TaxTMI Updates e-Newsletter
Apr 08,2026

Maintainability of the writ petition - Alternative statutory remedy - prescribed period of limitation - sufficient cause - delay in invoking writ jurisdiction under Article 226 of the Constitution of India.

Writ petition against the order-in-original and consequential recovery proceedings -HELD THAT: - The Court held that the petitioner admittedly had a statutory appellate remedy against the order-in-original, with a prescribed limitation and a limited condonable period, but chose not to pursue that remedy. Since the writ petition was filed after expiry of even the extendable appellate period, the petitioner could not invoke Article 226 to bypass the statutory machinery. Applying the principles laid down by the Supreme Court in Assistant Commissioner (Ct) Ltu, Kakinada and Others v. Glaxo Smith Kline Consumer Health Care Limited [2020 (5) TMI 149 - SUPREME COURT] and Rikhab Chand Jain v. Union of India [2025 (11) TMI 1377 - SUPREME COURT], the Court held that when a party disables itself from availing the statutory remedy by its own default, the High Court should ordinarily decline to exercise writ jurisdiction. [Paras 5, 6, 7]

The writ petition was declined on the ground of availability of an alternate statutory remedy which the petitioner failed to avail within limitation.

Final Conclusion: The High Court refused to entertain the writ petition, holding that the petitioner had bypassed the statutory appellate remedy and approached the Court after expiry of the permissible appellate period. The petition was accordingly dismissed.

Validity of the assessment order passed under Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017 -Failure to consider documentary evidence- discrepancies arising from mismatch, hypothetical supplies and double taxation.

Failure to consider documentary evidence - Fresh opportunity before assessing authority - HELD THAT:- The Court found that the impugned assessment proceeded on the basis that the assessee had not produced proof in support of its stand on mismatch, alleged hypothetical supplies and double taxation. Since the assessee specifically stated that the relevant documents had already been filed, and the controversy turned upon verification of such material, the proper course was to permit the assessee to place the documents item-wise before the original authority and require a fresh consideration. The Court held that such reconsideration would enable proper reconciliation and correct determination of liability, and therefore chose not to relegate the assessee to the appellate remedy. [Paras 7, 8]

The impugned assessment order was set aside and the matter was remanded to the assessing authority for fresh consideration item-wise, after permitting the assessee to file an additional reply and supporting documents.

Final Conclusion: The writ petition was allowed. The assessment for the financial year 2021-2022 was set aside and the matter was remitted to the original authority for fresh item-wise consideration after affording the assessee an opportunity to place the supporting documents.

Denial of a meaningful opportunity of hearing prior to passing of the OIO - Audi alteram partem - breach of natural justice -Writ jurisdiction - Alternative remedy in writ jurisdiction.

Principles of natural justice - Meaningful opportunity of hearing - Alternative remedy in writ jurisdiction - HELD THAT:- The Court found that the communication issued on 27.12.2025 required the petitioner to furnish additional documents and attend personal hearing within a severely truncated timeline, leaving less than one effective working day, especially when voluminous records were sought. The request for short adjournment was not shown to have been duly considered. The Court held that participation in hearing by itself did not satisfy the requirement under the statute, since the opportunity contemplated is not a mere formality but must be real, reasonable and effective. It further held that where additional material is sought to be relied upon, reasonable time must be afforded to respond. The order having been passed on the same day on which the hearing concluded, the Court considered the haste sufficient to raise legitimate apprehension that the material may not have been adequately considered. On that basis, the objection as to alternate remedy was rejected, since violation of natural justice permits exercise of writ jurisdiction. [Paras 30, 31, 32, 33, 34]

The impugned order was quashed for breach of natural justice and the matter was remanded to the adjudicating authority for fresh adjudication after granting proper opportunity of hearing and considering all contentions.

Final Conclusion: The writ petition was allowed. The impugned order was set aside solely on the ground of denial of meaningful opportunity of hearing, and the matter was remanded for fresh adjudication with all rights and contentions left open.

Review application for modification of the remand direction - apparent error - directed the authority to examine whether the services under question were for authorized operations, as endorsed by the specified officer of the zone - Zero rated supply - Authorized operations - Prospective applicability of statutory amendment.

Whether the services were for authorized operations could not be sustained for the period in dispute, which was prior to the amendment inserting that expression in section 16(1)(b) of the Integrated Goods and Services Tax Act, 2017. - HELD THAT: - The Court found that the words "for authorized operations" were inserted in the definition of zero rated supply by the Finance Act, 2021 with effect from 1/10/2023. Since the transaction in question related to the period from March - 2020 to June - 2023, the earlier remand direction requiring the authority to examine whether the services were for authorized operations could not be maintained on that basis. The Court therefore deleted that part of the earlier order, while leaving it open to the revenue to raise that plea before the Deputy Commissioner, who would consider it on its own merits if so raised. The further contention regarding Rule 89, namely whether such requirement applies to a unit located in a special economic zone or only to the supplier of services, was not decided and was left for consideration by the authority if pleaded. [Paras 7, 8, 10, 11]

The earlier remand direction was modified by deleting the requirement to examine authorized operations, with liberty to the concerned respondent to raise that plea before the Deputy Commissioner for consideration on merits.

Final Conclusion: The review application was partly allowed. The Court corrected the earlier order and deleted the remand direction requiring examination of authorized operations for the pre-1/10/2023 period, while reserving liberty to raise that plea before the authority for independent consideration.

Delay and laches in seeking interim relief - Entitlement to interim relief against recovery proceedings in view of the delay in approaching the Court after receipt of the initial notice threatening action under the recovery provision.

Delay and laches in seeking interim relief - HELD THAT: - The Court noted that the petitioner had been informed by the notice that, upon non-payment within the stipulated period, recovery proceedings would be initiated, and that the petitioner had already responded by its communication raising its objections. In that situation, if the petitioner intended to challenge the proposed coercive action and complain of non-consideration of its representation, it ought to have approached the Court promptly. Since the petition was not brought at that stage and the challenge was made only after subsequent recovery notices were issued, the delay was treated as unjustified for the purpose of interim protection. [Paras 6]

Interim relief was rejected on the ground of unjustified delay in approaching the Court.

Final Conclusion: The Court did not decide the merits of the recovery dispute or the grievance regarding non-consideration of the petitioner's representation. It rejected interim relief for delay, issued notice in the petition, and called upon the respondents to explain the non-consideration of the representation and the timing of the recovery action.

Condonation of delay - delay in filing the statutory appeal beyond the period under Section 107 - Improper communication of adjudication order - Writ jurisdiction under Article 226 - Speaking order - Principles of natural justice.

Condonation of delay in appeal - HELD THAT: - The Court held that the appellate authority was right in rejecting the appeal as it had no power to condone delay beyond the limit prescribed under the statute. However, the Court found that the petitioner could not be left remediless, particularly when the original order had not been properly communicated. Applying the principle recognised in Tecnimont Private Limited (Formerly Known As Tecnimont ICB Private Limited) vs. State of Punjab & Ors. [2019 (9) TMI 788 - SUPREME COURT], the Court exercised its writ jurisdiction to condone the delay and permit revival of the appeal for decision on merits. [Paras 6, 7]

Delay in filing the appeal was condoned by the High Court, and the petitioner was permitted to re-present the appeal for revival and disposal on merits in accordance with law.

Final Conclusion: The writ petition was disposed of by sustaining the appellate authority's view that it lacked power to condone delay beyond the statutory limit, while independently condoning the delay in exercise of writ jurisdiction on account of improper communication of the order. The petitioner was permitted to have the appeal revived and decided on merits.

SEZ unit refund of unutilised input tax credit - Entitlement to have its claim examined in the light of the law governing refund claims under the GST regime and the binding effect of the existing High Court ruling.

SEZ unit refund of unutilised input tax credit - HELD THAT: - The Court held that, since the Supreme Court had disposed of the challenge to the Gujarat High Court view without deciding the question of law, the law declared in Britannia's case [2020 (9) TMI 294 - GUJARAT HIGH COURT] continued to hold the field. Applying the principle stated in Commissioner of Income Tax Vidarbha & Marathwada, Nagpur Vs. Smt. Godavaridevi Saraf [1977 (9) TMI 24 - BOMBAY HIGH COURT], the Court held that authorities under the tax law were bound to follow that declaration of law until a contrary view was taken by another High Court or by the Supreme Court. The refusal of the appellate authority to apply Britannia's case only because the matter had been carried to the Supreme Court was therefore unsustainable. [Paras 7, 8, 9]

The impugned orders could not be sustained insofar as they declined the refund claim by refusing to follow Britannia's case.

Authorized operations endorsement - Fresh consideration of refund claim - HELD THAT: - The Court noted the submission on behalf of the State that refund to an SEZ unit would depend upon the services being for authorized operations as endorsed by the specified officer, and further noted that no finding on that aspect had been recorded by the authorities below. Since that point had not been raised earlier and the petitioner had no opportunity to meet it, the Court did not decide the aspect on merits but directed reconsideration in the light of Britannia's case and after examining the required endorsement. [Paras 12]

The matter was remanded to the Assistant Commissioner for a fresh decision in accordance with law after examining the requirement of authorized operations endorsement.

Final Conclusion: The Court partly allowed the petition, held that the authorities could not disregard Britannia's case merely because a challenge had been filed before the Supreme Court, set aside the impugned refund rejection and appellate orders, and remanded the matter for fresh consideration on the question whether the services were for authorized operations.

Liability to pay GST - rebates received by the applicant from the bank for payment of excise duty through a corporate card - Transaction in money within the meaning of section 2(75) - Scope of consideration for supply under section 7 - Short-term financial accommodation.

Whether rebates received from HSBC for payment of Excise duty through Corporate Card, is liable for GST ?- HELD THAT:- The Authority held that a taxable supply under the Act requires consideration and a corresponding quid pro quo. The rebate granted by the bank was only a post-transaction financial adjustment linked to use of the corporate card and was not referable to any independent or identifiable supply of goods or services by the applicant to the bank. It merely reduced the applicant's outstanding monetary liability and was therefore in the nature of a transaction in money, falling outside the ambit of supply. Relying on Union of India and Anr. v. M/s. Intercontinental Consultants and Technocrats Put. Ltd.[2018 (3) TMI 357 - SUPREME COURT], the Authority further held that in the absence of consideration for a taxable service, the rebate could not be subjected to GST. The corporate card arrangement was also treated as facilitating short-term credit, with the rebate operating as a discount in respect of that financial accommodation. [Paras 14, 15, 16, 17, 18]

The rebate was held to be a monetary adjustment and not consideration for any supply; consequently, it was held not liable to GST.

