TaxTMI Updates e-Newsletter
Apr 06,2026

Cross-empowerment of State tax officers - Jurisdiction, to initiate proceedings under Section 129 or section 130, in relation to movement of goods under the IGST Act - inter-State transit - Detention and confiscation on valuation discrepancies - Whether the officers appointed under the APGST act, can exercise any power under Section 129 or 130 of the APGST Act or CGST Act for intercepting, detaining or confiscating goods, whose movement, falls under the ambit of the IGST Act.

Cross-empowerment - Proper officer - Inter-State movement of goods - HELD THAT: - The Court held that cross-empowerment under the GST framework is not automatic in the abstract, but operates in relation to a taxpayer who has been administratively allotted to the State and in respect of functions assigned to the State officer as the proper officer. While such cross-empowerment is sufficient for exercise of corresponding functions under the CGST Act, a distinct limitation applies under the IGST Act. In the case of inter-State supplies originating outside Andhra Pradesh and terminating outside Andhra Pradesh, no part of the tax is allocable to Andhra Pradesh under Section 17 of the IGST Act. Consequently, detention, seizure or confiscation by Andhra Pradesh officers under Sections 129 and 130 would result in recovery of penalty, fine or sale proceeds by an intermediary State which has no statutory entitlement to that transaction. The Court therefore held that APGST officers may act under the IGST regime only where Andhra Pradesh is entitled to allocation of a share of tax; otherwise, if discrepancies are noticed during transit, they may only forward the material to the proper officers of the consignor and consignee. [Paras 28, 29, 36, 37, 38]

The impugned proceedings under Sections 129 and 130 were set aside as without jurisdiction, with liberty to the respondents to forward the record and samples to the respective proper officers of the petitioners.

Valuation discrepancy - Undervaluation - Scope of detention and confiscation - HELD THAT:- Agreeing with the view taken by other High Court in Panchi Traders Vs. State of Gujarat [2025 (12) TMI 941 - GUJARAT HIGH COURT], the Court held that questions of valuation do not by themselves justify action under Sections 129 and 130. Those provisions are intended to address contraventions of the requisite degree connected with evasion, and not to permit the intercepting officer to undertake an assessment or valuation exercise at the point of transit. In the present batch, where the consignments were generally accompanied by the necessary documents and the action was based on alleged undervaluation, mismatch of description, or excess quantity as against documents, such grounds did not sustain seizure or confiscation under these provisions. As regards the case in which absence of e-way bill was alleged, the Court found no basis to depart from its earlier interlocutory observations, since the alleged earlier inspection had not been recorded in the manner required and the respondents' contention was rejected. [Paras 32, 33, 34, 35, 38]

Proceedings based on valuation-related grounds were held unsustainable, and the respondents' stand regarding absence of e-way bill in the concerned writ petition was also rejected.

Final Conclusion: The Court held that Andhra Pradesh State tax officers had no jurisdiction to invoke Sections 129 and 130 in respect of goods moving under the IGST regime from outside the State to a destination outside the State, and further held that valuation-related discrepancies did not justify detention or confiscation under those provisions. The writ petitions were accordingly allowed by setting aside the impugned proceedings, while permitting the respondents to transmit the material to the respective proper officers.

Cancellation of GST registration - Statutory grounds for cancellation - Filing of NIL return.

Cancellation of GST registration - HELD THAT: - The Court held that the power to cancel registration can be exercised only on the grounds enumerated in Section 29(2). Since filing of NIL return does not fall within any of the statutory grounds specified therein, cancellation of registration on that basis was held to be without authority of law. Accepting the view taken in Kali Shanker Enterprises vs. Additional Commissioner, Goods and Service Tax Officer, the Chief Commissioner, Government of Andhra Pradesh [2024 (1) TMI 430 - ANDHRA PRADESH HIGH COURT], the Court concluded that both the show cause notice founded on that allegation and the consequential cancellation order were unsustainable. [Paras 4]

The show cause notice and the consequential order cancelling registration were quashed.

Final Conclusion: The writ petition was allowed. The Court quashed the show cause notice and the cancellation order, holding that filing of NIL return is not a statutory ground for cancellation of GST registration.

Rejection of the petitioner's application under Section 128A - GST amnesty waiver - Clerical error in summary assessment.

GST amnesty waiver - Non-perpetuation of ascertainable mistake - HELD THAT: - The Court found from the original order that the demand was not confined to penalty alone, but included tax and interest as distinct components, with only part of the demand representing penalty. Once that position was apparent from the record, the error in the summary assessment proceedings showing the entire amount under penalty was merely an ascertainable human error. Such a mistake could not be carried forward while deciding the application under Section 128A waiver. The authority considering the waiver ought to have examined the correctness of the summary proceedings and decided the application on its own merits instead of rejecting it solely on that erroneous basis. [Paras 7, 8]

The impugned order was set aside and the matter was remanded for fresh consideration, with a direction to treat the demand as comprising tax, interest and penalty and to consider the waiver application afresh, subject to the petitioner's eligibility under the scheme, after hearing the petitioner.

Final Conclusion: The writ petition was allowed. The rejection of waiver under the scheme was set aside because it proceeded on an apparent clerical error in the summary proceedings, and the application was directed to be reconsidered on merits.

Condonation of delay - Rejection of the statutory appeal solely on the ground of delay of one day - Sufficient cause - Pragmatic approach in limitation.

Condonation of delay - Pragmatic approach in limitation - HELD THAT: - The Court held that while considering delay, a pragmatic and not a pedantic approach is required, since refusal to condone even a minimal delay may defeat adjudication on merits. Accepting the petitioner's submission, and noting the respondent's no-objection to restoration, the Court applied the principle stated in Collector, Land Acquisition, Anantnag and Another v. Mst. Katiji and Others.[1987 (2) TMI 61 - SUPREME COURT] that substantial justice should prevail over technical considerations in matters of limitation. [Paras 17, 18, 19]

The appellate order rejecting the appeal as time-barred was set aside, and the appeal was restored for fresh hearing and decision on merits; all other contentions were kept open.

Final Conclusion: The petition was disposed of by restoring the petitioner's appeal for adjudication on merits, the Court holding that a one-day delay ought not to have been viewed pedantically. The challenge on the merits of the underlying tax controversy and to the impugned notifications was not examined, and all contentions were left open.

Classification of goods - geomembranes - licensed by the Bureau of Indian Standards (BIS) for the manufacture of the Geomembranes in accordance with IS 15351:2015 and IS 7903 :2017 - Binding precedent of jurisdictional High Court - Whether the product namely, geomembranes merits classification under heading 5911, sub-heading 59111000 or sub heading 59119090 as textile products, coated, covered or laminated with plastic, used for technical purposes?

Classification of geomembranes - HELD THAT: - The Appellate Authority found that the respondent's manufacturing process, including the woven fabric stage and subsequent lamination, was identical to that considered by the Gujarat High Court in M/s Ananta Synthetic Innovations[2024 (8) TMI 139 - GUJARAT HIGH COURT], where geomembranes were held classifiable under Chapter 59 and not Chapter 39. Since no further appeal had been filed against that decision, the Authority treated the issue as having attained finality. It further noted that the reliance placed by the Department on M/s Raj Packwell Ltd. [1989 (9) TMI 120 - MADHYA PRADESH HIGH COURT] was untenable because, as explained by the Gujarat High Court in M/s CTM Technical Textiles Ltd. [2020 (12) TMI 1100 - GUJARAT HIGH COURT], that decision did not concern woven fabric as a textile product. In view of the binding jurisdictional precedent, the contrary authorities cited by the Department could not prevail. [Paras 12, 13, 14, 15, 16]

The advance ruling classifying geomembranes under HSN 5911 was upheld and the Department's appeal was rejected.

Final Conclusion: Following the binding decision of the Gujarat High Court on an identical product, the Appellate Authority upheld the advance ruling that geomembranes are classifiable under HSN 5911. The departmental appeal seeking classification under HSN 3926 was rejected.

Blocked input tax credit on construction of immovable property - Leasehold rights as input service for construction- definition of ‘plant and machinery” - Permanent Beneficial Enjoyment - Marketability Test - Functional Efficacy - Strict Interpretation of Taxing Statutes - Whether they would be entitled to avail and utilize Input Tax Credit (ITC) of Goods and Services Tax (GST) charged by India Pistons Limited (IPL) if such transaction is considered to be a supply.

Blocked input tax credit on construction of immovable property - HELD THAT: - The Authority held that the transfer of leasehold rights was not a standalone business input unrelated to construction, but an integral enabling service without which the appellant could neither obtain the land nor set up the proposed manufacturing facility. Having regard to the long-term lease, the existence of shed and superstructures, the stated purpose of establishing the air separation plant, and the statutory explanation that construction includes additions or alterations to an existing immovable property to the extent capitalised, the consideration paid for obtaining the leasehold rights formed part of the cost of the facility and was capitalised with it. On that basis, the service received from IPL was treated as one received for construction, and such construction was undertaken on the appellant's own account. [Paras 6]

The first condition for invoking the bar under section 17(5)(d) was held satisfied, and the appellant's claim that the leasing service was not used for construction was rejected.

Immovable property - Plant and machinery - Distinction between manufacturing facility and apparatus or equipment - HELD THAT: - The Authority applied the tests of annexation, object, intendment and marketability and held that the overall installation was meant for the permanent beneficial enjoyment of the leased land. It observed that even if some individual components were detachable, the integrated plant with supporting infrastructure could not be detached and moved as such, and was not marketable as a standalone article. The appellant's reliance on Bharti Airtel Ltd. v. Commissioner of Central Excise, Pune [2024 (11) TMI 1042 - SUPREME COURT] and M/s.Solid & Correct Engineering Works & Others [2010 (4) TMI 15 - SUPREME COURT] was rejected as distinguishable, and the CESTAT order in the appellant's Raigad matter was also held inapplicable because it arose under the Finance Act, 1994 on a different statutory definition and materially different facts. On the separate question directed to be examined on remand, the Authority held that the statutory definition of plant and machinery covers apparatus, equipment or machinery fixed to earth by foundation or structural support and used for making outward supplies, but does not extend to the entire manufacturing facility comprising multiple units and supporting infrastructure. Since the resultant immovable property was the manufacturing facility itself and not an apparatus, equipment or machinery as defined, it did not qualify for the exclusion from the credit bar. [Paras 6]

The air separation plant was held to be an immovable property other than plant and machinery, and therefore ITC of GST charged on the impugned service was held to be barred under section 17(5)(d).

Final Conclusion: On de novo consideration after remand, the Authority held that the GST paid on the transfer of leasehold rights was received for construction of an immovable manufacturing facility on the appellant's own account, and that the facility did not qualify as plant and machinery under the statute. The appeal was accordingly rejected and the ruling denying ITC was sustained.

Eligibility of exemption from GST under Sl. No. 69 of Notification No. 12/2017-Central Tax (Rate) - training services provided by an MSDE/NSDC affiliated training partner conducting NSQF-aligned digital marketing courses - amendment omitting NSDC-approved training partners - Regularisation on as is where is basis.

Whether the digital marketing courses conducted by the applicant by enrolling students is exempted under Entry No. 69 of Notification No. 12/2017-CT(R) dated 28th June 2017, as amended. - HELD THAT: - The Authority found that Entry 69 exempts services under the relevant headings when provided by a training partner approved by the National Skill Development Corporation in relation to the National Skill Development Programme or other specified skill development schemes. The applicant had produced material showing that it was an approved training partner of NSDC and was accredited to conduct the 'Digital Marketing Manager' course. Since the services were classifiable as training services and were provided in relation to the NSDC-approved skill development framework, they fell within the exemption. [Paras 14]

The training services were held exempt under Entry 69 so long as the applicant answered the description of an NSDC-approved training partner covered by the notification.

Withdrawal and restoration of exemption - NCVET-accredited training body - As is where is basis - HELD THAT: - The Authority held that, after the amendment made by Notification No. 08/2024-CT(R), training bodies accredited with an awarding body recognised by NCVET and training partners approved by NSDC were treated as separate classes, and the applicant could not be brought under the NCVET route merely because its course was NSQF-aligned. The exemption for NSDC-approved training partners had been withdrawn for the intervening period and was restored only by Notification No. 06/2025-CT(R). At the same time, relying on the CBIC circular and the interpretation of the expression as is where is basis by the Gujarat High Court in the case of J.K. Papad Industries Vs Union of India [2024 (9) TMI 759 - GUJARAT HIGH COURT] the Authority held that if no GST had been paid for that period, no tax would be recoverable; and if tax had already been paid, no refund would arise. [Paras 15, 16, 17, 18]

The exemption was held unavailable for the intervening period, but the position for that period was to stand regularised on 'as is where is' basis in terms of the circular.

