TaxTMI Updates e-Newsletter
Apr 03,2026

Maintainability of writ petition - time-barred - availability of an appellate remedy under the GST statute - Non-Production of Necessary Documents.

Maintainability of writ petition - Non-filing of necessary documents - HELD THAT:- The Court held that the petitioner had an effective statutory remedy of appeal before the Tribunal, including on the question whether the first appellate authority had rightly dismissed the appeal on limitation. It further noted that the writ petition was deficient because the petitioner had not placed on record the order rejecting the application for revocation of cancellation, thereby preventing proper examination of the matter. In these circumstances, and particularly after establishment of the Tribunal for appeals against orders of subordinate GST authorities, exercise of writ jurisdiction was declined. [Paras 6, 7, 8, 9]

The writ petition was dismissed, with liberty to pursue the statutory remedy.

Final Conclusion: The Court declined to entertain the writ petition on account of the efficacious statutory remedy before the GST Appellate Tribunal and the petitioner's failure to place necessary material on record. The petition was accordingly dismissed with liberty to avail the remedy available in law.

Jurisdictional defect - Challenged the show cause notice and the impugned order - contrary to Section 75(7) of the respective GST enactment.

Demand beyond show cause notice - Compliance with Section 75(7) - HELD THAT: - On comparison of the show cause notice and the impugned order, the Court found that both covered the same period and the same GST registration, and that except for the difference in the reference mentioned, the order prima facie indicated confirmation of a demand inconsistent with what had been proposed in the notice. The Court therefore held that the order appeared to have been passed contrary to Section 75(7) and could not be allowed to stand. [Paras 6, 7]

The impugned order was quashed and the matter was remitted for fresh adjudication on merits, with liberty to the authority to issue a corrigendum and proceed after receiving the petitioner's response.

Final Conclusion: The writ petition was disposed of by setting aside the impugned order on the ground that the confirmed demand did not align with the show cause notice for the same tax period and registration, attracting Section 75(7). The matter was remanded for fresh consideration in accordance with law.

Cancellation of GST registration - rejection of the restoration request - Statutory limitation in appeal - bona fide reasons for not filing the appeal -Opportunity of Hearing - Exercise of writ jurisdiction

Cancellation of GST registration - HELD THAT:- Following observations as made by the Court in Kishore Nichani [2026 (1) TMI 1560 - BOMBAY HIGH COURT], held that there were bona fide reasons for not filing the appeal and therefore, cancellation of registration itself is prejudicial as held by this Court.

The Court accepted that the Appellate Authority had no power to condone delay beyond the period permitted by statute and, therefore, the rejection of the appeal on limitation could not be faulted on that ground. However, the Court found that the petitioner had shown bona fide reasons for not filing returns and held that such circumstances ought not to result in loss of registration. Proceeding on the principle that cancellation of registration has adverse civil consequences and that continued cancellation does not benefit the revenue where the assessee can be brought back into the tax fold by compliance, the Court exercised writ jurisdiction to direct restoration of registration while permitting the petitioner to comply with statutory obligations within the time granted. [Paras 8, 9]

The cancellation order and the appellate order were quashed, the registration was directed to be restored, and the petitioner was allowed time to fulfil remaining obligations under the Act.

Final Conclusion: The Court held that although the statutory appeal was beyond the condonable period, the petitioner's registration ought not to remain cancelled in the facts of the case. Exercising writ jurisdiction, it set aside both orders, directed restoration of GST registration, and granted time for statutory compliance.

Binding effect of appellate remand directions - Simultaneous Adjudication - Seeking Fair Opportunity of hearing - pending show cause notices and grant of a fair hearing.

Binding effect of appellate remand directions - Fresh adjudication after opportunity of hearing - HELD THAT: - The Court held that the order of the Additional Commissioner (Appeals-II), remanding the matter with a direction that the show cause notice dated 8 February, 2023 and the cancellation proceedings be considered together, was required to be followed, since the issues could have a bearing on the decision to be taken by the original authority. As the impugned order had been passed without acting in conformity with that remand direction, the proper course was to restore the proceedings to the Joint Commissioner for adjudication in accordance with the appellate order and after giving an opportunity of hearing to the parties. [Paras 5, 6]

The impugned order was set aside and the proceedings were remanded to the Joint Commissioner for fresh adjudication in accordance with law and the appellate remand directions, with all contentions kept open.

Final Conclusion: The petition was disposed of by setting aside the impugned adjudication order and directing fresh consideration of the show cause notice by the Joint Commissioner in conformity with the prior appellate remand order and after granting hearing to the parties.

Lack of jurisdiction - Validity of the show cause notice(s) issued under Section 74 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’) issued without jurisdiction, arbitrarily and in violation of the principles of natural justice. - HELD THAT:- Having perused the show cause cum demand notice(s) dated 2 January 2025, and more particularly from the contents of paragraph 9, on what is sought to be taxed, is on a concluded issue in respect of the development in question, namely the flats constructed by the petitioner have been handed over to the tenants under the scheme ‘free of cost’. The show cause cum demand notice(s) clearly indicates that the development agreement in question was of 6 March 2011. The construction was undertaken by the petitioner for Dattaramanad CHS Ltd. in respect of which Occupation Certificate was granted on 31 December 2021, and in respect of SAT Anupa CHS Ltd. the development agreement was dated 22 November 2008. Under both these development agreements, the obligations of the petitioner stood crystallized. The said development agreement(s), were executed between the petitioner and the society much prior to the GST regime being brought into force, by the promulgation of the CGST and MGST Act with effect from 1 July 2017.

Be that as it may, prima facie, we see substance in the petitioners contentions that having regard to the nature of the development agreement and the obligations of the petitioner thereunder, to provide free of cost flats/tenements to the existing members of the society, the approach of the commissioner appears to us to be in the teeth of the audit report dated 26 October 2023. Whether the audit report as accepted by the assessing officer, had concluded the issue is also a question more particularly when the petitioner had settled the taxes as set out in the communication dated 27 October 2023 (Exhibit B, page 81 of the paper-book).

We thus, prima facie, find substance in the contention as urged by Mr. Dada that the impugned show cause notice(s) are issued without jurisdiction in purported exercise of Section 74 of the CGST Act. Hence, the parties would be required to be heard finally on this Writ Petition.

Summary order. Rule was issued and, pending final disposal of the writ petition, further proceedings pursuant to the impugned show cause notice were stayed, the Court recording only a prima facie view that the challenge to jurisdiction required consideration.

Rejection of the claim for IGST refund - Failure to consider binding precedent - Non-application of mind - trade of auto mobile parts registered with DGFT vide IEC No.0412030438 With the introduction of GST, exports were treated as zero-rate supplies in terms of Section 16 of IGST Act, 2017 - Reasonable opportunity of hearing.

Failure to consider binding precedent - Non-application of mind - HELD THAT: - This Court is inclined to set aside and remand the matter back to the respondent authority to reconsider and pass orders afresh keeping in view the law laid down by this Court in the case of Numinous impex [2022 (4) TMI 760 - MADRAS HIGH COURT] and Carbolase [2025 (3) TMI 248 - MADRAS HIGH COURT] and in accordance with law, after affording a reasonable opportunity of hearing to the petitioner. It is also open to the petitioner to submit additional documents and it is also open to the petitioner to place reliance on any judgment including Carbolaseand any other documents in support of their claim of refund. The above exercise shall be completed within a period of six weeks from the date of receipt of a copy of this order.

The impugned order was set aside and the matter was remanded for fresh consideration in accordance with law, keeping in view the decisions referred to by the Court.

Final Conclusion: The Court set aside the order rejecting the IGST refund claim on the ground that the authority had not considered the relevant judgments cited before it. The matter was remanded for fresh decision after hearing the petitioner and in the light of the law laid down by this Court.

Ex parte assessment - Opportunity to file reply to show cause notice - Conditional remand subject to pre-deposit.

Ex parte assessment - HELD THAT:- The Court noted that the impugned assessment had confirmed the proposal in the show cause notice in the absence of any reply from the petitioner and treated the matter as one involving an ex parte assessment. Following the consistent course adopted in similar circumstances, the Court held that a fresh decision on merits should be made after affording the petitioner an opportunity to submit a reply with supporting documents. The remand was made conditional upon deposit of 25% of the disputed tax in cash through the electronic cash register, with adjustment of amounts already recovered through the electronic cash register or electronic credit ledger towards such pre-deposit; if the recovered amount already satisfied that requirement, no further deposit was required. On compliance, the respondent was directed to pass a fresh order on merits, and any bank attachment was to stand lifted subject to the stated conditions. [Paras 9, 10, 11, 12, 13]

The impugned ex parte assessment was remitted for fresh adjudication on merits, subject to the petitioner filing a reply with documents and satisfying the prescribed pre-deposit conditions, with consequential adjustment of prior recoveries and conditional lifting of bank attachment.

Final Conclusion: The writ petition was disposed of by remitting the ex parte assessment for fresh adjudication on merits. The remand was made subject to filing of reply, compliance with the stipulated pre-deposit condition, and adjustment of amounts already recovered.

Challenged the order confirming the proposal in the show cause notice - payment of an additional pre-deposit.

Remand on conditional pre-deposit - HELD THAT:- The Court recorded the petitioner's willingness to deposit an additional 15% of the disputed tax over and above the amount already pre-deposited at the time of appeal, and to have the matter reconsidered. Following the consistent course adopted by the Court in similar circumstances, it directed a de novo consideration by the first respondent on merits, subject to such additional deposit being made within the time granted and the petitioner filing a reply to the show cause notice with the requisite documents. The impugned order was directed to be treated as an addendum to the show cause notice, amounts already recovered or paid were directed to be adjusted towards the required deposit subject to verification, and lifting of the bank attachment was made conditional upon compliance with the deposit direction and absence of arrears for other tax periods. [Paras 8, 9, 10, 11, 12]

The matter was remitted to the first respondent for fresh decision on merits, subject to the petitioner depositing an additional 15% of the disputed tax and complying with the further directions issued by the Court.

Final Conclusion: The writ petition was disposed of by setting aside the immediate effect of the impugned adjudication and directing fresh consideration by the first respondent on the petitioner's compliance with the ordered additional pre-deposit and filing of reply. Consequential relief regarding bank attachment was also made conditional on such compliance.

Taxation of recovery of canteen services and transportation services made from employees - Employer-employee supplies - Perquisites under employment contract - Contractual Employment Benefits - clarification in the GST circular on notice pay recoveries - Supply in the Course or Furtherance of Business.

Employer-employee supplies - Canteen and transportation recoveries - Perquisites under employment contract - HELD THAT: - The Authority held that provision of canteen and transportation facilities to employees is activity incidental or ancillary to the applicant's principal business and therefore falls within business under section 2(17). It further held that there are two distinct supplies: one by the third-party service providers to the applicant, and another by the applicant to its employees, since the applicant contracts for the services, pays the vendors, and recovers part of the cost from employees. Referring to CBIC Circular No. 172/04/2022-GST, the Authority reasoned that only the concessional portion borne by the employer partakes the character of a perquisite under the employment arrangement and is not subjected to GST as a corollary to Schedule III. The amount actually recovered from employees constitutes consideration for supply by the employer to employees and is therefore liable to GST. [Paras 5]

GST is payable on the amounts recovered from employees towards canteen and bus transportation facilities; the balance cost borne by the employer as perquisite is not taxable.

Notice pay recovery - Agreeing to tolerate an act - HELD THAT: - The Authority followed CBIC Circular No. 178/10/2022-GST, which clarifies that notice pay recovery is not consideration for tolerating an act or a situation. Such recovery is in the nature of a deterrent or compensation arising from the employment contract, and the employee receives nothing in return from the employer against such payment. On that reasoning, notice pay recovery does not attract GST. [Paras 5]

GST is not payable on notice pay recoveries made from employees on account of shortfall in the notice period.

Final Conclusion: The Authority ruled that employee recoveries towards canteen and bus transportation facilities are taxable to the extent recovered from the employees, the employer-borne concessional portion being treated as a non-taxable perquisite under the employment arrangement. Notice pay recoveries were held to be outside the levy of GST.

Levy of GST on recoveries made from the employees’ salary towards providing the canteen facility at subsidized rates in the factory - Employer-employee perquisites under Schedule III - non-fulfilment of the notice period.

Canteen recoveries from employees - Incidental or ancillary business activity - Consideration for supply - HELD THAT: - The Authority held that providing canteen facility to employees, though not the applicant's principal activity, is an activity connected with and incidental or ancillary to its manufacturing business, since it supports the workforce engaged in the principal activity. The applicant pays the canteen contractor and thereafter recovers part of the cost from employees; there is no privity between the contractor and the employees. This results in two distinct supplies, one by the canteen contractor to the applicant and the other by the applicant to its employees. As the applicant recovers money from employees, the elements of business and consideration are satisfied, and the recovered portion is exigible to GST. [Paras 5]

GST is payable on the amount recovered from employees towards canteen services.

Employer-employee perquisites under Schedule III - Concessional canteen facility - HELD THAT: - As per Section 15(a)(iii), employer and employee are deemed to be related persons for the purposes of this Act. This means any transaction between employer and employee will not come out of ‘supply’ for the reason of not having consideration. However, respite to such transactions has come through Schedule 3. Section 7(2)(a) states that, notwithstanding anything in sub-section (1), activities or transactions specified in Schedule III shall be treated neither as a supply of goods nor a supply of services.

