that the immovable property represented the value of proceeds of crime as defined under Section 2(1)(u) and was liable for immediate attachment. Since the statutory basis and the reason for attachment were already stated in the order, the principle in Mohinder Singh Gill & Anr. Vs. Chief Election Commissioner, New Delhi & Ors [1977 (12) TMI 138 - SUPREME COURT] against supplementing reasons by subsequent explanation had no application. [Paras 12]

The challenge founded on absence of reasons in the provisional attachment order was rejected.

Proceeds of crime - Nexus with scheduled offence - Pre-offence property attachment -HELD THAT: - On a conjoint reading of the decisions in Vijay Madanlal Choudhary & Ors. Vs. Union of India & Ors [2022 (7) TMI 1316 - SUPREME COURT (LB)] and Pavana Dibbur Vs. Directorate of Enforcement [2023 (12) TMI 49 - Supreme Court], the Court held that there was no conflict between them. The governing principle is that attachment under the Act is confined to property linked to the scheduled offence; the statutory expression cannot be read as permitting attachment of any unconnected property merely because the alleged proceeds have become untraceable. The Court further held that the exception permitting attachment of equivalent value property applies where the property derived from criminal activity is taken or held outside India. Accordingly, property acquired prior to the commission of the crime, and having no nexus to the criminal activity relating to the scheduled offence, cannot be regarded as proceeds of crime. [Paras 27, 34, 35, 36, 37]

The Court held that attachment of property acquired prior to the commission of the crime would not fall within the definition of proceeds of crime.

Disputed question of fact - Timing of acquisition - HELD THAT:- The appellant asserted that consideration for the property had been paid between 2008 and 2011, whereas the respondents maintained that the property was purchased on the date of registration during the period of the alleged scheduled offence. In view of this factual dispute, and particularly because the property stood registered in the appellant's name during the period of commission of the offence, the Court held that the question whether the property had in fact been acquired prior to the crime had to be established by evidence. Until that factual foundation was proved, the Court declined to interfere. [Paras 38, 39, 40]

As the factual basis for treating the property as pre-offence property was unproved, the appeal was dismissed.

Final Conclusion: The Court held that only property having nexus with criminal activity relating to a scheduled offence can be treated as proceeds of crime, and that property acquired prior to the commission of the crime would not ordinarily fall within that definition. However, since the appellant failed to establish, on the present record, that the attached property had in fact been acquired before the alleged offence period, the appeal was dismissed.

Denial Of CENVAT credit for lack of original documents - demand for service tax on claimed exports - sponsorship expenses - reconciliation between ST-3 returns and financial statements - cum-tax (cum-duty) price benefit - Invocation of extended period of limitation for suppression of facts - penalty under Section - suppression/mis-declaration.

Supreme Court dismissed the SLP of the assessee against the decision of CESTAT wherein the appeal of the assessee was allowed partly.

Service tax exemption on legal services - Jurisdiction in disregard of binding exemption notifications

Legal services by advocate to partnership firm of advocates - Binding exemption notifications - Lack of jurisdiction - Service tax could not be levied on the petitioner, an advocate, in respect of legal services rendered to a partnership firm of advocates, and the adjudicating authority lacked jurisdiction to proceed contrary to the governing notifications. - HELD THAT: - The Court held that the controversy stood covered by its earlier decision in Advocate Pooja Patil, which had construed Notification Nos. 25/2012-ST and 30/2012-ST to mean that legal services provided by an individual advocate to an advocate or partnership firm of advocates were either exempt or not exigible in the hands of the advocate, the liability, where applicable, being structured under the reverse charge mechanism. Since the impugned proceedings proceeded against the individual advocate despite the binding notifications, the authority had acted without jurisdiction. The Court also found the petitioner's reliance on Manisha Rajiv Shroff 2026 (2) TMI 532-Bombay High Court to be well founded and treated the present case as requiring the same result. [Paras 8, 9, 10, 11]

The order-in-original and consequential recovery action were liable to be quashed, and the petition was allowed.

Final Conclusion: Following its earlier decisions and the applicable notifications, the Court held that service tax was not leviable on the petitioner for the legal services in question and that the proceedings against him were without jurisdiction. The petition was accordingly allowed and the impugned adjudication and recovery consequences were set aside.

Taxability of CRS/GDS incentives - Basic fare under Rule 6(7) - Abatement on proportionate reversal of common CENVAT credit - Adjustment of excess service tax - CENVAT credit on gateway charges - Reverse charge on services performed outside India - Extended period of limitation

Business Auxiliary Service - CRS/GDS incentives - consideration - Incentives received by air travel agents from CRS/GDS companies were not chargeable to service tax as Business Auxiliary Service. - HELD THAT: - Following the Larger Bench decision in Kafila Hospitality & Travels Pvt Ltd [2021 (3) TMI 773 - CESTAT NEW DELHI (LB)] the Tribunal held that the travel agents were promoting their own business and not the business of the CRS/GDS companies or airlines. Passengers were not the audience for any promotion of the CRS/GDS companies, and the incentives paid for achieving booking targets were not consideration for any taxable service rendered to those companies. The contrary reliance placed by Revenue on earlier decisions was held to be of no avail. [Paras 17]

The demand on CRS/GDS incentives in all the appeals was set aside.