Final Conclusion: The Authority ruled that the applicant's NSDC-linked digital marketing training services are exempt under Entry 69 of Notification No. 12/2017-CT(R). For the period 10.10.2024 to 15.01.2025, the exemption was held not to be available on the wording of the notification, but the tax position for that period was directed to be governed on 'as is where is' basis.

Eligibility of input tax credit on input services used for construction of foundation and structural support for plant and machinery installed within the factory for manufacture of Active Pharmaceutical Ingredients, in view of the restriction under section 17(5)(c) - Exclusion of other civil structures - Works Contract Service - Immovable Property - Civil Structure Exclusion - Course or Furtherance of Business.

Input tax credit on works contract services - Foundation and structural support - Plant and machinery - HELD THAT: - Explanation to Section 17, defines what comes under the ambit of ‘plant and machinery’, means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both. The definition also includes foundation and structural support of the apparatus, equipment, and machinery but excludes land, building or any other civil structures, telecommunication towers and the pipelines laid outside the factory.

The Authority held that though section 17(5)(c) restricts credit of works contract services used for construction of immovable property, the restriction does not apply where such services are used for construction of plant and machinery. The equipment installed in the API plant was found to be apparatus, equipment or machinery used in making outward supply, and the foundations and structural supports were necessary to provide stability, absorb vibration, and ensure proper functioning. In view of the Explanation to section 17, foundation and structural support of such equipment are expressly included within plant and machinery. The inspection report also supported that the RCC and steel structures were made only to support the machines. The exclusion for land, building or other civil structures was held not to cover such foundation and structural support, and the ruling in Re: M/s KEI Industries Limited [2025 (8) TMI 551 - APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT], Gujarat was followed to hold that civil structures other than foundation and structural support alone stand excluded. [Paras 18, 19, 20, 21, 22]

The applicant was held entitled to avail input tax credit on the impugned input services, as the foundation and structural support formed part of plant and machinery for purposes of section 17.

Final Conclusion: The Authority answered the reference in favour of the applicant. It held that input services used for construction of foundation and structural support for plant and machinery installed within the factory are eligible for input tax credit under section 17(5)(c), since such foundation and structural support form part of plant and machinery.

Eligibility to avail Input tax credit on input services used for construction of foundation and structural support for plant and machinery installed within the factory for recovery of solvents and treatment of wastewater in API manufacture - Works contract service - definition of ‘plant and machinery’ as mentioned in Section 17 - Course or furtherance of business - Immovable property exclusion.

Course or furtherance of business - Input services for plant installation - HELD THAT:- The Authority found that the applicant manufactures and supplies active pharmaceutical ingredients and that the solvent recovery plant and mobile effluent treatment plant are used for enhancing operational efficiency and cost optimisation in that manufacturing activity. Since the foundations and structural supports are required for installing and operating the equipment used in those plants, the input services used for such construction bear a direct business nexus and satisfy the requirement of use in the course or furtherance of business. [Paras 15]

The condition under section 16 was satisfied for the impugned input services.

Plant and machinery - Foundation and structural support - Works contract restriction - HELD THAT: - Explanation to Section 17, defines what comes under the ambit of ‘plant and machinery’, means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both. The definition also includes foundation and structural support of the apparatus, equipment, and machinery but excludes land, building or any other civil structures, telecommunication towers and the pipelines laid outside the factory.

The Authority held that the works executed in steel and RCC for mounting and supporting the equipment amounted to works contract services, but the statutory restriction applies only where such services are for construction of an immovable property other than plant and machinery. Referring to the Explanation to section 17, it held that the equipment installed in the two plants answers to apparatus, equipment or machinery fixed to earth by foundation or structural support and used for making outward supply. The Explanation expressly includes such foundation and structural supports. On the inspection report also, the Authority found that the RCC and steel structures were made only to support the machines and were necessary to bear load, torque, vibration and dynamic forces. Relying on CBIC Circular No. 219/13/2024-GST and on Re: M/s KEI Industries Limited [2025 (8) TMI 551 - APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT], the Authority held that the exclusion of land, building or other civil structures does not extend to foundation and structural support forming part of plant and machinery. Accordingly, the impugned foundation and support works were not treated as excluded civil structures for the purposes of section 17(5)(c). [Paras 18, 19, 20, 21, 22]

Input tax credit was held admissible on the input services used for construction of foundation and structural support for the plant and machinery installed within the factory.

Final Conclusion: The Authority answered the reference in favour of the applicant. It held that input tax credit is available on input services used for constructing the foundation and structural support of the plant and machinery installed in the applicant's factory for solvent recovery and wastewater treatment, as such foundation and support form part of plant and machinery and are not hit by section 17(5)(c).

Determination of liability to pay tax on a proposed arrangement and fall within the scope of Section 97(2) (e) of the CGST Act, 2017 - Supply of service - Capital contribution to LLP - Supply of service - Transfer of leasehold rights - Consideration in non-monetary form - Course or furtherance of business - Non-monetary consideration.

Whether the proposed contribution of constructed hotel floors and associated infrastructure by the applicant to the LLP constitutes a “supply” under Section 7 of the CGST Act, 2017 - The proposed contribution of the hotel project, comprising developed leasehold land and the constructed hotel portion, by the applicant to the proposed LLP is a taxable supply of service and not a non-taxable transfer of immovable property outside GST. - HELD THAT: - The Authority held that the applicant and the proposed LLP are two distinct persons, and transfer of assets by the applicant to the LLP is therefore a transaction between separate taxable persons. It further held that consideration under the Act includes non-monetary consideration, and the applicant, in return for contributing the hotel project, would receive partnership interest, profit-sharing rights and allied commercial benefits. On the facts presented, what is proposed to be made available to the LLP is not an outright sale of land or completed building, but the right to use and enjoy the leasehold land and constructed structure for hotel business. Such transfer of leasehold and occupancy rights was treated as falling within supply of service. The Authority also found that the arrangement formed part of a pre-planned commercial model for exploitation of the hotel project and was therefore in the course or furtherance of business. Since the transaction was not regarded as a sale of land or completed building within Schedule III, the plea that it was a mere capital contribution outside GST was rejected.

GST was held leviable on the proposed transaction, which was ruled to be a supply of service made for consideration in the course or furtherance of business.

Final Conclusion: The application was answered against the applicant. The proposed transfer of the hotel project to the LLP as capital contribution was held to attract GST as a supply of service, and not to fall outside the Act as a mere transfer of immovable property.

Levy of GST - Supply of canteen and transportation services - Recovery of nominal amounts - Employer-employee relationship - Applicability of exemption for non-air-conditioned contract carriage under Notification No. 12/2017-Central Tax (Rate) - input tax credit on the transport service - Perquisites under employment contract - Passenger transport exemption - Input tax credit for personal consumption.

Employer-to-employee supplies - Consideration recovered from employees - Perquisites under employment contract - HELD THAT: - The Authority held that provision of canteen and transportation facilities to employees is activity in connection with and incidental or ancillary to the applicant's main business and therefore falls within the scope of business. It found two distinct supplies: one by the third-party service provider to the applicant, and another by the applicant to its employees, since the applicant receives consideration from employees by salary deduction and there is no privity of contract between the service providers and the employees. Referring to the CBIC circular on perquisites, the Authority held that only the concessionary portion borne by the employer can be treated as a perquisite flowing from the employment relationship; the amount recovered from employees remains consideration for the outward supply and is liable to GST. [Paras 5]

GST is payable on the amount recovered from employees towards canteen and transportation facilities.

Exemption for transport of passengers by non-air-conditioned contract carriage under Sr. No. 15(b) of Notification No. 12/2017-Central Tax (Rate) - transportation provided to its employees. - HELD THAT: - The Authority held that the applicant was not itself providing exempt contract carriage service to employees. It noted that the applicant was not the holder of a contract carriage permit, did not contract with passengers in the manner contemplated by the Motor Vehicles Act, and the buses were operated on routes to pick up multiple employees. On that basis, the arrangement with the transport provider was treated as renting of transport vehicles with operator, and not as exempt transport by non-air-conditioned contract carriage. Since hire or charter services stand excluded from the exemption entry, the employee transportation facility was held outside Sr. No. 15(b). [Paras 5]

The claimed exemption under Sr. No. 15(b) was denied.

Input tax credit - Personal consumption - Employee transportation - 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.

Although the Authority noted that hiring of motor vehicles with seating capacity exceeding thirteen persons is not blocked under section 17(5)(b)(i), it held that the decisive test was section 17(5)(g). Employee transportation from residence to workplace was treated as a facility for the personal convenience or comfort of employees and as a service consumed for discharging the employer's obligation towards them, rather than as an input used for business supply. Applying the ratio of Solar Industries India Limited Vs Commissioner, Central Excise, Customs and Service Tax [2021 (12) TMI 1047 - BOMBAY HIGH COURT] the Authority concluded that such service is for personal consumption and hence credit is barred. [Paras 5]

Input tax credit on the transportation services procured for employees was held to be inadmissible.

Final Conclusion: The Authority ruled that nominal recoveries from employees towards transportation and canteen facilities are taxable in the hands of the employer to the extent recovered, while the unrecovered concessional portion is treated as perquisite. The claimed exemption for employee transportation under Sr. No. 15(b) was rejected, and input tax credit on transportation services procured for employees was held to be unavailable.

Admissibility and maintainability of the application in consonance with the provision enshrined in the Section 95 of CGST/OGST Act, 2017 -Manufacture vis-a-vis job work - crushing, screening and sizing of limestone/dolomite by the contractor - Processing of another person's goods as supply of service

Maintainability of advance ruling at the instance of service recipient - Definition of applicant - HELD THAT: - The Authority held that the expression applicant under the statute is wide enough to cover a registered person seeking clarity on the tax implications of a transaction affecting it, even if it approaches the Authority as recipient of the supply. Relying on the Calcutta High Court in the case of Anmol Industries Limited & Anr. v. West Bengal Authority for Advance Ruling, GST & Ors. [2023 (5) TMI 288 - CALCUTTA HIGH COURT] decisions noticed in its own discussion, and following the principle stated in Godavari Devi Saraf, the Authority treated the objection to locus as untenable and proceeded to decide the question on merits.

The advance ruling application was admitted and examined on merits.

Manufacture vis-a-vis job work - Distinct name, character and use - Processing of another person's goods as supply of service - HELD THAT: - The Authority applied the statutory test that manufacture requires emergence of a new product having a distinct name, character and use. It found that, after the processes undertaken, the goods continued to remain limestone/dolomite; only their physical dimensions changed, while their mineral identity, chemical composition and commercial understanding remained the same. Marketability or suitability for industrial use was held insufficient in the absence of a new and distinct commodity. The contractual assumption of operational or commercial risk by the contractor was held irrelevant for classification under GST. Since the activity consisted of treatment or process applied to goods owned by another person, it fell within supply of service in the nature of job work and not manufacture.

The question was answered against the applicant; the activity was held not to be manufacture.

Final Conclusion: The Authority held that the applicant, though a recipient of the impugned service, was competent to seek an advance ruling. On merits, crushing, screening and sizing of the applicant's limestone/dolomite were held not to result in manufacture, but to remain processing of another person's goods constituting a supply of service.

Condonation of delay - Appellate interference with discretionary orders - Appellate Tribunal's order condoning a delay of 763 days in filing the statutory appeal under the benami law -Sufficient cause - Discretion in condonation of delay - Limited appellate interference -

HELD THAT: - The Court held that the Appellate Tribunal had considered the explanation offered for the delay, the connected nature of the pending appeals between the same parties, and the requirement of deciding the matter on merits in the interest of substantial justice. Once the Tribunal, on being satisfied with the reasons assigned, exercised its discretion to condone the delay, appellate interference was not warranted unless such exercise was shown to be on untenable grounds or to be arbitrary or perverse. As no such infirmity was established, the condonation order was not liable to be disturbed. [Paras 7, 8]

The challenge to the condonation of delay failed and the order of the Appellate Tribunal was allowed to stand.