Relying on the CBIC clarification, the Authority held that perquisites provided by an employer under the contractual arrangement with employees are not subjected to GST as a corollary to Entry 1 of Schedule III. However, that principle applies only to the portion representing the employer's concession or free facility. Where part of the canteen value is recovered from employees, that recovered portion is not a perquisite and remains taxable. Accordingly, the total canteen value was bifurcated into the recovered amount and the employer-borne perquisite portion, with only the latter kept outside tax. [Paras 5]

The employer-borne concessional portion is not taxable as perquisite, but GST remains payable on the employees' recovery portion.

The Authority followed the CBIC clarification that such recoveries are made as a deterrent or penalty on premature quitting of employment and not as consideration for tolerating an act or situation. Since the employee receives nothing in return against payment of notice pay, the recovery does not amount to consideration for a taxable supply. [Paras 5]

Notice pay recoveries are not taxable under the GST Act.

Final Conclusion: The Authority held that subsidised canteen facility supplied by the employer to employees amounts to a taxable supply to the extent of the amount recovered from employees, while the employer-borne concessional portion is treated as a non-taxable perquisite. Notice pay recovery for shortfall in notice period was held not liable to GST.

Taxability based on ownership of content - nature of supply and the value of supply - Scope of printing and supply of books, textbooks, large-print books, online admission booklets, open-sale publications and special-edition books where the content is owned by the applicant or by the customer constitutes supply of goods or supply of services, and the tax consequence thereof - job work service or a printing service under GST.

Printing services - Content supplied by customer - SAC 9989 - Printing and supply of books or booklets where the content is not owned by the applicant but is supplied by the customer constitutes supply of services. - HELD THAT:- The Authority applied the CBIC clarification on printing contracts and held that, where the customer or the person owning the usage rights supplies the content and the printer uses its own physical inputs, the principal supply is printing. On that basis, supplies of Bengali books, Tamil and other language books printed on orders of authorities, online admission booklets, special edition books, and other books or study material printed from customer-supplied content were held to be printing services classifiable under SAC 9989. The same principle was applied to open sale publications and big books wherever the content is not owned by the applicant. [Paras 5]

Such supplies were held taxable as services under SAC 9989 at 18% GST.

Printed books - Supply of goods - Exemption under HSN 4901 - Supply of printed books where the content or intellectual property is owned by the applicant is a supply of goods. - HELD THAT: - The Authority held that when the applicant owns the content and prints books using its own materials for supply, the transaction is not a mere printing contract but supply of printed books classifiable as goods. Applying that principle, books sold in open sale and big books would be treated as goods if the content belongs to the applicant; Tamil books translated and printed by the applicant for supply to education authorities were also treated as printed books. Such supplies fall under HSN 4901 and are covered by the exemption available to printed books. [Paras 5]

Where the applicant owns the content, the supply was held to be goods under HSN 4901 and exempt from GST.

Final Conclusion: The Authority ruled that the tax treatment of the applicant's printed publications depends on ownership of the content. Where the applicant merely prints customer-supplied content, the supply is a printing service under SAC 9989 taxable at 18%; where the applicant owns the content and supplies printed books, it is a supply of goods under HSN 4901 exempt from GST.

Taxability of employee recoveries for canteen and transportation facilities - Supply in the course or furtherance of business - Employer-employee relationship​​​​​​​ - Blocked input tax credit - definition of ‘business’, as defined in Section 2(17) - Mandatory statutory obligation - Perquisites under employment contract -term ‘consideration’ has been defined in Section 2(31)​​​​​​​ - recovery of notice pay from employees who leave without serving the stipulated notice period.

Supply to employees - Consideration - Perquisite - Employer-employee relationship - HELD THAT:- The Authority held that provision of canteen and transportation facilities to employees is an activity incidental or ancillary to the applicant's business and therefore falls within the concept of business. Since the applicant receives a part of the cost from employees, there are two distinct supplies in the arrangement: one by the third-party vendor to the applicant and another by the applicant to its employees, and the employee recovery answers the description of consideration. At the same time, the CBIC clarification on perquisites under the employment contract was applied to hold that only the concessional element borne by the employer is a perquisite in lieu of services rendered by the employees and is not liable to GST; the amount actually recovered from employees remains taxable. [Paras 5]

GST is payable on the nominal amounts recovered from employees towards canteen and transportation facilities, while the employer-borne concessional portion is not taxable.

Blocked credit - Mandatory canteen facility - Restaurant service - HELD THAT: - Section 17(5)(g) of CGST/MGST Act 2017 states that input tax credit shall not be available in respect of goods or services or both used for personal consumption. Provision of service of transportation of employees from residence to factory or office premises has been used for personal consumption or comfort of employees. The applicant is not under any statutory obligation to provide these services to his employees and the services provided comes under category of personal consumption which makes the applicant ineligible to avail input tax credit on the invoices issued to him by the transporter for transportation of employees as per Section 17(5)(g) of CGST/MGST Act 2017.

The Authority accepted that the proviso to section 17(5)(b) applies to the whole of clause (b), and that provision of canteen facilities is obligatory for the applicant under the Factories law. However, it held that the canteen contractor supplies restaurantservice taxable at the prescribed concessional rate without input tax credit under the rate notification, and that such bar operates notwithstanding the non-applicability of the statutory block under section 17(5). On that basis, ITC on the canteen service was denied in full. [Paras 5]

The applicant is not entitled to input tax credit of the tax charged by the canteen service provider.

Input tax credit on employee transportation - Personal consumption - Transportation of employees - HELD THAT:- The Authority observed that hiring of motor vehicles with seating capacity of more than 13 persons is not blocked under section 17(5)(b)(i). Nevertheless, it held that transportation of employees from residence to factory or office is for the personal convenience and consumption of employees and not a statutory obligation of the employer. Applying that characterisation, the Authority denied ITC under section 17(5)(g) as credit on services used for personal consumption. [Paras 5]

Input tax credit on the tax charged for employee transportation services is inadmissible.

Notice pay recovery - Agreement to tolerate an act - HELD THAT: - Relying on the CBIC circular No. 178/10/2022-GST dated 3rd August 2022 clarification, the Authority held that notice pay recovery is not consideration for tolerating an act or situation. Such recovery is in the nature of a deterrent or penalty arising from the employment contract, and the employee does not receive any independent service in return for that payment. It therefore falls outside GST. [Paras 5]

Notice pay recovered from employees is not liable to GST.

Final Conclusion: The Authority held that the applicant's recoveries from employees towards canteen and bus transportation facilities are taxable supplies to the extent of the amounts recovered, while the employer-borne concessional portion is treated as non-taxable perquisite. Input tax credit on canteen and transportation services was denied, whereas notice pay recovery from employees was held not liable to GST.

Deduction u/s 80IB - interest income received consequent to the refund of income tax - scope of expression ‘derived’ and expression ‘attributable’.

HELD THAT: - The Court held that Section 80IB permits deduction only in respect of profits and gains derived from the eligible business activity, and not income arising from any other source unconnected with that activity.

In the case of the assessee, the eligible business was manufacture of colour papers, GAF and X-ray films, whereas the interest in question arose because excess tax had been paid and later refunded by the Department. The Court further held that the expression "derived" is narrower than "attributable", and the assessee's attempt to treat such interest as connected with the business could not bring it within Section 80IB. The interest on refund was attributable only to the tax dispute and refund process, and not to the manufacturing activity either directly or indirectly. [Paras 13, 14, 15]

The disallowance of deduction under Section 80IB on interest received on income-tax refund was upheld.

Final Conclusion: The appeal was dismissed. The Court affirmed that interest received on refund of excess income tax does not form part of profits and gains derived from the eligible industrial undertaking and therefore does not qualify for deduction under Section 80IB.

Final assessment order passed without first serving a draft assessment order on an eligible assessee -Mandatory compliance with dispute resolution procedure - Jurisdictional error in faceless assessment

HELD THAT: - The Court held that, on a combined reading of Section 144B(1)(xxi) to (xxix) and Section 144C, the procedure requiring service of a draft assessment order upon an eligible assessee continued to apply even in faceless assessment. Since the petitioner's case involved an international transaction, and the proposed variation was prejudicial to it, service of a draft assessment order was mandatory before a final order could be made.

The direct passing of the final assessment order without affording the statutory opportunity to file objections before the DRP was therefore a breach of the mandatory scheme of the Act and constituted a jurisdictional defect.

The Court rejected the Revenue's request either to treat the final assessment order as a draft assessment order or to remand the matter for that purpose, holding that such an order, having been made in breach of the mandatory procedure, was liable to be quashed. The question whether the Assessing Officer could lawfully recommence the process by issuing a fresh draft assessment order was expressly left open. [Paras 6, 7, 8]

The impugned final assessment order was quashed and set aside as having been passed in violation of the mandatory procedure u/s 144C read with Section 144B.

Final Conclusion: The writ petition was allowed and the final assessment order for A. Y. 2023-24 was quashed for failure to follow the mandatory draft assessment procedure applicable to an eligible assessee. The Court left open the question whether the Revenue could, in law, initiate the process afresh by issuing a proper draft assessment order.

Territorial jurisdiction under Article 226(2) - arising of cause of action - Transfer of case under Section 127 - Recovery of non-existent tax demand - erstwhile entity had amalgamated

Territorial jurisdiction of Bombay Court to entertain the present Petition - Part of cause of action - Transfer of case under Section 127 - erstwhile entity had amalgamated with the petitioner having its registered office in Pune - as argued that the demands in question pertain to the erstwhile entity which was assessed in Delhi - HELD THAT: - The Court held that after the insertion of Article 226(2), territorial jurisdiction is not confined to the situs of the authority passing the order, but extends to a High Court within whose territory the cause of action wholly or in part arises.

More recently, in Teleperformance Global Services Pvt. Ltd. [2021 (4) TMI 550 - BOMBAY HIGH COURT] a Division Bench of this Court dealt with a case where the assessment order was passed in Delhi against a non-existent entity which had amalgamated with the Petitioner in Mumbai. The Court held that since the successor company was in Mumbai and the impact of the order was felt in Mumbai, a part of the cause of action arose in Mumbai.

In the present case, the erstwhile entity had amalgamated with the petitioner having its registered office in Pune; the recovery notice was received there; the consequences of the demands would operate against the petitioner there; and, importantly, jurisdiction over the case had already been transferred under Section 127 to the Pune officer. By reason of that transfer, all proceedings in respect of the relevant years stood with the transferee officer, the Delhi officer became functus officio, and any effective relief in relation to the impugned demands could be granted only by the Pune officer.

The reliance placed by the Revenue on Lt. Col. Khajoor Singh [1960 (12) TMI 84 - SUPREME COURT] was held to be misplaced because that decision pre-dated Article 226(2), while ABC Papers Limited [2022 (8) TMI 863 - SUPREME COURT] was found inapplicable as it concerned the scheme of section 260A and not the meaning of cause of action under Article 226(2). The objection that Article 226(2) was merely supplemental to Article 226(1) was also rejected, the Court holding that Article 226(2) furnishes an alternative jurisdictional basis. [Paras 38, 39, 40, 41, 42]

The preliminary objection to territorial jurisdiction was rejected and the writ petition was held maintainable before this Court.

Recovery of non-existent tax demand - Absence of underlying assessment or rectification orders - Adverse inference for non-production of records - HELD THAT: - The Court found that, despite RTI proceedings, directions of the First Appellate Authority under the RTI Act, and specific directions of the Court to file affidavits on merits and disclose the status of records, the respondents failed to place on record any assessment order, rectification order, intimation, or proof of service giving rise to the impugned demands.

Only illegible computation screenshots were furnished for two years, and for the remaining year records were stated to be unavailable. The affidavit of the Pune officer merely stated that physical records had not been transferred from Delhi, while the Delhi officer, though served, did not file any reply at all. On these facts, the Court held that there was no material to substantiate the existence of valid demand-creating orders, and an adverse inference necessarily arose against the Revenue. Old demands could not be permitted to surface on the portal and be enforced without the underlying orders being available and served. Applying the principle stated in Bharat Serums and Vaccines Limited [2024 (9) TMI 1126 - BOMBAY HIGH COURT] and Udayan Bhaskaran Nair [2026 (1) TMI 1045 - BOMBAY HIGH COURT] the Court held that recovery of such non-existent demands was impermissible.

In the present case, there is absolutely no material on record to substantiate the existence of valid orders giving rise to the impugned demands. The Respondents have failed to produce the orders and service records, despite repeated opportunities. The failure of Respondent No. 2 to respond and the inability of the Pune Officer to locate records leads to the inevitable conclusion that no such valid orders exist or were ever served upon the Petitioner. [Paras 44, 45, 46, 47, 48]

Final Conclusion: The Court held that part of the cause of action had arisen within its territorial jurisdiction and that, after transfer of the case to Pune, the writ petition was maintainable before it. On merits, since the Revenue failed to produce the underlying orders or service records supporting the impugned demands, the demands, recovery notice, and related computation sheets were quashed.

Book profit under MAT u/s 115JB - Preparation of profit and loss account in accordance with Schedule VI - mechanism adopted by the Assessee/Appellant in computing its book profits - Capital profit on sale of fixed assets

Whether the profit on sale of fixed assets could be credited directly to reserves and surplus in the balance sheet, or had to be routed through the profit and loss account for computation of book profit under section 115JB? - HELD THAT: - Part II of Schedule VI of the Companies Act, 1956, lays down the requirement for profit and loss account and in clause (2) it mandates the assessee to disclose every material feature including credits or receipts and debits of expenses in respect of non recurring transactions or transaction of an exceptional nature.

Clause xi (a) mandates the amount of income from investments, distinguishing between trade investments and other investments must be disclosed.