Basic fare - fuel surcharge - Rule 6(7) - Commission on fuel surcharge was not includible in the basic fare for payment of service tax under Rule 6(7). - HELD THAT: - Relying on BCD Travels India Pvt Ltd [2023 (4) TMI 1134 - CESTAT CHENNAI] the Tribunal held that once the assessee had opted to discharge tax under Rule 6(7), the Revenue could not alter that basis by importing valuation under section 67. The ticket itself separately indicated the basic fare and other charges, and the authorities could not expand the meaning of basic fare to include fuel surcharge. [Paras 18]

The demand on account of non-inclusion of fuel surcharge was held unsustainable and was set aside.

Abatement - proportionate reversal of credit - non-speaking order - Abatement under the notifications could not be denied where proportionate common credit had been reversed, and the adjudicating authority's contrary view on formula and valuation was unsustainable. - HELD THAT: - The Tribunal held that, before 01.04.2011, no statutory formula existed for reversing common credit and the appellants could not be faulted for adopting a proportionate method which later aligned with the formula introduced from 01.04.2011. For the period after 01.04.2011, the authority's insistence on section 67 valuation instead of the value relatable to the option under Rule 6(7) had no statutory backing. Having accepted in principle that reversal of credit amounts to non-availment, the adjudicating authority could not deny abatement merely by branding the method as home-grown without disputing the actual calculations. The order was also found cryptic, contradictory, beyond the scope of the show cause notice, and unsustainable as a non-speaking order. The Tribunal declined Revenue's request for remand since the correctness of quantification had never been the case set up in the notices or the order. [Paras 19]

The appellants were held entitled to abatement and the demand on this count was set aside without remand.

Adjustment of excess service tax - procedural lapse - intimation - Adjustment of excess service tax paid in earlier months could not be denied merely for alleged procedural non-compliance. - HELD THAT: - The Tribunal recorded that the appellants had intimated the jurisdictional Superintendent regarding the adjustments. In any event, following General Manager (CMTS), it held that adjustment of excess payment cannot be denied for procedural lapses such as non-filing of intimation or adjustment beyond the prescribed monetary limit, where the excess payment was not attributable to disputes of interpretation, classification, valuation or exemption. The excess payment was in the nature of advance tax payment and could be adjusted against subsequent liability. [Paras 20]

The demand raised on account of wrongful adjustment of excess service tax was not sustainable.

Input service - gateway charges - reimbursement - CENVAT credit on gateway charges could not be denied merely because some airlines reimbursed those charges. - HELD THAT: - The Tribunal held that the reasoning in the impugned order had no legal basis. The relevant question was whether the gateway service was an input service for the appellants' output service, and neither the show cause notice nor the impugned order disputed that character. The CENVAT Credit Rules contained no restriction denying credit merely because the expense was reimbursed, and the Department had not set up any case that such reimbursement altered the admissibility of credit. [Paras 21]

The denial of CENVAT credit on gateway charges was set aside.

Reverse charge mechanism - services performed outside India - reimbursement of expenses - Service tax under reverse charge was not payable on services performed outside India, and mere reimbursements could not be taxed in the absence of an identified taxable service. - HELD THAT: - For the earlier notice, the Tribunal found that the appellants had already discharged the liability with interest and the balance demand survived only because of erroneous appropriation. For the subsequent notice, it held that booking of accommodation for tours abroad and the right to participate in business exhibitions held abroad were performed outside India and, under Rule 3(ii) of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, were not taxable in India. As regards UK marketing expenses, the demand was unsustainable because it was only reimbursement of expenses and no taxable service had been identified by the Department. [Paras 22]

The reverse charge demands were held unsustainable and were set aside.

Extended period - suppression of facts - audit-based demand - The extended period of limitation was not invocable where the material facts had been regularly disclosed to the Department. - HELD THAT: - The Tribunal found that the appellants were filing returns regularly, had informed the Department about adjustments, reversals and methodology from time to time, and had also furnished details concerning gateway charges during audit. No evidence of suppression, mis-declaration, misrepresentation or collusion was brought out in the show cause notices. Mere assertion of suppression was held insufficient, and where issues arose from audit, the extended period could not be invoked on that basis. [Paras 23]

All demands falling beyond the normal period were held barred by limitation.

Final Conclusion: The Tribunal held that none of the service tax and CENVAT credit demands survived on merits, and that the demands raised beyond the normal period were also barred by limitation. All the impugned orders were set aside and all three appeals were allowed.

Classification of service as job work or manpower supply - Principal-to-principal contractual arrangement

Job work - Supply of manpower - Control and supervision test - Principal-to-principal contract - The activities undertaken by the appellants for L&T were job work contracts on a principal-to-principal basis and not taxable supply of manpower. - HELD THAT: - The Tribunal held that the show cause notices had neither extracted nor relied upon the relevant work orders, which were the best evidence of the true nature of the arrangement. On the contractual terms produced, the appellants were engaged for specified fabrication activities, and consideration was linked to the quantity or tonnage of work executed, not to the number of workers supplied or the time spent. Mere execution of work at the principal's premises with the principal's materials, power or machinery did not convert the arrangement into supply of manpower. The determinative factor was who retained responsibility for execution of the work and deployment of labour, and that responsibility remained with the appellants. The Tribunal also followed its earlier decision in M/s. Larsen & Toubro Ltd. Vs Commissioner of GST & Central Excise [2026 (3) TMI 435 - CESTAT CHENNAI] on an identical work order and noted that, in similar cases involving the second appellant and another contractor, the Revenue had accepted orders treating the activity as job work. In the absence of distinguishing facts, the Revenue could not take a contrary stand in the present appeals. [Paras 5, 6, 7]

The demand treating the activity as manpower supply was unsustainable, and the impugned orders were liable to be set aside.