Final Conclusion: The Authority ruled that the rebate received from the bank under the corporate card arrangement for payment of excise duty is merely a transaction in money and does not constitute consideration for any supply of goods or services. It was therefore held to be outside the scope of GST.

Deduction u/s 80IA(4) - Developer versus works contractor - Judicial consistency - deduction on the railway signalling contracts - nature of work executed by assessee - HELD THAT: - The Tribunal held that the disallowance rested only on the view that the assessee had executed a works contract and was not a developer. On examining the nature of the contracts and following the earlier orders in the assessee's own case, it found that the contractual scope included design, drawings, procurement, fabrication, erection, installation and commissioning of the railway signalling system, followed by transfer of the infrastructure facility to the Railway authorities. These features showed that the assessee had undertaken development of the infrastructure facility and had not merely executed a simple works contract. The Tribunal therefore accepted that the statutory conditions for deduction stood satisfied. [Paras 6, 7]

The Tribunal held that the order of the jurisdictional High Court affirming relief to the assessee in earlier years constituted a binding judicial precedent. It further observed that, in the absence of any material showing reversal of that decision and where the facts remained identical, judicial consistency required that the deduction once granted in earlier assessment years should not be denied in the subsequent year. On that basis, no infirmity was found in the order of the Commissioner (Appeals). [Paras 7]

The relief granted by the Commissioner (Appeals) by following the earlier binding decisions was upheld.

Final Conclusion: The Tribunal upheld the order allowing deduction under section 80IA(4) to the assessee for AY 2015-16. Holding that the assessee was a developer of the railway signalling infrastructure and that the earlier jurisdictional High Court decision on identical facts was binding, the Revenue's appeal was dismissed.

Addition u/s 69A - Cash deposits during demonetization period - prove the source of the cash - assessee submitted that the source of the cash deposit was from her late mother - assessee is a non-resident currently residing in Canada

HELD THAT:- Although the assessee could prove the source of the cash in the hands of the mother even during the remand proceedings, considering the overall circumstances and the status of the parties, we draw an inference that the defence raised by the assessee cannot be disbelieved, especially as it is supported by an affidavit.

Thus, considering the fact that the money deposited by the assessee was her mother’s lifetime savings, meant for her two granddaughters, and was handed over to the assessee’s brother in 2014, we find merit in the explanation.

Although Ld. AR relied upon Circular/Instruction No. 3 of 2017 issued by the CBDT, the same is not applicable in the present case, as it relates to taxpayers above 70 years of age. In the present case, the assessee is not above 70 years of age, and as per his submission, the amount belonged to his late mother.

As AO could not rebut the specific contentions of the assessee, we delete the impugned addition made by the AO.

Final Conclusion: The Tribunal allowed the appeal of assessee accepting cash deposits in bank account as money deposited by the assessee was her mother’s lifetime savings money deposited by the assessee was her mother’s lifetime savings as mother of the assessee died in 2014, and the money was lying with the assessee’s brother. When the assessee visited India, her brother handed over the said amount.

Deduction u/s 80IA - belated Filing of Form 10CCB - Procedural requirement versus mandatory condition - Adjustment u/s 143(1) - Denial of deduction u/s 80IA merely because Form 10CCB was not filed by the due date of return, though it was filed before issuance of the intimation, was not sustainable - HELD THAT: - The Tribunal found that the return had been filed within time and Form 10CCB was subsequently filed on 07.05.2022, which was much before the intimation u/s 143(1) dated 13.11.2022. Since the audit report was already on record before processing of the return, it was incumbent on CPC to examine it.

Tribunal accepted the principle that filing of Form 10CCB within the due date is a procedural requirement and that where the report is furnished before assessment or processing, the assessee cannot be denied the deduction on that ground alone. On that basis, the order of the Commissioner (Appeals) allowing the deduction was upheld. [Paras 4]

The Revenue's challenge to deletion of the disallowance failed, and the deduction claimed u/s 80IA was held allowable.

Final Conclusion: The Tribunal held that belated filing of Form 10CCB, when made before issuance of the intimation, could not by itself defeat the claim for deduction u/s 80IA. The order of the Commissioner (Appeals) was sustained and the Revenue's appeal was dismissed.

Revision u/s 263 - distinction between “lack of enquiry” and “inadequate enquiry” - Reversal of provision for onerous contract -Bad debts written off - Reversal of provision and double taxation - Buy-back tax compliance - Ind AS 116 lease adjustments

Revision u/s 263 - Reversal of provision for onerous contract -Reversal of provision and double taxation - scope of section 41(1) - HELD THAT: - The Tribunal found that the AO had neither raised any specific query nor carried out verification regarding the deduction claimed under the head reversal of provision for onerous contract, and therefore the Principal Commissioner was justified in invoking revisional jurisdiction on this issue. At the same time, the Tribunal held that if the provision had been disallowed in an earlier year, its subsequent reversal could not again be brought to tax or disallowed, as that would result in double taxation. Likewise, reversal credited in the profit and loss account would be taxable only if deduction for the original provision had been allowed earlier; otherwise it would not constitute taxable income. Since the necessary factual material was not available on record, the issue was directed to be examined afresh by the Assessing Officer on those parameters. [Paras 17]

The order under section 263 was upheld on this issue, but modified by directing the Assessing Officer to verify whether the earlier provision had been disallowed and to tax the reversal only in accordance with that factual position.

Bad debts written off - Lack of enquiry v/s inadequate enquiry - HELD THAT: - The Tribunal recorded that the claim for bad debts was specifically covered by the scrutiny selection, that the AO had issued a specific notice calling for complete details, and that the assessee had furnished the details which were accepted after consideration. In such circumstances, the case was not one of absence of enquiry, and revisional jurisdiction could not be exercised merely because the Principal Commissioner desired further verification.

On merits also, the Tribunal held that after the amendment to section 36(1)(vii), it is sufficient if the debt is written off as irrecoverable in the assessee's books, and the Revenue cannot insist upon proof of actual irrecoverability. The Tribunal further held that the Principal Commissioner's insistence on examining the identity, genuineness and creditworthiness of debtors, or whether the amount was shown as income in the debtor's books, was irrelevant to the statutory test governing bad debt deduction. [Paras 18]

The order under section 263 on the bad debts issue was set aside and the assessment order allowing the claim was restored.

Buy-back tax compliance - The revision on the allegation of non-payment of tax on buy-back of shares - HELD THAT: - The Tribunal noted that the assessee had produced before the Principal Commissioner complete details and challans evidencing payment of tax on the buy-back transaction. It held that once tax had been duly discharged, no further demand could be raised in the company's hands on that basis. The Principal Commissioner ought to have considered the material already produced instead of remitting the matter for verification, especially when the Revenue had not disputed the genuineness of the challans and even before the Tribunal the departmental representative fairly accepted that the tax had been paid. [Paras 19]

The order under section 263 on the buy-back tax issue was set aside.

Ind AS 116 lease adjustments - Allowability under the Act independent of accounting standards - HELD THAT: - The Tribunal held that although the Assessing Officer had generally observed compliance with ICDS, he had not specifically verified the allowability of the claim for amortization charges under Ind AS 116, and therefore the Principal Commissioner was justified in invoking section 263 on this aspect. At the same time, the Tribunal clarified that deductibility under the Act must be tested independently of accounting standards: lease rentals, if revenue in nature, may be allowable under the Act, and if the right-of-use asset qualifies as a depreciable asset, depreciation would be governed by the statutory provisions. The Tribunal also noted that no finding had been recorded to show either double deduction or any violation of a specific provision of the Act. For that reason, the matter was remitted for fresh adjudication applying these principles. [Paras 20]

The order under section 263 on this issue was sustained in part and modified by directing fresh examination by the Assessing Officer in accordance with the legal principles stated by the Tribunal.

Final Conclusion: The Tribunal partly allowed the assessee's appeal. The revisional order was set aside on the issues of bad debts and buy-back tax, while on the issues relating to reversal of provision for onerous contract and Ind AS 116 amortization the matter was directed to be re-examined by the Assessing Officer in terms of the principles laid down by the Tribunal.

Addition of profit element on alleged unaccounted sales and agency-based transactions - basis of loose sheets found from the premises which are not known/owned by the appellant -Evidentiary value of seized material - Retraction of search statements - Characterisation of unaccounted transactions - Estimation of profit on undisclosed turnover - Facilitation-based commission transactions

Evidentiary value of seized material - Retraction of search statements - seized loose papers, Rojmel, MITI, FAS and related digital records treated - HELD THAT: - The Tribunal found that the Assessing Officer had undertaken detailed correlation of the seized records with each other and, in the case of Ambica Ashish Trade Link LLP, had reconstructed the account in AATL software to identify unaccounted sales, purchases, investments, withdrawals and expenses. No specific defect or inconsistency in that analysis was shown by the assessees. Mere incompleteness of the material did not render it evidenceless.

Merely because the assessee had submitted affidavit of the employees retracting their statements given during the course of search, this does not obliterate the evidentiary value of the seized documents. No alternative explanation of the seized documents was given while retracting the statements - The retractions were also held ineffective since no alternative explanation of the seized entries was furnished, and the appellate findings accepting the evidentiary value of the seized material and rejecting the retraction-based challenge were affirmed. [Paras 7, 8, 9, 24]

The challenge to the additions on the ground that the seized records were dumb documents, and the challenge founded on retraction of statements, failed.

Characterisation of unaccounted transactions - Facilitation-based commission transactions - entries reflected direct transfers between customers and manufacturers or because no stock discrepancy was found - HELD THAT: - The Tribunal accepted that the seized material showed the existence of facilitation-based transactions in some instances and noted that the Assessing Officer had also recognized such transactions on the basis of details furnished by the assessee. At the same time, the assessee could not establish by independent and verifiable evidence that every entry in the Rojmel was only a pass-through facilitation entry. The Tribunal also accepted the Revenue's contention that transactions reflected through invoices containing "discount" and "special discount" represented the assessee's own unaccounted sales and not mere facilitation transactions. Absence of stock discrepancy was held not conclusive, since in the business model identified by the Department, part of the sale proceeds was received in cash through such discounts and that circumstance by itself did not negate own sales. [Paras 11, 12, 13]

The plea that all under-reported cash sales of Ambica Ashish Trade Link LLP were only facilitation transactions was rejected.

