TaxTMI Updates e-Newsletter
Apr 09,2026

Condonation of delay - HELD THAT:- Delay was condoned and the special leave petitions were dismissed, the Court declining to interfere with the impugned judgment under Article 136 of the Constitution of India.

Application seeking condonation of delay of 167 days in filing the review petitions - HELD THAT:- Delay in filing the review petitions was not condoned, and the review petitions were dismissed on the ground of delay as well as on merits.

Entitlement to avail Input Tax Credit - Statutory time limit - extending the time limit for availing ITC - Retrospective benefit of Section 16(5) - Demand-cum-Show Cause Notice.

Input tax credit time limit - HELD THAT: - The Court held that, by reason of the amendment inserting sub-section (5) in Section 16, the restriction under Section 16(4) stood overridden for invoices or debit notes pertaining to, inter alia, the financial year 2018-19, and input tax credit could be taken in a return filed up to 30th November 2021. On that basis, the challenge to the demand founded on delay under Section 16(4) no longer survived for adjudication, and the petitioner was entitled to the benefit of input tax credit for the relevant period. Since the petitioner accepted liability to pay the excess utilised amount and the interest thereon, the petition was disposed of on that basis and the order confirming the larger demand was set aside. [Paras 6, 7, 9, 10]

The petitioner was held entitled to the benefit of input tax credit for the relevant period under the amended law, subject to payment of the admitted excess utilised amount and interest, and the order-in-original was set aside.

Final Conclusion: The writ petition was disposed of by applying the amended Section 16(5), under which the petitioner became entitled to input tax credit for the financial year 2018-19. The petitioner was directed to pay only the admitted excess utilised amount with interest, and the order-in-original was set aside.

Validity of the show cause notice issued under Section 73 on the basis of an audit report - vagueness and incorrect factual premise and for non-supply of the material forming its basis - failure to disclose the required details of the alleged tax, interest and input tax credit discrepancies - Principles of natural justice.

Vagueness of show cause notice - No specific particulars of the alleged excess input tax credit, mismatch, reverse charge liability, or undischarged tax liability - HELD THAT: - The Court found that the notice proceeded on a factually incorrect premise, as it stated that the special audit had been conducted by the CAG of the petitioner company, whereas the State admitted that no such audit of the petitioner had been conducted and that the audit was of the GST Department. The report forming the sole basis of the notice had also not been supplied to the petitioner. On examining the notice, the Court held it to be wholly vague, since though it alleged excess ITC, mismatch of ITC, short payment under reverse charge, and undischarged tax liability, it disclosed neither the basis of those conclusions nor the underlying details. The Court held that a notice must make the assessee aware of the department's case so as to enable an effective response, and that service of a non-specific notice is an empty formality and violative of natural justice. Reading Section 73(3), the Court further held that the requisite details of tax not paid, short paid, or ITC wrongly availed or utilised must be furnished to the assessee. Since the impugned notice was based on a wrong premise and was bereft of such details, it was unsustainable. [Paras 6, 7, 9, 10, 11]

The show cause notice was set aside, with liberty to the authorities to proceed afresh in accordance with law.

Final Conclusion: The Court set aside the impugned show cause notice on the ground that it was founded on a factually incorrect basis, the underlying audit report had not been supplied, and the notice itself was vague and lacking in the statutory details necessary for an effective reply. Liberty was, however, reserved to the authorities to take action afresh in accordance with law.

Validity of Retrospective cancellation of GST registration - Specific show cause notice - Seven working days to respond - statutory opportunity to respond - Principles of natural justice.

Retrospective cancellation of GST registration - HELD THAT: - The Court held that although retrospective cancellation of GST registration is permissible in law, it can be resorted to only after the assessee is specifically put to notice that such retrospective action is proposed. The original notice did not propose retrospective cancellation. The later communication and e-mail, which for the first time indicated retrospective cancellation, also did not satisfy Rule 22 of the Central Goods and Services Tax Rules, 2017, since the assessee was not granted at least seven working days from service of notice to respond. A retrospective cancellation order passed on the same day on which such notice was received was therefore contrary to Rule 22 and violative of fair procedure. [Paras 6, 7, 8]

The impugned order cancelling registration with retrospective effect was set aside, with liberty to the authorities to initiate fresh proceedings for retrospective cancellation in accordance with law.