Final Conclusion: The Tribunal allowed the appeals and set aside the impugned orders. It held that the appellants had undertaken contractual fabrication job work and had not rendered taxable manpower supply service.

Taxability of builder/developer services prior to 01.07.2010 - Composite works contract

Taxability of builder/developer services prior to 01.07.2010 - Composite works contract - Commercial or Industrial Construction Service - The appellant's activity as a developer during October 2005 to March 2008 was not taxable under Commercial or Industrial Construction Service. - HELD THAT: - The Tribunal held that the controversy stood settled by precedent. Following Krishna Homes v. CCE, read with Larsen & Toubro Ltd. v. State of Karnataka [2013 (9) TMI 853 - SUPREME COURT] construction agreements entered into by builders or developers with buyers are in the nature of works contracts. Such activity became taxable only from 01.07.2010 upon insertion of the relevant Explanation, and therefore there was no legislative intent to levy service tax on the appellant's activity during the disputed period. The Tribunal also followed its own decision in Dugar Housing Vs Commissioner of GST and Central Excise, Chennai [2025 (11) TMI 951 - CESTAT CHENNAI] and, applying judicial discipline, held that the impugned demand with interest and penalties could not be sustained. [Paras 5, 6]

The demand of service tax on the appellant's developer activity for the relevant period was unsustainable, and the impugned order was set aside.

Final Conclusion: The Tribunal held that the appellant's activity as a developer during the disputed period, being in the nature of a works contract, was not liable to service tax under Commercial or Industrial Construction Service prior to 01.07.2010. The impugned order was therefore set aside and the appeal was allowed with consequential relief.

Extended period of limitation - Suppression of facts - Demand based on Form 26AS / ITR mismatch - Successive show cause notices

Extended period of limitation - Suppression of facts - Demand based on Form 26AS / ITR mismatch - Invocation of the extended period on the basis of differential figures between Form 26AS / ITR and ST-3 returns, without independent verification of the nature and taxability of the transactions, was unsustainable. - HELD THAT: - The Tribunal found that the appellant was a registered assessee, had regularly filed ST-3 returns, and had produced its books, balance sheet, ITR and TDS records before the department. A departmental audit covering the relevant period had also been conducted without raising objection. In these circumstances, mere reliance on CBDT data and the mismatch with ST-3 returns, without any independent inquiry to establish the nature of the services and the corresponding tax liability, could not justify the demand. As no material was brought on record to establish suppression or wilful mis-statement with intent to evade tax, the conditions for invoking the extended period under Section 73 were held to be absent. [Paras 8, 9]

The demands for both periods, together with interest and penalties, were held barred by limitation on this ground.

Successive show cause notices - Extended period of limitation - The second show cause notice could not invoke the extended period when the department was already aware of the material facts at the time of issuing the first notice on the same issue. - HELD THAT: - The Tribunal recorded that, by the time the first notice had been issued invoking the extended period, the relevant material facts were already within the department's knowledge. Applying the principle stated in Nizam Sugar Factory Versus Collector of Central Excise, AP, it held that once a demand had been raised on an issue, a subsequent notice for a later period on the same issue could not again invoke the extended period. The second notice was therefore legally impermissible on this additional ground. [Paras 10]

The proceedings initiated through the second show cause notice were also liable to be set aside for invalid invocation of the extended period.

Final Conclusion: The Tribunal held that the extended period of limitation was not available to the department, since the demands were founded only on return mismatch data without independent verification and without proof of suppression. It further held that the second notice could not again invoke the extended period once the facts were already within departmental knowledge; accordingly, the entire service tax demand with interest and penalties was set aside.

Taxability of affiliation fees - Statutory functions of educational institutions - Service tax on non-commercial public law functions

Affiliation fees - Statutory public functions - Service tax exemption - Affiliation fees received by the university from non-Government colleges were not liable to service tax. - HELD THAT: - The Tribunal noted that the controversy was no longer res integra and had already been decided in favour of educational institutions by Rajiv Gandhi University of Health Sciences versus Principal Additional Director General, Directorate General of GST Intelligence, which was also acknowledged by the Department. As no distinguishing feature was shown in the present case, the Tribunal followed that decision and held that the order dropping the demand called for no interference. The demand founded on taxability of affiliation fees was therefore unsustainable. [Paras 5]

The order dropping the service tax demand, interest and penalties was upheld, and the Department's appeal was dismissed.

Final Conclusion: Following the Karnataka High Court decision on the same issue and finding no distinguishing facts, the Tribunal held that affiliation fees received by the university were not taxable. The order dropping the demand was affirmed and the Department's appeal was dismissed.

Mutuality in club or association service - Trust as association of persons

Club or association service - Principle of mutuality - Association of persons - Levy of service tax on amounts collected by the appellant-club from its members for providing facilities and services to those members during the disputed period. - HELD THAT: - The Tribunal held that the controversy stood covered by State of West Bengal Vs. Calcutta Club Limited, which settled that services provided by a body or association of persons to its own members were not exigible to service tax under club or association service for the period in question. The appellant, though registered as a charitable trust, was treated as a body or association of persons, and the receipts from members towards subscription, membership-related charges and allied amounts for providing facilities to members were therefore held outside the levy. On that basis, the foundation of the demand did not survive. [Paras 7, 8]

The demand of service tax on receipts collected from members for services and facilities provided to them was held unsustainable, and the impugned order was set aside.

Final Conclusion: Following the law declared in Calcutta Club, the Tribunal held that the appellant-club was not liable to service tax on receipts collected from its members for providing facilities to them during the disputed period. The order confirming tax, interest and penalties was therefore set aside and the appeal was allowed with consequential relief.