In the financial statement of the assessee, we find in the cash flow statement the receipt of sale of fixed asset is shown under cash from investment activities however had not brought it in the profit and loss account as it is required under part II of the Schedule VI to the Income Tax Act. The deviation from the accounting policy for under statement of profit is noted and recorded by the Statutory Auditor however, no justifiable reasoning placed by assessee for the said deviation.

The decision of the Hon'ble Supreme Court in M/s Dynamics Orthopaedics (P) Ltd. Case [2010 (2) TMI 8 - SUPREME COURT] has clearly held that Assessee Companies has to necessarily prepare its profit and loss Account only in terms of Part II and Part III of Schedule VI in the Companies Act and being a deeming fiction, there cannot be any liberal interpretation to the Section 115J. As rightly contented by the Learned Senior Standing Counsel for the Department, this point of law has reached finality and this is not the point of reference to the larger bench.

Thus, we hold, the capital profit on the sale of the Fixed Assets of the Company cannot be taken directly to the Reserves & Surplus in the Balance Sheet and the same has to be routed through the Profit & Loss Account to arrive at the correct book profits under Section 115JB of the Act and it is absolutely right in law to rework the profits u/s 115JB of the Act and assess the tax on the ground that the profit on the sale of Fixed Assets credited to the capital reserve by the Appellant are to be treated as normal profit for arriving at book profits u/s 115 JB.

Final Conclusion: Assessee appeal dismissed. The Court held that, for Assessment Year 2010-2011, the profit on sale of the assessee's fixed assets had to be routed through the profit and loss account and included in book profit for the purposes of section 115JB.

Deductibility of LIC premium -Payment to partners at a predetermined amount per month after their retirement for the continued use of their share of goodwill -Accrued liability or contingent liability - Annuity payment to retiring employee-partners - contractual obligation to provide the assured annuity - classification as contingent liability or as an expenditure towards a liability actually existing at the time of payment.

HELD THAT: - The Court held that the assessee had undertaken a present contractual obligation under the partnership arrangement and the LIC premium was paid to discharge that existing obligation. If the premium was not paid, the promised annuity would not be available on retirement; therefore, the payment was not a mere setting apart of money for an uncertain future event.

The contingencies of retirement, attainment of a particular age, or completion of service were only conditions for receiving the annuity and did not render the premium payment itself contingent.

Court also noted the absence of any clause showing refund of premium on non-fulfilment of those conditions, and on that basis found Indian Molasses Co.(P.) Ltd. inapplicable.

Applying the principle stated in Bharat Earth Movers [2000 (8) TMI 4 - SUPREME COURT] relying on Metal Box case [1968 (8) TMI 53 - SUPREME COURT] the Court concluded that a liability already accrued, though to be discharged in future, remains deductible and is not converted into a contingent liability by a condition subsequent. [Paras 8, 9, 10, 11, 12]

The Tribunal's view was rejected and the deduction was held allowable; the appellate authority's order was restored.

Final Conclusion: The appeal was allowed. The Court held that the LIC premium paid for securing annuity to retiring employee-partners represented expenditure towards an existing liability and was therefore deductible; the Tribunal's order was set aside and the appellate authority's order restored.

Continuation of income tax proceedings beyond insolvency proceedings -Clean slate theory - tax liability during CIRP - binding effect of approved resolution plan - failure to include statutory dues in the Resolution Plan -condonation of delay in filing return - whether petitioner was entitled to immunity from reassessment and tax liability for AY 2018-2019 on the basis of the approved resolution plan or the clean slate principle?

HELD THAT: - The Court held that the demand related to income earned during the period ending 31.03.2018, while the corporate insolvency resolution process had already commenced and the return for that year fell due thereafter. Approved resolution plan itself showed awareness of pending tax compliances and contemplated audit of financials and determination of tax liabilities for the relevant years.

NCLT, while approving the plan, did not approve the clauses seeking blanket waiver or extinguishment of tax dues, and instead directed the resolution applicant to seek reliefs before the appropriate forum in accordance with law. On that basis, the Court held that the approved plan could not be construed as granting immunity from tax liability arising during the currency of CIRP.

Court further held that the decisions in Committee of Creditors of Essar Steel India Limited Vs. Sathish Kumar Gupta and others 2019 (11) TMI 731 - SUPREME COURT and Ghanashyam Mishra and Sons Private Limited [2021 (4) TMI 613 - SUPREME COURT] concerned pre-CIRP dues, and their ratio could not be extended to liabilities arising during CIRP. [Paras 94, 106, 107, 108, 109]

The challenge to the order u/s 148A(d) and the reassessment order for Assessment Year 2018-2019 failed, since no immunity from such tax liability could be claimed under the approved resolution plan.

Condonation of delay in filing return - carry forward of losses - claim for belated filing of return and consequential carry forward or set-off of losses - HELD THAT: - The Court held that the resolution applicant had undertaken under the plan to file pending returns after approval of the resolution plan. The NCLT had also recorded that reliefs relating to income-tax compliance and carry forward of losses had to be sought before the appropriate authority. Therefore, without filing the return and without moving an application for condonation under the statutory mechanism, the petitioner could not claim waiver, relief, or set-off of losses for subsequent years. The Court specifically held that the petitioner ought to have approached the Central Board of Direct Taxes u/s 119(2)(b) for condonation of delay in filing the return for Assessment Year 2018-2019. [Paras 99, 102, 103, 104, 105]

Relief based on non-filing of returns or carry forward of losses was not available in the writ petition and had to be worked out before the competent authority in accordance with law.

Final Conclusion: The writ petition was dismissed. The Court held that tax liability for Assessment Year 2018-2019, arising during the CIRP period, was not extinguished by the approved resolution plan, while any claim for condonation of delay in filing returns or related relief had to be pursued before the competent income-tax authority in accordance with law.

Bogus purchases - estimation of income/profit element embedded in purchases - disallowance to 10% of hawala purchases

HELD THAT: - The Court held that the controversy stood covered by its earlier decisions in M/s. Paramshakti Distributors Pvt. Ltd [2019 (7) TMI 838 - BOMBAY HIGH COURT], SVD Resins & Plastics (P.) Ltd [2024 (8) TMI 564 - BOMBAY HIGH COURT]and Ramelex (P.) Ltd [2025 (10) TMI 808 - BOMBAY HIGH COURT] - Applying those decisions, it accepted that where the Department has not rejected the corresponding sales and the allegation of bogus purchases rests essentially on information forwarded by the Sales Tax Department, the proper course is to tax only the profit element embedded in such purchases, unless there is proper proof showing that the transactions were wholly bogus. In that context, the Tribunal was justified in restricting the addition to 10% of the alleged bogus purchases. [Paras 10, 11, 12, 13, 14]

The restriction of the addition to 10% of the alleged bogus purchases was affirmed.

Final Conclusion: The Court upheld the Tribunal's view that only 10% of the alleged bogus purchases could be added as the embedded profit element. Holding that the matter was covered by its earlier decisions and raised no substantial question of law, it dismissed the Revenue's appeal.

Computation of capital gains u/s 50C- matter referred to the Departmental Valuation Officer (DVO) - property had been valued in probate proceedings - AO taking the guideline value as fixed by the Sub Registrar and the valuation report given by the Departmental Valuation Officer under Section 50C demanded capital gain - subject property was initially owned by her grandmother and by a Will she bequeathed the property to the appellant and her uncle

HELD THAT: - The Court held that the view taken by the Tribunal in the co-owner's case represented the correct legal position and was in consonance with the decision in CIT Vs. Vummidi Amarendran [2020 (6) TMI 74 - ITAT CHENNAI]. Proceeding on that basis, it accepted the assessee's grievance against the valuation adopted by the authorities below and directed that the guideline value as on 03.10.2006 be taken for recomputing the capital gains after giving reasonable opportunity to the assessee. [Paras 8]

The orders of the authorities below were set aside and the Assessing Officer was directed to adopt the guideline value as on 03.10.2006 and recompute the capital gains.

Final Conclusion: The appeal was allowed. The Court set aside the orders under challenge and directed fresh computation of capital gains by adopting the guideline value as on 03.10.2006 after affording opportunity to the assessee.

TP Adjustment - addition made on creation of marketing intangible by assessee in favour of his associates enterprise on account of AMP expenses -Bright line test - Business expenditure - Foreign tax credit verification - Additional ground

Advertisement, marketing and promotion expenses - International transaction - Bright line test - Transfer pricing adjustment - HELD THAT: - The Tribunal held that, in the assessee's own case for the earlier year [2014 (1) TMI 1529 - ITAT DELHI], the Delhi High Court [2015 (12) TMI 1188 - DELHI HIGH COURT] had already held that AMP expenditure did not constitute an international transaction, and that view had been sustained when the Revenue's appeal was dismissed by the Supreme Court [2024 (11) TMI 1164 - SC ORDER]. The coordinate benches had followed that position for subsequent years as well.

Since the Revenue could not show any change in facts or law for the year under appeal, the same view was required to be followed. The Tribunal further noted that application of the bright line test stood rejected in Sony Ericsson Mobile Communication India Pvt. Ltd. [2015 (3) TMI 580 - DELHI HIGH COURT] and once no international transaction existed in relation to AMP expenditure, the protective adjustment based on that test also necessarily failed. [Paras 6, 7, 8]

Ground Nos. 2 and 3, along with their sub-grounds, were decided in favour of the assessee and the AMP-related additions were deleted.

Ex-gratia payment made to its employee at the time of marriage of their daughter - allowable Business expenditure - Employee welfare expenditure - HELD THAT: - The Tribunal noted that in the assessee's own cases for AY: 2015-16 [2020 (1) TMI 861 - ITAT DELHI] and AY: 2016-17 [2023 (1) TMI 1197 - ITAT DELHI], the coordinate bench had remitted the same issue to the Assessing Officer for allowing the deduction after verification of details, and that in the consequential proceedings relief had been granted. Following the same course, the Tribunal directed that the present year's claim also be dealt with on identical lines. [Paras 10, 11]

Ground No. 4 was allowed for statistical purposes with a direction to the Assessing Officer to follow the earlier Tribunal directions and verify the claim.

Denial of Foreign tax credit - Verification of certificates - Claim of foreign tax credit was remitted to the Assessing Officer for verification of the supporting certificates. - HELD THAT: - The Tribunal observed that in the assessee's own earlier years the issue of foreign tax credit had been remitted for verification of certificates, and that in the consequential order the credit had been allowed after reconciliation and examination of the documents. On the same reasoning, the claim for the year under appeal required fresh verification by the Assessing Officer. [Paras 12]

Ground No. 5 was allowed for statistical purposes and remitted to the Assessing Officer for verification of certificates.

Additional ground - Warranty provision - Mercantile system of accounting - HELD THAT: - The Tribunal held that there was no dispute in principle that provision for warranty is deductible as an ascertained liability under section 37(1), applying Rotork Controls India Ltd. [2009 (5) TMI 16 - SUPREME COURT]. It further held that if there was a mismatch between the accounting presentation in the books and the computation in the return, the assessee was entitled to explain that position in assessment proceedings. Since the claim was not a wholly new claim but one involving enhancement of an existing claim, it deserved to be admitted and examined afresh by the Assessing Officer. [Paras 15, 16]

The additional ground was admitted and restored to the Assessing Officer for fresh determination after necessary queries; it was allowed for statistical purposes.

Final Conclusion: The appeal was allowed. The AMP-related transfer pricing and protective adjustments were deleted, while the claims relating to daughter marriage fund, foreign tax credit and the additional warranty deduction were restored to the Assessing Officer for fresh verification and determination.

Taxability of income in India - Payments made by the assessee to two Singapore based entities towards consultancy and architectural and structural design - Fees for technical services - Make available test - Disallowance for non-deduction of tax at source u/s 195 - India-Singapore DTAA - Project-specific consultancy services -

HELD THAT: - The Tribunal held that, under Article 12(4), consultancy or technical services qualify as fees for technical services only where the services make available technical knowledge, experience, skill, know-how or processes so as to enable the recipient to apply the technology independently. On the facts, the services rendered by the two Singapore entities consisted of architectural and structural drawings/designs for a specific residential project and were confined to that project alone. Such services did not transfer technical knowledge or skill to the assessee for independent future use, nor were the designs capable of being applied by the assessee independently for other projects.

Tribunal found complete parity with the decision rendered in the assessee's own case for the immediately preceding year [2021 (10) TMI 356 - ITAT MUMBAI] and, no distinguishing material having been shown, followed that view. [Paras 8, 9]

The payments were held not to be fees for technical services under the treaty; therefore, tax was not deductible under section 195 and the deletion of the disallowance under section 40(a)(i) was upheld.

Final Conclusion: The revenue's appeal was dismissed. The Tribunal upheld the appellate order deleting the disallowance on the ground that the payments for project-specific architectural and design services did not satisfy the make available requirement under Article 12(4) of the India-Singapore DTAA.

Validity of the assessment framed u/s 147 r.w.s 144 r.w.s 144B - absence of a valid notice u/s 143(2) - return of income filed by an assessee in response to notice under section 148 - whether or not a return of income filed in response to the notice issued by the AO u/s 148 after the lapse of the prescribed time period is to be construed as a return of income filed by the assessee?