Final Conclusion: The writ petition was disposed of by setting aside the retrospective cancellation of GST registration for want of a valid specific notice and non-compliance with the minimum response period under Rule 22. The challenge to vires was kept open for consideration in an appropriate case.

Condonation of delay in statutory appeal - Cancellation of GST registration - Sufficient cause - limitation prescribed under Section 107 - denial of effective statutory remedy - arbitrary and violative of Articles 14, 19(1)(g), and 21 of the Constitution of India​​​​​​​ - Writ jurisdiction where online portal does not permit delayed appeal filing.

Condonation of delay in statutory appeal - GST registration cancellation - HELD THAT: - The Court held that though the Appellate Authority is bound by the limitation prescribed under Section 107 of the RGST/CGST Act, 2017, the facts disclosed that the petitioner could not file the appeal within time for reasons beyond its control and, once limitation expired, the appeal could not be presented online. In such circumstances, refusal to permit adjudication of the appeal on merits would cause grave injury and prejudice. Following the consistent view already taken by the Court in earlier Division Bench decisions, the delay was treated as not deliberate and was condoned in exercise of writ jurisdiction. [Paras 7, 8, 9, 10]

The delay of 40 days in filing the appeal was condoned, and the Appellate Authority was directed to entertain and decide the appeal on merits.

Final Conclusion: The writ petition was allowed to the limited extent of condoning the delay in filing the statutory appeal against cancellation of registration. The Appellate Authority was directed to entertain the appeal and adjudicate it on merits.

Maintainability of writ petition seeking direction for quashing and setting aside the show cause notice issued in Form GST DRC-01, the order of detention issued in Form GST MOV-06, the confiscation order issued in Form GST MOV-11 and the consequent demand order issued in Form GST DRC-07 - Alternative remedy under GST - Suppression of material facts - Transport without e-way bill

Alternative remedy under GST - HELD THAT: - The Court found that the petitioner had withheld the release order and related statutory forms, all of which bore the petitioner's signature, and had made incorrect statements regarding non-service and non-issuance of the relevant forms. The record showed that the goods and conveyance had been released upon payment of tax and penalty, without any contemporaneous objection as to the quantum or legality of the action. On examining the material, the Court noted that detention was founded on transport of goods without an e-way bill, and the grievance was raised for the first time in the writ petition after suppression of the correct facts. In these circumstances, particularly when an efficacious appellate remedy under Section 107 was available, no case for interference in writ jurisdiction was made out. [Paras 6, 7, 8]

The writ petition was rejected as devoid of merit, the Court declining to interfere with the impugned GST orders.

Final Conclusion: The Court declined to entertain the writ petition and rejected it, holding that the petitioner had suppressed material facts and that no ground for interference was made out, particularly when the goods had been transported without an e-way bill and an appellate remedy was available.

Civil contempt - wilful disobedience of a judgment, decree, direction, order, writ or undertaking - entitlement for more amount, which according to the petitioner is based upon deduction already made, which would be evident from the various bills -substantial compliance of remand directions - Scope of contempt jurisdiction under Article 215 of the Constitution of India, read with Sections 11 and 12 of the Contempt of Courts Act, 1971.

Civil contempt - wilful disobedience - substantial compliance of remand directions - HELD THAT: - This Court is conscious that the power conferred to this Court to initiate the proceeding for contempt is under Article 215 of the Constitution of India read with Sections 11 and 12 of the Contempt of Courts Act, 1971.

The word ‘willful and deliberate non-compliance is the core of the issue for the purpose of the High Court, in exercise of power conferred under Article 215 of the Constitution of India read with the relevant provisions of Sections 11 and 12 of the Contempt of Courts Act, 1971, by which, the power is to be exercised by the High Court to initiate a proceeding for contempt.