Renting of immovable property by a religious body - Exemption for renting of precincts of a religious place meant for general public - Extended period of limitation and penalty

Religious body - Exclusion from renting of immovable property - Service tax was not leviable on rent received by the appellant up to 30.06.2012, as the appellant church was a religious body and its activity fell within the exclusion for renting of immovable property by or to a religious body. - HELD THAT: - The Tribunal treated the appellant church as a religious body, noting that its status and functioning were comparable to those considered in the earlier Tribunal decision relied upon. On that basis, the renting of the commercial premises prior to 01.07.2012 was held to fall within the statutory exclusion for renting of immovable property by a religious body or to a religious body. The demand for the period up to 30.06.2012, therefore, could not be sustained. [Paras 9, 10]

The demand for the period up to 30.06.2012 was set aside.

Precincts of a religious place meant for general public - Mega exemption - Renting of shops situated within the church premises to private tenants for commercial use did not qualify for exemption as renting of precincts of a religious place meant for general public. - HELD THAT: - The Tribunal rejected the contention that the post-01.07.2012 activity was covered by clause 5(a) of Notification No. 25/2012-ST. It held that where commercial shops are let out to private persons for carrying on their business and sale of merchandise, such renting cannot be regarded as renting of precincts meant for use by the general public in the sense contemplated by the exemption. Consequently, service tax remained payable on the rent from such commercial space even though the shops were located within the precincts of the church. [Paras 11]

The exemption was denied and the rent from commercial space after 01.07.2012 was held taxable.

Extended period of limitation - Penalty - Normal period - The extended period and penalties were not sustainable for the post-01.07.2012 liability, and only the normal period demand with interest could survive. - HELD THAT: - The Tribunal found that there was considerable confusion regarding the levy on renting of immovable property during the relevant period and that the appellant, being a religious body, had taken registration and complied once approached by the Department. In those circumstances, non-payment for the period after 01.07.2012 was held to be sufficiently explained, so suppression justifying the extended period was not established. Penalties were therefore unsustainable, while the adjudicating authority was directed to recompute the service tax liability with interest confined to the normal period. [Paras 12, 13]

The demand was restricted to the normal period for 01.07.2012 to February 2015 with interest, penalties were set aside, and the matter was remanded only for recomputation.

Final Conclusion: The Tribunal held that no service tax was payable on the appellant's rental receipts up to 30.06.2012, but the post-01.07.2012 renting of commercial shops within the church premises was taxable and not covered by the exemption. The demand was confined to the normal period with interest, penalties were set aside, and the matter was remanded only for recomputation.

Taxability of facilities provided by the builder to occupants in the club house and residential complex - Membership of Club or Association Services - Levy of service tax on electricity recovery and backup power charges - Maintenance deposits and interest as consideration for management, maintenance or repair service - Extended Period of Limitation - Suppression of Facts.

Residential complex amenities - HELD THAT:- The Tribunal found that the appellant was a builder-developer which had constructed the complex and provided the impugned amenities as part of the sale of units to purchasers and shareholders. These facilities were merely extended to residents and occupants by virtue of purchase of the flats or units, and were not services rendered by a club or association to enrolled members. On that basis, the amount collected for such facilities could not be brought to tax under that taxable category. [Paras 10]

The demand under membership of club or association service was set aside.

Electricity charges - Backup power charges - Management, maintenance or repair service - HELD THAT: - The Tribunal held that electricity charges collected unit-wise and remitted to BESCOM could not be subjected to service tax, following Kiran Gems Ltd. vs. CCE & ST [2018 (11) TMI 1388 - CESTAT AHMEDABAD] As regards the additional amount recovered in relation to generator backup, the Commissioner's view that it represented consideration for repair and maintenance of generator sets was found unsupported by evidence. In the absence of material showing that the excess or surplus amount was collected towards repairs and maintenance of the DG set, the levy under management, maintenance or repair service was unsustainable. [Paras 11]

The demand relating to power generation and water charges was set aside.

Maintenance deposits - Interest on fixed deposits - Consideration for management, maintenance or repair service - HELD THAT:- On examining the contractual terms, the Tribunal found that the appellant was legally obliged during the relevant period to undertake maintenance and repair of the complex and to utilise the interest arising from the deposits collected from occupants for that purpose. The minutes of the general body meeting did not establish cancellation of the original arrangement; they only revised the service charges and provided for adjustment of deposits against outstanding maintenance charges. Consequently, the interest accrued from the interest-free deposits, when utilised for maintenance of the complex, and the deposits appropriated towards such charges constituted consideration for management, maintenance or repair service. The plea that part of the deposit amount had not been received was rejected for want of evidence. [Paras 13, 14]

The demands relating to interest on fixed deposits and maintenance deposits were upheld, and the claim for exclusion of the alleged unreceived amount was rejected.

Extended period of limitation - Suppression - HELD THAT:- The Tribunal recorded that no evidence had been produced to show payment of service tax on the maintenance activity during the period in question, even though service charges were effectively derived through interest-free deposits and the interest accrued thereon for maintenance and repair of the complex. Since such receipts were neither subjected to tax nor disclosed to the department, the finding of suppression and the consequent invocation of the extended period were sustained. [Paras 14]

The extended period of limitation was held to have been validly invoked for the demand upheld under management, maintenance or repair service.