HELD THAT:- Tribunal held that issues had been deliberated upon at length by the Tribunal in Sanghi Textiles Private Limited [2026 (1) TMI 1586 - ITAT HYDERABAD] as held that a notice under section 143(2) is mandatorily required to be issue where the assessee has filed a return of income in response to notice u/s 148 of the Act is supported by the judgment of Rajeev Sharma [2010 (5) TMI 600 - ALLAHABAD HIGH COURT] It was observed that, where the return of income is filed by the assessee in response to notice under section 148 of the Act, the AO, before proceeding to decide the controversy with regard to the escaped assessment, is mandatorily required to issue notice under section 143(2)

AO in the present case while framing the assessment specifically observed that the issuance of notice under section 143(2) of the Act was being dispensed with as the assessee had failed to file the return of income in compliance to the notice issued under section 148 therefore, we respectfully follow the same.

Accordingly, we concur with the AR that the AO had grossly erred in law and facts of the case in assuming jurisdiction and framing the assessment vide his order passed under section 147 r.w.s 144 r.w.s 144B without considering the return of income filed by the assessee on 13/12/2021, and issuing a notice under section 143(2) of the Act.

Final conclusion:- As tribunal held where the return of income is filed by the assessee in response to notice under section 148 of the Act, the AO, before proceeding to decide the controversy with regard to the escaped assessment, is mandatorily required to issue notice under section 143(2)

Allowability of ESOP expenditure as deductible business expenditure under section 37(1) - Reliability onBinding precedent of jurisdictional High Court -pendency of the issue before the Supreme Court

HELD THAT:- Both the parties confirmed that issues are covered in favour of the assessee by the decision of the honourable Karnataka High court in M/S IBM INDIA PVT LTD [2025 (1) TMI 1807 - KARNATAKA HIGH COURT] where in order of the ITAT in assessee’s own case is confirmed.

Though the revenue might have challenged the deductibility of ESOP expenditure before the Honourable Supreme Court however, as in the case of the assessee the issue is settled by the Honourable Karnataka High Court against which the special limitation filed by the assessee is also dismissed - Mere pendency of the issue before the Supreme Court in another matter was held insufficient to displace the binding effect of the jurisdictional High Court decision governing the assessee. On that basis, the Revenue's challenge to the allowability of the ESOP claim under section 37(1) was rejected.

Final Conclusion: The appeal of the Revenue was dismissed. The Tribunal upheld the order deleting the disallowance of ESOP expenditure on the ground that the issue was already concluded in favour of the assessee by the jurisdictional High Court.

Validity of assessment order passed u/s 153C being barred by limitation as per section 153B - time limit for completion of assessment - Joint warrant of authorization - Assessment year-specific satisfaction - Incriminating material - Third-party statements and cross-examination - additions towards 1% commission income on total sub-contract works received by the assessee

Limitation for assessment u/s 153C - Joint warrant of authorization - Execution of authorization - HELD THAT: - The Tribunal held that where assessment is required to be made separately on each person named in a joint warrant, the limitation under section 153B has to be reckoned with reference to the conclusion of search as recorded in the last panchanama drawn in the case of that assessee, and not from the last panchanama drawn in the case of some other person covered by the joint warrant. Section 292CC was treated as clarifying that, though a joint authorization may be issued, assessment remains person-specific; consequently, the execution of authorization relevant for limitation must also be person-specific. On the facts, the search in the assessee's case stood concluded on 12.02.2020, and, after giving effect to the extension available under TOLA and the CBDT notifications, the outer limit expired on 30.09.2021. The Revenue's contention that the later panchanama in the case of another person covered by the joint warrant, or the extension ordered by the Supreme Court for judicial and quasi-judicial proceedings, would save limitation was rejected. [Paras 21, 22, 23, 24]

The assessment orders were held time-barred and were quashed on this ground.

Assessment year-specific satisfaction - Jurisdiction under section 153C - Incriminating evidence linkage - common satisfaction note recorded for multiple assessment years - HELD THAT: - The Tribunal found that the satisfaction note was generic and failed to identify, for each assessment year, the incriminating material relied upon and its nexus with the undisclosed income sought to be assessed. It held that the satisfaction note is the foundation of proceedings under section 153C and must disclose application of mind to the seized material and its bearing on the determination of total income for the relevant assessment year. A sweeping common note for several years, without year-wise linkage between seized material and undisclosed income, was held insufficient in law. The authorities relied upon by the Revenue were held inapplicable as they did not dilute the basic requirement of valid satisfaction founded on incriminating material. [Paras 29, 30, 31, 32]

The assumption of jurisdiction under section 153C on the basis of the consolidated satisfaction note was held bad in law, and the assessment orders were liable to be quashed on this ground as well.

Incriminating material - Third-party statements and cross-examination - Addition in search assessment - additions towards 1% commission income on total sub-contract works received by the assessee - HELD THAT: - The Tribunal held that an assessment under section 153C must be founded on tangible and incriminating material relating to undisclosed income, and cannot be expanded on suspicion, surmise, or uncorroborated oral statements. The addition had been made only on the basis of statements of certain employees and a few sub-contractors, while the underlying payments were reflected in the regular books, routed through banking channels, and the accounts were statutorily audited without qualification. No independent material, cash, asset, document, or other evidence was found to establish return of cash to the assessee. The Tribunal further held that third-party statements could not be used against the assessee without corroboration and without affording opportunity of cross-examination, and the denial of such opportunity offended the principles of natural justice. On that reasoning, the confirmed addition was found unsustainable. [Paras 35, 36, 37, 38, 39]

The addition towards alleged cash receipts from sub-contractors was directed to be deleted for all the assessment years.

Final Conclusion: The Tribunal allowed the assessee's appeals for all the three assessment years. The assessments under section 153C were held to be barred by limitation and also vitiated for want of a valid year-specific satisfaction note; independently, the substantive addition based only on uncorroborated third-party statements was directed to be deleted.

Validity of assessment order passed by the A.O. u/s 143(3) - approval u/s 148B accorded by Addl.CIT/JCIT - approval granted by the Range Head is mechanical and without any application of mind

HELD THAT: - The Tribunal found from the approval orders that they did not disclose any independent consideration of the draft assessment orders, the proposed additions, or the supporting material. It held that approval under section 148B, like analogous statutory approval requirements in search assessments, is not an empty formality but a mandatory safeguard intended to check arbitrary exercise of power by the Assessing Officer.

The approving authority must therefore examine the draft order and record at least some indication of the thought process leading to approval. Mere grant of approval without such indication amounts to a mechanical exercise. On that basis, the Tribunal concluded that the approvals in the lead appeal and the connected appeals were invalid, and the consequential assessments were non-est in law. [Paras 15, 16, 20, 21, 22]

Final Conclusion: The Tribunal admitted the additional legal ground and held that the approvals granted under section 148B were mechanical and devoid of application of mind. On that basis, the assessments for assessment years 2022-23 and 2023-24 in all the connected appeals were quashed, leaving the grounds on merits unexamined.

Denial of TDS credit pertaining to services rendered - year of assessability of income - deductor depositing the tax and reflecting the credit in Form 26AS in the subsequent year.

HELD THAT: - The Tribunal followed its earlier decision in M/s. Greatship (India) Limited [2020 (2) TMI 21 - ITAT MUMBAI] and held that credit for tax deducted at source is to be allowed for the assessment year in which the related income is assessable. Since the subject income was accounted for by the assessee during AY 2020-21, the corresponding TDS credit could not be denied merely because the deductor accounted for the transaction and deducted tax in the subsequent year, resulting in a mismatch with Form 26AS. The Tribunal, however, directed that while allowing the credit, the Assessing Officer must ensure that the same TDS credit is not availed again in the immediately succeeding year. [Paras 9, 10]

The Assessing Officer was directed to allow the TDS credit in AY 2020-21, subject to verification that no duplicate claim of the same credit is made in AY 2021-22.

Final Conclusion: The appeal was allowed. The Tribunal held that the assessee was entitled to the TDS credit in AY 2020-21, being the year in which the related income was assessable, with a direction to prevent any duplicate credit in the succeeding year.

Maintainability of customs appeal against confiscation - Valuation objection and the monetary limit instruction - Prudent Man Test - Town Seizure Doctrine -seizure of gold in a town seizure, without foreign markings - fulfilment of the requirement of reasonable belief under Section 123 - Reasonable belief under reverse burden provisions - Evidentiary value of retracted statements in deemed judicial proceedings - Proof of lawful provenance of high-purity gold.

Maintainability of customs appeal against confiscation - Valuation exclusion - Monetary limit exceptions - HELD THAT:- The Court held that a challenge to absolute confiscation is an enforcement dispute concerning liability of goods to confiscation and penalties, and not a question of valuation for assessment purposes. It further held that the controversy involved interpretation of the reverse-burden provision and a recurring legal issue, which fell within the threshold-neutral category under the departmental policy. The Court also recorded that the value of the goods together with the penalties exceeded the prescribed monetary limit. On that reasoning, the preliminary objection to maintainability failed. [Paras 7]

The preliminary objection was overruled and the appeals were held maintainable.

Reasonable belief under reverse burden provisions - Town seizure - Prudent man test - HELD THAT:- Section 123 constitutes a self-contained code; it does not establish a geographical hierarchy for the formation of “Reasonable Belief.” Whether bullion is intercepted at an international border or within a domestic metropolis, the jurisdictional trigger remains the “Prudent Man Test” as propounded in D. Bhoormall [1974 (4) TMI 33 - SUPREME COURT]

In distilling the essence of “Reasonable Belief,” we are guided by the seminal observations of the Hon’ble Supreme Court in D. Bhoormall [1974 (4) TMI 33 - SUPREME COURT] which clarify that the Revenue is not mandated to establish its case with mathematical certainty at the threshold stage. Rather, it must demonstrate a degree of probability such that a “prudent man” would, based on the available material, believe in the illicit origin of the goods. This subjective satisfaction, as reaffirmed by this Court in Rajendra Kumar Damani [2024 (5) TMI 730 - CALCUTTA HIGH COURT] is generally insulated from judicial review unless found to be wholly arbitrary or capricious. The Patna High Court observed in M.L. Dey [1973 (12) TMI 40 - HIGH COURT OF PATNA] that reasonable belief is more than mere suspicion; it is a belief reached by a prudent man applying his mind judicially to the facts.

The Court held that the statutory requirement of reasonable belief is governed by the standard of prudence and not by geography. The Tribunal erred in treating a town seizure as creating an artificial bar to the formation of such belief. The clandestine transport of high-value gold in a specially stitched waist belt was itself material sufficient for a prudent officer to infer illicit origin at the threshold stage. The absence of foreign markings was held not to negate such belief, since the statute does not make geographical location or visible foreign marks a precondition for shifting the burden. Once the concealment and surrounding circumstances were established, the reverse burden stood attracted. [Paras 8, 9, 12]

The Court held that the jurisdictional prerequisite of the reverse-burden provision was satisfied and that the Tribunal's reliance on the town-seizure approach was legally unsustainable.

Retracted statements in deemed judicial proceedings - Section 108 statements - Belated retraction - HELD THAT:- Following the celebrated Constitution Bench decision in Illias v. Collector of Customs, Madras [1968 (10) TMI 48 - SUPREME COURT], it is settled law that Customs Officers are not “police officers” for the purposes of Section 25 of the Evidence Act. Their primary mandate is the protection of the National Exchequer and the prevention of smuggling; since they lack the power to file a charge sheet under Section 173 of the Code of Criminal Procedure, a confession recorded by them is admissible as substantive evidence. Such statements are neither hit by the exclusionary rules of the Evidence Act nor do they violate the constitutional protection against self-incrimination enshrined in Article 20(3). As the Apex Court clarified in Ramesh Chandra Mehta v. State of West Bengal [1968 (10) TMI 50 - SUPREME COURT] at the stage of a Section 108 inquiry, the deponent is not an “accused” in the technical sense, rendering the shield of Article 20(3) unavailable.

The Court emphasized that statements recorded under Section 108 are made in a statutorily deemed judicial proceeding and are not to be equated with police confessions. It held that a retraction, to have legal force, must be contemporaneous and supported by circumstances showing coercion. In the present case, the statement was not only initially made but was reaffirmed later, while the plea of duress surfaced only after a prolonged delay. In the absence of prompt complaint or independent material showing compulsion, the later retraction was treated as an afterthought and insufficient to destroy the evidentiary worth of the earlier statements. [Paras 10, 12]

The Tribunal was wrong in discarding the Section 108 statements on the basis of a highly belated retraction.

Proof of lawful provenance of high-purity gold - Scientific purity - Identity mismatch - HELD THAT:- Following the ratio of the Kerala High Court in Commissioner of Customs v. Om Prakash Khatri [2019 (3) TMI 457 - KERALA HIGH COURT] we hold that high purity acts as a “silent but formidable rebuttal” to any claim of indigenous origin. As observed in Paragraph 19 of the said judgment, such purity constitutes potent circumstantial evidence of foreign origin when the possessor fails to establish industrial provenance. In the absence of a “Melting Memo” or “Refinery Certificate,” the Respondents’ paper trail is effectively a “trail to nowhere.”

The Court held that the respondents' documentary trail related only to old ornaments and did not explain the transformation of such material into gold of 99.5% to 99.6% purity. The CRCL report showed bullion of industrial-standard fineness, and the Court treated this as creating an identity mismatch between the claimed source material and the seized goods. In the absence of melting memos, refinery slips, or refinery certificates establishing industrial conversion, the respondents failed to bridge that gap. The Court therefore rejected the Tribunal's view that the discrepancies were merely technical and held that the scientific purity, coupled with concealment and lack of industrial provenance documents, showed failure to discharge the reverse burden. [Paras 8, 11, 12]

The protection of the “Venial Breach” doctrine under Hindustan Steel Ltd. [1969 (8) TMI 31 - SUPREME COURT] cannot be extended to a foundational failure of proof involving two kilograms of industrial-grade bullion. A legitimate commercial transaction of such magnitude is not transported secreted in a waist belt, nor does it lack the requisite industrial nomenclature of refinery documentation.