The Court held that the earlier writ order did not contain any specific command declaring the petitioner entitled to a fixed sum, but merely remitted the matter to JBVNL for calculation of the withheld amount and payment with statutory interest. Once JBVNL undertook that exercise, determined the petitioner's entitlement, and paid the amount so calculated, the essential requirement of wilful disobedience under the law of civil contempt was not made out. A dispute as to correctness or adequacy of the quantum so determined could not be adjudicated in contempt proceedings, since that would require the Court to substitute its own conclusion on the amount in place of the authority's determination under the remand order. [Paras 25, 26, 28]

The contempt cases were closed, with liberty to the petitioners to pursue their grievance regarding the quantum before the appropriate forum.

Final Conclusion: The Court found substantial compliance with the earlier writ direction and held that no case of wilful disobedience was made out. The contempt proceedings were accordingly closed, leaving the petitioners free to challenge the quantum determined by JBVNL before the appropriate forum.

Challenged the legality of the impugned detention order issued in Form MOV-06 as well as the impugned demand order in Form MOV-09 read with order in Form DRC-07 passed - Non-consideration of reply - authority failed to consider the petitioner's explanation regarding the delayed movement of goods before passing the order - Speaking order - Opportunity of hearing.

Non-consideration of reply - Speaking order - Opportunity of hearing - HELD THAT: - The Court found, on examining the impugned order, that the authority had not considered the explanation furnished in the reply, particularly the reasons stated for the delay in movement of the goods. Since the order was passed without adverting to that explanation, it could not be sustained. The determinative principle applied was that an order affecting the party must be a fresh, reasoned and speaking order after due consideration of the reply and, if required, after granting opportunity of hearing. The merits of the controversy were therefore left open and the matter was remitted for reconsideration. [Paras 6, 7, 8]

The impugned order was quashed and the matter was remanded to the authority for fresh consideration of the reply and for passing a reasoned order, with all contentions kept open.

Final Conclusion: The petition was allowed on the limited ground that the authority had passed the impugned order without considering the petitioner's explanation. The matter was remanded for a fresh reasoned decision after due consideration of the reply and hearing, if required.

Writ Jurisdiction - Validity of the Cancellation of GST registration - registration obtained by means of fraud, wilful misstatement, or suppression of facts -discrepancies between the show-cause notice and the cancellation order - Mechanical show-cause notice - Non-application of mind - availability of an alternative statutory remedy.

Cancellation of GST registration - HELD THAT:- The Court found that the show-cause notice was a cyclostyled notice and that the authority had not adverted either to the contents of that notice or to the reply submitted by the petitioner while passing the cancellation order. The notice alleged one ground, whereas the impugned order proceeded on a different basis, without narrating any particulars of the alleged defects or objections. In these circumstances, the authority had failed to exercise jurisdiction in accordance with the statute and had acted in a casual and mechanical manner. On that finding, the existence of a statutory remedy for revocation did not bar interference under Article 226. [Paras 5, 6, 7]

The impugned cancellation order was quashed and the petitioner's GST registration was restored.

Final Conclusion: The Court held that the cancellation order suffered from patent non-application of mind and could not be sustained. The writ petition was allowed, the impugned order was set aside, and the GST registration was restored.

Condonation of Delay - Powers of the High Court to interfere under Article 226 of the Constitution of India - extend the statutory period for filing a GST appeal beyond the maximum condonable limit under Section 107 - Alternative Efficacious Remedy - Writ jurisdiction vis-a-vis condonable period.