Final Conclusion: The appeal was dismissed. The Court declined to interfere with the Tribunal's discretionary order condoning the delay, holding that no arbitrariness, perversity, or untenable exercise of discretion had been shown.

Revisional jurisdiction u/s 264 - Under-reported income - Penalty on debatable issue- penalty order under Section 270A -Bona fide explanation and full disclosure - disallowance relating to employees' contribution to PF/ESI - whether a penalty order under section 270A could be made the subject of revision u/s 264 notwithstanding that it was otherwise appealable? - HELD THAT: - The Court held that section 264 is couched in wide terms and extends to any order passed by an authority subordinate to the Principal Commissioner. The exclusions to that power are exhaustively contained in section 264(4).

An appealable order is not, by that reason alone, outside revisional jurisdiction; the bar operates only in the situations expressly specified, namely where the appeal period is still available and not waived, or where an appeal has already been filed and is pending, or the order has already been made the subject of an appeal. The assessee is therefore not compelled by statute to pursue the appellate remedy and may choose revision instead.

On that footing, the Principal Commissioner erred in declining to entertain the revision on the ground of maintainability and in failing to examine the penalty on merits, contrary to the wide revisional power recognised in Swaminarayan Mandir Trust [2026 (1) TMI 370 - BOMBAY HIGH COURT] and Pramod R. Agrawal [2023 (10) TMI 1142 - BOMBAY HIGH COURT] [Paras 9, 10, 11]

The objection to maintainability was rejected, and the order refusing to exercise jurisdiction under section 264 was held unsustainable.

Penalty order u/s 270A - Under-reported income - Section 143(1)(a) intimation - Reiterated disallowance - HELD THAT: - The Court applied the statutory computation under section 270A(2)(a) and section 270A(3)(i)(a), under which under-reported income arises only if the income assessed exceeds the income determined in the return processed under section 143(1)(a), and the quantum of such under-reporting is the difference between the two. In the present case, the PF/ESI disallowance had already been added while processing the return under section 143(1)(a), and the assessment order merely repeated the same addition. Since, qua this addition, the assessed income did not exceed the income already determined in the intimation, the statutory ingredients of under-reported income were not satisfied. On that ground alone, the penalty could not stand. [Paras 15, 17, 18, 19, 20]

The disallowance could not be treated as under-reported income, and the penalty was liable to be deleted.

Bona fide explanation and full disclosure - Exception to under-reported income - HELD THAT: - The Court found that the assessee had disclosed all material facts in the return and the tax audit report, and that the claim was advanced under a bona fide belief supported by jurisdictional precedent. In those circumstances, the explanation satisfied the statutory requirement of section 270A(6)(a), and the amount in question could not be included in under-reported income. The Court applied the principle stated in CIT v. Reliance Petroproducts (P.) Ltd. [2010 (3) TMI 80 - SUPREME COURT] that a mere unsustainable claim, absent any false or inaccurate particulars, does not justify penalty, and held that the same rationale applies to the exception contained in section 270A(6)(a). [Paras 26, 27, 28]

The assessee was entitled to the protection of section 270A(6)(a), furnishing an additional and independent ground for setting aside the penalty.

Final Conclusion: The Court held that the revision under section 264 was maintainable and that the Principal Commissioner wrongly refused to exercise his revisional jurisdiction. On merits, the penalty under section 270A was held unsustainable since there was no under-reported income, the claim was made on the basis of binding and at least debatable law, and the assessee had made full disclosure with a bona fide explanation; accordingly, both the revisional order and the penalty order were quashed.

Validity of order passed within the prescribed limitation u/s 153 -Limitation for fresh assessment on remand - Deemed acceptance of return on failure to complete remand assessment

HELD THAT: - The Court held that, once the Tribunal's remand order was received in Financial Year 2021-22 and the case involved a reference to the Transfer Pricing Officer, the outer time-limit for completing the fresh assessment expired on 31.03.2024. It was undisputed that no assessment order was passed within that period. In such a situation, the Assessing Officer's inaction denuded him of authority to make any further demand, and the returned income could not be disturbed.

The Court rejected the Revenue's contention that finality attached to some earlier findings of the Tribunal would prevent acceptance of the return as filed, and held that non-compliance with the remand directions within limitation resulted in the return having to be accepted as such. [Paras 13, 15, 16, 20]

The returned income for AY 2013-14 was directed to be accepted as such, no assessment having been completed within the statutory period after remand.

Final Conclusion: The writ petition was allowed. Since no fresh assessment order was passed within the limitation applicable after the Tribunal's remand, the income returned by the petitioner for AY 2013-14 was directed to be accepted.

Assessment proceedings as barred by limitation in view of Section 153(3) r/w Section 153(4) -Limitation for fresh assessment after remand - Deemed acceptance of return on failure to complete assessment within limitation

HELD THAT: - The Court held that it was undisputed that no assessment order pursuant to the Tribunal's remand had been passed within the extended period available under Section 153. Once the statutory time for completing the fresh assessment expired, the Assessing Officer could not keep the matter pending and at the same time refuse to give effect to the consequence of such failure. The Court rejected the contention that only the remanded issues would be hit by limitation while earlier findings could survive independently in the absence of a consequential assessment order. It held that non-passing of the order within limitation barred any further demand and the income returned by the assessee had to be accepted as such. In reaching this conclusion, the Court relied upon the principle stated in CIT v. Shelly Products [2003 (5) TMI 4 - SUPREME COURT] and found support from Plasticotes Investments (P.) Ltd. [2014 (8) TMI 204 - BOMBAY HIGH COURT] and Aircom International India (P.) Ltd. [2023 (12) TMI 1380 - DELHI HIGH COURT] [Paras 18, 19, 20, 21, 22]

The return of income for AY 2014-15 was directed to be accepted as filed, since no fresh assessment order was passed within the limitation period.

Final Conclusion: The writ petition was allowed. Since no assessment order was passed within the statutory period after the Tribunal's remand, the assessee's return for AY 2014-15 was held liable to be accepted as filed.

Deduction u/s 80P(2)(d) - Interest on deposits with co-operative banks - HELD THAT: - The Court held that the second substantial question of law stood concluded by its earlier decision in M/s. Judicial Employees House Building Cooperative Society Limited [2025 (10) TMI 770 - KARNATAKA HIGH COURT]. Following that view, it accepted that once the deposit is with a co-operative bank carrying on banking business under a banking licence, the statutory bar under Section 80P(4) applies, and the interest so earned cannot be treated as qualifying for deduction u/s 80P(2)(d). As no distinguishing feature was shown, the question was held not to survive for consideration. [Paras 4, 6]

The claim for deduction u/s 80P(2)(d) on interest from deposits with co-operative banks was rejected.

Deduction u/s 80P(2)(a)(i) - HELD THAT: - The Court noted that the Tribunal had remanded the matter only for determining the proper head of income. It held that an order of remand does not by itself give rise to a substantial question of law unless perversity is shown. Since no fundamental error in the remand order was pointed out and the Court found the remand justified, it declined to entertain the challenge on this issue. [Paras 7]

The remand on the issue under Section 80P(2)(a)(i) was upheld, and no substantial question of law was found to arise.

Final Conclusion: Both appeals were dismissed. The Court held that the claim under Section 80P(2)(d) was concluded against the assessee by binding precedent, and the Tribunal's remand on the issue under Section 80P(2)(a)(i) disclosed no perversity warranting interference.

TP Adjustment - comparability - Compliance with DRP directions - Working capital adjustment - Consequential interest

Transfer pricing comparability - Functional comparability - Related party transaction filter - Trading sales filter - Compliance with DRP directions - HELD THAT: - The Tribunal found that Peoplelink Unified Communications Pvt. Ltd. had already been held by the DRP to be functionally different and, therefore, not a good comparable; the Assessing Officer was bound to exclude it in conformity with those directions.

Zoho Corporation Pvt. Ltd., Quick Heal Technologies Ltd., and the three companies [RAH Infotech Pvt. Ltd., MSR IT Solution Pvt Ltd. and ESDS Corporation Pvt. Ltd] alleged to fail the trading sales filter, the Tribunal accepted that the objections required verification from the annual reports and directed the TPO to re-examine the RPT filter, availability of segmental data, and the trading sales filter, and to exclude the companies if they did not satisfy the prescribed criteria. [Paras 7]

Operating margin computation - Comparable company margins - HELD THAT: - Compass IT Solutions and Services Pvt Ltd. - The Tribunal noted the assessee's grievance that the TPO had applied a margin of 6.93% instead of the claimed correct margin of 2.80%. It, therefore, directed verification from the annual report and application of the correct margin, instead of sustaining the computation as made. [Paras 8]

Working capital adjustment - Compliance with DRP directions - HELD THAT: - The Tribunal found that the DRP had already directed the Assessing Officer to allow working capital adjustment. Since that direction had not been given effect to, the Tribunal directed the Assessing Officer to grant the adjustment in accordance with the DRP's directions. [Paras 9]

Working capital adjustment was directed to be granted in accordance with the DRP's directions.

Levy of interest u/s 234A, 234B and 234C did not survive on merits

Final Conclusion: The appeal was partly allowed. The Tribunal directed exclusion of one comparable, ordered re-examination of other disputed comparables and margin computation, and directed grant of working capital adjustment, while dismissing the challenge to consequential interest.

Estimation of unexplained cash deposits - addition u/s 69A -Source of cash deposits from cash sales and cash withdrawals

HELD THAT: - The Tribunal found that the AO had made the addition on presumptions and without supporting evidence on record. It noted that the appellate authority had already accepted that the deposits were substantially referable to cash sales and cash withdrawals, and had only retained an estimated addition because exact correlation of the remaining deposits with withdrawals was not possible. In the peculiar facts of the case, and in the interest of substantial justice, the Tribunal held that the estimate sustained by the appellate authority at 10% of the balance cash deposits was excessive and required reduction to 5%. [Paras 5]

The addition was restricted to 5% of the balance cash deposits, with consequential computation to follow in accordance with law.

Final Conclusion: The Tribunal partly allowed the appeal and reduced the estimated addition sustained on the remaining cash deposits from 10% to 5%, holding that the original addition had been made on presumptions and that only a limited estimated disallowance could be maintained.

Disallowance of direct labour and contract expenses -Deductibility of interest on delayed remittance of TDS

Ad hoc disallowance - Labour expenses - Addition of ad hoc basis at the rate of 30% - HELD THAT: - The Tribunal held that, since the assessee had in fact produced labour summary sheets and site-wise labour details, the expenditure could not be rejected to the extent adopted by the lower authorities merely on a broad estimate. At the same time, as the details were found to contain deficiencies, some ad hoc disallowance was justified to cover such defects. On the facts, disallowance at 30% was considered excessive, and disallowance at 10% of labour expenses was held sufficient to meet the ends of justice, with a clarification that the determination was confined to the peculiar facts of the year. [Paras 4]

The ad hoc disallowance out of labour expenses was restricted to 10%, and the ground was partly allowed.

Interest on delayed payment of TDS - Allowability of deduction - interest payment made on delayed payment of TDS - HELD THAT: - The Tribunal held that interest paid for delayed remittance of TDS is not an allowable deduction. Applying the settled principle that interest takes the character of the principal amount to which it relates, the Tribunal held that, since the underlying tax payment is not deductible, the interest paid on delayed remittance thereof also cannot be allowed as a deduction. [Paras 6]

The disallowance of interest paid on delayed payment of TDS was upheld and the ground was dismissed.

Final Conclusion: The appeal was partly allowed. The disallowance out of labour expenses was reduced to 10%, while the disallowance of interest paid on delayed remittance of TDS was sustained.

Transfer pricingAdjustment -Reimbursement of intra-group expenses - Arm's length price of royalty

Reimbursement of personnel cost - Reimbursement of IT related expenses - Cost-to-cost reimbursement - assessee benchmarked the aforesaid transaction by using ‘Other Method’ as the Most Appropriate Method (MAM) - HELD THAT: - The Tribunal found that, for both categories of reimbursement, the assessee had furnished material to establish the nature of the expenses and that the amounts were reimbursed on a pure cost-to-cost basis without markup. In respect of personnel cost, the Tribunal noted that the issue stood covered by orders in the assessee's own case for earlier years, including the decision of the Delhi High Court [2025 (2) TMI 498 - DELHI HIGH COURT], and held that the later remand order for another year did not affect the year under consideration because the consultancy agreement referred to there was not relevant to this year. In respect of IT related expenses, the Tribunal accepted that the assessee had produced material to show the use and necessity of the software support services and saw no reason to disturb the appellate finding deleting the adjustment. [Paras 7]

The revenue's challenge to deletion of the adjustments on reimbursement of personnel cost and IT related expenses failed.