Final Conclusion: The appeal was partly allowed. The demands on club or association service and on electricity and backup power related recovery were set aside, while the demands on interest from maintenance deposits and on appropriated maintenance deposits, with consequential interest and penalty, were sustained along with invocation of the extended period.

Exemption based on intended use - procuring Naphtha at nil rate of duty - claiming benefit of exemption under notification Nos. 75/84-CE and 4/97-CE dated 01.03.1997, as amended, for ‘intended use’ in the manufacture of fertilizer - Extended period of limitation - Suppression of Facts - Intent to Evade Duty - duty demand - interest and penalty.

Intended use in exemption notification - Concessional duty on Naphtha - HELD THAT: - Section 5A of the Central Excise Act deals with the power to grant exemption from duty of excise. As per sub-section (1), if the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the official gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the notification, excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon.

The exemption notification No. 75/1984-CE dated 01.03.1984. This notification was issued by the Central Government in exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 exempting the goods described in column (3) of the table appended thereto and included in the first Schedule to the Central Excise Act, 1944 from so much of the duty of excise leviable thereon subject to the intended use or the conditions laid down in the corresponding entry in the table appended. At serial No. 6.02 is mentioned raw Naphtha at the concessional rate of duty as mentioned in column (4). In column (5) of the table, it is mentioned that such concessional rate of duty would be available if the raw Naphtha was procured for the intended use in the manufacture of fertilizers and ammonia. As per the proviso, where the intended use was in the manufacture of ammonia, such ammonia was used elsewhere in the manufacture of fertilizers and the procedure set out in Chapter X of the Central Excise Rules, 1944 was followed.

The next notification is notification No. 4/1997-CE dated 01.03.1997. In exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise Act, 1944, the Central Government being satisfied that it is necessary in the public interest so to do, exempted the excisable goods specified in column (3) of the appended table and included in the Schedule to the Central Excise Tariff Act, 1985 as specified in the corresponding entry to column (2) of the table from so much of the duty of excise leviable thereon as specified in the corresponding entry in column (4), subject to any of the conditions specified in the annexures to the said notification, which were mentioned in the corresponding entry in column (5) of the appended table. At serial No. 8 is mentioned the excisable goods Naphtha and natural gasoline liquid for use in the manufacture of fertilizer or ammonia. The rate of duty is nil and it is subject to condition Nos. 3 and 4 as per the annexure. Condition Nos. 3 and 4 are the same as the conditions mentioned in the proviso to the notification No. 75/84-CE.

The first show cause notice is dated 29.08.2001. This show cause notice covers the period from 27.11.1996 to 31.03.2001. Within the aforesaid period, the last period in respect of which the aforesaid show cause notice was issued was from 16.02.2001 to 31.03.2001. The subsequent 25 show cause notices are from dated 05.10.2004 to dated 03.08.2005. The show cause notice dated 05.10.2004 covered the period from September, 2003 to June, 2004. As regards the show cause notice dated 03.08.2005 is concerned, the same covered the period from July, 2004 to February, 2005.

The Court held that the governing expression in the notifications was use or intended use in the manufacture of fertilizer or ammonia. Relying on Dalmia Dadri Cement Ltd.[1987 (11) TMI 94 - SUPREME COURT] and Steel Authority of India Ltd [1996 (7) TMI 147 - SUPREME COURT] it held that the notification did not require proof of actual exclusive end-use in every downstream segment, but proof that the goods were procured and used for the purpose and with the intention of manufacturing fertilizer or ammonia.

It is quite evident that Naphtha which was procured from HPCL was intended for use by the appellant in the manufacture of fertilizer and ammonia. It is immaterial that a fraction of such procured Naphtha had to be used for generation of electricity which was also mostly used in the manufacture of fertilizer and ammonia but a portion of which had to be used in the chemical plant beside being supplied to the Maharashtra State Electricity Board. If that be the position, appellant would be entitled to avail the benefit of concessional rate of duty in terms of the exemption notifications alluded too hereinabove.

The appellant was entitled to the benefit of the exemption notifications and the duty demand on the footing of non-eligible use was unsustainable.

Extended period of limitation - Suppression of facts - Revenue neutrality - HELD THAT: - As noted, prior to 08.04.2011, the limitation period under Section 11A of the Central Excise Act was one year. It is thus evident that all the show cause notices issued to the appellant pertained to periods which were beyond one year. In such circumstances, respondent invoked the extended period of limitation under the proviso to sub-section (1) of Section 11A of the Central Excise Act. We have also noted that the extended limitation period of five years would be available to the respondent in a case where any duty of excise has not been levied or not paid or has been short levied or short paid or erroneously refunded by reason of fraud or collusion or on account of any willful mis-statement or suppression of facts or contravention of any of the provisions of the Central Excise Act or of the Rules made thereunder with the intent to evade payment of duty.

Thus, fraud, collusion, willful mis-statement or suppression of facts stand in one category and contravention of any of the provisions of the Central Excise Act or the rules made thereunder is another category. In the first category, the act is deliberate and is so egregious that such omission or infraction would by itself be sufficient to attract the extended period of limitation. However, in the later category, the contravention of the statute would have to be accompanied by an intent to evade payment of duty to attract the extended period of limitation.