Statutory limitation for GST appeal - Condonation beyond prescribed period - Writ jurisdiction vis-a-vis legislative intent - HELD THAT: - The Court held that Section 107 permits filing of appeal within three months, with only a further period of one month being condonable on sufficient cause. Once that outer limit is crossed, the Appellate Authority has no power to entertain the appeal. Relying on the principle stated in Assistant Commissioner (CT) LTU, Kakinada and Ors. v. Glaxo Smith Kline Consumer Health Care Limited [2020 (5) TMI 149 - SUPREME COURT] and Oil and Natural Gas Corporation Limited v. Gujarat Energy Transmission Corporation Limited and Others [2017 (3) TMI 1628 - SUPREME COURT], the Court held that writ jurisdiction cannot be exercised to defeat the legislative scheme of limitation under a special statute. Even if sufficient cause is shown, the Court cannot extend the period beyond the statutory cap, and general explanations such as negligence of the accountant did not justify interference. [Paras 14, 16, 18]

The delay beyond 120 days was held to be not condonable either by the Appellate Authority or in writ jurisdiction, and the challenge to the appellate rejection on limitation failed.

Alternative efficacious remedy - Challenge to cancellation order in writ - HELD THAT: - The Court held that, having chosen the statutory remedy of appeal, the petitioner could not seek a fresh examination in writ proceedings of the validity of the show-cause notice or the cancellation order, particularly when no one remained present before the appellate authority despite opportunity of hearing. The Court treated the controversy as one confined to the statutory appellate mechanism and declined to reopen the original order on grounds of natural justice or jurisdiction in the facts of the case. [Paras 17]

The challenge to the show-cause notice and the cancellation order was not entertained in writ jurisdiction.

Final Conclusion: The Court held that an appeal under Section 107 filed beyond the maximum condonable period could not be revived through writ jurisdiction, and it also declined to examine the original cancellation proceedings after the petitioner had availed the statutory remedy. The writ petition was accordingly dismissed.

Profit on sale of investments - Assessee carrying on a general insurance business - MAT/115JB on Insurance Companies -Commission paid for receipt of re-insurance - TDS on the payments made to surveyors outside the Country - Depreciation on UPS - Disallowance u/s 14A - Disallowing the re-insurance premium u/s 40(a)(i) -

HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court [2025 (6) TMI 1488 - MADRAS HIGH COURT] as all substantial questions of law admitted in the listed appeals are answered largely in favour of the assessee

The Special Leave Petitions are dismissed.

TCS u/s 206C - compounding fees received from illegal miners/transporters of minerals - Scope of Mines and Minerals (Development and Regulation) Act, 1957/ ‘the MMDR Act’ - Ofenders who do illegal mining or transportation/storage without having lease or license or have not entered into the contract for transfer of right in Mines or Quarry

As decided by HC [2025 (6) TMI 2041 - CHHATTISGARH HIGH COURT] reliance upon a general definition in Section 2(47) of the IT Act was held insufficient to override the specific language and scheme of Section 206C(1C). Consequently, the ITAT's demand, interest and penalty premised on treating compounding fees as chargeable to TCS under Section 206C(1C) could not be sustained. Compounding fee/fine collected under Section 23A read with Rule 71(5) is not taxable by way of TCS under Section 206C(1C); the ITAT order demanding TCS, interest and penalty is set aside.

HELD THAT:- We are not inclined to interfere with the impugned judgment and order of the High Court; hence, the special leave petition is dismissed.

Reassessment based on non-existent material - petitioner had availed ineligible Input Tax Credit (ITC) on the strength of invoices issued without actual supply of goods from alleged non-genuine parties and leading to cancellation of petitioner’s GST registration - Appellate Authority concluded that cancellation based on unverified suspicion or procedural lapses was unwarranted and arbitrary and reversed it

HELD THAT: - The Court found that the entire basis for invoking reassessment was the GST action alleging non-genuine transactions and wrongful ITC, which had culminated in cancellation of registration. That cancellation had already been reversed by the GST Appellate Authority, which specifically recorded that there was no fraudulent ITC claim and no violation attracting adjudication under the GST law.

The petitioner had placed that appellate order before the income-tax authority, yet the impugned order proceeded without considering this vital material. The Court further recorded that, apart from the GST cancellation order already set aside, there was no other material with the respondent to establish escapement of income. On that basis, the reopening was held to be unwarranted. [Paras 6]

The order under Section 148A(3) and the consequential notice under Section 148 were quashed.