Estimation of profit on undisclosed turnover - Facilitation-based commission transactions - HELD THAT: - The Tribunal held that although only the real income embedded in the unaccounted transactions was taxable, estimation could not rest on pure guesswork. The Assessing Officer had given no basis for applying 20% to the assessee's own unaccounted sales and 8% to facilitation-based transactions. The Commissioner (Appeals) was right in rejecting those estimates and in looking to disclosed margins and comparable trade data, but the rates of 5% and 2% were still found excessive. Considering that the assessee's average disclosed net profit was 1.70%, that unaccounted transactions would normally yield a higher margin, and that facilitation transactions involved lesser effort and risk because the assessee functioned as an intermediary earning commission, the Tribunal held that a fair estimate would be 4% on undisclosed own transactions and 1.5% on undisclosed facilitation-based transactions. [Paras 13, 14, 15, 16, 18]

Estimation of profit on undisclosed cash sales transactions - HELD THAT: - The Tribunal held that the objections as to dumb documents, retraction, rejection of books and estimation of turnover had already been correctly dealt with against the assessees. On profit estimation, however, it found that the appropriate guide was the weighted average of the disclosed net profit of Ambica Trading Co. and Bahucharkrupa Trading Co., since the MITI account contained common unaccounted cash receipts and payments of both concerns and entity-wise segregation was not feasible. With the average disclosed profits noted at 2.83% and 1.67% respectively, the weighted average worked out to 2.25%, and the 5% rate sustained by the Commissioner (Appeals) was considered excessive. Following the approach adopted in the lead case, the Tribunal reduced the rate to 4% for both concerns. [Paras 24, 25, 26, 27]

For Ambica Trading Co. and Bahucharkrupa Trading Co., income from unaccounted cash sales was directed to be worked out by applying a net profit rate of 4% for all the years under appeal.

Final Conclusion: The Tribunal upheld the evidentiary value of the seized records and rejected the assessees' attempt to treat all transactions as mere facilitation entries. It, however, moderated the profit estimation, directing application of 4% on undisclosed own transactions and unaccounted cash sales, and 1.5% on facilitation-based transactions in the case of Ambica Ashish Trade Link LLP. All appeals of the assessees were partly allowed and all Revenue appeals were dismissed.

Unexplained cash credit - Cash deposits made during the demonetisation period - Burden of proving nature and source of money - Test of human probabilities

HELD THAT: - The Tribunal held that the statutory burden to explain the nature and source of the cash deposits lay on the assessee, and that burden was not discharged by a bare oral assertion that the money represented earlier withdrawals kept in hand for an intended property purchase. No documentary material showing any proposed transaction in immovable property was produced, nor was there any evidence of any agreement, advance, cancellation, or lender confirmation linking the borrowings to such purpose.

Tribunal further found the conduct alleged by the assessee to be contrary to normal commercial behaviour, since repeated borrowings and cash withdrawals over several months, followed by retention of the cash and redeposit of the entire amount during demonetisation, did not satisfy the test of human probabilities. It also accepted the view that an explanation resting on a purported large cash property transaction was legally untenable. On this reasoning, the cash deposits were not satisfactorily explained and were assessable under section 68. [Paras 8]

Final Conclusion: The Tribunal upheld the treatment of the cash deposits as unexplained cash credits u/s 68, finding the assessee's explanation unsupported by evidence and contrary to human probabilities. The appeal was dismissed.

Exemption u/s 11(1)(d) - Corpus donation receipts -Donor's specific direction - Exemption of voluntary contributions - absence of any enabling clause in the Trust Deed that allows the Trust to collect corpus donations - principle of consistency - shortfall in application of income

Corpus donations - Donor's specific direction - absence of any enabling clause in the Trust Deed - HELD THAT: - The Tribunal held that under section 11(1)(d), the determinative factor is the specific direction of the donor and not the presence or absence of a clause in the trust deed authorising receipt of corpus donations. Since the donor letters on record clearly stated that the contributions were towards corpus, and the AO had neither disputed the genuineness of the donations nor produced material to show misuse contrary to the objects of the trust, the donations retained their corpus character.

AO's approach of denying exemption solely because of silence in the trust deed was held to be contrary to the settled legal position. The Tribunal also noted that, in subsequent years, similar corpus donations had been accepted by the Revenue as exempt and, in the absence of any change in facts or law, a contrary stand for the year in question was not justified. [Paras 14, 15, 17]

The deletion of the addition relating to corpus donations was upheld.

Application of income - Accumulation of income - Form No. 9A - The addition made on account of alleged shortfall in application of income was unsustainable once corpus donations were excluded from income, and the assessee was in any event entitled to the benefit of accumulation on filing Form No. 9A before completion of assessment. - HELD THAT: - The Tribunal held that, once corpus donations were excluded from the ambit of income, the very basis for computing any shortfall in application disappeared. It further accepted the assessee's contention that Form No. 9A had been filed during the assessment proceedings before completion of the reassessment, and therefore the statutory requirement for claiming accumulation stood complied with. On that reasoning, the benefit of accumulation could not be denied on a technical objection. [Paras 16]

The addition for alleged shortfall in application of income was held to be untenable.

Final Conclusion: The Tribunal upheld the appellate order and dismissed the Revenue's appeal. It held that the corpus donations were exempt on the basis of the donors' specific direction and that the consequential addition for shortfall in application of income could not survive.

Addition u/s 68 - unsecured loans taken by the appellant from 11 companies were not genuine - Identity, creditworthiness and genuineness not proved - Addition in first year of business

HELD THAT:- The Tribunal found that the assessee had produced confirmations, income-tax returns, bank statements, MCA data, 26AS and audited financial statements of all the lenders, and the genuineness of these documents was not shown to be false or fabricated. The loans had moved through banking channels, interest was credited and tax was deducted at source, while the lenders' financial statements disclosed sufficient net worth to support their creditworthiness.

AO had made no independent enquiry from the lenders under sections 133(6) or 131 and had merely doubted the transactions on general allegations regarding bank entries and low returned income. The Tribunal held that the end-use of the borrowed funds for a proposed property transaction could not by itself justify rejection of the loans as non-genuine.

Assessee being in its first year of operations and having no revenue till the close of the financial year, the conclusion that the loans represented its own unaccounted money was not sustainable. On that reasoning, the addition under section 68 failed, and the disallowance of interest, being consequential, also could not survive. [Paras 6, 7, 8, 9, 10]

Final Conclusion: The Tribunal allowed the appeal and held that the unsecured loans could not be treated as unexplained cash credits on the material brought on record. The consequential disallowance of interest was also deleted.

Disallowing the claim of exemption u/s 11 - not filing requisite Form No. 10B as per the Act - assessee filed Form No. 10BB whereas it was required to file Form No. 10B

HELD THAT: - The Tribunal held that, under the amended requirement applicable to AY 2023-24, the assessee was required to furnish Form No. 10B for compliance with section 12A(1)(b). Though Form No. 10BB had been filed before processing of the return under section 143(1)(a), the prescribed form had still not been filed. The decisions cited on behalf of the assessee were found inapplicable because they concerned cases where the requisite form was ultimately filed after the due date and the lapse was treated as procedural, whereas in the present case Form No. 10B had not been filed at all. On that basis, the Tribunal upheld the disallowance of exemption and affirmed the view that the assessee had failed to satisfy the statutory condition for claiming exemption. [Paras 7]

The denial of exemption under section 11 was upheld and the assessee's appeal was dismissed.

Final Conclusion: The Tribunal held that for AY 2023-24 the assessee was required to file Form No. 10B and that filing Form No. 10BB did not satisfy the statutory requirement. Since Form No. 10B had not been filed, the disallowance of exemption under section 11 was sustained and the appeal was dismissed.

Denial of Reasonable opportunity of hearing - Ex-parte first appellate order - Non-consideration of material on record - requirement of a speaking order under section 250(6)

HELD THAT: - The Tribunal found that the notices issued in the first appellate proceedings granted only a short time for compliance and required both appellants to represent all their appeals on the same dates. Such opportunity was held to be merely formal and not real, reasonable or effective.

Tribunal further noted that material had been uploaded by the assessees through the e-portal, but the impugned orders were passed ex parte by reiterating the AO's view without considering that material. On this basis, the impugned orders were held to suffer from denial of natural justice and from non-compliance with the requirement of a speaking order u/s 250(6), warranting fresh adjudication. [Paras 8, 9, 10, 11, 12]

The impugned appellate orders were set aside and the matters were remanded to the Commissioner (Appeals) for de novo disposal in accordance with law after granting reasonable opportunity and passing a speaking order.

Final Conclusion: The Tribunal held that the appellate orders had been passed without affording a real and reasonable opportunity and without proper consideration of the material available on record. The orders were therefore set aside and all the appeals were remanded to the Commissioner (Appeals) for fresh decision by a speaking order.

Jurisdiction to issue reassessment notice - Pecuniary jurisdiction under CBDT Instruction - Jurisdiction of NFAC to complete reassessment - validity of proceedings for want of jurisdiction

Jurisdiction to issue reassessment notice - Pecuniary jurisdiction under CBDT Instruction - validity of proceedings for want of jurisdiction - assessee, being a corporate assessee in Kolkata, had returned income exceeding the monetary limit prescribed for an Income Tax Officer - HELD THAT: - The Tribunal held that, under CBDT Instruction No. 01/2011, jurisdiction over a corporate assessee in Kolkata having returned income above Rs. 30 lakhs vested in the AC/DC and not in the Income Tax Officer. Since the notice u/s148 was issued by the Income Tax Officer despite absence of such jurisdiction, the very foundation of reopening was invalid.

Tribunal treated the defect as going to the root of the matter and held that the subsequent reassessment proceedings were void ab initio. [Paras 12]

The notice u/s 148 and all consequential reassessment proceedings were held to be without jurisdiction and void ab initio.

Jurisdiction of NFAC to complete reassessment - Assessment under Income Escaping Assessment Scheme - HELD THAT: - The Tribunal accepted the assessee's legal objection that the statutory notification under section 151A bringing the scheme into force was issued on 29.03.2022, whereas the reassessment order had been passed earlier on 23.03.2022. On that basis, it held that NFAC lacked jurisdiction to pass the reassessment order on that date. The reassessment order was therefore treated as void ab initio. [Paras 12]

The reassessment order passed by NFAC was held to be without jurisdiction and void ab initio.

Final Conclusion: The Tribunal allowed the assessee's appeal and held that the reassessment proceedings were unsustainable on jurisdictional grounds. Both the notice issued by the Income Tax Officer and the reassessment order passed by NFAC were declared void ab initio.

Addition u/s 50C - sale of agricultural lands by virtue of separate sale deeds on the basis of ready reckoner value on which the Purchasers were required to make the payment of Stamp duty - short-terms capital gain on the sale of capital asset -Stamp duty valuation on date of agreement - Retrospective application of curative amendment - Date of agreement versus date of registration -HELD THAT: - The Tribunal found it undisputed that the assessee had sold all three groups of land under a single arrangement, that the entire consideration was received through cheques in December 2007 at the time of execution of the Memorandum of Understanding, and that the sale deeds were registered only subsequently.