Advertisement and publicity reimbursement - Nil arm's length price - Failure of evidentiary substantiation - HELD THAT: - The Tribunal held that the assessee could not substantiate the claim with documentary evidence. Since the appellate authority had recorded that relevant information and complete documentation were not furnished to establish the need for, and incurrence of, the expenditure, and no supporting material was produced before the Tribunal either, there was no ground to interfere with the sustaining of the adjustment. [Paras 7]

The assessee's challenge to the transfer pricing adjustment on reimbursement of advertisement and publicity expenses was rejected.

Royalty payment - Comparable uncontrolled price - Consistency in assessee's own case - HELD THAT: - The Tribunal noted that the appellate authority had followed the Tribunal's order in the assessee's own case for an earlier assessment year and also noted that, for another year in which the issue had been decided in favour of the assessee, the revenue had not carried the matter further before the Tribunal. As the issue was found to be squarely covered by the earlier order in the assessee's own case, the Tribunal held that there was no infirmity in deletion of the royalty adjustment. [Paras 8]

The revenue's challenge to deletion of the royalty adjustment was dismissed.

Final Conclusion: For AY 2013-14, the Tribunal dismissed both cross-appeals. The relief granted by the appellate authority in respect of reimbursement of personnel cost, IT related expenses and royalty was sustained, while the adjustment relating to reimbursement of advertisement and publicity expenses was left undisturbed.

Deduction u/s 80P(2)(a)(i) - interest income earned from bank deposits by a members' credit co-operative society -Interest on temporary parking of surplus funds - Business income of co-operative credit society -HELD THAT: - The Tribunal found that the interest arose from deployment of funds belonging to the assessee which were not immediately required for lending to members, and not from amounts payable to members or other liabilities. Such funds retained the character of business funds of the credit co-operative society, and the interest derived therefrom was attributable to its business of providing credit to members.

On that factual footing, the case was held to be governed by the principle laid down in Tumkur Merchants Souharda Credit Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] while the later decision in Totagars Co-operative Sale Society [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] was treated as factually distinguishable. The interest could not therefore be assessed as income from other sources for denying the claimed deduction. [Paras 9]

The disallowance was reversed and the assessee was held entitled to deduction on the interest income under section 80P(2)(a)(i).

Final Conclusion: The Tribunal held that the interest earned on temporary parking of funds in bank accounts formed part of the assessee's business income attributable to its activity of providing credit to members and qualified for deduction under section 80P(2)(a)(i). The appeal was accordingly partly allowed.

Exemption for educational institution u/s 10(23C)(iiiad) -Threshold-based exemption - HELD THAT: - The Tribunal recorded that the assessee was carrying on educational activity by running a school and that its gross receipts for the relevant year were below the prescribed limit of Rs 5 crores.

On that admitted factual position, it held that even if exemption claimed under section 10(23C)(vi) was not to be allowed, the assessee would still be legally entitled to exemption under section 10(23C)(iiiad). The alternative plea was therefore accepted on the basis of the nature of activity and the receipts being within the statutory threshold. [Paras 8]

The alternative claim for exemption under section 10(23C)(iiiad) was allowed.

Final Conclusion: The appeal was allowed by accepting the assessee's alternative plea that, being engaged in educational activity and having gross receipts below the prescribed limit, it was entitled to exemption under section 10(23C)(iiiad). In view of that conclusion, the other grounds were left open.

Penalty u/s 271(1)(c) - Natural justice in penalty proceedings - Independent satisfaction for penalty - Specified previous year for penalty under section 271AAA

Penalty u/s 271(1)(c) - without proper consideration of the assessee's material and without an independent examination in the penalty proceedings - HELD THAT: - The Tribunal found that the grievance raised by the assessee was justified on the face of the record, as the appellate authority had proceeded on the findings of the Assessing Officer and the penalty had been levied solely on the basis of the assessment order, without independent findings in the penalty proceedings and while ignoring the material filed by the assessee. Since the documents and information supporting the assessee's claim had not been duly considered and adequate opportunity was required to be afforded, the matter was restored to the Assessing Officer for fresh adjudication in accordance with the principles of natural justice. [Paras 6, 8]

Penalty u/sec 271AAA - Specified previous year for penalty - Whether assessment year 2011-12 fell within the expression "specified previous year" for the purpose of penalty? - HELD THAT: - As interpreting the words “specified year” as defined u/s 271AAA of the Act in the case of Mahendra R. Gupta [2014 (2) TMI 734 - ITAT AHMEDABAD] “wherein it was held that the specified year is the previous year in which the search is conducted or the previous year which has expired before the date of search in conducted or the previous year which has expired before the date of search but the due date for filing for return of income u/s 139(1) of the Act has not expired and the assessee has not furnished the return of income before the dated of search

The Tribunal accepted the contention that section 271AAA applies only to a specified previous year as defined in the Explanation to that provision. On the facts recorded, A.Y.2011-12 did not answer that description. The penalty under section 271AAA was therefore held to be inapplicable, and the Tribunal directed its deletion. [Paras 9]

Final Conclusion: The appeals relating to penalty under section 271(1)(c) for A.Y. 2007-08, AY 2009-10 and AY 2010-11 were allowed for statistical purposes by restoring the matters to the Assessing Officer for fresh decision after due opportunity. The appeal for A.Y.2011-12 was allowed on merits, with a direction to delete the penalty under section 271AAA as that year was not a specified previous year.

Unexplained money u/s 69A -Telescoping of agricultural income - Rejection of books of account - Best judgment estimation of profit

Unexplained money - Demonetisation cash deposits - Adverse inference for non-production of records - Cash deposits in specified bank notes made during the demonetisation period - HELD THAT: - The Tribunal found that the assessee, despite claiming that the deposits arose from trading in agricultural commodities and from recorded sales, did not produce the audited books, bills, vouchers, stock records or any convincing material from the APMC to establish that the impugned sales were in fact effected. The tax audit report itself contained inconsistencies, and the supporting statement referred to by the Revenue remained unrebutted. In these circumstances, the source and nature of the deposits remained unproved, and adverse inference was justified in terms of Motor General Finance [2001 (12) TMI 62 - DELHI HIGH COURT]

The appellate deletion based on Anantpur Kalpana [2021 (12) TMI 599 - ITAT BANGALORE] was held misplaced because, unlike that case, the genuineness of the underlying sales itself had not been established here. [Paras 4]

The deletion of the addition under section 69A was set aside and the assessment on this issue was restored.

Denial of Agricultural income - Telescoping - HELD THAT: - The Tribunal held that the assessee's agricultural source could not be doubted, since the Revenue itself accepted that the assessee owned or held agricultural land and had agricultural operations, though it disputed only the rate or quantum of income. At the same time, the Tribunal found that both the AO's ad hoc restriction and the Commissioner (Appeals)'s total deletion lacked any rational basis founded on relevant agricultural or statistical material. Though a remand for recomputation was considered, it was declined. Since the Assessing Officer had already made an addition on account of unexplained money and there was no material to show that an equivalent asset or cash representing the agricultural income had separately been brought to tax so as to deny set-off, the assessee's plea for telescoping was accepted, and the agricultural income as returned was directed to be allowed without variation. [Paras 5]

The Revenue's challenge to deletion of the agricultural income addition failed, and the exempt agricultural income as declared was directed to be accepted.

Rejection of books of account - Best judgment assessment - Estimation of business profit - Rejection of books u/s 145(3) for substantial incompleteness and non-production of material records, but the profit rate adopted by the AO at 10% was ad hoc and required reduction - HELD THAT:- The Tribunal held that non-maintenance or non-production of audited books, trading and stock records, vouchers, bills and invoices, together with the inconsistent tax audit reporting, showed substantial incorrectness and incompleteness of accounts sufficient to attract section 145(3). Once the books and returned business results were not acceptable, the AO was justified in proceeding to estimate income to the best of judgment, and the Commissioner (Appeals) erred in deleting the addition outright. However, the Tribunal also found that the AO had placed no material on record to justify the net profit rate of 10%, making that estimate ad hoc. Having regard to the nature of the assessee's trading activity, the estimation was modified and the net margin was directed to be taken at 8% of the reported turnover. [Paras 6]

The rejection of books and resort to estimation were upheld, but the profit rate was reduced from 10% to 8% of the reported turnover.

Final Conclusion: Revenue's appeal was partly allowed. Addition under section 69A on demonetisation deposits was restored, the acceptance of agricultural income as returned was sustained on telescoping, and the rejection of books with profit estimation was upheld subject to reduction of the net profit rate to 8% of the reported turnover.

Unexplained stock under section 69B - Melting loss in gold jewellery business - undisclosed stock u/s. 69B v/s business income - conversion of gold from 22 CT to 24 CT and 18 CT to 24 CT - Treatment to excess stock disclosed during survey - HELD THAT: - The Tribunal noted that, in the process of melting and refining ornaments, loss may arise on account of removal of alloy metals, stones, decorative materials, solder, fittings and impurities, and that such loss can be inherent in the refining process. However, in the present case, the assessee had not satisfactorily explained the claimed loss with supporting documentary evidence. The creation of huge melting loss on account of conversion of gold from 22 CT to 24 CT and 18 CT to 24 CT, has not been explained by the assessee with documentary evidences.

Since the correctness and necessity of the claimed melting loss required factual verification, the appellate order confirming the addition on that aspect could not be sustained without fresh examination by the Assessing Officer. [Paras 20, 21]

The order of the Commissioner (Appeals) on this issue was set aside and the matter was remanded to the Assessing Officer for fresh consideration after giving the assessee an opportunity to produce further evidence.

Final Conclusion: The Tribunal restored the dispute concerning the claimed melting loss and its impact on the addition relating to excess stock to the Assessing Officer for fresh examination. The appeal was accordingly treated as allowed for statistical purposes.

Unexplained expenditure - Applicability of section 69C to recorded business payments

Unexplained expenditure - alleged payment reflected from GST data was upheld on the finding that no expenditure had in fact been incurred by the assessee - HELD THAT: - The Tribunal held that the Assessing Officer had relied on GST data which was denied by the assessee, but had not produced evidence to support the allegation. The appellate finding that no payment was made, no input tax credit was claimed and no expense was booked was accepted. In the absence of any actual expenditure having been incurred, the addition could not be sustained as unexplained expenditure. [Paras 6]

The deletion of the addition relating to the alleged payment was affirmed.

Recorded business expenditure - Source of expenditure - payments to vendors - HELD THAT: - The Tribunal noted that the assessee had furnished agreements, invoices, ledger accounts and bank statements in support of the payments, and that the Commissioner (Appeals) had found the payments to be genuine. The payments were made through banking channels, were supported by contracts with the assessee's customer, and the business reality stood established by the profit earned. On these facts, the expenditure was held to be recorded in the books and the foundation for invoking section 69C was absent. [Paras 6]

The deletion of the addition in respect of vendor payments was upheld and the Revenue's challenge failed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the order of the Commissioner (Appeals) deleting both additions under section 69C. It held that one item did not represent any expenditure at all, while the remaining payments were genuine, recorded business outgoings made through banking channels.

Refund claim arising from provisionally assessed shipping bills - Finalisation of provisional assessment - Contractual price revision in export valuation - Classification of iron ore fines containing lumps within tolerance - Whether the appellants have received the refund in accordance with proper assessment of their shipping bills, which were initially assessed provisionally or otherwise.

Finalisation of provisional assessment - Contractual price revision in export valuation - Actual export realisation - HELD THAT:- The Tribunal held that the original contract terms had subsequently been amended on account of variation in Fe content and this necessarily affected the PDMT price. It noted that there was no case that the appellant had realised any amount over and above what was reflected in the BRC for the consignments covered by the shipping bills. The assessing officer had failed to appreciate the contractual modifications and had therefore not considered the revised unit price based on actual moisture content, Fe content and related parameters. Since identical issues had already been dealt with by the Bench in Vibhutigudda Mines Vs CC [2025 (5) TMI 171 - CESTAT HYDERABAD] and Bonai Industrial Co. Pvt Ltd, Rungta Mines, Feegrade & Co. Pvt Ltd & Others Vs CC, Visakhapatnam [2024 (6) TMI 1016 - CESTAT HYDERABAD], the assessment was directed to be re-finalised in the light of those decisions, the original contract, the addendum and supporting documents. [Paras 7, 8]

The assessment on export value was not sustainable on the basis adopted and was remanded for fresh finalisation after considering the amended contractual terms and supporting material.