Final Conclusion: The writ petition was allowed. Since the reassessment proceedings were founded on a GST cancellation order already reversed in appeal and no independent material existed to show escapement of income, the impugned reopening order and notice were set aside.

Limitation for reassessment pursuant to search - Computation of ten-year block period - Inclusion of search assessment year

HELD THAT: - The Court held that the statutory scheme adopts two distinct computational rules: the six-year block u/s 153A is confined to assessment years immediately preceding the assessment year relevant to the previous year of search, whereas the extended ten-year block under Explanation 1 is to be reckoned from the end of the assessment year relevant to the previous year in which the search is conducted.

This difference in phraseology was treated as deliberate and incapable of being collapsed into a single method of computation. On that basis, the search assessment year itself must be included as the first year in reckoning the ten-year block.

Applying that construction, where the search was conducted during Financial Year 2023-24, Assessment Year 2024-25 became the first year and Assessment Year 2015-16 the tenth year; consequently, Assessment Year 2014-15 fell outside the permissible period. The Court followed its earlier decision and the views in OJJUS MEDICARE PVT. LTD. AND OTHERS [2024 (4) TMI 268 - DELHI HIGH COURT] and A.R. SAFIULLAH [2021 (6) TMI 867 - MADRAS HIGH COURT], and rejected the Revenue's contention that the search year had to be excluded while computing the ten-year period. [Paras 8, 9]

Final Conclusion: The writ petition was allowed and the notice issued u/s 148 for AY 2014-15 was quashed as time-barred. The Court held that, for the extended ten-year computation in search-related reassessment, the search assessment year is to be included in the reckoning.

Denial of exemptions u/s 11 - delay in filing Form 10B - Scope of enquiry u/s 119(2)(b) - Consideration of explanation for delay - trust had not produced the registration certificate u/s 12AA for the relevant assessment year - HELD THAT: - The Court held that, on an application u/s 119(2)(b), the authority was required to confine itself to the question whether the delay deserved to be condoned on the explanation furnished by the petitioner. The petitioner had specifically explained that the audit report had been uploaded within time and that there was only a delay in acceptance or verification on the portal.

Without examining that explanation, the authority rejected the application on the separate ground that the registration certificate u/s 12AA had not been produced. The Court held that this amounted to travelling beyond the scope of the condonation application, since the question of registration was not required to be examined at that stage and could be considered, if necessary, in assessment proceedings. [Paras 10]

Final Conclusion: The writ petition was allowed. The order rejecting condonation of delay was quashed, and the matter was remanded for fresh decision limited to the explanation furnished for the delay in filing Form 10B.

Transfer of case for coordinated investigation - Validity of notice u/s 153A - Limitation for reassessment proceedings

Transfer of case for coordinated investigation - Administrative power under section 127 - Natural justice in transfer proceedings - Transfer of the petitioner's case from Alwar to Faridabad for coordinated investigation - HELD THAT: - The Court held that transfer under Section 127 is an administrative power and an assessee has no vested right to be assessed at a particular place. A transfer for coordinated investigation is a sufficient reason, provided the power is not exercised mala fide, arbitrarily or capriciously. In the present case, show cause notice had been issued, reasons were indicated, and the department considered the overall circumstances, including the need to assess the petitioner with connected entities and the petitioner's own earlier request for transfer. On these facts, no infirmity was found in the transfer order. [Paras 22, 23, 24]

The challenge to the order u/s 127 failed and the issue was decided in favour of the Revenue.