On those facts, the valuation adopted by the stamp authority on the dates of registration could not be treated as the full value of consideration u/s 50C. The Tribunal also noted that the assessee had produced valuation material and stamp duty rate information relevant to December 2007, and held that the amendment to section 50C intended to address such hardship was curative and applicable retrospectively. Accordingly, the relevant stamp duty valuation was the valuation as on the date of the agreement to sell, when the consideration stood received through banking channels. [Paras 5, 6, 7, 8]

Final Conclusion: The Tribunal held that section 50C had to be applied with reference to the stamp duty valuation prevailing on the date of the agreement to sell, since the entire consideration had been received through banking channels on that date. The addition sustained under section 50C was therefore deleted.

Rectification of mistake apparent from record - Review not permissible u/s 254(2) - approval u/s. 151 of the Act which was received by the assessee electronically was not signed and therefore, it was violative of Section 282A(1)

HELD THAT: - The Tribunal held that its power under section 254(2) is confined to rectifying a mistake apparent from the record and does not extend to reviewing its own order, reappreciating facts, or reopening the matter through a fresh process of arguments and counter-arguments. On examining the miscellaneous application, the Tribunal found that no apparent mistake existed in the earlier order; the application merely challenged the correctness of the view already taken on the validity of the approval under section 151 and the consequent reassessment. Since such an exercise would amount to a review, it was beyond the scope of section 254(2). [Paras 3, 4]

The miscellaneous application was dismissed as devoid of merit, there being no apparent mistake in the Tribunal's earlier order.

Final Conclusion: The Tribunal held that section 254(2) permits only rectification of an apparent mistake and cannot be invoked to review an earlier decision on merits. As the Revenue's application sought reconsideration of the view already taken, it was dismissed.

Validity of reassessment for want of valid notice - Mandatory notice u/s 143(2) in reassessment - Limitation for issuance of jurisdictional notice - curable defect u/s 292BB

HELD THAT: - The Tribunal held that a return filed in response to notice under section 148 has, by virtue of the statutory scheme, to be treated as a return furnished under section 139 for the purpose of applying the assessment machinery. Consequently, where the Assessing Officer seeks to scrutinise such return and frame reassessment, issuance of notice under section 143(2) within the prescribed time is mandatory.

Section 148 merely enables calling for the return and does not itself provide the machinery for completing assessment without compliance with section 143(2). Since the only notice under section 143(2) on record was issued after the limitation period, the defect went to the root of jurisdiction. Participation by the assessee in the proceedings could not cure that defect, because section 292BB operates in relation to service of notice and not to complete absence of a valid notice within limitation. [Paras 17, 18, 19, 20, 21]

The reassessment was held void for want of valid assumption of jurisdiction, as notice under section 143(2) was not issued within time and the defect was not curable under section 292BB.

Final Conclusion: The Tribunal allowed the appeal and quashed the reassessment. It held that, after the return filed in response to notice under section 148, issuance of notice u/s 143(2) within limitation was mandatory, and the delayed notice could not be saved by section 292BB.

Reassessment proceedings u/s 147 - Reason to believe - Independent Application of mind or Borrowed satisfaction - reliance onrecorded reasons founded on investigation wing information - disallowance of LTCG on shares

HELD THAT: - The Tribunal found that the recorded reasons did not disclose the nature of the alleged transaction, the relevant scrip, or any concrete material showing escapement of income, and merely referred to the investigation wing report while asserting an independent belief. It further noted that the AO incorrectly recorded that no return had been filed for the assessment year, whereas the return and computation already contained particulars of the exempt long-term capital gain transaction.

Since the assessment record itself could have been examined and there was no indication of any independent inquiry or scrutiny of the assessee's claim before issuance of notice, the reopening was held to be based on mere reliance on investigation wing information without application of mind and therefore unsustainable in law. The reassessment was held to be invalid and was quashed.[Paras 5, 6, 7]

Final Conclusion: The Tribunal allowed the appeal on the jurisdictional ground and quashed the reassessment for AY: 2015-16, holding that the notice u/s 147/148 was founded on inadequate reasons and lack of independent application of mind.

Benami transaction - Cash as benami property - transfer of cash to entities controlled by the alleged benamidar - Re-transfer by benamidar - Converted form of property- definition of “benami transaction” as defined u/s. 2(9)(A) of the PBPT Act -Attachment of transformed business assets - PBPT Act in addition to Income-tax proceedings

Benami transaction - Cash as benami property - Re-transfer by benamidar - Cash handed over by the appellant, deposited by entities controlled by another person and then routed back to the appellant through banking channels - HELD THAT: - The Tribunal held that cash is property within the wide definition under the Act, and where such cash is provided by one person, held through another person's entities, and thereafter returned for the provider's benefit, both limbs of section 2(9)(A) stand satisfied. It found a clear transfer and temporary holding of the amount in the entities controlled by Atul Tyagi before its re-transfer to the appellant, thereby constituting those entities as benamidars and the appellant as beneficial owner. The Tribunal further held that the mere fact that the amount was later transferred back to the appellant after serving the intended purpose did not exonerate the parties, since re-transfer after such holding still attracted the PBPT Act. [Paras 23]

The Tribunal decided this controversy against the appellant and upheld the application of the PBPT Act to the routed cash transaction.

PBPT Act in addition to Income-tax proceedings - Filing of return not exonerative - Whether Disclosure of the amount in the income-tax return and payment of tax thereon bar or nullify proceedings under the PBPT Act? - HELD THAT: - The Tribunal held that the PBPT Act operates in addition to other laws and serves a distinct purpose from the Income-tax Act. Whereas income-tax proceedings are directed to collection of tax, proceedings under the PBPT Act are directed to prohibition and confiscation of benami property. It therefore rejected the contention that filing an income-tax return or paying tax on the amount could, by itself, relieve the appellant from the consequences of a benami transaction. [Paras 24]

The appellant's plea based on disclosure in the return and payment of tax was rejected.

Quantification of benami property - Set-off of tax paid - HELD THAT: - Having accepted that the impugned amount constituted benami property, the Tribunal nonetheless held that, since income tax had already been paid on the transformed amount, the benami property in the appellant's hands stood reduced to that extent. The quantification of the attachable property was therefore confined to the amount received from the benamidars, less the income tax already paid thereon. [Paras 25]

The Tribunal directed that the benami property be treated as reduced by the extent of tax paid on the impugned amount.

Converted form of property - Attachment of transformed business assets - whether Stock in the form of cut and polished diamonds and outstanding book debts treated as benami property where the benami amount had been used and transformed in the course of a running business? - HELD THAT: - The Tribunal held that in a running business, cash or bank balances are not static and are continually transformed into stock, receivables and other business forms. On that reasoning, once the benami amount had entered the business stream, its converted manifestations, including cut and polished diamonds and outstanding debts arising from supplies, remained attachable as benami property. The absence of the original cash balance, by itself, was therefore not a ground to deny attachment of the transformed assets. [Paras 26]

The attachment of the cut and polished diamonds and book debts was sustained as representing the converted form of the benami property.

Partial release of attachment - HELD THAT: - As a consequence of its finding that the benami property stood reduced by the tax already paid, the Tribunal held that the attachment had to be correspondingly released to that limited extent. For the remaining amount, the attachment was directed to continue, with liberty to the appellant to indicate preference regarding the property to be released. [Paras 27]

The Tribunal ordered partial release of the attachment limited to the extent of tax paid, and maintained attachment over the balance.

Final Conclusion: The appeal was dismissed, but the impugned order was modified to direct release of the attached property to the extent of the income tax paid on the routed amount. Subject to that reduction, the attachment of the transformed business assets and receivables was sustained under the PBPT Act.

Classification of Imported Goods - Engine stands - classifiable under CTI 8716 39 00 Or under CTI 7310 29 10 - Exemption from IGST on imports under lease agreement - claim to IGST exemption under Sr. No. 557B of Notification No. 50/2017 dated 30.06.2017 - demand of differential duty (including IGST) with interest under section 28AA of the Customs Act, 1962.

Exemption from IGST on imports under lease agreement - Reconsideration on relevant import documents - HELD THAT: - The Tribunal found that the show cause notice itself proceeded on the basis that the imports had been made under a lease through the 22 Bills of Entry. Though the lease agreements had not been placed on record, the bonds executed by the appellant formed part of the record. In these circumstances, the Principal Commissioner could not rest the denial solely on absence of documents without re-examining the matter in the light of the recital in the show cause notice and the documents already available, along with any further material that the appellant may produce. [Paras 6, 7, 8, 9]

The issue of IGST exemption under Sr. No. 557B was remitted to the Principal Commissioner for fresh decision after giving the appellant an opportunity to place the relevant lease agreements and other supporting material on record.

Classification of engine stands - Consistency with tribunal precedent - HELD THAT:- The Tribunal noted that, in Interglobe Aviation Ltd. Vs. Commissioner of Customs, New Delhi [2025 (2) TMI 380 - CESTAT NEW DELHI], engine stands had been held classifiable under CTI 8609 00 00 and not under CTI 8716 39 00. Since the exemption issue was being remitted for fresh examination, the connected classification issue was also directed to be examined afresh by the Principal Commissioner in the light of that decision. [Paras 5, 8, 9]

The classification issue was remitted to the Principal Commissioner for fresh consideration in the light of the Tribunal decision referred to by the Bench.

Final Conclusion: The Tribunal did not finally decide either the exemption claim or the tariff classification on merits. It remitted both issues to the Principal Commissioner for fresh consideration after giving the appellant an opportunity to produce the relevant lease documents and in the light of the Tribunal's earlier decision on classification.

Veracity of Smuggling of foreign origin gold - Retracted confession - Admissibility of Statements under Section 108 - denial of cross-examination - Principles of natural justice - Preponderance of probabilities​​​​​​​ - Preventive detention - Reasonable belief - Mens rea - Corroboration of co-accused statements - penalties on carriers, facilitators and associated persons, on the basis of statements, call records, travel data and other surrounding circumstances - seizure and confiscation - interception of the passenger and based on his confession, on the same day, the investigating officers confiscated 13 kgs. of gold from two ferry buses which were used to ferry the passengers from the aircraft to the airport.

The Revenue has presented a detailed analysis and has argued that not only 13 kgs of gold that has been confiscated has been smuggled but on various previous occasions, the smuggling of gold has taken place which is evident from the statements, travel documents, seizure of cash etc. On the other hand, the learned counsels representing various appellants have put forth their arguments mainly alleging that the statements were drawn under threat and coercion and that there was no other evidence other than the statements and some of them have requested for cross-examination, which has been rejected.