The Court held that invocation of the extended period required fraud, collusion, wilful misstatement or deliberate suppression, or contravention with intent to evade duty. Referring to Pushpam Pharmaceuticals Company [1995 (3) TMI 100 - SUPREME COURT] it reiterated that suppression in this context must be deliberate. The appellant had furnished particulars on the basis of which CT-2 certificates were issued, and the dispute itself turned on interpretation of the expression intended use in the exemption notifications. In that setting, intent to evade duty could not be attributed. The Court further held that the case was revenue neutral, since any duty impact would ultimately stand neutralised, and following Nirlon Limited [2015 (5) TMI 101 - SUPREME COURT] such revenue neutrality ruled out invocation of the extended period. [Paras 49, 50, 56, 57, 58]

The demand was barred by limitation to the extent it depended on the extended period, and the penalty sustained on that basis was liable to fail.

Final Conclusion: The Court allowed the two civil appeals on both merits and limitation, holding that the appellant was entitled to the exemption on Naphtha and that the extended period could not be invoked. The orders-in-original and the CESTAT order were set aside, and the appeal arising from the rectification proceedings was disposed of as academic.

Condonation of Delay - Limitation for appeal - sufficient cause -barred by limitation in view of the Supreme Court's Covid-19 limitation directions - statutory scheme under Section 35.

Limitation for appeal - HELD THAT:- The Court held that paragraph 5(III) of the Supreme Court's order in Suo Motu Writ Petition [2022 (1) TMI 385 - SC ORDER] granted a limitation period of 90 days from 01.03.2022 and could not be read in a manner that created an artificial distinction between cases whose limitation expired during the excluded period and other cases governed by the same statutory scheme. It rejected the view that, in the absence of a separate application for condonation, the appellant could claim only the original 60-day period under Section 35. The Court further noted that the last two days preceding the filing were Saturday and Sunday, and therefore the appeal presented on 30.05.2022 could not be treated as beyond time. [Paras 12, 13, 14]

The Tribunal's order dismissing the appeal as time-barred was set aside, and the appeal was restored for decision on merits.

Final Conclusion: The appeal was allowed. The order treating the statutory appeal as barred by limitation was set aside, and the matter was restored to be decided on merits.

CENVAT credit on capital goods - job worker as consignee - eligibility of credit on invoice not issued in claimant's name - consequential penalty

CENVAT credit on capital goods - job worker as consignee - eligibility of credit on invoice not issued in claimant's name - Avlon Cosmetics Private Ltd. was entitled to avail CENVAT credit on capital goods though the invoices were raised in the name of Glaxo, where Avlon was shown as consignee and the goods were received and used in its factory. - HELD THAT: - The Tribunal held that the material requirements for availment of credit stood satisfied since the capital goods were duty paid, were received in the factory, and credit was taken on the basis of the invoices covered by Rule 9. Though the invoices were not issued in the name of the assessee, they specifically mentioned the assessee's name and address as consignee, the shipping address was that of the assessee, and even the Bill of Entry endorsement showed delivery to the assessee's premises under the instructions of Glaxo. It was also undisputed that Glaxo had not availed any credit on the same goods. On these facts, the objection that the document was ineligible merely because the invoice stood in the principal's name was held unsustainable; the Tribunal also found support from the Board circular and the decision in Uni Cast Pvt. Ltd. CCE Meerut [2015 (10) TMI 375 - ALLAHABAD HIGH COURT]. [Paras 9, 10, 11]

The denial of CENVAT credit was set aside as the assessee had validly availed the credit on capital goods received and used by it as consignee.

Consequential penalty - The penalties imposed on both appellants were not sustainable once the allegation of wrong availment of CENVAT credit failed. - HELD THAT: - Since the foundational charge of ineligible availment of credit was rejected, the Tribunal held that the penalties imposed on the manufacturer as well as the co-noticee lacked merit. No separate basis survived for sustaining penalty. [Paras 11]

The penalties imposed under the impugned orders were set aside.

Final Conclusion: The Tribunal held that the job worker was entitled to CENVAT credit on the capital goods since the invoices and import documents showed receipt at its premises as consignee and the principal had not taken credit. Consequently, the demand and the penalties against both appellants were set aside and the appeals were allowed.

Tariff classification of machine parts - Specific heading vis-a-vis parts heading - Extended period of limitation - Suppression of facts - Cum-duty benefit - Adjustment of Rule 6(3) reversals

Tariff classification of machine parts - Specific heading vis-a-vis parts heading - Section Note 2 to Section XVI - The impugned goods, namely transmission shafts, gears, gearing, gear boxes and allied items manufactured for use in agricultural machinery, were classifiable under Heading 8483 and not under Headings 8432/8433 as parts of agricultural machinery. - HELD THAT: - The Tribunal held that classification had to be determined by the terms of the headings read with the relevant Section and Chapter Notes. Applying Note 2(a) to Section XVI, it found that parts which are themselves covered by a heading in Chapter 84 must be classified in that heading even if specially designed for use in a particular machine. Since transmission shafts, gears, gearing and gear boxes are specifically enumerated in Heading 8483, their exclusive or principal use in rotavators or other agricultural equipment did not shift them to the parts headings under 8432/8433. The Tribunal further found support from the decisions in Raja Forgings & Gears Ltd [2008 (7) TMI 710 - CESTAT, NEW DELHI] and Sree Ganesh Gears Pvt. Ltd., [2001 (11) TMI 110 - CEGAT, BANGALORE] and held that the authorities had correctly adopted Heading 8483. [Paras 17, 18, 19]

The classification adopted in the impugned order under Heading 8483 was upheld.