The respondents failed to prove lawful provenance of the seized bullion, and the Tribunal's acceptance of the paper trail was held perverse.

Final Conclusion: The High Court allowed the Revenue's appeals, held the Tribunal's order to be perverse, and restored the order of absolute confiscation with consequential penalties. It ruled that the seizure was supported by reasonable belief, the belated retraction did not nullify the Section 108 statements, and the respondents' documentary trail failed to establish lawful provenance of the high-purity bullion.

Entitlement for the goods to be released for re-export after the duty and penalties imposed under the adjudication and appellate orders had been deposited -Binding effect of appellate orders - Absence of stay on pending departmental appeal

Release of confiscated goods on payment of redemption fine, duty and penalty - The case of the petitioner is that once the Order-in-Original was complied with, there was no warrant in the Department not releasing the goods in question. - HELD THAT:- The Court proceeded on the undisputed position that the Order-in-Original, as modified by the appellate authority, continued to bind the departmental officers, and that the duty and penalties payable thereunder had already been deposited. The Revenue fairly accepted both the existence of the adjudication and appellate orders and the binding nature of the appellate order. Since no stay of the appellate order had been obtained in the pending appeal before the Tribunal, the Court held that there was no embargo on release of the goods, particularly when the revenue's interest already stood secured by deposit of the full duty and consequential amounts. The Court therefore did not permit continued detention of the goods or any contrary departmental position to defeat implementation of the operative appellate order. [Paras 9, 10, 11]

The goods were directed to be released for the purpose of re-export upon confirmation that the deposited amount stood credited to the Government treasury.

Final Conclusion: Holding that the appellate order remained operative and binding in the absence of any stay, and that the duty and penalties payable thereunder had already been deposited, the Court directed release of the confiscated goods for re-export. The writ petition was accordingly disposed of.

Maintainability of appeal in view of the monetary limit prescribed under the litigation policy - Central Board of Indirect Taxes and Customs through its instruction dated 02.11.2023 - imposition of penalties imposed under Section 112(b) and Section 114AA.

Monetary limit for departmental appeals - CBIC litigation policy - HELD THAT: - The Tribunal held that the latest CBIC instruction issued under the power traceable to Section 131BA prescribed a threshold of Rs. 50 lakhs below which appeals are not to be filed before CESTAT. It further found that the exceptions stated in the instruction for pursuing appeals irrespective of monetary limit did not cover the present dispute concerning penalties under Sections 112(b) and 114AA. Since the penalty involved in each appeal was below the prescribed limit, the appeals were liable to be disposed of in terms of the Government litigation policy. [Paras 3, 4]

The Revenue appeals were dismissed as barred by the applicable monetary-limit instruction.

Final Conclusion: Applying the CBIC monetary-limit instruction, the Tribunal dismissed the departmental appeals since the penalty involved in each case was below the prescribed threshold and the stated exceptions were inapplicable.

Seeking amendment of Shipping Bills, under the provisions of Section 149 - correct the reward column from "No" to "Yes" for claiming MEIS benefit - Procedural lapse vis-a-vis substantive export incentive - limitation prescribed under the Notification No.21/2025-Cus CMT - Reasonable time under amendment power - Single Member jurisdiction - Whether the application filed by the Appellants for amendment of the shipping bill can be allowed.

Single Member jurisdiction - Waiver of forum objection - HELD THAT:- The Tribunal found that the appeal had been pending since 2019, had earlier been heard and decided by a Single Member, and no objection to such hearing had been raised by the Revenue at any stage. The Revenue had also not taken this as a ground before the High Court in the earlier round. In those circumstances, no reason was found to re-post the matter before a Division Bench. [Paras 12]

The appeals were held fit to be decided by the present Bench.

Limitation prescribed under the Notification No.21/2025-Cus CMT - HELD THAT: - The limitation prescribed under the Notification No.21/2025-Cus CMT dated 03.04.2025, I find that even as per said Notification, the application for conversion shall be filed by an exporter in writing within one year from the date of clearance of goods under Section 1 of Section 51 Section 69 of the Act or from the date of entry made under Section 84 of the Act as the cases may be. Further jurisdictional Commissioner is empowered to extend for further period of six months and jurisdictional Chief Commissioner of the Customs is vested with the power to extend the time limit not exceeding further six months. Thus even if a request is made within two year and if the jurisdiction Commissioner or Chief Commissioner is satisfied with the reason given for the delay, they are empowered to amend such amendment even up to two year after the relevant date of export. In Appeal No. C/20532/2019, shipping bill dated 29.10.2015 to 31.03.2016 related to 123 exports are involved and the request for the amendment was made on 22.05.2017. Similarly in Appeal No. C/20930/2019, two shipping bills dated 28.07.2017 and one shipping bill dated 07.09.2017 are involved and request for amendment was made on 02.04.2019.

Amendment of shipping bills - MEIS benefit - HELD THAT: - The Tribunal held that the decision on delay under the amendment power depends on the facts of each case and that no rigid rule could be applied. It noted that even the departmental circular contemplated conversion or amendment on the basis of documentary evidence existing at the time of export, and there was no dispute that the exported goods were otherwise eligible for the scheme. In one appeal, the DGFT had already issued MEIS scrips after being satisfied about export and repatriation. Relying on M/s. Shah Nanji Nagsi Exports Pvt Ltd. [2025 (9) TMI 418 - SUPREME COURT], the Tribunal treated the wrong indication in the reward column as an inadvertent procedural defect which, once corrected under the statutory power of amendment, could not defeat substantive entitlement under a beneficial export incentive scheme. On that reasoning, the requests for amendment were allowed. [Paras 13, 14, 15, 16]

The rejection of amendment was not sustained, and the appeals were allowed with consequential relief in accordance with law.

Final Conclusion: The Tribunal rejected the preliminary objection as to forum and held that the exporters were entitled to amendment of the shipping bills for correction of the MEIS declaration. Treating the error as a curable procedural lapse and not a ground to deny substantive export incentive, the appeals were allowed with consequential relief.

Imposition of penalty under Section 117 on the Customs House Agent - failed to fulfill their basic responsibility - wrong classification and declaration made in the Bills of Entry - violation of the provisions of Customs Broker Licensing Regulation, 2018 (CBLR, 2018) -Extinguishment of pre-resolution statutory claims - Validity of post-resolution show cause notice.

Customs broker's liability for importer-declared classification - Penalty under residuary provision - HELD THAT: - The Tribunal held that the appellant's admitted role was confined to filing Bills of Entry on behalf of the importers and there was no allegation or evidence that the appellant had advised the tariff classification of the imported aircraft parts. The statutory obligation to make a truthful declaration in the Bill of Entry rested on the importer, and a customs broker could not be treated as technically competent or obliged to determine the correct classification of such goods. Relying on the principle noticed in M/s. Chakiat Agencies [2023 (2) TMI 490 - CESTAT CHENNAI] and Kunal Travels (Cargo) [2017 (3) TMI 1494 - DELHI HIGH COURT], the Tribunal observed that a customs broker acts as a processing agent on the basis of information supplied by the client, and innocent filing on that basis does not by itself amount to misdeclaration by the broker. The finding in the impugned orders that the appellant had filed Bills of Entry with wrong classifications for the same goods was found to be based on presumption, without evidentiary support. It was further noted that though violation of Regulation 10(d) and 10(e) of the Customs Broker Licensing Regulations, 2018 had been alleged, no proceedings had been initiated under those Regulations and no evidence of such violation was shown. In the absence of proof that the appellant had violated any provision of the Customs Act or failed to discharge any duty cast upon it under the Act, invocation of the residuary penalty provision was held to be unsustainable. [Paras 8, 9, 10, 11, 12]

The penalty imposed on the customs broker under Section 117 was held to have been wrongly invoked and was set aside.

Resolution plan and statutory dues - Validity of post-resolution show cause notice - HELD THAT: - The Tribunal recorded that the importers were already under insolvency proceedings and that the resolution plan had been approved prior to issuance of the impugned show cause notices. Applying the law declared in Ghanshyam Mishra and Sons Pvt. Ltd.[2021 (4) TMI 613 - SUPREME COURT], it held that once a resolution plan is approved, claims not forming part of that plan stand extinguished, including statutory dues, and no proceedings can be initiated or continued in respect of such claims for the earlier period. On that principle, the show cause notices themselves were held to be invalid, and any demand confirmed on their basis was liable to be set aside. [Paras 13]

The show cause notices were treated as invalid on account of prior approval of the resolution plan, and consequential demands could not survive.

Final Conclusion: The Tribunal allowed all four appeals and set aside the penalties imposed on the customs broker. It held both that Section 117 had been wrongly invoked in the absence of any proved contravention by the broker and that the show cause notices could not survive after approval of the importers' resolution plan.

Imposition of Penalty on customs broker - absence of evidence showing knowledge of contraband export - Business of Customs broker facilitation and clearance of export and import consignments - Factory-sealed consignments.

Penalty on customs broker - Knowledge of prohibited export - Factory-sealed consignments - HELD THAT:- The Tribunal found that the export consignments were factory-sealed and, during investigation, the seals were found intact. The customs broker had obtained the exporter's KYC documents, including IEC, PAN card, bank account details, Aadhaar card and self-sealing permission, and these were found genuine. On these facts, Revenue failed to establish that the customs broker, its director or employees had any knowledge of the actual stuffing of red sanders or of any attempt to export contraband goods. The Tribunal also noted that proceedings initiated against the customs broker under the CBLR, 2018 had already been dropped. In the absence of evidence of knowledge, penalty was held not imposable. [Paras 6]

Penalties imposed on all the appellants were held unsustainable and were set aside.

Final Conclusion: The Tribunal held that no penalty could be sustained against the customs broker, its director and employees, since there was no evidence that they had knowledge of the prohibited goods concealed in the factory-sealed consignments. The appeals were accordingly allowed and the penalties were dropped.

Imposition of Penalty on customs broker - absence of evidence showing knowledge of contraband export - Business of Customs broker facilitation and clearance of export and import consignments.

Penalty on customs broker - HELD THAT:- The Tribunal found that the consignments had been sent as factory-sealed consignments and, during investigation, the seals were found intact. The customs broker had obtained the exporter's KYC documents, including IEC, PAN card, bank account, Aadhaar card and self-sealing permission, and those documents were found genuine. On these facts, the Revenue failed to place any evidence showing that the customs broker, its director or employees had knowledge that prohibited goods were stuffed in the consignments or that they were aware of the actual contents. The Tribunal also noted that the proceedings initiated against the customs broker under CBLR, 2018 had already been dropped. In the absence of proof of knowledge, penalty under the Customs Act was held not imposable. [Paras 6, 7]

The penalties imposed on all the appellants were set aside and the appeals were allowed.

Final Conclusion: The Tribunal held that, where the export consignments were factory-sealed, the seals remained intact, and the customs broker had verified genuine KYC documents, penalty under the Customs Act could not be imposed without evidence of knowledge or involvement in the attempted export of prohibited goods. The impugned penalties were accordingly set aside.

Statutory cap on condonation of delay- delay of 253 days - Maintainability of appeal under the Insolvency and Bankruptcy Code. - HELD THAT: - The Court held that under Section 62(2) of the Insolvency and Bankruptcy Code, 2016, delay can be condoned only up to 15 days beyond the prescribed period of 45 days, if the Court is satisfied. Since the reported delay of 253 days was far beyond that outer statutory limit, the appeal was not entertainable. [Paras 1, 2]

The appeal was dismissed as barred by limitation on the ground that the delay exceeded the statutorily condonable period.

Final Conclusion: The Court dismissed the appeal on the ground of delay, holding that the reported delay was far beyond the maximum period that could be condoned under Section 62(2) of the Insolvency and Bankruptcy Code, 2016.

Withdrawal of application - Finality of possession with resolution professional - Access rights of third-party occupants.

Finality of possession with resolution professional - Suspended director's access claim - HELD THAT:- The Appellate Tribunal held that the earlier order granting possession and access to the Resolution Professional had already become final, including after dismissal of the appeal against it. In consequence, the Resolution Professional's possession and control over the premises could no longer be disputed by the suspended director. The Adjudicating Authority therefore erred in permitting withdrawal of the application while simultaneously directing the Resolution Professional to ensure full access to the applicant, since such a direction effectively reopened a matter that had already attained finality. [Paras 13, 15]

The direction requiring the Resolution Professional to ensure full access to the respondent was set aside.

Access rights of third-party occupants - Liberty to seek independent relief - HELD THAT:- The Appellate Tribunal did not adjudicate the entitlement of other entities said to be operating from the premises. It held that, if such entities claimed obstruction by the Resolution Professional, it was open to them to file appropriate applications before the Adjudicating Authority, and the setting aside of the impugned direction would not prejudice their right to pursue such remedies in accordance with law. [Paras 14]

Relief, if any, for such entities was left open to be sought by them through appropriate independent applications.

Final Conclusion: The appeal was partly allowed. The direction compelling the Resolution Professional to provide full access to the respondent was set aside, while liberty was reserved to any other affected entities to approach the Adjudicating Authority independently in accordance with law.

Maintainability of proceedings under Section 95 -Invocation of personal guarantee - Deemed service - Validity of the service of demand notice and subsequent notices on the personal guarantor - joint and several liability - absence of a further opportunity to object to the resolution professional's report - Compliance with insolvency process for personal guarantors.