Penalty confined to proved smuggling - Proof of quantum - HELD THAT: - The Tribunal held that, though the investigation alleged organised smuggling on earlier occasions, the adjudicatory basis in the present matter was the seizure and confiscation of 13 kgs. of gold on 24.05.2015. In the absence of acceptable proof connecting the appellants to the wider alleged quantity, penalty had to be examined only with reference to the proved seizure. Consequently, wherever liability was otherwise established, the penalties were scaled down by treating the confiscated 13 kgs. as the permissible basis, and not the unproved larger quantity alleged by the department. [Paras 16, 18, 19, 23, 25]

The Tribunal limited penal consequences to the proved confiscation of 13 kgs. of gold and reduced several penalties which had been imposed on the basis of the larger unestablished allegation.

Cross-examination in adjudication - Statements under Section 108 - Retraction of confession - HELD THAT: - - Out of these 33 appellants, one of the appellant Shinoy K. Mohandas who was the Duty Manager of BWFS during the relevant period and all the co-accused in the gold smuggling were employees of BWFS and the statements of various employees when corroborated with the statement of Shinoy K. Mohandas, it emerges as to how the employees were used to facilitate the gold smuggling. We find that in his statement dated 13.06.2015, he had specifically stated that P.A. Noushad (no appeal has been filed) was known to him very well, who introduced him to Baburaj Scaria (no appeal has been filed) and also stated that they used to communicate to each other and based on their directions, gold was collected from the passengers and transported to the persons concerned outside the airport. The mobile numbers have been specifically mentioned and there is no retraction, as such, on these Call Data Records. The retraction statement dated 30.07.2015 filed by the appellant only submits that he was being harassed and beaten by the Custom Officers and hence, out of coercion, the statements were given. But it is also on record that after retraction statements were given admitting the offence which were not retracted.

The Tribunal rejected the contention founded on Section 138B, holding that the provision applies in the context of offences and prosecutions and not as a general mandate for cross-examination in adjudication. It further held that cross-examination is not an absolute right in quasi-judicial customs proceedings and becomes material only where reliance is placed solely on an untested statement without corroboration.

In the present case, many statements were not retracted, several retractions were treated as belated afterthoughts since no complaint of coercion had been made when the persons were medically examined and produced before the Magistrate, and the record contained other materials such as call records, travel details, recoveries and connected circumstances. The Tribunal also noted that some persons were unavailable and one principal carrier had died, so permitting cross-examination after a decade would only delay the proceedings without serving any useful purpose. [Paras 11, 12, 13]

The challenge based on denial of cross-examination and alleged inadmissibility of statements was rejected, subject to the Tribunal separately excluding cases where there was no corroborative evidence.

Corroboration of co-accused statements - Independent corroborative evidence - Confiscation of conveyance - HELD THAT: - The Tribunal upheld the liability of those appellants against whom the record contained more than bare allegations, such as their own statements, unretracted inculpatory statements of co-noticees, call data records, travel patterns, recoveries, money trails, use of vehicles for transport, and other surrounding evidence. It also took note that in several instances the materials forming the basis of preventive detention had already withstood scrutiny before the High Court under the COFEPOSA Act, and that those principal persons who had implicated the appellants had not challenged the order. On that basis, the Tribunal sustained, with reduction in quantum, the penalties imposed on Shinoy K. Mohandas, Yasir Ibnu Muhammed, Sreevalsan C.K., Jeevan Nair, Arun Balakrishnan, Akhil Kumar K.M., Rimshad A., Rabins, Abins, Riyas, Ajins, P.K. Prasannan, Sharath M.V., Chandra Kumar M., Baburaj K. Hassan, P.A. Abdul Latheef, Ismail and Nibin K. Basheer; and it upheld the confiscation of vehicles where their nexus with the smuggling activity stood established, while giving limited relief where sale proceeds or other seized items were not proved to be connected with smuggled goods. [Paras 21, 23, 24, 25, 26]

The findings of involvement were sustained against the above appellants, but the penalties were reduced substantially and certain confiscations were confined to assets shown to have a proven nexus with the smuggling activity.

The Tribunal held that mere implication in statements, without reliable supporting evidence, was insufficient to sustain penalty. Applying that principle, it set aside penalty on persons against whom no statement had been recorded and whose role was not independently proved, or where the statements relied on lacked corroboration. It also held that the burden to establish that gold jewellery, cash or vehicles represented smuggled goods or sale proceeds lay on the department, and that burden had not been discharged in certain cases. On this reasoning, relief was granted to Shefil A.B., Nasheed Ameen, Aslam Mytheen, Ashiq Tutu alias Ashik Ali N.A., Ameer Mamikutty, Muhammed Saleem Konikkuzhiyil, Mujeeb Rehman Konikkuzhiyil, Hamza Valappil, Shinuraj T., Aneer Ashraf Nagarambil, Vipin MD, Shamal T.K., Rafeek MM, Jithin N.C. and Jithin P.R.; and confiscation of the jewellery and vehicle in Ameer Mamikutty's case, as well as certain amounts or articles in other cases, was set aside for want of proof of nexus. [Paras 16, 17, 19, 20, 22]

Where corroboration or nexus was lacking, the Tribunal annulled the penalties and set aside the related confiscations.

Final Conclusion: The Tribunal upheld the confiscation of the 13 kgs. of gold and sustained the case only to the extent supported by proved material. Several penalties were reduced substantially, some confiscations were partly upheld, and penalties or confiscations resting only on uncorroborated statements or unproved nexus were set aside.

Validity of Penalty under section 112(a)(ii) against the customs broker - First Check Assessment - Abetment of misdeclaration - Customs broker liability for informing the department about the pendency of an earlier show cause notice when the broker had sought first check examination.

Penalty under section 112(a)(ii) - First check assessment - Customs broker liability - HELD THAT: - The Tribunal held that non-disclosure by the customs broker of the pendency of an earlier show cause notice could not, by itself, justify penalty, since there was no legal obligation on the broker to intimate the department of a notice issued by the department itself. It further held that, once the broker requested first check and the department undertook full examination and accepted the classification declared in the Bill of Entry, the broker could not be said to have done or omitted any act, or abetted any act or omission, rendering the goods liable to confiscation under section 111. The Tribunal applied the same principle stated in Devraj M. Salian and Commissioner of Customs & Central Excise, Noida versus Prakash Freight Movers Ltd. [2015 (1) TMI 752 - CESTAT MUMBAI], namely that a customs broker who himself seeks first check cannot ordinarily be treated as having facilitated misdeclaration or evasion. [Paras 13, 15, 16, 17, 19]

The penalty imposed on the appellant under section 112(a)(ii) was set aside.

Final Conclusion: The Tribunal held that the customs broker was not liable to penalty merely for not informing the department about the pendency of an earlier show cause notice, particularly when first check had been sought by the broker and the classification was verified and accepted by the departmental officer. The impugned order, insofar as it imposed penalty on the appellant, was therefore set aside and the appeal was allowed.

Smuggling of Peas - unauthorized routes in violation to the provisions of Notification No. 63/94(N.T.) dated 21.11.1994 under Section 7(1)(c) of the Customs Act, 1962 -Evidentiary value of statements under Section 108 - Confiscation of smuggled goods - Mens rea - Imposition of penalty under Section 112(b).

Evidentiary value of statements under Section 108 - Confiscation of smuggled goods - HELD THAT: - The Tribunal held that the confiscation could be sustained on the basis of the statements recorded under Section 108, since the appellant and the vehicle drivers had admitted that the peas were brought from Nepal through unauthorised routes and those statements were never retracted or discredited. The appellant's subsequent stand was found inconsistent, as he alternately claimed lawful import documents and purchase from local farmers. The particulars later furnished regarding alleged local purchases did not match the seized quantity and were unsupported by purchase or payment documents. In these circumstances, the finding that the goods were illegally imported and liable to confiscation was upheld. [Paras 4]

The order upholding confiscation of the seized peas was affirmed.

Imposition of penalty under Section 112(b) - HELD THAT: - The Tribunal held that penalty under Section 112(b) required a finding showing the appellant's mens rea. While the material on record was sufficient to sustain confiscation, neither the original authority nor the appellate authority had recorded any finding establishing the requisite guilty knowledge or intention on the appellant's part. The mere fact that confiscation was upheld did not by itself justify imposition of penalty under that provision. [Paras 4]

The penalty imposed on the appellant under Section 112(b) was set aside.

Final Conclusion: The appeal was partly allowed. The confiscation of the seized peas was upheld, but the penalty imposed on the appellant under Section 112(b) was set aside for want of a finding establishing mens rea.

Entitlement to revive the first option at a later stage or dislodge the sale already made - Buy-out of shares - Waiver of first purchase option - Belated challenge to share valuation - fair valuation determined by the independent auditor - First Option to Purchase Shares - Oppression and Mismanagement.

Buy-out of shares - First purchase option - Waiver - HELD THAT: - The Appellate Tribunal held that the order directing valuation and granting the appellant the first opportunity to purchase was self-operative. Once the fair value reports were available, it was for the appellant to exercise that option by expressing willingness to buy at the valuation. The order did not contemplate a further formal offer by the Tribunal or by the valuers. Since the appellant did not accept the higher valuation of Rs. 1,941 per share and instead sought averaging of the two reports, the appellant failed to avail the first option. In that situation, the consequence contemplated by the earlier order necessarily followed, namely, that the respondents became entitled to purchase the appellant's shares at the accepted fair value. [Paras 37, 38, 43, 45, 46]

The Tribunal upheld the finding that the appellant had failed to exercise the first option to purchase and that the respondents were consequently entitled to buy the shares.

Belated challenge to valuation - Acquiescence - Finality of prior directions - HELD THAT: - The Appellate Tribunal held that the appellant's subsequent attempt to question the valuation and later express readiness to purchase at the higher rate was untenable. The appellant had earlier opposed the higher valuation as unrealistic and had sought an average of the two reports, showing that the challenge was directed to valuation rather than a contemporaneous willingness to purchase. Once the appellant did not exercise the option when it was available, the respondents' rights stood crystallised, and the appellant could not revive a waived right after the impugned arrangement had already been acted upon. Relying on Namtech Consultants Pvt. Ltd. & Anr. v. GE Thermometrics India Pvt. Ltd. & Ors. [2007 (11) TMI 674 - KARNATAKA HIGH COURT], the Tribunal further observed that in such disputes one group must exit, and the higher value accepted in the interest of the company could not be reopened at the appellant's convenience. [Paras 49, 50, 51, 52, 53]

The challenge to the valuation and the belated offer to purchase were rejected, and the sale effected in favour of the respondents on the basis of the higher valuation was sustained.

Final Conclusion: The Appellate Tribunal found no procedural or legal infirmity in the impugned order permitting the respondents to purchase the shares at the higher valuation after the appellant failed to exercise the first option. The appeal was dismissed and the connected applications stood closed.