Adjustment of Rule 6(3) reversals - Cum-duty benefit - The amount already reversed under Rule 6(3) on the footing that the goods were exempted was liable to be adjusted against the duty demand, and the assessee was also entitled to cum-duty benefit. - HELD THAT: - Having rejected the classification claim, the Tribunal nevertheless accepted the contention that the reversals already made under Rule 6(3) were under a bona fide belief that the goods were exempted and therefore required adjustment toward any duty liability. It also held that, since no duty had been collected separately from customers, the recoveries had to be treated as inclusive of excise duty and cum-duty benefit was admissible. [Paras 20]

Adjustment of the amount reversed under Rule 6(3) and grant of cum-duty benefit were held admissible.

Extended period of limitation - Suppression of facts - Bona fide belief - Invocation of the extended period was not justified, as the dispute arose from interpretation of tariff entries, the assessee's belief was bona fide, and deliberate suppression with intent to evade duty was not established. - HELD THAT: - The Tribunal found that the goods were manufactured to customer drawings for use in rotavators and similar agricultural equipment, furnishing a reasonable basis for the assessee's belief that they were classifiable as agricultural machinery parts. It also noted that the Revenue had earlier issued a notice demanding reversal under Rule 6(3) on the basis that the goods were exempted, which showed that the Department itself was not clear on the correct legal position. Regular ER-1 returns had been filed, and the Tribunal rejected the Revenue's contention that a general description in the returns justified extended limitation, observing that the officers scrutinising the returns ought to have made necessary enquiries. Relying on Pushpam Pharmaceuticals Company, [1995 (3) TMI 100 - SUPREME COURT] Continental Foundation Joint Venture Holding, [2007 (8) TMI 11 - SUPREME COURT] and Nizam Sugar Factory vs. Collector of Central Excise, A.P., [2006 (4) TMI 127 - SUPREME COURT] along with other decisions noticed by it, the Tribunal held that suppression in the proviso requires a deliberate act with intent to evade duty, and such intent could not be presumed merely because the Department discovered the issue later or during audit. In these circumstances, the notice issued beyond the normal period was unsustainable. [Paras 24, 25, 26, 27, 28]

The demand was held barred by limitation and the extended period was ruled out.

Final Conclusion: The Tribunal upheld the classification of the impugned goods under Heading 8483 and also recognised adjustment of the Rule 6(3) reversals together with cum-duty benefit. However, it ultimately allowed the appeal on the ground that the extended period of limitation had been wrongly invoked, and consequently the demand did not survive.

Input service - Expansion of existing manufacturing facility - Exclusion clause under CENVAT credit - Limitation for recovery of wrongly availed credit

Input service - Expansion of existing manufacturing facility - Exclusion clause - CENVAT credit on erection, commissioning, installation, consulting engineering and manpower supply services used for expansion of an existing manufacturing facility remained admissible after deletion of the phrase "setting up of a factory" from the inclusive part of Rule 2(l). - HELD THAT: - The Tribunal held that deletion of the expression relating to setting up of a factory from the inclusive portion of Rule 2(l) did not cut down the width of the main part of the definition, which continued to cover services used directly or indirectly in or in relation to manufacture of final products. It found that expansion of capacity in an already functioning factory could not be equated with setting up of a new factory. The disputed services were used for installation and operationalisation of plant and machinery in the expanded facility, and the show cause notice did not establish that they related to construction of a building or civil structure or laying of foundation for support of capital goods so as to fall within the specific exclusion. On that reasoning, denial of credit solely because the services were connected with expansion was held unsustainable. [Paras 12, 13, 14]

The credit was held admissible on merits.

Limitation - Relevant date for availment of credit - Extended period - The demand for recovery of the credit was barred by limitation. - HELD THAT: - The Tribunal held that for the relevant period the normal limitation under Section 11A(1) was one year, and the later amendment extending the period to two years was prospective and could not revive a demand already barred. It further held that, in cases of alleged wrongful availment of CENVAT credit, limitation had to be computed from the date of availment of credit and not from the due date for filing ST-3 returns, there being no statutory basis for adopting the return-filing date as the starting point. Since the notice did not invoke the extended period or allege suppression, fraud or wilful misstatement with intent to evade duty, and the dispute was interpretational, the demand issued beyond one year from availment was time-barred. [Paras 15, 16, 17, 18]

The demand was held barred by limitation.

Penalty - Consequential interest - Penalty and interest could not survive once the demand failed on merits and limitation. - HELD THAT: - The Tribunal held that, since the denial of credit failed both on merits and on limitation, the foundation for penalty under Rule 15(1) read with Section 11AC ceased to exist. On the same basis, the consequential demand of interest also could not be sustained. [Paras 19]

Penalty and interest were held unsustainable.

Final Conclusion: The Tribunal held that the disputed services used for expansion of the assessee's existing manufacturing facility qualified as input services and were not shown to fall within the exclusion clause. The recovery was also held time-barred, and consequently the interest and penalty were set aside and the appeal was allowed.

Fraudulent cenvat credit - Effect of settlement by the main party under SVLDRS on penalty liability of co noticees - admission in statement as evidence - illicit manufacture and clandestine clearance of excisable goods in the guise of job work goods under the cover of job work challans - Whether settlement of the case of main party under SVLDR Scheme will absolve other co-noticees of their wrongful deeds and its consequences.

Liability of co noticees despite settlement by main party under SVLDRS - HELD THAT: - The appellant has cited some decisions to plead that once case of the main party is settled under SVLDRS, 2019, penalty on other co-noticees automatically goes away and therefore, impugned order may be set aside as far as penalty on the appellant Shri Brij Kishor Choudhary is concerned. I find that in this case there are total 21 co-noticees including the present appellant out of which some of conoticees have already settled their cases under SVLDRS.