Invocation of personal guarantee - Debt crystallised by DRT decree - HELD THAT: - The Appellate Tribunal held that the earlier proceedings before the DRT had been initiated against both the corporate debtor and the personal guarantors after issuance of demand notice, and a joint and several decree had been passed against them. In the absence of any material showing that the decree had been set aside or had ceased to operate, the liability of the personal guarantors stood established and it was not open to them to contend that the guarantee had not been invoked. [Paras 10, 11]

The existence of the operative DRT decree conclusively established invocation of the guarantee and the debt due from the personal guarantors.

Deemed service of demand notice - Construction of guarantee deed with statutory rules - HELD THAT: - Relying on clause 20 of the guarantee deed, the Appellate Tribunal held that dispatch of notice by registered post or certificate of posting to the guarantor's stated address or other address intimated to the bank constituted deemed service. Even assuming that the person who received the notice at the Masab Tank address was not connected with the appellant, dispatch to that address satisfied the contractual requirement. Rule 3 of the Personal Guarantors Rules, 2019 was read in conjunction with clause 20, and on that basis no violation of the Rule was found. [Paras 12, 13]

Service of the creditor's demand notice at the Masab Tank address was treated as valid deemed service and did not vitiate the proceedings.

Service of notice by resolution professional - Subsequent production of service material - HELD THAT: - The Appellate Tribunal found that the Resolution Professional's letter itself showed dispatch to the Masab Tank address and that the postal tracking report had to be read with that letter. It therefore accepted that the notice had been sent and served at the correct address. The later production of material relating to service at the Amba Gardens address was held immaterial, since effective service at one address, namely Masab Tank, was sufficient and the proceedings could not be invalidated on that account. [Paras 14, 15, 16, 17]

The insolvency proceedings were upheld, subject to the observation that the appellant must be given opportunity to submit a repayment plan in accordance with law.

Final Conclusion: Both appeals were dismissed. The Appellate Tribunal upheld admission of the Section 95 application against the personal guarantors, while observing that the Resolution Professional must afford opportunity to submit a repayment plan in accordance with the Code and the applicable Rules.

Condonation of delay - application filed with more than 600 days of delay -Time-bound liquidation process - Limitation for appeal against rejection of claim by liquidator - due to pendency of Writ Petitions in Hon’ble High Court and the time required to comply with it.

Limitation for appeal against rejection of claim by liquidator - Time-bound liquidation process - HELD THAT: - The Appellate Tribunal held that the scheme of the I & B Code requires the insolvency and liquidation process to be completed in a time-bound manner, and time is of the essence throughout. The claim had been invited through public announcement with a specified last date, but the appellant submitted its claim long thereafter and later sought to challenge rejection of the claim only after a further substantial delay. Since Section 42 itself confines the appeal against the liquidator's decision to 14 days from the date of rejection, an appeal filed after 612 days, followed by further delay in refiling, was plainly beyond the statutory period. In that view, the applications for condonation of delay, refiling, and the appeal under Section 42 were rightly rejected. [Paras 11]

The rejection of the delayed applications was affirmed, and the company appeal was dismissed.

Final Conclusion: The Appellate Tribunal found no ground to interfere with the order rejecting the appellant's delayed challenge to the liquidator's rejection of its claim. Holding that the claim process and the appeal under Section 42 are governed by strict timelines under the Code, the appeal was rejected.

Condonation of delay - Sufficiency of cause - delay of 207 days in filing the appeal - vigilance and diligence - Limitation for appeal against rejection of claim in liquidation - Mandatory nature of appellate time-limit.

Limitation for appeal against rejection of claim in liquidation-HELD THAT:- The Tribunal held that where the statute prescribes a specific and restricted period for filing an appeal in the liquidation framework, in which timeliness is integral to completion of the process, that period cannot be treated as merely directory. Internal or in-house approval procedures of the appellant are variable matters within its own control and do not constitute a reasonable or definite explanation for belated filing. A financial institution, being conscious of legal proceedings and already pursuing its claim before the liquidator, was expected to act with diligence and vigilance. The contention that absence of prejudice to the opposite side justified condonation was also rejected, since prejudice is not the statutory test under Section 42. The earlier decision in M/s. Prakash Oil Depot V. G. Madhusudhan Rao & Anr [2025 (8) TMI 176 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI], concerning extension of time in the context of a scheme of arrangement, was held inapplicable to an appellate limitation provision under the Code. [Paras 20, 21, 23, 24, 25]

The delay in filing the appeal under Section 42 was held not liable to be condoned, and the dismissal of the application challenging rejection of the claim was sustained.

Final Conclusion: The Tribunal held that the appeal against the liquidator's rejection of the claim had been filed far beyond the statutory period and that the explanation based on internal approvals did not furnish sufficient cause. The appeal was accordingly dismissed.

Seeking extension of Time for the purposes of completion of the liquidation process - Condonation of Delay -Last opportunity subject to undertaking.

Extension of liquidation process - Undertaking by liquidator - Dissolution direction - HELD THAT:- The Appellate Tribunal held that, having regard to the conduct of the liquidator and the manner in which the liquidation had remained pending for more than six years, no further extension was otherwise deserved. Even so, exclusively in the interest of justice, and to enable the sale process already undertaken to reach its logical end, a final extension of three months was granted on the basis of the undertaking given through counsel that the process would be completed within that period. The earlier order directing filing of a dissolution application was directed to remain in suspension only during this extended period, with automatic revival if the liquidation was not completed within the time now granted. [Paras 6, 7, 8, 9]

The order refusing further extension was quashed and modified to grant a final extension up to 19.05.2026; the earlier direction to file for dissolution was kept in abeyance till then and would automatically revive on default.

Final Conclusion: The Appellate Tribunal granted the liquidator a final and limited extension to complete the liquidation process, solely in the interest of justice and subject to his undertaking. The connected challenge to the earlier dissolution direction was disposed of by keeping that direction suspended during the extended period, with automatic revival if the process remained incomplete.

Maintainability of Section 7 proceedings as against the principal borrower and its impact on the Corporate Guarantor's liability - Locus to appeal as aggrieved person - seeking liquidation of the Corporate Debtor owing to the pending Civil Appeal proceedings before the Hon'ble Apex Court.

Aggrieved person - intervention denied - finality of interlocutory order - HELD THAT: - The Appellate Tribunal held that, though the appellate provision confers a right of appeal on any aggrieved person, that expression could not be invoked by the appellant after the Adjudicating Authority had already declined his prayer to intervene in the liquidation proceedings. The order disposing of the intervention petition had, in legal effect, denied intervention and determined that he was not required to be impleaded in those proceedings. Since that order was not independently challenged and had attained finality, the appellant could not, by filing an appeal against the liquidation order, reintroduce himself into the proceedings and override the earlier determination. The earlier disposal of his stay application and the unchallenged order on intervention, both having attained finality, precluded him from claiming locus under the appellate jurisdiction. [Paras 8, 10, 11, 12]

The appeal was held not maintainable at the instance of the appellant and was dismissed.

Final Conclusion: The Appellate Tribunal dismissed the company appeal, holding that the appellant, having failed to challenge the earlier order refusing intervention in the liquidation proceedings, could not thereafter maintain an appeal against the liquidation order as an aggrieved person. Pending interlocutory applications were also closed.

Acknowledgment of debt and limitation - insolvency application against the personal guarantor - barred by limitation - release or revocation of the guarantee - Effect of without prejudice communication - expression "without prejudice" - Irrevocable and continuing guarantee - Limitation for the application under Section 95 was to be computed from the later written acknowledgment of liability made by the Corporate Debtor, Or from the date on which the loan account was classified as NPA - Co-extensive liability of personal guarantor.

Acknowledgment of debt - Section 18 of the Limitation Act - Co-extensive liability - HELD THAT:- The Tribunal held that the successive restructuring and settlement communications, culminating in the letter dated 15.03.2017, constituted written acknowledgment of the subsisting debt before expiry of the original limitation period. By reason of the co-extensive liability of the guarantor, such acknowledgment by the principal borrower also bound the Personal Guarantor. The right to proceed under Section 95 therefore had to be reckoned from 15.03.2017, and the plea that limitation ran only from the NPA date was rejected. [Paras 22, 24, 27, 28, 30]

The objection that the Section 95 proceedings were barred by limitation was rejected.

Without prejudice communication - Unequivocal acknowledgment - Limitation - HELD THAT:- The Hon’ble Apex Court in Vidyasagar Prasad vs UCO Bank [2024 (10) TMI 1184 - SUPREME COURT], therein, had dealt with, as to how, the term “without prejudice” is to be interpreted, and accordingly, the Hon’ble Apex Court has drawn its conclusion in para 12 of the said judgment. And in accordance with the principle laid down, therein by the Hon’ble Apex Court, it prescribes that, for the purposes of interpreting the word “without prejudice”, the basic elements that are required to be satisfied are that it has to be an unequivocal acknowledgement of liability of the Corporate Debtor. But if any communication, which is attached with the rider, that could be taken into consideration as to give an exception to the said correspondence. But owing to what has been discussed above and particularly in the light of the contents of the letter of 15.03.2017, the terminology used “without prejudice” therein doesn't mean that the said letter was at all eradicating the liability of payment of the amount due and as agreed by the Corporate Debtor in the various communications, which has been placed on record.

The Hon’ble Apex Court in Chairman & M.D., N.T.P.C. Limited versus M/s. Reshmi Constructions, Builders & Contractors [2004 (1) TMI 672 - SUPREME COURT] Where the Hon’ble Apex Court, while deriving its implication from the earlier judgment of Cutts v. Head, had come down to the conclusion that in any letter or correspondence, which uses the expression “without prejudice” its always a subject matter of interpretation, which is capable of being given various interpretations and usage according to the contents of the letter itself, which has to be read in its totality. It is prescribed that the rule, which has been provided as a protection to give a privilege over a communication, it depends partly on the public policy and partly on the parameters given therein to facilitate the compromise, to settle or to impede an agreement.

Reading the letter as a whole, the Tribunal found that it contained clear references to repayment, restructuring and continuation of the one-time settlement proposal, and therefore operated as an acknowledgment of subsisting liability. The mere use of the words without prejudice did not, in the context of that communication, erase its substantive admission of debt. Hence the letter remained available for computing a fresh period of limitation under Section 18. [Paras 32, 33, 34, 35, 37]

The expression "without prejudice" was held not to exclude the letter of 15.03.2017 from consideration as an acknowledgment of debt.

Continuing guarantee - Irrevocable guarantee - Revocation of guarantee - HELD THAT:- The aspect of irrevocability of the bank guarantee, by the person, by way of personal guarantee was considered by the Hon’ble Apex Court in the matters of Sita Ram Gupta v Punjab National Bank and Others [2008 (3) TMI 743 - SUPREME COURT], had laid down that wherever in there in the clauses of the Guarantee Agreement it provides an aspect of irrevocability, the right to revoke stands explicitly waived off and therefore any revocation letter, even if it is submitted after signing the Deed of Guarantee, will not help in limiting his liability flowing from guarantee document.

The guarantee deed was treated as unconditional, absolute and irrevocable, and therefore the Appellant could not rely on a unilateral communication to revoke or curtail liability. The Tribunal further noted that the alleged letter seeking release had not been duly brought on record before the Adjudicating Authority in accordance with law, and could not be read in evidence merely because it was later filed by memo. On both counts, the plea of release from guarantee failed. [Paras 38, 39, 40, 41]

The contention that the Appellant stood released from the personal guarantee was rejected.

Final Conclusion: The Appellate Tribunal upheld the admission of the Section 95 proceedings against the Personal Guarantor. It held that the debt stood validly acknowledged within limitation, the letter containing the words "without prejudice" still operated as an acknowledgment of liability, and the plea of unilateral release from an irrevocable continuing guarantee was untenable.

Condonation of Delay - delay of 495 days in filing of the amended copy of Application - sufficient cause - Seeking Extension of time for carrying out amendment - non-compliance with the mandatory provisions as contained under Section 180 of the Companies Act, 2013 - failed to prosecute or to defend the legal proceedings, as per the mandate of the law -Vigilantibus Non Dormientibus Jura Subveniunt.

Failure to amend after order - Order VI Rule 18 CPC - Extension of time for amendment - Sufficient cause - HELD THAT:- It is settled law that, the general rule or procedure will not prevail over a special statute. The proceedings before the Ld. NCLT are governed by the provisions contained under Section 424 of the Companies Act 2013, which depends upon the principles of natural justice which is again guided by the provisions as contained under the Code of Civil Procedure, 1908.

The Appellate Tribunal held that once leave to amend had been granted, the consequence of failure to carry out the amendment within the time allowed was governed by the specific procedural scheme embodied in Order VI Rule 18. Since proceedings before the Tribunal are guided by the principles of the Code of Civil Procedure, the amendment already permitted had to be effected within the prescribed time, and a request made after 495 days was far beyond that permissible ambit. The Tribunal further held that the general provisions invoked for enlargement or condonation, including Section 148 of the Code of Civil Procedure and Section 5 of the Limitation Act, could not override a specific provision regulating the time and consequence of failure to amend. The explanation that the delay occurred because of counsel or counsel's clerk was found not credible, unsupported by material, and inconsistent with the diligence expected from the Resolution Professional/Liquidator. In the absence of bona fide and reasonable explanation, no interference with the rejection of the application was warranted. [Paras 14, 16, 17, 18, 20]

The application seeking condonation of delay and permission to carry out the amendment was rightly rejected, and the appeal was dismissed.

Final Conclusion: The Appellate Tribunal upheld the refusal to condone the delay in filing the amended application, holding that the appellant had failed to act with diligence and that the specific procedural bar governing delayed amendments could not be overcome by resort to general condonation provisions. The appeal was accordingly dismissed.