Export duty on iron ore fines - HELD THAT: - The Tribunal found that where a consignment contains some portion of lumps but remains within the tolerated limit, the consignment is to be treated as fines and not otherwise merely on the basis of the departmental direction referred to in the order. It recorded that this aspect too stood covered by the Bench decisions relied upon in the case. On that basis, the manner in which higher duty had been levied on part of the consignment by treating it as lumps could not be sustained and required reconsideration by the original authority. [Paras 7, 8]

The levy founded on treating part of the export consignment as lumps was set aside for reconsideration while re-finalising the provisional assessment.

Final Conclusion: The Tribunal set aside the appellate order and remanded the matter to the original authority for fresh finalisation of the provisional assessments in the light of the amended contract, supporting documents and the earlier decisions of the Bench, with consequential refund to be granted in accordance with law, if due.

Imposition of costs- Lack of diligence - dereliction of counsel in conducting the proceedings .

Imposition of costs - Litigant not to suffer for counsel's default - HELD THAT: - The Appellate Tribunal held that the lapse noted in the impugned order was attributable to the conduct of the counsel and not to any want of diligence on the part of the appellant himself. It reiterated the settled principle that a litigant should not be made to suffer for slackness or dereliction of the advocate representing him. It further found that mere failure of counsel to properly press the pending application or chronologically argue the documents could not justify saddling the appellant with costs, particularly when the order did not disclose any basis for quantifying the costs imposed. [Paras 4, 5, 6]

The impugned order was quashed to the extent it imposed costs on the appellant, while the appellant was required to diligently participate in the further proceedings.

Final Conclusion: The appeal was allowed in part by setting aside the direction imposing costs on the appellant, since the default was that of counsel and not of the litigant. The main company petition was directed to be taken up and disposed of expeditiously, and the pending interlocutory applications were closed.

Maintainability of application under Section 420 of the Companies Act,seeking recall or review of an order - Review under the guise of rectification - Rectification of mistake apparent from record.

Rectification of mistake apparent from record - HELD THAT: - Section 420 of the Companies Act, is not a substitute or an alternative provision to the provision of review and since, the power of review is not statutorily vested with the Tribunals, those are created under the Companies Act, the alternative provisions contained under Section 420, cannot be utilized as a platform for seeking review of an order, and that too on an application filed by the party to the proceedings, under the garb of seeking a rectification.

The Appellate Tribunal held that Section 420 vests a limited power in the Tribunal itself to amend its order within the prescribed period only for rectifying a mistake apparent from the record. The provision does not confer on a party a right to file an application seeking reconsideration of the merits of the order. A rectification under Section 420 is confined to superficial or patent errors and cannot extend to a reappraisal of the matter on merits. Since the appellant's own application described the relief as a review and sought reconsideration of the earlier order directing disclosure, attachment and restraint, it was in substance a review petition.

Supreme Court in T.S Balaram, Income Tax Officer, Company Circle IV, Bombay v. M/S Volkart Brothers, Bombay [1971 (8) TMI 3 - SUPREME COURT], wherein it has been considered that, any order where it is required to be reconsidered on merits to take a different view, it will not amount to be a patent apparent error, to exercise a power of review, even what to say about the exercise of powers under Section 420, which has been exclusively reserved under the statute to be exercised by the Tribunal and not by a party to the proceedings. Thus, the application has been rightly dismissed by the learned Tribunal.

The application filed by the appellant under Section 420 was not maintainable, and the refusal to recall or review the earlier order was upheld.

Final Conclusion: The appeal was dismissed. The Appellate Tribunal held that Section 420 permits only limited rectification by the Tribunal of an apparent mistake on record and cannot be invoked by a party as a vehicle for review of an order passed on merits.

Territorial jurisdiction under Article 226 - situs of issuance of the impugned orders - Cause of Action - forum conveniens - functus officio - Corporate Insolvency Resolution Process (‘CIRP’) - Petitioner is residing in Kolkata, State of West Bengal, and is a registered Insolvency Professional engaged in professional assignments, CoC proceedings, and other related activities primarily in Kolkata - respondents are situated in Delhi, and the impugned Show Cause Notice and the suspension order were issued from its offices in Delhi.

Territorial jurisdiction under Article 226 - forum conveniens - part of cause of action - The writ petition was not liable to be entertained by the Delhi High Court merely because the show cause notice and disciplinary order were issued from Delhi. - HELD THAT: - The Court held that, although a part of the cause of action had arisen in Delhi, that circumstance was not by itself determinative of territorial jurisdiction for entertaining the writ petition. Applying the principle in Kusum Ingots & Alloys Ltd. v. Union of India and Anr. [2004 (4) TMI 342 - SUPREME COURT (LB)] and following its own decision in The Indure Pvt. Ltd. v. Government of NCT of Delhi [2026 (2) TMI 1397 - DELHI HIGH COURT], the Court held that the situs of the respondent authority and issuance of the impugned order from Delhi are not the dominant or integral facts when the underlying events, professional activities, and relevant proceedings were centered outside Delhi. On that basis, the Court declined to exercise jurisdiction on the ground of forum conveniens and relegated the petitioner to the jurisdictional High Court. [Paras 8, 9, 10, 11, 12]

The petition was dismissed, leaving the petitioner to pursue remedies before the jurisdictional High Court.

Functus officio - interim relief after dismissal - HELD THAT: - The Court held that once the petition stood dismissed, no interim protection could thereafter be granted. It applied the principle stated by the Supreme Court in Mangal Rajendra Kamthe vs. Tahsildar, Purandhar & Ors [2026 (3) TMI 1055 - SC ORDER]. that, upon dismissal of the petition, the Court becomes functus officio. [Paras 15]

The prayer for interim protection was declined.

Final Conclusion: The Delhi High Court declined to entertain the writ petition, holding that the mere issuance of the impugned proceedings from Delhi did not justify exercise of jurisdiction when the substantive cause lay elsewhere, and relegated the petitioner to the jurisdictional High Court. The request for interim protection was also refused.

Application under Section 95 of the Insolvency and Bankruptcy Code, 2016 - barred by limitation under Section 238A of the Insolvency and Bankruptcy Code, 2016 read with Article 137 of the Limitation Act, 1963 - Limitation for insolvency proceedings against personal guarantor - Effect of demand notice and the loan documentation - Continuing guarantee under Section 129 of the Indian Contract Act, 1872 so as to extend Or shift the date of default.

Article 137 limitation - Definite date of default - HELD THAT:- Admittedly, there had been an Arbitration proceeding which had already been drawn before the Arbitral Tribunal, which had resulted into rendering of an award and as of now, after exhaustion of the proceedings, under Section 34 of the Act of 1996, the same is at the stage of its execution which has to be done as a decree. If we see the pleadings, as well as the conclusion that has been arrived at, it was on the basis that, the Claimants have filed their statement of claim for the recovery of a sum of Rs. 25,02, 61,350/-, wherein the amount shown therein was shown to have fallen due to be paid, as on 15.10.2012, that means even on the basis of the Arbitration proceedings, there had been a definite determination of default at the hands of the creditor for the purposes of initiating the proceedings of Arbitration, and when it has come to the conclusion about the liability, which could be fastened upon the borrower to be paid and due to be paid was determined to be as on 15.10.2012.

The provisions contained under Article 137 of Limitation Act, is once again definite in its expression as, for the purposes of construing to determine, the period of limitation, which is given therein to be three years, the provision uses the word “when a right to apply accrues” hereto, it's a definite expression, which has been used under law for triggering of the proceedings, and that would be when there is a definite conclusion arrived at by the creditor, about an occurrence of default and consequential cause of action for the purposes of initiation of the proceeding under Section 95 of the Code. Even Article 137 of Limitation Act do not provide that the aspect of determination of limitation could be made, or even permissible to be made under law on the basis of so-called concept of Continuing Guarantee, which is not even thought of under the provisions contained under Article 137 of the Limitation Act.

The Appellate Tribunal held that for initiation of proceedings under Section 95, the existence of debt and default must be established as definite preconditions. The expression "default" under the Code denotes a specific event of non-payment when the debt becomes due and payable, and cannot be converted into a continuing or variable default merely by relying on the concept of continuing guarantee under Section 129 of the Contract Act. On the terms of the Facility Agreement and Schedule II, the loan was a term loan and nothing in the contractual arrangement showed a series of transactions or a stipulation making default a continuing feature. The creditor having itself stated in the statutory demand notice that the date of default was 01.08.2012, it could not shift or enlarge that date by referring to the date of issuance of the notice or by invoking execution proceedings arising out of the arbitral award. The pendency of arbitration or execution proceedings did not extend or suspend limitation under the Code. Even if the arbitral award were taken as the starting point, the notice issued in 2020 remained beyond the three-year period under Article 137 as applied through Section 238A. The plea of continuing guarantee was therefore rejected, and the application was held to be barred by limitation. [Paras 64, 65, 67, 68, 69]

The Section 95 proceedings were held to be barred by limitation, the theory of continuing guarantee was rejected, and the admission order against the appellant as personal guarantor was quashed.

Final Conclusion: The appeal was allowed. The Appellate Tribunal held that the creditor's own disclosure of default as 01.08.2012 governed limitation, the plea of continuing guarantee was untenable, and the Section 95 admission order was therefore unsustainable as time-barred.

Jurisdiction of the Adjudicating Authority and the Appellate Tribunal for the direction to place a simpliciter account before the Income Tax Authorities - Seeking refund of TDS deducted on interest from fixed deposits during liquidation - Competence of Income Tax Authorities in TDS refund - Liquidation proceedings - Alternate remedy - Cause of action - Statutory domain.

Prematurity of appeal - Interlocutory order - HELD THAT: - The Appellate Tribunal held that the impugned order did not decide the appellant's claim on merits, but only directed submission of a simpliciter account of income and expenditure for the company in liquidation. Since the question whether refund of TDS could be granted, and whether any exemption under Section 140 of the Income Tax Act could be claimed, was still left for consideration by the Income Tax Authorities, the appellant's challenge was only to an anticipatory or apprehended consequence. A challenge to such an enabling and interlocutory direction was therefore held to be premature. [Paras 27, 29, 30, 31, 34]

The appeal was not maintainable at this stage, as no final decision on the appellant's request had yet been taken by the competent tax authority.

Competence of Income Tax Authorities in TDS refund - Jurisdiction under the I&B Code - HELD THAT: - Under I & B Code, 2016, there is no such provision of law, which prescribes for conferring of the power on the Ld. Adjudicating Authority, to issue any such direction for refund of the TDS already made on the interest accruing on the fixed deposit. The exercise of powers of refund of the TDS, would always be the prerogative to be exercised by the Income Tax Authorities under prevailing income tax laws, particularly when they have to consider the aspect of their ambit and exercise of their powers of deduction of TDS on the interest accruing on the fixed deposit, in relation to a company which is under liquidation, whether there could be a refund or not. These are all the issues which are yet to be decided by the Income Tax Authorities, which has been directed to be considered by the Income Tax Authorities in pursuance to the impugned order of 25.11.2025.

The Appellate Tribunal held that refund of TDS, and the allied question whether deduction of TDS on such interest was legally sustainable in the case of a company under liquidation, fall within the domain of the Income Tax Authorities. The I&B Code contains no provision empowering the Adjudicating Authority to order refund of TDS. The direction requiring the liquidator to submit an account statement was therefore only to enable the tax authorities to examine the refund request. The Tribunal also declined to examine, at this stage, the appellant's contention based on Section 140 of the Income Tax Act and the plea of inconsistency with the I&B Code, since those questions would arise only after the tax authority took a decision. [Paras 24, 25, 26, 32, 33]

The claim for refund of TDS and any issue concerning exemption or return verification under the Income Tax Act were left to be considered by the Income Tax Authorities, and no direction for refund could be issued in insolvency proceedings.

Final Conclusion: The Appellate Tribunal dismissed the company appeal, holding that the impugned order was only an interlocutory and enabling direction and that the claim for refund of TDS must first be pursued before the Income Tax Authorities. Questions relating to Section 140 of the Income Tax Act and any claimed exemption were left open for decision by the competent tax authority.