Imposition of penalty - This Tribunal in the case of Vinod Bhadra [2022 (12) TMI 366 - CESTAT AHMEDABAD] decided the very same issue of imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on co-noticees involved in the case made against M/s. Shri Ram Tubes Pvt. Ltd. After considering various evidences against various co-noticees, this Tribunal dismissed their appeal(s) and upheld the penalty imposed on them by the Adjudicating Authority.

The issue of imposition of penalty on co-noticees under Rule 26 of the Central Excise Rules, 2002, when main party’s case is settled under SVLDRS, 2019, has recently been considered by CESTAT Allahabad in the case of Sushila Steel, Ghaziabad [2025 (7) TMI 1992 - CESTAT ALLAHABAD] it held that each noticee has to approach separately under SVLDRS for settlement of their case if case against the main party is settled

The Adjudicating Authority in para 96.1 & 96.2 of the impugned order has discussed the role of the appellant in availment of fraudulent Cenvat Credit by M/s. Shri Ram Tubes Pvt. Ltd. The appellant had issued two bogus LRs showing transportation of 49,210 Kgs of copper ingots from ICD, Tughlaquabad to the factory of M/s. Shriram Tubes Pvt Ltd., Ahmedabad, whereas, the said goods had been diverted to different parties in Shahdara Delhi and were never received in said unit. M/s. Shriram Tubes Pvt Ltd. availed fraudulent Cenvat Credit which has also been confirmed by their various concerned persons in their respective statements. It is also on record that M/s. Shriram Tubes Pvt Ltd., after accepting their involvement in fraudulent availment of Cenvat Credit, applied under SVLDRS, 2019 and settled their case. Admission by the appellant of issuance of bogus LRs in his statements clearly establishes abetment on his part in availment of fraudulent Cenvat Credit by M/s. Shri Ram Tubes Pvt. Ltd. I therefore do no find any merit in his appeal and retain the penalty imposed by the learned Adjudicating Authority in the impugned order.

Final Conclusion: The Tribunal held that settlement of the main noticee's case under the Sabka Vishwas scheme did not extinguish the appellant's separate liability as a co-noticee. Since the appellant's own role in issuing bogus transport documents and thereby abetting fraudulent availment of Cenvat credit was established, the penalty was sustained and the appeal was dismissed.

Valuation of cement stock-transferred to the appellants' RMC units - Notification No. 14/2013 C.E.(N.T.) - retrospective effect of substitution of a statutory rule - Whether for stock transfer of cement to the RMC units, the assessable value is required be determined under Rule 8 of the Rules of 2000 as claimed by the appellants, or under Rule 4 of the said rules, as held by the department.

Valuation of captively consumed goods -HELD THAT: - The Tribunal accepted its earlier detailed reasoning in the appellants' Final Order [2024 (11) TMI 1606 - CESTAT MUMBAI] and held that the substituted Rule 8 (w.e.f. 01.12.2013) expanded the scope to cover situations where part of the excisable goods are sold and part are captively consumed, thereby removing the anomaly between sales to independent buyers and captive consumption. The substitution was held to operate retrospectively: substitution repeals the earlier text and replaces it, and where the later text rectifies the earlier anomaly it may be applied retrospectively. The CBEC Circular explaining the substituted Rule 8 was noted as consistent with that legislative intent. A contrary view in the Larger Bench decision was distinguished on the ground that it did not consider the subsequent substitution and circular clarifications. [Paras 3, 4, 5]

The impugned adjudication holding that valuation of stock transfers should be under Rule 4 was reversed; valuation for the stock-transferred cement is governed by Rule 8.

Final Conclusion: The Tribunal allowed the appeals, set aside the impugned order to the extent it applied Rule 4 to stock transfers to RMC units, and held that substituted Rule 8 governs valuation (applied retrospectively) for the period in dispute.

Summary order. In SLP(C) No. 28962/2025, in view of the Commissioner's decision accepting in principle the petitioner's claim of exemption from entry tax for goods imported into its SEZ unit for authorised operations, the Court held that nothing further survived for adjudication and disposed of the petition by setting aside the original assessment order and all demand notices, while leaving it open to the Department to proceed in future in accordance with law if warranted. In SLP(C) No. 15952/2025, the petition was dismissed as not pressed with liberty to avail the remedy under the amended settlement legislation.

Consideration of pre-deposit compliance - Protection against coercive recovery pending decision on appeal maintainability

Pre-deposit compliance - Non-consideration of application by appellate authority - Interim protection from recovery - The appellate authority was required to decide the petitioner's pending application asserting compliance with the statutory pre-deposit requirement before recovery could proceed further. - HELD THAT: - The Court noted that the petitioner had already filed an appeal and a stay application against the assessment order, and had also moved a separate application asserting that the appeal was maintainable and liable to be admitted on the basis that the pre-deposit requirement already stood satisfied. Since that application had not been considered at all, the Court did not examine the merits of the dispute regarding adjustment of recovered amounts towards pre-deposit, but held that the proper course was to direct the appellate authority to decide the pending application expeditiously in accordance with law. Pending such decision, coercive recovery was not permitted. [Paras 4, 5, 7, 8]

The pending application was directed to be decided within two weeks, no coercive recovery was to be taken till then, and if an adverse order was passed, seven working days' prior notice was to be given before any coercive action; all merits were kept open.

Final Conclusion: The petition was disposed of by directing the appellate authority to decide the petitioner's pending application on pre-deposit compliance within the stipulated time. Until such decision, no coercive recovery could be taken, and all rival contentions on the merits were expressly left open.