Application under Section 7 - barred by limitation - Limitation for initiation of CIRP - Acknowledgment of debt - One-Time Settlement - Admission of Default - Substitution of legal heir - Right to continue pending appeal - Whether the proceedings drawn under Section 7 of the I & B Code, 2016, after lapse of five years would be barred by limitation owing to the so-called default, which was reckoned as to be 22.06.2018, as a consequence of the projected loan agreement of 02.03.2000, which was said to have been defaulted.

Limitation for initiation of CIRP - Acknowledgment of debt - Recovery certificate as fresh cause of action - HELD THAT: - The Appellate Tribunal held that the existence of debt and default was not in dispute, and the controversy was confined to limitation. It found that the Corporate Debtor had acknowledged the liability in its balance sheets and, more importantly, through one-time settlement proposals, negotiated settlement efforts and the email communication of 27.09.2018. Such written acknowledgments attracted Section 18 of the Limitation Act and extended limitation. The Tribunal also accepted the principle stated in Dena Bank (now Bank of Baroda) V C. Shivakumar Reddy and Anr. [2021 (8) TMI 315 - SUPREME COURT] that a recovery certificate gives a fresh cause of action for initiation of proceedings under Section 7. On that reasoning, the filing of the insolvency application after the recovery certificate and the later acknowledgments of liability could not be treated as time-barred. [Paras 23, 24, 25, 33, 34]

The challenge to admission of the Section 7 application on the ground of limitation was rejected, and the commencement of CIRP was upheld.

Substitution of legal heir - Right to continue pending appeal - HELD THAT: - The principles of substitution, are almost akin to the provisions contained under Order XXII of the CPC, and it is by adopting the aforesaid principles Rule 53 has been incorporated under the NCLT Rules 2016, which prescribes for a right to a party to the proceedings, to substitute the legal heir or a party to whom the right to sue is devested upon a death of a party to the proceedings, to whom a right to litigate subsists or where the right of the deceased Appellant is required to be preserved by carrying out the proceedings further at their behest by his heirs. It's exercising those powers under Rule 53 of the NCLT Rules 2016, which almost happens to be akin provisions to be applied in appeal, to protect a right to sue upon death of a party. The substitution was permitted to be carried by an order passed by us on 24.12.2024, in the order thus passed by this Appellate Tribunal on 24.12.2024, while recording the objection taken by the Respondents counsel, as to whether at all a right to sue survived to the proposed heirs of the deceased Appellant, that is the present substituted heir Mrs P. Radhakumari was an aspect considered by this Appellate Tribunal in the order passed on 24.12.2024 and we permitted the substitution to be a carried, reserving the rights for the Respondents to raise the objection in that context when the appeal is considered on merits.

The Appellate Tribunal held that once substitution had already been permitted and that order had remained unchallenged, the respondent could not contend that the appeal was not maintainable through the substituted heir. It reasoned that the substituted party was not asserting an independent right or instituting a fresh appeal, but was only stepping into the shoes of the deceased appellant to preserve and continue the pending litigation. The Tribunal treated the principle of substitution as akin to that embodied in Order XXII CPC and reflected in Rule 53 of the NCLT Rules, 2016, for continuation of proceedings where the right to sue survives. [Paras 27, 28, 29, 30, 31]

The objection to the maintainability of the appeal at the instance of the substituted legal heir was turned down.

Final Conclusion: The Appellate Tribunal held that the insolvency application under Section 7 was within limitation in view of the recovery certificate and subsequent acknowledgments of liability, including the one-time settlement proposals and email communication. The objection to continuation of the appeal through the substituted legal heir was also rejected, and the appeal was dismissed.

Provisional attachment - attachment of immovable and movable properties - definition of proceeds of crime under section 2(1)(u) - continuing offence of money-laundering - unauthorized diversion of Government funds from the Treasury Accounts to the Accounts which were not assigned for the purpose - scheduled offences both under the IPC and the Prevention of Corruption Act, 1988 - continuation of attachment proceedings after death - exclusion of Covid-19 period in computing limitation.

Proceeds of crime - unauthorised diversion of Government funds - projecting tainted property as untainted - HELD THAT: - The Tribunal found that the cooperative society, managed by late Smt. Manorma Devi, was used for financial transactions involving diversion of Government funds from departmental bank accounts to the accounts of the society, and thereafter to private persons and entities. It rejected the plea that these were merely ordinary financial flows or lawful cooperative transactions, noting that there was nothing on record to show any RBI authorisation for carrying on banking business. Applying the statutory meaning of proceeds of crime, the Tribunal held that once the diverted Government funds were used for acquisition of movable and immovable assets, the resulting properties bore the taint of criminal activity relating to the scheduled offences. The material collected in investigation, including bank account analysis and records from builders and developers, was held sufficient to link the impugned properties to such tainted funds. [Paras 31, 32, 33, 38]

The challenge to the characterisation of the attached properties as proceeds of crime was rejected.

Continuing offence of money-laundering - relevant date for invoking PMLA - exclusion of Covid-19 period in computing limitation - HELD THAT:- The Tribunal held that, for purposes of money-laundering, the relevant date is not the original acquisition of illicit funds but the subsequent process or activity of dealing with those proceeds of crime and projecting them as untainted. Hence, the fact that the diversion of funds extended to a period prior to the coming into force of the Act did not preclude attachment where the process of holding, transferring or using those proceeds continued thereafter. On limitation, although the provisional attachment orders appeared to have been confirmed after 180 days, the Tribunal held that the period from 15.03.2020 to 28.02.2022, together with the further period directed by the Supreme Court, had to be excluded in view of the Covid-19 limitation orders. On that basis, the confirmations were held to be within time and not in breach of Section 5(1). [Paras 34, 35]

The plea based on retrospectivity and the plea of expiry of the 180-day period were both rejected.

Attachment of property held by persons not accused in the scheduled offence - possession of proceeds of crime - HELD THAT:- The Tribunal held that the sweep of provisional attachment is not confined to persons arraigned as accused in the predicate offence. If material shows that a person is in possession of proceeds of crime or is involved in a process or activity connected with them, action under the PMLA can be taken against such person as well. On the facts, the Tribunal found that none of the appellants could establish a lawful source for the funds or assets received by them, whereas the investigation had linked the money, wholly or partly, to the society or to late Smt. Manorma Devi. The Tribunal therefore rejected the contention that absence of arraignment in the scheduled offence immunised the attached properties from action under the Act. [Paras 36, 38]

The objection founded on non-accused status in the scheduled offences was held to be untenable.

Continuation of attachment proceedings after death - legal representatives continuing appeal - HELD THAT:- The Tribunal held that, notwithstanding the abatement of criminal proceedings against a deceased person, Section 72 of the PMLA expressly permits continuation of proceedings through legal representatives in matters concerning attached property. It noted that the appeals on behalf of late Smt. Manorma Devi had in fact been pursued by her legal heirs. The Tribunal therefore declined to accept the contention that attachment of properties traceable to late Smt. Manorma Devi had to be vacated merely because of her death. [Paras 37]

The plea that the attachments lapsed on account of the death of late Smt. Manorma Devi was rejected.

Final Conclusion: The Tribunal upheld both confirmation orders and held that the attached movable and immovable properties were validly treated as connected with proceeds of crime. All fifteen appeals were dismissed, and the pending applications were disposed of.

Show cause notice to distinct taxable entities - demand for the period after conversion of the proprietorship concern into the partnership firm - Construction activities relating to roads, boundary walls, tunnels, culverts, etc. - extended the benefit of cum-tax, and deducted the value of material involved therein - taxable category of ‘Renting of Immovable Property Services' - taxable value and TDS deduction - Non-Commercial Use - Works Contract Service​​​​​​​ - refundable security deposit and taxable value - Best Judgment Assessment - Principles of Natural Justice.

Show cause notice to distinct taxable entities - judicial discipline - HELD THAT: - The Tribunal held that its earlier remand order had already concluded that a single show cause notice covering both the proprietorship concern and the subsequent partnership firm was not executable, while also granting liberty to the Department to issue separate notices in accordance with law. Since no fresh notice to the partnership firm was shown to have been issued after remand, the adjudicating authority could not revive the demand for the later period merely by bifurcating liability in the order. The subordinate authority was bound to follow the remand directions unreservedly. [Paras 10, 11]

The demand for the financial years 2009-10 and 2010-11 was set aside.

Commercial purpose test in works contract service - community hall construction - fruit and vegetable stalls - HELD THAT: - On the objection that the notice lacked proper classification, the Tribunal found that the assessee had participated in the remand proceedings and understood that the demand was under works contract service, so no prejudice was caused. On merits, it held that a community hall intended for use on payment could not be treated as non-commercial in the absence of supporting evidence, and that fruit and vegetable stalls by their very nature had clear commercial use. The exemption claimed on the basis of non-commercial character was therefore unavailable. [Paras 14, 15]

The demand on construction of the community hall and 200 fruit and vegetable stalls was upheld.

EWS housing construction - appropriation of tax paid - HELD THAT: - The Tribunal recorded that payment of service tax on the admitted liability relating to EWS houses had been made and appropriated in the impugned order. Since the Department contended that no verification had been carried out, the Tribunal did not disturb the appropriation but reserved liberty to the Revenue to verify whether the amount paid matched the actual service tax liability. [Paras 13]

The payment already made was upheld, with liberty to the Department to verify its correctness against the tax liability.

Taxable value and TDS deduction - refundable security deposit and taxable value - HELD THAT:- The Tribunal held that TDS is deposited pursuant to a statutory obligation under the income-tax law and is not consideration agreed between the parties for rendition of service; it therefore cannot be added to the gross amount charged for service tax. Likewise, security amounts or deposits, if refundable, do not form part of the consideration for the service. Even on the Department's own objection that refund of the security amount had not been verified, the Tribunal held that such amount was not exigible to tax. [Paras 17, 19, 20]

The adjudicating authority was right in excluding TDS and security deposits from the taxable value.

Commercial purpose test in works contract service - boundary wall construction - sports complex construction - landscaping for public use facilities - HELD THAT:- The Tribunal held that boundary walls for public or semi-public sites and public projects could not be treated as commercial merely because they were constructed in developed areas, especially when no evidence was produced by Revenue to show profit-oriented commercial use and the record showed that they were meant to protect public property. As regards sports complex construction, the decisive test was the primary or dominant use of the structure; incidental amenities or limited commercial facilities did not alter its essentially non-commercial character as a public sports facility. The same approach was applied to landscaping in the Commonwealth Games practice area, which at the time of construction was meant for use by participants and not for commercial exploitation. [Paras 21, 22, 23]

The exemption granted by the adjudicating authority on these works was sustained, and the Revenue's challenge failed.

Final Conclusion: The assessee's appeal was partly allowed by setting aside the demand for 2009-10 and 2010-11 for want of a fresh show cause notice to the partnership firm, while sustaining the demand on the community hall and fruit and vegetable stalls and leaving the EWS housing payment open to verification. The Revenue's appeal was dismissed, the Tribunal holding that TDS and security deposits were not includible in taxable value and that the works relating to boundary walls, sports complex and landscaping were not taxable.

Show cause notice as foundation of demand - Works Contract Service though the show cause notice proposed a different taxable category - Exemption for construction relating to historical monument - exemption for services rendered in relation to a historical monument under Notification No. 25/2012-ST - construction activity relating to Coronation Park, including parking and connected structures.

Show cause notice as foundation of demand - Change of taxable classification in adjudication - Works Contract Service - HELD THAT: - The Tribunal held that the adjudicating authority could not travel beyond the classification proposed in the show cause notice. Since the notice proposed the demand under Construction of Residential Complex Service, confirmation of the demand under Works Contract Service amounted to departure from the very foundation of the proceedings and offended principles of natural justice, because the assessee could not be called upon to meet a case not put to it in the notice. On that settled principle alone, the confirmed demand was held to be unsustainable. [Paras 5]

The demand confirmed under Works Contract Service was set aside.

Exemption for construction relating to historical monument - Public utility parking not commercial activity - HELD THAT:- The Tribunal found that Coronation Park was a historical site of national importance and therefore construction relating to it was covered by the exemption under serial no. 12 of Notification No. 25/2012-ST. It further held that parking provided adjacent to such a historical site was a public utility for visitors, and the levy of nominal charges did not impart a commercial character to the activity. The Revenue's objection based on alleged commercial nature was therefore rejected. The Tribunal additionally observed that, even otherwise, no demand on the construction of the International Centre and Restaurant could be sustained when the adjudication had proceeded under a different taxable head from that proposed in the notice. [Paras 6]

The exemption was held applicable and the Revenue's cross-appeal was rejected.

Final Conclusion: The Tribunal allowed the assessee's appeal by holding that the service tax demand could not be sustained under a taxable category different from the one proposed in the show cause notice. The Revenue's cross-appeal was rejected, the works relating to Coronation Park and its parking facility having been held exempt and non-commercial in character.

Valuation of clearing and forwarding agent service - transportation charges collected in addition to clearing and forwarding charges - Eligibility of input service credit availed towards the ‘Outdoor Catering Services’ along with the applicable interest and imposed equivalent penalties under Section 78 of the Finance Act, 1994 (Act) along with a penalty - Wilful suppression of facts - Extended period of limitation - Cenvat credit on outdoor catering services.