Resolution Plan - Validity of Promoter restructuring proposal - Liquidation on failure of approved resolution plan - Non- compliance with Section 30(2) of the I & B Code, 2016.

Resolution plan compliance - Promoter restructuring proposal - Section 12A withdrawal proposal - HELD THAT: - The Appellate Tribunal held that, from the minutes of the Committee of Creditors, the proposal submitted by the promoter was not a resolution plan within the meaning of the Code. At best, such a restructuring proposal could be a proposal to the financial creditors for permitting withdrawal under Section 12A. For a plan to be considered a resolution plan, the statutory requirements under the Code and the CIRP Regulations had to be satisfied. In the present case, the plan had not been submitted pursuant to the expression of interest invited by the Resolution Professional on the instructions of the Committee of Creditors. On that basis, the Adjudicating Authority was found justified in holding that the proposal did not comply with Section 30(2). [Paras 7, 8]

The rejection of the promoter's restructuring plan as non-compliant with the Code was upheld.

Liquidation on failure of approved resolution plan - Infructuous appeal - HELD THAT:- The Appellate Tribunal held that once there was no plan approved in accordance with the Code, liquidation had to follow under Section 33(1)(b). It further noted that, as stated by the appellant himself, the corporate debtor had already been sold in liquidation and a sale certificate had been issued. In these circumstances, no effective relief could be granted to the appellant. The contention regarding the appellant's eligibility under Section 29A did not alter the position, since the foundational defect was the absence of a valid resolution plan under the Code. [Paras 8, 9, 10, 11]

The liquidation order was sustained, and the appeal was dismissed as disclosing no ground for interference and as having become infructuous.

Final Conclusion: The Appellate Tribunal upheld the rejection of the promoter's restructuring proposal on the ground that it was not a resolution plan compliant with the Code and the CIRP framework. Consequently, the liquidation order was affirmed, and the appeal was dismissed, the corporate debtor having already been sold in liquidation.

Maintainability of application filed in the name of a company that had ceased to exist after amalgamation - non-existent company - Vesting by operation of law -scheme of arrangement -Effect of amalgamation on juristic status.

Maintainability by non-existent company - HELD THAT: - The Appellate Tribunal held that, by virtue of the earlier order approving the scheme of arrangement, the concerned company had amalgamated into the resultant company and stood dissolved without winding up. Consequently, on the date when the insolvency application was filed, the applicant named therein had no subsisting juristic existence and therefore lacked authority to institute proceedings. The later order relied upon by the appellant concerning the effective date did not revive or confer juristic status on the entity in whose name the Section 9 application had actually been filed, particularly when that name was distinct from the appellant's own present description. In the absence of any material showing that the named applicant continued to exist in law on the date of institution, the dismissal of the company petition as not maintainable was held to be correct. [Paras 11, 12, 13, 14, 15]

The filing of the Section 9 application by a company which had already merged and ceased to exist rendered the proceedings not maintainable, and the dismissal of the petition was affirmed.

Final Conclusion: The appeal was dismissed. The Appellate Tribunal upheld the finding that the insolvency application had been instituted by a non-existent entity and was therefore not maintainable.

Rejection of the repayment plan under personal guarantor insolvency - Discretion under section 114(3) to direct reconsideration - Limited judicial interference with creditors' commercial decision.

Repayment plan under personal guarantor insolvency - Discretion under section 114(3) to direct reconsideration - Commercial decision of creditors - HELD THAT: - The Tribunal held that the power under section 114(3) is enabling and can be exercised only where the Adjudicating Authority forms an opinion, on sufficient material, that the repayment plan requires modification. In the present case, the principal creditor holding 71.22% voting share had, after deliberation, declined to accept the plan, and the amount offered under the plan was far below the outstanding dues. The mere fact that the offered amount was higher than the assessed value of the appellant's assets did not, by itself, require acceptance of the plan or justify a direction for reconsideration. The Tribunal further held that no obligation could be cast on the financial creditor to accept the plan, and interference would arise only if the creditor's decision were shown to be arbitrary, which was not established. Complaints regarding non-disbursement and other actions of the bank were also held to be outside the scope of consideration at the stage of accepting the resolution professional's report on rejection of the repayment plan. [Paras 18, 19, 20, 21, 22]

The order accepting the resolution professional's report and taking on record the creditors' rejection of the repayment plan was upheld, and the appeal was dismissed.

Final Conclusion: The Tribunal found no ground to interfere with the Adjudicating Authority's acceptance of the resolution professional's report recording rejection of the repayment plan. The appeal was accordingly dismissed.

Condonation of delay - 14 day's delay in filing the appeal - Retention of security deposit pending arbitration - Limits of adjudicatory power under the Insolvency and Bankruptcy Code in contractual disputes remitted to arbitration.

Security deposit -Arbitration of contractual disputes - Jurisdiction under the Insolvency and Bankruptcy Code - HELD THAT:- The Tribunal noted that the deposit made under the earlier interim order was only by way of security for grant of interim protection in the miscellaneous application and that, once that application stood finally decided, continuation of such retention required an independent assessment in accordance with the Arbitration Act. It held that the need to retain a security during pendency of arbitral proceedings had to be considered independently in arbitral proceedings, and that a direction under the I & B Code to retain the amount even before initiation of arbitration would be arbitrary. In view of the consensus between the parties, the amount was directed to continue only as a security up to the stage when either party initiates arbitration, after which it would abide by orders passed by the arbitrator on appropriate interlocutory applications; the respondent also agreed not to take coercive steps for disconnection of electricity till initiation of arbitration. [Paras 16, 17, 18]

The impugned direction was modified by consent so that the deposited amount would remain only as security until arbitration is initiated by either party, and no coercive action for disconnection of electricity would be taken in the meantime.

Final Conclusion: The appeal was disposed of in terms of the parties' consensus, with the Tribunal holding that retention of the deposited amount under the I & B Code beyond the stage of initiation of arbitration was not justified. The amount was directed to remain as security only until arbitration is commenced, subject thereafter to orders of the arbitrator.

Jurisdictional Limitation - Scope of adjudicatory power under the Insolvency and Bankruptcy Code - grant or renewal of an excise licence - Statutory Pre-conditions - Sovereign and statutory domain of State excise law - fulfilment of prescribed conditions including payment of the applicable fee.

Scope of adjudicatory power under the Insolvency and Bankruptcy Code - Renewal of excise licence - Failure to implead and hear affected statutory authority - HELD THAT:- The Appellate Tribunal held that grant or renewal of an excise licence is governed by the Telangana Excise Act, 1968 and the Rules framed thereunder, and falls within the State's exclusive statutory and constitutional domain. Renewal is not automatic, but is conditional upon satisfaction of prescribed statutory requirements, including payment of the applicable fee. Relying on the principle in M/s. Embassy Property Developments Pvt. Ltd. v. State of Karnataka [2019 (12) TMI 188 - SUPREME COURT] the Tribunal held that the insolvency adjudicatory forum cannot, in exercise of its powers under the Code, override a sovereign or statutory regulatory function of the State by directing renewal of licence or waiver of statutory preconditions. The direction was further unsustainable because it affected the Excise Department without impleading it or affording it a hearing. [Paras 7, 8, 10, 12]

The direction for renewal of the excise licence without insisting on renewal fee was beyond the Adjudicating Authority's jurisdiction and was quashed, leaving the respondent free to pursue any remedy otherwise available in law for refund, adjustment, or renewal in accordance with the excise law.

Final Conclusion: The Appellate Tribunal allowed the appeal and quashed the impugned order. It held that the insolvency forum had no authority to compel renewal of an excise licence or dispense with statutory renewal fee in a matter lying within the exclusive regulatory domain of the State under the excise law.

Condonation of delay - Rejection of the belated claim under the liquidation regulations - delay of 787 days - non-fulfilment of the export obligation - statutory scheme under the Insolvency and Bankruptcy Code - Sufficient Cause - prescribed period under Regulation 12(2)(b).

Belated claim in liquidation - HELD THAT:- The Appellate Tribunal held that the liquidation framework required submission or updation of claims within the time prescribed in Regulation 12(2)(b) of the Liquidation Regulations, and that the scheme of the Code treats time as fundamental to insolvency and liquidation proceedings. Even assuming, in light of State Tax Officer (1) Vs. Rainbow Papers Limited [2022 (9) TMI 317 - SUPREME COURT], that the timeline is directory and not strictly mandatory, a claim filed after an inordinate delay could not be entertained without a satisfactory explanation. The Customs Department had knowledge of the debt and of the liquidation process, and the pendency or abatement of proceedings under the Customs Act did not create any legal bar to lodging its claim before the Liquidator within time. The Tribunal further held that a Government department does not enjoy any special status in seeking condonation of delay in such proceedings, and the principles applied in State of Nagaland Vs. Lipok AO & Ors. [2005 (4) TMI 321 - SUPREME COURT] arising in a criminal-law context, were inapposite. Since no reasonable explanation was given for the 787-day delay, and entertaining the claim at that stage would disturb an advanced liquidation process and run contrary to the object of expeditious completion under the Code, interference with the rejection of the claim was unwarranted. [Paras 26, 28, 29, 30, 31]

The rejection of the delayed claim was upheld and the appeal was dismissed.

Final Conclusion: The Appellate Tribunal affirmed the rejection of the Customs Department's claim as hopelessly delayed and unsupported by any satisfactory explanation. It held that neither the pendency of customs proceedings nor the claimant's status as a Government department justified entertaining the claim at an advanced stage of liquidation.

Admission of the Section 7 applicationfor outstanding amount of default of Rs.69,49,71,322/- along with the interest - recovery mechanism - financial creditor's application on proof of debt and default - Post-constitution settlement under Section 12A through Committee of Creditors.

Section 7 insolvency proceedings not being a recovery mechanism - Debt and default - Settlement after constitution of Committee of Creditors - HELD THAT: - The Appellate Tribunal held that there was no dispute with the principle that proceedings under Section 7 are not a mere recovery mechanism, but observed that such proceedings are meant for resolution of a corporate debtor that has committed default. Once debt and default stood established, the bank was fully entitled to invoke Section 7. A subsequent offer to settle did not invalidate the admission order; after constitution of the Committee of Creditors, any settlement could be acted upon only in accordance with Section 12A and with approval of the Committee of Creditors. The Tribunal therefore confined itself to observing that the appellant could place any settlement before the Committee of Creditors in accordance with law. [Paras 7, 8]

The challenge to admission on the ground that Section 7 was being used for recovery, or because settlement was being pursued, was rejected.

Non-functioning corporate debtor - Resolution despite cessation of business operations - HELD THAT: - The Appellate Tribunal held that the mere fact that the corporate debtor was not functioning for the last two years and had no employees did not furnish any reason to prevent initiation of resolution proceedings once financial default had occurred. That circumstance did not convert the proceeding into a recovery action, nor did it justify interference with the admission order. [Paras 9]

The contention founded on the corporate debtor's non-operational status was rejected.

Final Conclusion: The appeal against admission of the Section 7 application was dismissed. The Appellate Tribunal held that, debt and default having been established, the financial creditor was entitled to invoke the insolvency process, while leaving it open to the appellant to pursue any settlement before the Committee of Creditors in accordance with law.

Condonation of delay - delay of 36 days in filing the company appeal - maximum period permitted under the insolvency law - Limitation for appeal under the Insolvency and Bankruptcy Code - Scope of Section 5 of the Limitation Act - Inherent lack of jurisdiction - Self-contained code - Exclusion of general limitation law - Sufficient cause.

Statutory outer limit of limitation - Condonation beyond prescribed period - Self-contained limitation code - HELD THAT: - The Appellate Tribunal held that the proviso to section 61(2) fixes a strict timeline of 30 days for filing an appeal, extendable only by a further period not exceeding 15 days on sufficient cause being shown. This creates an absolute outer limit of 45 days, beyond which the Tribunal has no jurisdiction to condone delay. On the facts recorded, the appeal was filed beyond that maximum period whether limitation was computed from the date of pronouncement of the impugned order or from the date on which the free copy was made available. The Tribunal further held that where the statute contains a self-contained limitation provision, recourse to section 5 of the Limitation Act is unavailable. The appellant's omission to disclose the earlier writ proceedings was also noticed, and the plea that time was consumed in consulting counsel or choosing the proper forum did not alter the statutory bar, particularly when the appellant still had time after the High Court order to approach the Appellate Tribunal within limitation. [Paras 5, 6, 7, 8]

The application for condonation of delay in filing was rejected as the Tribunal lacked jurisdiction to condone delay beyond the statutory cap, and the appeal was consequently dismissed as barred by limitation.