Maintainability of subsequent application of liquidator's reporting completion of sale of the corporate debtor as a going concern and seeking 41 reliefs and concessions - earlier withdrawn application for similar reliefs - Constructive res judicata - Commercial Terms of Auction Sale - seek reliefs and concessions beyond the express terms of the e-auction notice and process document - As is where is sale - Caveat emptor.

Constructive res judicata - Withdrawal without liberty - HELD THAT: - The Appellate Tribunal held that the earlier application filed by the successful bidder for similar reliefs had been dismissed as withdrawn simpliciter, without any liberty to revive or re-agitate the same claim. That order had attained finality and operated as a procedural bar. The Liquidator could not, through a fresh application, advance the bidder's cause or secure indirectly what the bidder had failed to obtain directly. On that reasoning, the subsequent application was barred by constructive res judicata and was not maintainable. [Paras 10, 11, 12, 15, 17]

The rejection of the Liquidator's application was upheld as the claim for similar reliefs stood barred after the bidder's earlier withdrawal without liberty.

As is where is sale - Caveat emptor - Auction purchaser bound by sale terms - The successful bidder was bound by the auction terms providing for sale on an "as is where is", "as is what is", "whatever there is" and "without recourse" basis, and was not entitled to post-sale clarifications, concessions or a declaration of completion of sale beyond those terms. - HELD THAT: - The Appellate Tribunal held that participation in the auction carried a presumption of knowledge and acceptance of the sale conditions, and the bidder remained bound by them after being declared successful. Relying on KC Ninaan Vs Kerala State Electricity Board & Others [2023 (5) TMI 1251 - SUPREME COURT] the Tribunal accepted that an as is where is sale places the burden of due diligence on the purchaser and does not permit shifting of pre-existing risks or liabilities to the seller through later applications. It further agreed that grant of the wide-ranging concessions sought could adversely affect pending applications challenging the auction itself; therefore, completion of sale could not be declared at that stage. [Paras 13, 14, 15, 16, 17]

The bidder was held bound by the auction conditions, and the refusal to grant post-sale concessions or declare completion of sale while auction challenges remained pending was affirmed.

Final Conclusion: The Appellate Tribunal dismissed the appeal and affirmed the order rejecting the Liquidator's application. It held that the reliefs sought were barred by the finality of the bidder's earlier withdrawal and were in any event inconsistent with the auction having been accepted on an "as is where is" and "without recourse" basis, especially when challenges to the auction were still pending.

Corporate Insolvency Resolution Process - Commercial Wisdom of the Committee of Creditors - Prospective resolution applicant - Consortium in resolution process - Regulation 39(1B)(b) -expression "person" in Section 3(23) -Interpretation of Definition Clause - violation of Regulation 36 (B) (6) of IBBI (CIRP) Regulations, 2016.

Consortium in resolution process - Regulation 39(1B)(b) - Prospective resolution applicant - Commercial wisdom of CoC - HELD THAT: - The Appellate Tribunal held that Regulation 39(1B)(b) bars consideration of a resolution plan received from a person who does not appear in the final list of prospective resolution applicants, but the Code's definition of person does not include a consortium or an individual member of a consortium. Hence, addition of a member to an already shortlisted consortium did not amount to receipt of a plan from a new person, particularly when the plan had not been shown to be a new or belated plan. The Tribunal further held that such addition, which could improve the financial viability of the consortium and potentially yield better value for the corporate debtor, did not prejudice any legal right of the appellant. It also noticed that neither the lead member nor other consortium members had objected to the induction of the fourth member, and there was no case that the inducted member was ineligible under Section 29A. Since the evaluation and negotiation of resolution plans fall within the exclusive domain of the CoC, and no statutory prohibition against such induction was established, the challenge failed. The decision in Jindal Power Limited Vs. Dhiren Shantilal Shah and Another [2024 (1) TMI 403 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] was held inapplicable on the facts. [Paras 8, 9, 10, 12, 13]

The challenge to consideration of the consortium's plan on the ground of subsequent induction of a fourth member was rejected, and the impugned order was upheld.

Final Conclusion: The Appellate Tribunal held that no legal bar was shown against induction of an additional member into the existing consortium of a prospective resolution applicant, and that the matter of evaluation of plans remained within the commercial domain of the CoC. The appeal was therefore dismissed.

Transaction Value - determination of full export value under FEMA - evasion of customs export duty by suppressing the real transaction value of the goods exported - Repatriation of foreign exchange - Commission paid by an overseas buyer to an overseas agent - Hearsay evidence - RBI Master Circular - Conclusive effect of settlement order - extraterritorial nature of the commission payment - Noticee Company evading custom export duty in their export of iron ore by undervaluing iron ore exported from different ports.

Whether Section 127J of Customs Act prohibits reopening of proceedings under FEMA on the same facts and circumstances as the Settlement Order? - HELD THAT:- The Tribunal held that FEMA is a self-contained code for imposition of penalty on the basis of material gathered in investigation under that enactment. It therefore concluded that the enforcement authority was not precluded by Section 127J of the Customs Act from proceeding under FEMA, so long as the action was founded on independent evidence and not merely on the settlement order under the Customs Act. [Paras 7]

The objection founded on Section 127J of the Customs Act was rejected.

Hearsay evidence - Personal knowledge - Selective reliance on statements - Whether selective reliance can be placed on statements of Mr. Saglani while disregarding statements of Mr. Arjun Salgaocar?​​​​​​​ -HELD THAT: - The Tribunal found that the export transactions had taken place before Mukesh Saglani's appointment as director. In the absence of any authentic source showing how he acquired knowledge of those earlier transactions, the relevant part of his statement was treated as hearsay and contrary to the company's records. On that footing, selective reliance on his statement, while no comparable factual foundation was obtained from the person admittedly connected with the relevant period, was held unsustainable. [Paras 5, 11]

The evidentiary foundation of the impugned order, insofar as it rested on Mukesh Saglani's statement, was discarded.

Overseas commission - Full export value of goods - Exporter's liability - HELD THAT: - The Tribunal recorded that it was an admitted position that the commission was paid by the foreign importer to the overseas agent and not by the appellants. It further found no material to show that the agent had been engaged by the exporter for certification or that any analysis charges had been claimed in the GR-I form or final invoice. On the contractual material, the Tribunal inferred that the payment was at the buyer's expense. Since the appellants neither paid nor were shown to be liable to pay the commission, the amount could not be brought into the export value on the facts found. [Paras 4, 6, 8]

The alleged commission amount was held not includible in the appellants' export value.

Repatriation of foreign exchange - Foreign exchange due or accrued - No loss of foreign exchange - HELD THAT: - The Tribunal held that even assuming the commission had not been disclosed in the export invoice, the question of its realisation by the exporter did not arise because the amount was payable to the foreign-based commission agent, whether directly by the exporter or through the foreign importer. The invoice value of the exported goods had been realised in India, and there was no case that the disputed amount ever became due or payable to the appellants. The determinative principle applied was that only foreign exchange due or accrued to the resident exporter can attract the obligation of realisation and repatriation; an amount belonging to the overseas agent does not answer that description. On that basis, the Tribunal also held that no loss of foreign exchange had been caused. [Paras 8, 12, 13]

No contravention of Sections 7 and 8 of FEMA was made out on the commission amount.

RBI Master Circular - Agency commission - HELD THAT: - The Tribunal accepted the appellants' contention that the circular regulates cases where commission is paid by the exporter, either by remittance or by deduction from invoice value. Since the factual foundation found by the Tribunal was that the appellants had not made any such payment, the requirement of compliance with the conditions in the circular did not arise in the present case. [Paras 9]

Non-compliance with the Master Circular could not be used against the appellants.

Export regulations - Full export value of goods - HELD THAT: - The Tribunal held that the same reasoning which excluded the commission amount from the appellants' export value under FEMA also answered the alleged breach of the Export Regulations. As the amount in question was neither part of the export value nor an amount expected to be received by the appellants on sale of goods, there was no failure to declare, realise or secure payment of export proceeds within the meaning of those regulations. [Paras 10]

The alleged contraventions of Regulations 3, 9 and 13 were decided in favour of the appellants.

Extraterritorial application - Transactions between non-residents - HELD THAT: - The Tribunal accepted the appellants' contention that there was nothing on record to show their involvement in any indirect payment of commission. Proceeding on that factual conclusion, it held that neither the appellants nor any other person could be made liable on account of the impugned transaction between the two non-resident parties. [Paras 12]

The invocation of FEMA against the appellants in relation to the overseas commission payment was held unsustainable.

Final Conclusion: The Tribunal held that, although proceedings under FEMA were not barred by Section 127J of the Customs Act, the impugned commission paid by the overseas buyer to the overseas agent was neither part of the appellants' realisable export value nor foreign exchange due to them. The statements relied upon by the adjudicating authority having been found hearsay and the substantive FEMA and regulatory contraventions having failed, the penalties were set aside and the appeals were allowed.

Funds remitted by the non-resident investor to the company - Repatriation basis of investment - Applicability of FDI scheme under Regulation 5(1) - Non-reporting of foreign investment - Failure to allot shares or refund within stipulated period - Penalty for civil contravention without mens rea - Liability of person in charge - Violation of the principles of natural justice - denial of cross-examination.

Whether the transfer of Funds by the individual Appellant to the Appellant Company was on repatriation basis or not -HELD THAT: - The Tribunal held that the appellants' plea of non-repatriation basis was contradicted by the record. The admitted position was that no shares were ever issued, and part of the amount received was thereafter remitted back to the individual appellant. In the absence of any allotment, the transaction could not be treated as one falling under the scheme governing purchase of shares on non-repatriation basis. The treatment of the amount in the company's balance sheet as long-term borrowing, followed by subsequent change in description after commencement of investigation, and the admitted repatriation from the funds received, justified the conclusion that the investment was on repatriation basis and attracted Regulation 5(1). [Paras 11]

The Tribunal affirmed the finding that the transaction was covered by Regulation 5(1) and rejected the appellants' reliance on Regulation 5(3)(ii) read with Schedule 4.

Non-reporting of foreign investment - Failure to allot shares or refund within 180 days - Quantifiable contravention - HELD THAT: - Once Regulation 5(1) was found applicable, compliance with the reporting and post-receipt conditions under Schedule I became mandatory. The Tribunal recorded that no intimation of receipt of funds was made to RBI as required. It further accepted the adjudicating authority's approach in adhering to the amounts stated in the show cause notice, since the appellants had not produced clear evidence to establish that larger remittances constituted refund of the share application money in the manner contemplated by the Regulations. The Tribunal also held that, irrespective of dispute over exact break-up between the amount retained and the amount repatriated, the contravention under paragraph 8 had in any event occurred because shares were not issued and the funds were not dealt with in conformity with the prescribed requirements. [Paras 12, 13]

The findings of contravention for non-reporting and for failure to issue shares or refund the amount within the stipulated period were upheld.