Valuation of clearing and forwarding service - Reimbursable transportation charges - Pure agent exclusion - HELD THAT:- The Tribunal found from the agreements that the appellant, while acting as a clearing and forwarding agent, merely arranged transportation of the principals' goods on their behalf through transporters approved by the principals; title in the goods remained with the principals, transport documents bore the principals' name, insurance during transit was the principals' responsibility, and the transportation amounts were separately billed and reimbursed. The show cause notice sought inclusion of such charges only by invoking the definitions of consideration and gross amount charged in section 67, without putting the appellant to notice under Rule 5 of the Service Tax (Determination of Value) Rules, 2006, which was the only statutory route for including expenditure incurred in the course of providing service. The notice therefore suffered from a fundamental legal infirmity. In any event, the Tribunal held that, prior to the amendment effective from 14-05-2015, section 67 permitted levy only on the consideration for such service, and reimbursed expenditure could not be added to the value of taxable service. On that principle, the demand on transportation charges under clearing and forwarding service was unsustainable. [Paras 16, 21, 22, 23]

The demand of service tax on transportation charges as part of clearing and forwarding service, with consequential interest, was set aside.

Outdoor catering as input service - Specific exclusion under Cenvat Credit Rules - Penalty - HELD THAT:- The Tribunal held that, after substitution of the definition of input service with effect from 01-04-2011, services relating to outdoor catering stood excluded when used primarily for personal use or consumption of employees. As the appellant had availed such service for providing lunch and had already reversed the credit, the adjudicating authority's denial of credit was found to be correct, subject to limitation. However, since the dispute was treated as debatable and interpretative, the penalties imposed were held to be unsustainable. [Paras 24]

The denial of cenvat credit on outdoor catering service was upheld only to the extent not barred by limitation, and the related penalties were set aside.

Extended period of limitation - Suppression with intent to evade - HELD THAT: - The Tribunal noted that the appellant had been regularly filing ST-3 returns and paying service tax on the registered services. The show cause notice did not even allege wilful suppression of facts with intent to evade tax, nor was there evidence of fraud, collusion, wilful misstatement or suppression with such intent. The Tribunal also took note that a similar controversy on inclusion of GTA value in clearing and forwarding service in the appellant's own case had earlier been decided in the appellant's favour, which reinforced the absence of any basis for invoking the extended period. The burden to establish suppression and intent to evade lay on the Revenue, and that burden had not been discharged. [Paras 25]

Extended limitation was held unavailable; consequently, the cenvat credit demand survived only for the normal period, and penalties were liable to be set aside.

Final Conclusion: The Tribunal held that separately reimbursed transportation charges could not be added to the value of clearing and forwarding service for the period in dispute, and accordingly set aside the related service tax demand with interest. The denial of cenvat credit on outdoor catering service was sustained only for the normal period, while the invocation of extended limitation and all penalties were set aside.

Classification of composite construction contracts - Works contract service - payment of Service Tax under composition scheme in respect of 'Works Contract service' - demands raised under commercial or industrial construction service and construction of complex service - eligible abatement under Notification No. 01/2006-ST dated 01.03.2006 - Exclusion of free-supplied materials.

Composite works contract - Wrong classification of taxable service - HELD THAT:- The Tribunal found that all the disputed periods were after introduction of works contract service and that the appellant had discharged service tax treating the activities as works contracts. Since the contracts involved execution of works contracts, the demands raised under commercial or industrial construction service and construction of complex service were held to be unsustainable. [Paras 23, 24]

The classification adopted in the impugned orders was held untenable and the demands raised under the other construction service categories were set aside.

Abatement - Free-supplied materials - Exclusion of VAT-paid goods value - HELD THAT: - The Tribunal held that the appellant was eligible for 67% abatement in respect of the works contracts. It further held, following Bhayana Builders, that the value of free-supplied materials was deductible from the taxable value. The further computation adopted by the Department by rejecting abatement on the entire receipts, including the value of goods on which VAT had been paid, was found not tenable in view of Sobha Developers Ltd.[2009 (9) TMI 342 - CESTAT, BANGALORE], [2017 (4) TMI 584 - SC ORDER], Bharat Sanchar Nigam Ltd. [2006 (3) TMI 1 - SUPREME COURT], Quick Heal Technologies Ltd. [2022 (8) TMI 283 - SUPREME COURT] and Ocean Interior Ltd.[2019 (11) TMI 124 - CESTAT CHENNAI], [2023 (9) TMI 818 - SC ORDER]. [Paras 23, 24]

The valuation adopted by the Department was rejected and the resulting tax demands were held unsustainable.

Final Conclusion: The Tribunal held that the impugned demands were unsustainable since the appellant's activities were taxable, if at all, as works contract service and the Department had also adopted an incorrect valuation by denying abatement and including non-taxable elements. The impugned orders were therefore set aside and the appeals were allowed with consequential relief.

Liability of service tax on the freight incurred for transport of iron ore fines from the mines to the port of export - reverse charge mechanism - show-cause notice issued after a substantial gap of time - barred by limitation - Limitation

Goods transport agency - Consignment note requirement - Reverse charge liability - HELD THAT: - The Tribunal held that the decisive test for levy under the category of goods transport agency is the existence of a service provider answering that statutory description, which requires issuance of a consignment note. The authorities had proceeded on the footing that tax was first payable and refund could thereafter be claimed under the export-related notification. The Tribunal, however, accepted the appellant's contention, following Lakshminarayana Mining Company [2019 (7) TMI 917 - CESTAT BANGALORE], that where transportation was arranged through individual lorries and there was no evidence of a goods transport agency issuing any consignment note, the freight incurred for moving the goods from the mines to the port did not attract service tax under reverse charge. [Paras 7, 8, 10]

The demand on the transportation charges was held unsustainable on merits.

Limitation - Extended period - HELD THAT: - The Tribunal found that the demand had been raised on the basis of balance sheet figures which had already been audited by the Department in 2009, while the show-cause notice was issued only in 2013. In these circumstances, and in the absence of suppression of facts or misdeclaration, invocation of the extended period was held to be unavailable. The demand was therefore barred by limitation. [Paras 9, 10]

The demand was also liable to fail on limitation.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal. It held that the freight in question was not taxable as GTA service in the absence of a consignment note and, in any event, the demand was barred by limitation.

Determination of taxable value with respect to suchEvent Management Service-Admissibility of loose papers and computer printouts - clandestine transactions - Protection against self-incrimination - interpretation of Section 67 of the Finance Act, 1994 - notional valuation - Burden of proof in alleged clandestine transactions - Extended period of limitation.

Event Management Service - Classification of service - HELD THAT:- On examination of the invoices and other documents on record, the Tribunal found no substance in the plea that the appellant was only a coordinator. The work undertaken involved planning and organising weddings, exhibitions, musical programmes and similar events through engagement of third-party service providers, which fell squarely within the statutory definition of Event Management Service. The circular relating to a sponsor organising its own event was held inapplicable, since the events were paid for by the customers and the appellant could not be treated as the sponsor. [Paras 5]

The service rendered by the appellant was held taxable under the category of Event Management Service.

Taxable value of service - Gross amount charged - HELD THAT: - The Tribunal held that the dispute turned on the meaning of the expression referring to the gross amount charged for such service. It found as an admitted position that most of the amounts received from customers were meant to be passed on to third-party vendors, that the appellant retained only 8-10% as commission, and that service tax had already been paid on that commission. Applying the principle laid down in M/s Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT], the Tribunal held that only the consideration for the service actually rendered by the appellant could form part of assessable value, and amounts received merely for onward payment to others could not be included. [Paras 11]

The taxable value was restricted to the appellant's commission, and the service tax demand raised on the entire gross receipts was set aside.

Admissibility of loose papers and computer printouts - Burden of proof in alleged clandestine transactions - HELD THAT: - The Tribunal held that loose papers and computer printouts not forming part of the regular books of account are, by themselves, inadmissible to fasten liability unless the Revenue first proves their authenticity and relevance through substantive corroboration. It further held that, in the case of computer printouts, the statutory requirement of certification had not been satisfied, and therefore no reliance could be placed on them in the absence of corroborative material. The Revenue had also failed to establish any chain of causation connecting the alleged clandestine transactions or bank credits with the appellant. Since the charts and computations were themselves prepared solely from such unproved material, they too could not sustain the demand. The Tribunal additionally reiterated that the burden to prove taxability and alleged clandestine transactions lay on the Revenue and could not be shifted to the appellant merely because the appellant did not disprove the departmental allegations. [Paras 14, 15, 16, 20, 21]

The documentary basis relied upon by the Revenue was held inadmissible and insufficient, and the demand founded on such material was set aside.

Protection against self-incrimination - Evidentiary value of statements - HELD THAT: - The Tribunal held that, in the punitive context of the proceedings, compelling the partners of the appellant firm to make statements against themselves and the firm attracted the protection against self-incrimination under Article 20(3) of the Constitution. As no valid reasoning had been furnished by the Revenue to sustain the legality of such statements, the Tribunal treated them as unconstitutional and void. Having so held, it found no necessity to examine in depth the further challenge based on statutory evidentiary provisions, while observing that the statements were not recorded as sworn statements by an authority empowered to administer oath. [Paras 19]

The statements relied upon by the Revenue were held inadmissible and incapable of sustaining the demand.

Extended period of limitation - Penalty under section 78 - HELD THAT: - The Tribunal found that, after examining the demand on merits, only the minor credit demand had survived on merits, while the substantial service tax demand failed. In those circumstances, the foundation for invoking the extended period on the ground of fraud, wilful misstatement or suppression of facts disappeared. The Tribunal held that mere non-payment of tax does not by itself establish suppression or intent to evade, and that the burden to prove mala fides lay on the Revenue, which had produced neither evidence nor proper reasoning to discharge it. It therefore concluded that the appellant had acted bona fide and that the extended period was wrongly invoked. As a result, the entire proceedings, including the demand otherwise sustained on Cenvat credit, were held barred by limitation, and the penalties under Sections 78 and 77 were also liable to be set aside. [Paras 23, 24, 25]

The extended period was held inapplicable; the entire demand was set aside as time-barred, and the penalties were also set aside.

Final Conclusion: The Tribunal held that the appellant's activity was classifiable as Event Management Service, but that tax could be levied only on the commission retained by it and not on amounts collected for onward payment to vendors. The service tax demand based on loose papers, computer printouts and statements was set aside, the extended period was held inapplicable, and the entire proceedings, including penalties, were quashed as time-barred.

Clandestine removal - Third-party records - Section 9D compliance - Corroborative evidence

Clandestine removal - Section 9D compliance - Third-party records - Corroborative evidence - Admissibility of Statements - cryptic and non-speaking order passed in gross violation of the principles of natural justice - HELD THAT:- The Tribunal held that the controversy stood covered by its earlier decision in Amiya Steel Pvt. Ltd. [2025 (11) TMI 1692 - CESTAT KOLKATA], arising from the same investigation. It found that no incriminating material had been recovered from the appellant's premises and that there was no investigation establishing excess production, procurement of excess raw material, mode of manufacture, sale of the alleged clandestinely cleared goods, or excess power consumption. The recorded statements, relied upon as the foundation of the case, were held to have no evidentiary value since the procedure mandated by Section 9D had not been followed. In the absence of such compliance and in the absence of cogent corroboration beyond third-party material, the charge of clandestine removal was held to be unsustainable. [Paras 9, 10]

The duty demand on the allegation of clandestine removal was set aside, and the connected penalties were held to be not imposable.

Final Conclusion: The Tribunal held that the allegation of clandestine removal was unsupported by legally admissible and corroborative evidence. The impugned order confirming duty and penalties was therefore set aside and the appeal was allowed with consequential relief.

Entitlement to exemption from basic customs duty on DTA clearances under the relevant exemption notification - 100% EOU and is manufacturing ‘polished granite slabs’ and ‘marble slabs’ - Mandatory and directory conditions - Burden of proof - Best judgment valuation - Contemporaneous import price - demand based on alleged undervaluation of granite slabs cleared to DTA - Admissibility of evidence.

EOU DTA clearances - Exemption from basic customs duty - Directory procedural condition - HELD THAT: - The Tribunal found that the respondent had not placed any positive or admissible evidence to show that the granite slabs cleared to DTA were manufactured from imported granite blocks. The record maintained by the assessee, including audited accounts and data from its system, was noticed, and the impugned order was found to contain no correlation between imports, exports and DTA clearances. The allegation of use of imported blocks for DTA clearances was therefore held unsupported and contrary to the factual position. The Tribunal further held, applying the ratio of M/s. Mangalore Chemicals and Fertilizer Ltd. [1991 (8) TMI 83 - SUPREME COURT] that the condition requiring the assessee to inform the proper officer was procedural and directory, particularly when DTA clearances of the EOU were under the supervision of the Development Commissioner and Customs authorities. The absence of proceedings by DGFT and the finding that export obligations had been complied with also weighed with the Tribunal in holding that the notification benefit was available. [Paras 21]

Exemption under the notification was held admissible and the demand founded on denial of basic customs duty exemption on DTA clearances was unsustainable.

Undervaluation - Transaction value - HELD THAT: - The Tribunal noted that, being a 100% EOU, assessments at the time of DTA clearances were made by the Customs officer and duty on granite slab clearances was paid on the basis of the values declared in the commercial invoices. It also noticed that ER-2 returns were regularly filed and acknowledged. On the evidence, the Tribunal found that the buyer concerned sourced most of its requirements from other suppliers, yet no comparison had been made by the department with the value of such procurements. In these circumstances, the charge of undervaluation was held not established. [Paras 22]

The finding of undervaluation was set aside.

Final Conclusion: The Tribunal set aside the impugned orders and allowed the appeals. It held that denial of exemption on DTA clearances and the allegation of undervaluation were both unsupported on the record.