Final Conclusion: The delay in re-filing was condoned, but the delay in filing the appeal was held to be beyond the non-extendable outer limit under section 61(2) of the Insolvency and Bankruptcy Code. The condonation application was therefore rejected and the appeal was dismissed as time-barred.

Provisional Attachment - Effect of property acquired prior to the commission of the scheduled offence - definition of " proceeds of crime" - Equivalent value attachment - immovable properties of the appellants, finding their involvement in money laundering - unauthorized deposits.

Proceeds of crime - Value equivalent - Property acquired prior to commission of crime - HELD THAT: - It has come on record that Smt. Nowhera Shaik and related others have collected Rs. 5600 crores as unauthorized deposits from around 1,72,000 investors (BIG members) across the country and outside. It engaged market executives and direct selling agents for luring the investors. It was with false promises of return of the amount with high rate of interest i.e., 3% per month (36% to 40% per year) by hatching various schemes and defaulted making payments to the investors. Around 250 accounts were opened in various banks across the country and 8 of them in UAE and Saudi Arabia. It was found that Smt. Nowhera Shaik and related others have diverted the depositor’s money to their personal accounts for wrongful gain and utilized it for purchase of movable and immovable properties. An ECIR was accordingly recorded finding a case of money laundering.

The appellant Syed Akhtar is a partner in M/s SA Builders and Developers and the proceeds of crime has been layered by Smt. Nowhera Shaik and Heera Group in lieu of purchasing land. A total proceeds of crime amounting to Rs. 78,63,45,010/- has been layered to M/s SA Builders and Developers, Mr. Syed Akhtar and Mr. Syed Afsar. Out of the said proceeds Rs. 41.05 Crores is lying with M/s Neelanchal Technocrats Pvt. Ltd. and the balance of Rs. 37,58,45,010/- is still with the appellants.

The Tribunal held that the definition of proceeds of crime includes, apart from property directly or indirectly derived from criminal activity, the concept of attachment for value equivalent. It accepted the respondent's case that the actual tainted funds received by the appellants were not available in traceable form and had been siphoned off, and therefore attachment of other properties standing in the appellants' names could validly be made for equivalent value. The Tribunal rejected the contention that properties acquired prior to the commission of crime are outside the reach of the Act in all situations, holding that such an interpretation would render the statutory expression relating to value equivalent redundant. Relying on its earlier decision in Shri Sadananda Nayak Vs. Directorate of Enforcement, Bhubaneswar [2024 (10) TMI 1619 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI] in Dilbag Singh @ Dilbag Sandhu Vs. Union of India & Ors. [2024 (11) TMI 833 - PUNJAB AND HARYANA HIGH COURT], and the authoritative pronouncement in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] it held that prior-acquired property is attachable only where the actual proceeds of crime are not found traceable or available. [Paras 18, 19, 20, 21]

The challenge to the attachment failed, and the confirmation of attachment was sustained.

Final Conclusion: The Tribunal held that attachment under the Act is not confined to property directly derived from the scheduled offence and extends to property of equivalent value where the actual proceeds of crime are unavailable or untraceable. On that basis, the appeals were dismissed and the confirmation of attachment was upheld.

Limitation for service tax demand - demand barred by limitation under Section 73(1) - Maintenance and repair of computers and copying machines -Mutual exclusivity of VAT and service tax - Alternative remedy in writ jurisdiction - fraud, collusion - wilful misstatement - suppression of facts or intentional contravention.

Extended period of limitation - Mutual exclusivity of VAT and service tax - Jurisdictional defect in show cause notice - HELD THAT:- The Court held that Section 73(1) required service of notice within thirty months from the relevant date, and the notice, insofar as it originated from the discrepancy for 2015-16, was admittedly issued beyond that period. The Revenue sought to invoke the extended period on the ground of suppression, but the Court found that basis untenable since the assessee had regularly paid VAT on sale of goods and, in that situation, levy of service tax for the same period and purpose could not be sustained. Relying on COMMISIONER OF SERVICE TAX-V, MUMBAI v. UFO MOVIEZ INDIA LIMITED [2022 (7) TMI 1064 - SUPREME COURT] and IMAGIC CREATIVE (P) LTD. v. COMMISSIONER OF COMMERCIAL TAXES [2008 (1) TMI 2 - SUPREME COURT] the Court held that VAT and service tax are mutually exclusive, and therefore the show cause notice itself was beyond limitation and without jurisdiction; all consequential proceedings were likewise vitiated. [Paras 8, 10]

The demand notice and the adjudication founded on it were held to be without jurisdiction and liable to be quashed.

Alternative statutory remedy - Maintainability of writ petition - Order wholly without jurisdiction - HELD THAT:- The Court held that where the impugned proceedings are wholly without jurisdiction, the existence of an appellate remedy does not bar exercise of writ jurisdiction. Applying the principles stated in WHIRLPOOL CORPORATION v. REGISTRAR OF TRADE MARKS, MUMBAI [1998 (10) TMI 510 - SUPREME COURT] and GODREJ SARA LEE LIMITED v. EXCISE AND TAXATION OFFICER-CUM-ASSESSING AUTHORITY [2023 (2) TMI 64 - SUPREME COURT], it concluded that the objection based on alternative remedy could not defeat the writ petition once the show cause notice and the ensuing order were found jurisdictionally unsustainable. [Paras 10]

The petition was entertained under Article 226 notwithstanding the statutory appeal.

Final Conclusion: The Court allowed the writ petition and quashed the impugned order determining service tax liability, penalty and late fee. It held that the proceedings were barred by limitation, the levy could not be sustained where VAT had been paid on sale of goods, and the writ petition was maintainable despite the alternative remedy.

Classification of the service - Services received from a foreign entity for technical know-how and confidential information - Intellectual Property Right service - Utilisation of CENVAT credit for reverse charge liability - denial of relief under Section 80 - Extended Period of Limitation - Statutory relief from interest and penalty.

Whether the demand made under the category of IPRS is correct in the facts of the case or otherwise - HELD THAT: - This issue was examined by the Co-ordinate Bench in the case of Schneider Electric India Pvt Ltd [2023 (6) TMI 1198 - CESTAT CHANDIGARH] wherein, the issue was non-payment of service tax on transfer of technical knowhow under the category of IPRs. The Co-ordinate Bench after examining various case laws, inter alia, held that only such IPRs which are prescribed under the law for the time being in force under the Indian law are chargeable to service tax and held that the appellant was not liable to pay service tax under the IPRS under Section 65(105)(zzr).

The Tribunal noted that, although the record did not show that the confidential information exchanged was protected under any Indian law, the appellant had not contested the classification under Intellectual Property Right Service either before the adjudicating authority or in appeal and had instead proceeded on the footing of such classification. In that view, the Tribunal declined to reopen the classification dispute and upheld the adjudicating authority's treatment of the service and the corresponding tax demand. [Paras 10, 12, 17, 18]

Classification under IPR Service was sustained and the service tax demand was maintained.

Whether the discharge of service tax liability by debiting the Cenvat credit account wherein they had availed credit in respect of capital goods is correct or otherwise -HELD THAT: - The Tribunal held that, before the amendment effective from 01.07.2012, there was no statutory bar against utilisation of available CENVAT credit for payment of service tax liability under reverse charge. Following the judicial view noticed by it, the Tribunal found that the debit made from the CENVAT credit account towards the confirmed liability was in accordance with law and had to be given adjustment against the demand. [Paras 14, 15, 16, 17, 18]

The payment made through the CENVAT credit account was held valid and liable to be adjusted towards the confirmed demand.

Section 73(3) - Section 80 - penalty and interest - HELD THAT: - The Tribunal held that the benefit of Section 73(3) was unavailable because the appellant had not paid interest along with the admitted tax liability. It further found no infirmity in denial of relief under Section 80, as the appellant had not taken registration and had not disclosed receipt of the service in the prescribed returns. Accordingly, interest and penalties under Sections 76, 77 and 78 were upheld. However, since utilisation of credit for discharge of the reverse charge liability was itself legally permissible during the material time, the penalty under Rule 15 of the CENVAT Credit Rules read with Section 11AC could not survive. [Paras 17, 18]

Interest and penalties under Sections 76, 77 and 78 were sustained, Section 73(3) and Section 80 reliefs were denied, and the penalty under Rule 15 read with Section 11AC was set aside.

Final Conclusion: The appeal was partly allowed. The classification and service tax demand were sustained, but the amount paid through CENVAT credit was directed to be adjusted against the demand; interest and penalties under the Finance Act were upheld, while the penalty for alleged wrongful utilisation of credit under the CENVAT Credit Rules read with Section 11AC was set aside.

Programme producer's service - Composite agreement involving copyright assignment and production work - invocation of the extended period - imposition of penalty - Wilful Suppression of Facts - Separate and Identifiable Aspects - Whether the demand of service tax on the appellant for ‘programme producer’s services’ premised on the assignment agreement between the appellant and M/s. Gemini TV Pvt ltd is tenable.

Programme producer's service - Copyright assignment - Tax on activity - HELD THAT:- The Hon’ble Supreme Court has in its decision in Association of Leasing & Financial Services Companies [2010 (10) TMI 4 - SUPREME COURT] held that service tax is a tax on an activity. Thus, the taxable event is each exercise/activity undertaken by the service provider and each time service tax gets attracted. The Apex Court in the said decision has also found that the same view is reiterated broadly in the earlier judgment of the Apex Court in Godfrey Phillips India Ltd. [2005 (1) TMI 391 - SUPREME COURT] in which a Constitution Bench observed that in the classical sense a tax is composed of two elements : the person, thing or activity on which tax is imposed. Thus, every tax may be levied on an object or on the event of taxation. Service tax is, thus, a tax on activity whereas sales tax is a tax on sale of a thing or goods. As held in Federation of Hotel & Restaurant Association of India [1989 (5) TMI 50 - SUPREME COURT], “The same transaction may involve two or more taxable events in its different aspects. But the fact that there is overlapping does not detract from the distinctiveness of the aspects”.

On a reading of the agreement as a whole, the Tribunal found that, besides clauses assigning exclusive copyright in perpetuity, the agreement expressly required the appellant to undertake production work from the first episode onwards under the direction of Gemini TV, to supply tapes before telecast, and subjected the work to quality control and rejection by the broadcaster. The episode-wise consideration payable after telecast was held to be indicative of payment for the production activity undertaken on behalf of Gemini TV. Applying the principle that service tax is a tax on the activity and that different aspects of the same transaction may constitute distinct taxable events, the Tribunal held that the copyright assignment clauses did not efface the separately identifiable taxable service of programme production. The decisions cited by the appellant were held distinguishable, since they concerned different factual situations and did not involve an agreement containing both perpetual assignment and production work on behalf of a television network. [Paras 14, 15, 16, 18]

The service tax demand under programme producer's service was held to be sustainable.

Extended period of limitation - Wilful suppression - Penalty under Section 78 - HELD THAT: - The Tribunal accepted the finding that the appellant had started paying service tax on the same payments from 01.04.2008 without any material change in the agreement or in the practice followed, yet had not disclosed that similar production work had been undertaken for the broadcaster from 2005-06. This withholding of the taxable activity for the earlier period was treated as a deliberate suppression of facts evidencing intent to evade service tax. On that basis, invocation of the extended period and the consequential penalty were upheld. [Paras 17, 19]

The invocation of the extended period and the imposition of penalty were upheld.

Final Conclusion: The Tribunal held that the agreement disclosed a taxable programme production activity undertaken by the appellant on behalf of Gemini TV notwithstanding the copyright assignment clauses. The demand, invocation of the extended period, and penalty were accordingly sustained, and the appeal was dismissed.

Invocation of the extended period for the service tax demand based on the difference between Form 26AS data and ST-3 returns -Extended period of limitation - Pure agent reimbursement - reimbursable expenses received by the service provider were excludable from taxable value as amounts incurred as a pure agent under Rule 5(2).