Liability of person in charge - Section 42 liability - The individual appellant, being the Managing Director and person in charge of the company, was liable for penalty under Section 42. - HELD THAT: - The Tribunal found that the individual appellant was directly connected with the transactions in question. The funds were remitted by him to the company, amounts were repatriated to his account, and the company's financial filings bore his signature along with that of another director. On these facts, and in the absence of proof that the contraventions occurred without his knowledge or despite due diligence on his part, the statutory conditions to avoid liability under Section 42 were not satisfied. [Paras 14]

The penalty liability of the individual appellant under Section 42 was sustained.

Penalty for civil contravention without mens rea - Inapplicability of Hindustan Steel principle - Absence of intention or bona fide belief did not bar imposition of penalty under Section 13(1) of FEMA. - HELD THAT: - The Tribunal held that Section 13(1) creates liability for civil contravention and does not incorporate any requirement of mens rea. Since the statutory language does not use expressions importing intent, penalty follows upon establishment of the breach itself. Relying on The Chairman, SEBI v. Shriram Mutual Fund [2006 (5) TMI 191 - SUPREME COURT] and the principle noticed therein from Director of Enforcement vs. MCTM Corporation Pvt. Ltd. and Ors.[1996 (1) TMI 351 - SUPREME COURT], the Tribunal held that guilty intention is irrelevant for such civil penalty provisions. Hindustan Steel Ltd. Vs. State of Orissa [1969 (8) TMI 31 - SUPREME COURT] was treated as inapplicable, being concerned with a different statutory setting involving criminal or quasi-criminal consequences. [Paras 15, 16]

The plea that the contraventions were unintentional was rejected, and the Tribunal held that penalty under FEMA was legally imposable notwithstanding absence of mens rea.

Denial of cross-examination -HELD THAT: - The Tribunal agreed that no prejudice had been caused by refusal of cross-examination. It noted that the statement of the manager had been made under express authorisation from the individual appellant and was later affirmed by him on affidavit. More importantly, the contraventions were supported by independent documentary material, namely bank statements and statutory filings before the Registrar of Companies, and were not founded solely on the statement sought to be tested. In those circumstances, the request for cross-examination was rightly declined as not serving any useful purpose. [Paras 17]

The challenge based on violation of natural justice was rejected.

Proportionality of penalty - Reduction of penalty - HELD THAT: - While sustaining the contraventions and the individual appellant's liability, the Tribunal held that the ends of justice would be met by reducing the penalties. It accordingly fixed a consolidated reduced penalty for the company in respect of all three contraventions and a corresponding reduced penalty for the individual appellant for the same contraventions read with Section 42, with adjustment of the pre-deposit towards the reduced amounts. [Paras 18]

The appeals were partly allowed only to the extent of reduction of penalty.

Final Conclusion: The Tribunal upheld the findings of contravention under FEMA, including the individual appellant's liability under Section 42, and rejected the pleas based on non-repatriation basis, absence of mens rea and denial of cross-examination. The appeals were partly allowed only by reducing the quantum of penalties, with adjustment of the pre-deposit towards the reduced amounts.

Nature of import of consignments on credit - current account transaction or a capital account transaction - Import of goods on credit, with remittance to the overseas supplier made beyond six months - contravention of Section 6(3)(d) of FEMA read with Regulation 5(3) - Imposition of penalty.

Import on credit -Whether appellants have contravened the provisions of Section 6(3)(d) of FEMA, 1999 r/w Regulation 3 & 5(3) of FEM (Borrowing or Lending in Foreign Exchange) Regulation, 2000. - HELD THAT: - The Tribunal held that a current account transaction under FEMA is one other than a capital account transaction, and that import on credit alters the resident importer's liabilities outside India until remittance is made. On that basis, import of the consignment on credit was treated as falling within the expression of borrowing in foreign exchange in whatever form or by whatever name called. The Tribunal further held that, on the facts, Regulation 5(3), which permits foreign currency credit for import only up to six months, was directly attracted, whereas Regulation 3 was technically not applicable. Since the payments to the overseas supplier were made long after expiry of six months and without RBI approval, the contravention stood established. The reliance placed by the appellants on Motia Rani Bhatia v. Additional Director of Enforcement and Others [1982 (10) TMI 190 - HIGH COURT OF DELHI] was rejected as inapplicable to the facts. [Paras 7]

The findings of contravention were upheld, and the issue was decided in favour of the respondent.

Imposition of penalty - Quantum of penalty - Mitigation of penalty - HELD THAT: - While affirming the contravention, the Tribunal treated the breach as technical, arising from delayed remittance against a single import consignment, and noted that the entire outstanding amount had already been remitted to the overseas supplier. On that basis, it found the penalties imposed by the adjudicating authority excessive and reduced them. [Paras 8, 9]

The penalties on the company and its directors were reduced, and the appeals were partly allowed to that extent.

Final Conclusion: The Tribunal held that delayed remittance beyond six months for goods imported on credit amounted to contravention of FEMA read with Regulation 5(3), though Regulation 3 was held technically inapplicable. The finding of contravention was sustained, but the penalties were substantially reduced on the footing that the breach was technical and the full remittance had already been made.

Provisional attachment - Seeking reduction or exemption of the monthly rent condition imposed by this Tribunal - Demand notional rent from the appellant for an attached residential property - proceeds of crime - Self-occupation of attached property - tribunal failed to adjudicate the Applicant's pending Modification Application filed earlier under Section 35(2)(f) of the Act - error apparent on the face of the record.

Self-occupation of attached property - Notional rent on attached residential property - HELD THAT: - Applying Vijay Madanlal Chaudhary v. Union of India [2022 (7) TMI 1316 - SUPREME COURT (LB)] the Tribunal held that even after confirmation of attachment, taking physical possession before confiscation is to be an exception and not the rule, and the person interested in the immovable property may continue to enjoy it unless exceptional circumstances are shown. Since the property was in the applicant's self-occupation, there was nothing on record to show that it had been handed over to any third party, and the Directorate failed to point out any exceptional ground warranting dispossession, the applicant was entitled to retain possession. On that basis, the Tribunal held that the Directorate could not demand notional rent from a self-occupying review applicant, while clarifying that the rights of mortgagee banks or secured creditors to proceed against the property in accordance with law would remain unaffected, subject to the conditions stated. [Paras 5, 6]

The review application was disposed of by holding that no notional rent was payable by the self-occupying applicant in respect of the attached property, with the rights of secured creditors kept open in accordance with law.

Final Conclusion: The Tribunal allowed the review to the extent of holding that, where the attached residential property remained in the applicant's self-occupation and no exceptional circumstances were shown, the Enforcement Directorate could neither insist on physical possession nor demand notional rent. The application was accordingly disposed of, subject to preservation of the rights of mortgagee banks and secured creditors in accordance with law.

Entitlement to the small-scale exemption under Notification No. 6/2005-S.T. on their respective shares of rent - Renting of immovable property service - taxable entity or association of persons.

Small scale exemption for co-owners - Association of persons - Renting of immovable property service - HELD THAT: - The Tribunal found that each co-owner owned a distinct share in the property, the lease arrangement with PSWC was on behalf of all co-owners, and rent was paid separately to each co-owner. It was also undisputed that TDS was deducted under the PAN of each co-owner separately. On these facts, the taxable value had to be examined in the hands of each co-owner individually, and not by clubbing the receipts as if the co-owners constituted a single entity. Following its earlier decision in M/s Ram Singh and Co-owners [2025 (10) TMI 1387 - CESTAT CHANDIGARH], the Tribunal held that the co-owners could not be treated as an Association of Persons for levying service tax and that the benefit of Notification No. 6/2005-ST was available to them in their individual capacity. [Paras 5, 6]

The denial of exemption was held unsustainable; the impugned orders were set aside and the appeals were allowed with consequential relief as per law.

Final Conclusion: The Tribunal held that service tax liability and exemption eligibility had to be determined separately for each co-owner receiving rent for his or her own share. On that basis, the denial of Notification No. 6/2005-ST was reversed and the appeals were allowed.

Entitlement to refund of accumulated CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 - denied on grounds such as alleged lack of nexus, documentary deficiencies, and other procedural lapses - Scope of scrutiny under Rule 5 refund proceedings -Procedural defects in input service documents.

Rule 5 refund - Rule 14 recovery mechanism - Procedural lapses - HELD THAT: - Following the ratio of the decision of this Tribunal in the matter of Cable & Wireless Networks India Pvt. Ltd. [2026 (2) TMI 1010 - CESTAT BANGALORE], The Tribunal held that Rule 14 of the CENVAT Credit Rules, 2004 specifically provides the mechanism for recovery where credit is alleged to have been irregularly availed or utilised, and such question is to be addressed through the recovery provisions referred to therein, not while deciding a refund claim under Rule 5. It further held that objections of the kind noted in the case were only procedural lapses, and a substantive refund claim could not be rejected on that basis. [Paras 7, 8]

The impugned appellate orders were set aside and the appellant's refund claims were allowed with consequential relief in accordance with law.

Final Conclusion: The Tribunal held that the appellant's Rule 5 refund claim could not be rejected on the basis of alleged irregular availment issues in refund proceedings or on mere procedural lapses in the supporting documents. The impugned orders were therefore set aside and the appeals were allowed with consequential relief.

Demand of Service tax on value of extended warranty received in relation to vehicle sales - Pre-Sale Activity - Commission Received - Teflon coating and under body coating activities as business auxiliary service.

Service tax on extended warranty - Commission from manufacturer - HELD THAT: - The Tribunal found that the extended warranty scheme belonged to the manufacturer and the consideration for that facility was paid by the vehicle buyer directly to the manufacturer. The appellant merely received commission for the activity and had already discharged service tax on that commission. In these circumstances, the entire value of the extended warranty could not be subjected to service tax in the appellant's hands. The Tribunal also noted that the issue stood covered by M/s. Shantesha Motors Pvt Ltd [2023 (6) TMI 698 - CESTAT BANGALORE] and CCE & ST, LTU., Delhi vs. Honda Seil Cars India Ltd. [2016 (3) TMI 669 - CESTAT NEW DELHI] [Paras 9]

The demand of service tax on the value of extended warranty was set aside.