Extended period of limitation - Suppression of facts - Form 26AS-based demand - HELD THAT: - The Tribunal found that the appellant was registered with the Department, had been regularly filing statutory returns, and had also furnished the required documents when called upon. The material relied on by the Department consisted of Form 26AS data, ST-3 returns and balance sheet particulars already available to it, and no independent verification was undertaken to establish the taxability of the alleged differential amount. In the absence of evidence of fraud, wilful misstatement or suppression with intent to evade tax, mere reliance on income-tax data could not sustain invocation of the extended period. [Paras 7]

The demand, interest and penalty insofar as confirmed by invoking the extended period were set aside.

Pure agent reimbursement - Exclusion from taxable value - Rule 5(2) - HELD THAT: - On examining the agreement, the Tribunal found that the appellant received fixed remuneration for its own services and separate reimbursement of expenses incurred on behalf of the principal on actual basis. It held that, after the amendment to Section 67, exclusion of such reimbursements would still be available where the conditions of Rule 5(2) relating to a pure agent were satisfied. Since the agreement and the record showed that the expenditure was incurred on behalf of the principal and recovered only on actual basis, the appellant fulfilled the conditions for exclusion, and those reimbursements could not form part of the taxable value. [Paras 9]

The service tax demand on reimbursable expenditure, with consequential interest and penalty, was set aside.

Final Conclusion: The Tribunal held that the extended period of limitation was not invocable and that the reimbursable expenses recovered by the appellant as a pure agent were not liable to be included in the taxable value. The service tax demand with interest and penalty was therefore held to be unsustainable and was set aside.

Limitation period - Rejection of refund claims as time-barred under Rule 5 of the CENVAT Credit Rules, 2004 - effect of the amendment made through Notification No. 14/2016-CE (N.T.) -applicability of the relevant-date concept - Failure to consider material legal submissions - Cash refund of accumulated CENVAT credit.

Failure to consider material legal submissions - Limitation for refund of unutilized CENVAT credit - HELD THAT: - As per the Authorized Representative by such legislative change carried out through the notification on Central Excise side as above, the Central Government has made up for deficiency as was pointed out by the aforesaid case of C.C.Ex. Jalandhar Vs. JCT Ltd.[2013 (12) TMI 583 - CESTAT NEW DELHI]. As per the Appellant the deficiency mentioned in the aforesaid case continues to exist in Section 11B in respect of service tax refund and relevant date thereof. Simply bringing in change in Cenvat Credit Rules through a notification issued which is a non tariff notification under Central Excise Act will not change the position specially when Section 11B has been borrowed by the Finance Act, 1944 for the purposes of refund and apart from Section 11B there does not exist any authority under Finance Act, 1944 for the purposes of allowing service tax refund and for calculating relevant date for the purposes of refund of Central Excise.

These questions, being pure questions of law going to the limitation objection on which the refund had been rejected, were not examined at all by the Commissioner (Appeals). In that situation, the Tribunal did not adjudicate the merits of limitation itself, but held that the matter required fresh consideration on all the legal aspects so raised. [Paras 5, 6]

The impugned appellate order was set aside on this ground and the matter was remanded to the Commissioner (Appeals) for fresh examination of the limitation issue and the connected legal objections.

Final Conclusion: The Tribunal held that the appellate authority had failed to examine the appellant's material legal submissions on limitation and the statutory basis of the refund rejection. The matter was accordingly remanded for fresh consideration, and the appeals were allowed by way of remand.

Service tax liability - demand under Business Auxiliary Service for profit earned from trading of cargo space and discounts received from shipping companies - entitlement to the Goods Transport Agency abatement and the demand by clubbing the services as clearing and forwarding service - Cenvat credit on insurance premium relating to motor vehicles.

Trading in cargo space - Business Auxiliary Service - Consideration for service - HELD THAT: - The Tribunal held that the appellant was engaged in purchase and sale of cargo space and earned margin or discount in that trading activity. Following M/s Bluemoon Logistics (P) Ltd. [2025 (8) TMI 86 - CESTAT KOLKATA], it held that mere purchase and sale of cargo space is not a service and the surplus earned therefrom is not consideration for rendition of Business Auxiliary Service. On that reasoning, neither the profit from ocean freight nor the discounts received from shipping companies could be subjected to service tax under that category. [Paras 7, 8]

Service tax demand on the margin earned from cargo space trading and on the discounts received from shipping companies was set aside.

Goods Transport Agency - Clearing and forwarding service - Abatement - Independent goods transport service could not be clubbed with clearing and forwarding service merely to deny abatement. - HELD THAT: - The Tribunal found that the appellant had segregated transportation charges from clearing and forwarding charges and was providing transportation of goods by road by issuing challans in the nature of consignment notes. In those circumstances, the transport activity could not be reclassified as clearing and forwarding agent service. Since the goods transport service was independent, the appellant was entitled to abatement under Notification No. 1/2006-ST and no service tax demand could be sustained by treating it as part of clearing and forwarding service. [Paras 9]

The appellant was held entitled to GTA abatement, and the demand raised by clubbing the transport activity with clearing and forwarding service was unsustainable.

Cenvat credit on input service - Motor vehicle insurance - Prospective operation of exclusion clause - HELD THAT: - The Tribunal noted that the credit denial related to insurance premium of motor vehicle and that the exclusion relied upon came into force only with effect from 01.04.2011. As part of the disputed period was prior to that date, the appellant was not liable on the basis of that later exclusion for the earlier period. For the subsequent period, the Tribunal recorded that the appellant had already paid the service tax and produced challans before the authorities. On that basis, no surviving demand was maintainable. [Paras 10, 11]

The credit-related demand was not sustainable for the pre-01.04.2011 period, and no further demand survived for the later period.

The Tribunal held that, as no demand survived against the appellant, the foundation for penalty also failed. The penalty was therefore held to be not imposable. [Paras 12]

All penalties were set aside as a consequence of the failure of the substantive demands.

Final Conclusion: The Tribunal held that the appellant was not liable to service tax on margin or discounts arising from trading in cargo space, was entitled to treat the road transport activity independently for GTA abatement, and faced no surviving credit-related demand. Consequently, the impugned order was set aside and the appeal was allowed with consequential relief.

Service tax liability on trade discount reimbursements and target-linked incentives received by an authorised car dealer from the manufacturer - Target-linked incentives as reduction of purchase price - Principal to principal basis -Declared service of agreeing to do an act - Penalty on the Accounts Manager.

Trade discounts and sales claim reimbursements - HELD THAT: - The Tribunal held that the dealer was purchasing vehicles and spare parts from the manufacturer and selling them onward on a principal-to-principal basis. Reimbursable discounts first passed on to customers and later credited by the manufacturer remained discounts connected with the purchase and sale transaction, and did not cease to be discounts merely because reimbursement followed later through credit notes. Likewise, quantity or target-linked incentives received on achieving specified purchase or sales targets were only post facto trade or quantity discounts resulting in reduction of purchase price. The Tribunal rejected the view that these amounts represented consideration for agreeing to do an act or for sales promotion services for the manufacturer, and followed the decisions treating such incentives as outside the scope of taxable service. [Paras 4]

The service tax demand, interest and penalties founded on taxability of these discounts and incentives were held unsustainable, the assessee's appeals were allowed, and the Revenue's challenge to the appellate order dropping the demand was rejected.

Penalty on employee - Consequential penalty - HELD THAT: - The Tribunal held that when the principal demand against the company was not sustainable on merits, there remained no basis to continue the penalty imposed on the Accounts Manager. The appellate order setting aside that penalty was therefore found to be correct. [Paras 4]

The penalty imposed on the Accounts Manager was set aside and the Revenue's appeal on that aspect was dismissed.

Final Conclusion: The Tribunal held that the dealer's receipts under trade discounts, sales claim reimbursements and target-based incentives were only discounts linked to principal-to-principal purchase and sale transactions and not consideration for any taxable service. Accordingly, the assessee's appeals were allowed, the Revenue's appeals were dismissed, and the penalty on the Accounts Manager also failed.

Service tax valuation - Notional interest on security deposit - value of taxable service under section 67 of the Finance Act.

Notional interest on security deposit - HELD THAT:- As per the Section 56D, interest on any amount retained would come under the ambit of negative list and no service tax would be chargeable on that. Therefore, in the instant case, interest on refundable security deposit in any form including notional interest if any would not be chargeable to service tax. She submitted that the appellant had never suppressed any information from the Department and submitted the information to the Department as and when demanded by the Department, as such, intention of the appellant was not to suppress the facts or evade the tax. Therefore, in the instant case, the proviso to section 73(1) of the Finance Act, 1994 should not be applicable.

The Tribunal held that the controversy stood concluded by the decision in the appellant's own case in M/s Jyotsna Vaults & Ors.[2023 (10) TMI 498 - CESTAT NEW DELHI], where it was found that service tax is leviable only on the consideration actually chargeable for the taxable service. A refundable security deposit, taken separately and not forming part of the amount charged for the service, could not be treated as taxable consideration merely by imputing a notional return on it. In the absence of any legal provision permitting inclusion of such notional interest in the value of taxable service, the demand was unsustainable. [Paras 6, 7]

The levy on notional interest over the refundable security deposit was set aside, and the appeal was allowed.

Final Conclusion: Following the earlier decision in the appellant's own case, the Tribunal held that no service tax was chargeable on notional interest attributed to the refundable security deposit. The impugned order was set aside and the appeal was allowed.

Penalty under CENVAT Credit Rules - removal of inputs - trading activity so as to attract reversal under Rule 6(3) of the CENVAT Credit Rules, 2004 - availing CENVAT Credit on inputs, input services and capital goods under the CENVAT Credit Rules, 2004 [CCR, 2004] -Absence of suppression or intent to evade - Pre-SCN payment of duty and interest.

Penalty under CENVAT Credit Rules - HELD THAT:- The Tribunal held that the surviving controversy was only as to penalty, since the confirmed amount for 2012-13 had already been paid with interest before issuance of the show cause notice and stood appropriated in adjudication. On examining the record, the Tribunal found no material showing misstatement, suppression of facts, fraud, collusion or any intent to evade payment of duty. In the absence of these ingredients, penalty under Rule 15 of the CENVAT Credit Rules, Rule 25 of the Central Excise Rules and section 11AC could not be sustained. As the demand with interest had already been discharged, no further amount was recoverable from the assessee. [Paras 15, 16, 17, 18]

The penalty was set aside and, the duty and interest having already been paid and appropriated, no further demand survived.

Final Conclusion: The Tribunal allowed the appeal by setting aside the impugned order to the extent it sustained penalty. Since the confirmed amount for 2012-13 had already been paid with interest prior to the show cause notice and no suppression or intent to evade was established, no further liability could be fastened on the assessee.

Wrongly availed Cenvat credit by simultaneously availing Status Holder Incentive Scrips and Technology Upgradation Fund Scheme benefits in contravention of the Foreign Trade Policy and the relevant customs notification - Cenvat credit on imported capital goods.

Availment and utilization of ‘Status Holder Incentive Scrips’ - HELD THAT: - As per DGFT letter dated 07.01.2014 and 14.10.2014, TUFS benefit is said to be availed in the year in which the loan has been sanctioned to the unit. The appellant has therefore availed benefit of TUFS in the year 2013-14 and in that year, benefit of SHIS has not been availed on the basis of exports made by them. In fact the appellant has never availed benefit of SHIS for exports made by them as the appellants are transferee license holder only.'

The Tribunal held that para 3.16.2 of the Foreign Trade Policy bars SHIS only in respect of exports made during the year in which the status holder has also availed TUFS. On the facts found, the appellant had never availed SHIS on the basis of its own exports; it was only a transferee holder of SHIS originally issued to other status holders on the basis of their exports for the eligible years. Its use of those scrips during later years for payment of duty on imported capital goods could not be treated as simultaneous availment of SHIS and TUFS on its own exports. The Tribunal further held that Notification No. 104/2009-Cus specifically permitted availment of drawback or Cenvat credit of additional duty debited in the scrip, and neither the Foreign Trade Policy nor the notification barred such credit to a transferee licence holder. The Commissioner's contrary view was therefore based on a misinterpretation of the policy and the very foundation of the demand failed. [Paras 6, 7]

The demand of wrongly availed Cenvat credit, with interest and penalty, was held unsustainable and the appeal was allowed.

Final Conclusion: The Tribunal set aside the impugned order, holding that the appellant, being a transferee holder of SHIS and not a beneficiary on the basis of its own exports, had not violated the Foreign Trade Policy by availing TUFS and using purchased SHIS scrips. The demand of credit, interest and penalty was accordingly annulled.