Business auxiliary service - Pre-sale Teflon coating and under body coating - done by the appellant before the sale of the vehicle as per the option exercised by the buyer of the car -HELD THAT: - The Tribunal found no basis to treat the appellant as promoting or marketing the services of M/s. Parijath Agencies. The material on record showed only sale of Teflon material by that supplier to the appellant, while the coating activity itself was undertaken by the appellant with its own labour before sale of the vehicle as opted by the buyer. On that factual basis, the activity did not fall within the alleged taxable category, and the issue was held to be covered by M/s. AVG Motors Ltd [2024 (12) TMI 1026 - CESTAT BANGALORE] Since the appeals succeeded on merits, limitation was not examined. [Paras 10]

The demand of service tax on Teflon coating and under body coating was set aside, and the plea of limitation was left undecided.

Final Conclusion: The Tribunal held that service tax was not leviable on the extended warranty value or on the Teflon and under body coating activity in the facts of the case. The impugned orders were set aside and, consequentially, the demands of interest and penalties also did not survive.

Invocation of the extended period for recovery of service tax for the disputed period - non-payment of service tax and wrongful availment of Cenvat credit - proof of fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade tax.

Extended period of limitation - HELD THAT: - The Tribunal held that for invoking the extended period, the statute requires a positive act of fraud, wilful mis-statement, suppression of facts or contravention with intent to evade tax, and mere non-payment or short payment is insufficient. The demand for 2014-15 was held to be time-barred even on the department's own case, since the show cause notice was issued beyond five years from the relevant dates. For the remaining period, the record showed that the appellant had filed returns and had furnished Form 26AS statements, income-tax returns, bank statements and reconciliation worksheets during inquiry. The enhanced quantification was itself based on material supplied by the appellant during adjudication. In the absence of any material showing deliberate concealment, falsification or withholding of information, and having regard also to the availability of unutilised Cenvat credit exceeding the tax liability, the allegation of suppression with intent to evade tax was not established. Detection of discrepancies on scrutiny or investigation, by itself, did not justify recourse to the extended period. [Paras 9, 11, 13, 14]

The entire demand was held barred by limitation and the appeal was allowed.

Final Conclusion: The Tribunal held that the extended period had been wrongly invoked. The demand for the disputed period was therefore barred by limitation, and the impugned order was set aside.

Eligibility of Exemption for services relating to transmission and distribution of electricity - Service tax liability on activity of laying and repair of electric cables and allied works undertaken for an electricity distribution utility - Naturally Bundled Services - Essential Character - Sub-contractor Exemption.

Exemption for services relating to transmission and distribution of electricity - Ancillary cable laying and repair services - HELD THAT: - The Tribunal held that the controversy stood covered by its earlier decision in Kusum Enterprises Vs. Commissioner of Central Excise and Service Tax, Guwahati- [2022 (4) TMI 135 - CESTAT KOLKATA] Following that decision, it held that the appellant's activity of laying and repairing electric cables along with or under the roadside for and on behalf of CESC formed part of services connected with transmission and distribution of electricity and was therefore not exigible to service tax.

The entire demand was set aside and the appeal was allowed with consequential relief.

Final Conclusion: Following its earlier decision in Kusum Enterprises, the Tribunal held that the appellant's cable laying and repair work for CESC was not liable to service tax. The impugned demand was set aside and the appeal was allowed with consequential relief.

Service tax liability on receipts from mess or eating-joint services - Benefit of entry no.19 of the Notification No.25/2012-ST - Threshold exemption - want of document as the appellant neither appeared nor produced any documents alongwith their appeal memo -Invocation of the extended period of limitation - Burden of Proof -demand barred by limitation.

Service tax exemption for mess or eating joint services - Threshold exemption - HELD THAT: - The Tribunal found that the appellate authority itself had noticed that the original authority proceeded ex parte for want of documents, yet the appellant had in fact produced replies during inquiry, a defence reply to the show cause notice, and sample invoices before the appellate authority. Those documents ought to have been considered, or the matter ought to have been remitted for fresh consideration. On the material placed, the Tribunal observed that the appellant had stated she was engaged in providing mess services, which were claimed to be exempt under Entry 19 of Notification No. 25/2012-ST, and the lower authorities had rejected that claim without properly taking cognizance of the documents. The Tribunal further held that the alternative claim ofthreshold exemption was justified on the documents produced, and denial of that benefit merely on the ground that the prescribed procedure had not been followed was without merit. Since the appellant was entertaining a bona fide belief that the services were exempt, the approach of the lower authorities in faulting her for not taking registration or filing returns was also held to be unsustainable. [Paras 4]

The demand was set aside on merits, and the penalties were also held unsustainable.

Invocation of the extended period of limitation - HELD THAT: - The Tribunal expressly held that the show cause notice had invoked the extended period though such invocation was not warranted in the present case. It therefore held that the demand would also fail on the ground of limitation. [Paras 4]

The demand was liable to fail independently on limitation as well.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal. It held that the demand was not sustainable both on merits, in view of the exemption and threshold exemption claims supported by the record, and also on the ground that the extended period had been wrongly invoked.

Excise duty liability on goods manufactured by the contract manufacturer and cleared - definition of “manufacture” as defined under Section 2(f) - Benefit of Notification No.8/2005–ST dated March 1, 2005, which grants service tax exemption on the activities of job workers and passes on the liability of duty on the principal manufacturer - Manufacturer supplied raw materials and tools but did not itself undertake the manufacturing activity.

Whether M/s. Lear Automotive India Pvt. Ltd. [Appellant] is liable to pay excise duty on the goods manufactured by the contract manufacturer, i.e. M/s. Kavin Creations on job work basis. - HELD THAT: - Following the ratio of the decision of theLarger Bench, the Tribunal in Daw Chemical International Pvt. Ltd. versus CCE. Kutch [2022 (8) TMI 609 - CESTAT AHMEDABAD] held that since the job worker has carried out all the activities whichs as per the Department amounts to manufacture, the job worker is alone to pay the excise duty, therefore, the duty demand raised against the appellant is not sustainable.

The decision of the Apex Court in CCE, Goa versus Cosme Pharma Laboratories [2015 (4) TMI 355 - SUPREME COURT], where it was held that when the manufacturing activity was done only by the job workers in their premises and with the help of their labour, force and machinery, following the quality control or specification of the principal manufacturer does not make the supplier of raw material as a manufacturer.

The Tribunal found it undisputed that the manufacturing activity was undertaken entirely by the contract manufacturer at its own premises with its own labour, machinery and resources, while the appellant merely supplied raw materials and certain tools and sold the goods further without carrying out any process of manufacture. The agreement itself treated the parties as independent contractors, showing that the contract manufacturer did not act as agent of the appellant. On that basis, and applying the settled principle that duty is attracted on the person who actually manufactures the excisable goods and not on the owner of inputs or goods, the Tribunal held that the contract manufacturer was the real manufacturer. It further held that Notification No. 214/86-CE did not shift the liability to the appellant in the facts of the case, since that notification does not by itself make the raw material supplier liable for duty on goods manufactured on job-work basis. The fact that the contract manufacturer had itself paid central excise duty for part of the period also reinforced that the liability was that of the contract manufacturer. [Paras 12, 13, 14, 15, 16]

The demand of excise duty, interest and penalty against the appellant was held unsustainable, as the liability, if any, rested on the contract manufacturer who actually manufactured the goods.

Final Conclusion: The Tribunal held that the appellant, who had not undertaken any manufacturing activity, could not be treated as the manufacturer merely because it supplied raw materials and got the goods manufactured through a contract manufacturer. The demand of duty with interest and penalty against the appellant was therefore set aside and the appeal was allowed.

Export of service - Demand on corporate guarantee charges - Receipt in convertible foreign exchange - Validity of the Penalty where tax and interest are paid before show-cause notice.

Export of service - Receipt in convertible foreign exchange - HELD THAT: - The Tribunal accepted the appellant's contention that, though the transaction had been reflected through a debit note and inter-unit adjustment, the requirement of receipt of consideration in convertible foreign exchange stood fulfilled. On that basis, the service was treated as export service and the service tax demand raised on that count was held to be unsustainable. [Paras 8]

The service tax demand on the alleged export of service was set aside.

Penalty where tax and interest are paid before show-cause notice - HELD THAT: - The Tribunal recorded that the appellant had paid the entire service tax before issuance of the show-cause notice. In those circumstances, it held that no penalty could be imposed on the appellant. [Paras 9]

The penalties were held to be not imposable.

Final Conclusion: The Tribunal set aside the impugned order in entirety. It held that the corporate guarantee transaction qualified for export treatment as the requirement of receipt in convertible foreign exchange stood satisfied, and that no penalty could survive since the tax had already been paid before issuance of the show-cause notice.

Entitlement to the benefit of Notification No. 23/2003-CE, on stock transfers to its own DTA units - Sales Tax or VAT Exemption -EOU clearances to DTA - Exemption from Special Additional Duty - demand barred by limitation - Extended period of limitation.

Whether the appellant is eligible for the benefit of Notification No.23/2003-CE dated 31.03.2003 for the stock transfers undertaken by the appellant wherein VAT was not liable to be paid. - HELD THAT: - The Learned Counsel submits that the appellant has not paid VAT on the clearances made through stock transfers to their own units. It is further submitted that the observation of the Commissioner that they are not eligible for the Notification No.23/2003-CE dated 31.03.2003 is misplaced as their transactions of stock transfers was not subjected to sales tax.

This issue is no longer res integra in as much as the Tribunal in the case of M/s. Micro Links Vs. CCE & ST Daman [2014 (2) TMI 207 - CESTAT AHMEDABAD], in similar set of facts,

The Tribunal held that non-payment of VAT on stock transfers could not be equated with exemption from sales tax or VAT. The determinative test under the notification was whether the goods were exempted by the State Government from payment of sales tax or VAT. Since there was no notification or order granting such exemption, mere non-leviability of tax on stock transfer transactions did not disentitle the appellant from the exemption from SAD. The Revenue's reliance on the decision in John Deere (I) Pvt. Ltd [2013 (6) TMI 676 - CESTAT MUMBAI] was found inapplicable because that case involved goods exempted from sales tax, whereas in the present case there was only absence of leviability on stock transfers. [Paras 5, 6]

The demand could not be sustained on merits, as the appellant was entitled to the benefit of the notification on the impugned DTA stock transfers.

Extended period of limitation - Disclosure in statutory returns - HELD THAT: - The Tribunal found that the appellant had intimated the Department about the DTA clearances and had also reflected the same in the relevant returns. Once such disclosure had been made, the Department could not invoke the extended period on the footing that the clearances had not been disclosed. The show-cause notice issued for the disputed period by invoking the extended period was therefore unsustainable. [Paras 5]

The demand was also barred by limitation and the extended period could not be invoked.

Final Conclusion: The Tribunal allowed the appeal, holding that stock transfers by the EOU to its own DTA units did not amount to goods being exempted from sales tax or VAT so as to deny the notification benefit. The demand was set aside both on merits and on limitation, with consequential relief.