Validity of notice u/s 153A - Search u/s 132 - Incriminating material - HELD THAT: - The Court accepted that search need not be confined to the registered office, but held that the statutory conditions for search u/s 132 must still be satisfied. It found that merely mentioning the petitioner's name in the warrant was insufficient. The record showed that the premises were closed, the survey was converted into search, but no incriminating material or documents were found, no search-based enquiry was made from the petitioner, and the notice u/s 153A did not disclose any basis for reopening the completed assessments. Since proceedings u/s 153A and 153C are drastic in nature, the foundational satisfaction u/s 132 had to exist on record and could not be presumed from the warrant alone. [Paras 25, 26, 27]

The notice issued u/s 153A was held illegal and liable to be quashed.

Limitation for reassessment proceedings - Best judgment assessment - Absence of stay - The reassessment proceedings had become time barred and could not be continued. - HELD THAT: - The Court held that its interim order only protected the petitioner from being compelled to file returns before the transferred officer and did not restrain the department from proceeding in accordance with law. Once notice under Section 144 had been issued, it was incumbent on the department to carry the matter forward through best judgment assessment if the petitioner failed to file returns. As the department did not complete the assessment despite there being no stay against it, the statutory time for doing so expired. The contention based on actus curiae neminem gravabit was rejected because the Court had not prevented the Revenue from acting. [Paras 28, 29, 30, 31]

The reassessment proceedings for the concerned assessment years were held to have lapsed as time barred and stood closed.

Final Conclusion: The Court upheld the transfer of the petitioner's case under Section 127 as a valid administrative measure for coordinated investigation. However, it quashed the notice under Section 153A for want of any incriminating material and further held that, in any event, the reassessment proceedings for Assessment Years 2006-07 to 2011-12 had become time barred and stood closed.

Unexplained cash credit - bogus Share sale consideration - Deduction u/s 54F

Unexplained cash credit - Share sale consideration - Source of source - Consideration received by the assessee on sale of shares to the purchaser company treated as unexplained cash credit u/s 68 r/w section 115BBE - HELD THAT: - The Tribunal held that the assessee had explained not only the immediate source of the receipt but also the source of the purchaser's funds. The transaction of sale of shares stood supported by the share purchase agreement, financial statements, bank records and confirmation from the purchaser, and the A0 had himself obtained information from the purchaser regarding the funding received from its holding company. On these facts, the objection as to the purchaser's creditworthiness or the alleged layering of funds could not justify an addition in the hands of the assessee in respect of a genuine share sale transaction.

Tribunal further held that if any issue arose regarding overvaluation or the issuance of shares by the purchaser to its holding company, that would not warrant taxing the assessee's sale proceeds as unexplained cash credit. [Paras 19]

The addition made under section 68 read with section 115BBE was deleted.

Deduction u/s 54F - Factual verification - HELD THAT: - Having held that the capital gain returned by the assessee was to be accepted, the Tribunal held that the claim for deduction under section 54F had to be considered in accordance with law. Since the AO had not examined the factual details relating to the nature of expenditure and the investment made, and the appellate authority had also not discussed that aspect, the matter required restoration for limited verification of the claim. [Paras 20]

The issue of deduction under section 54F was restored to the Assessing Officer for factual verification and allowance as per fact and law after giving due opportunity to the assessee.

Final Conclusion: The Tribunal held that the share sale consideration received by the assessee could not be assessed as unexplained cash credit and directed deletion of the addition. The claim for deduction under section 54F was restored to the Assessing Officer for factual verification, and the appeal was allowed for statistical purposes.

Revision u/s 263 - Adequate enquiry by AOor not? -Two possible views - twin conditions of the order being both "Erroneous" and "Prejudicial to the interest of Revenue" - enquiries on cash sales and cash deposits

HELD THAT: - The Tribunal found that, during assessment, the assessee had replied to the queries relating to cash sales and cash deposits and the relevant records were before the AO. It further held that the observation of the Principal Commissioner that opening stock and purchases were not verified was not justified, since those materials had also been examined by the AO.

On that basis, the Tribunal held that this was not a case of lack of enquiry; once a relevant enquiry had been made in all plausible manners and the AO had taken a view, the Principal Commissioner could not invoke section 263 merely to substitute a different view. The governing principle applied was that where two views are possible, revision cannot be exercised only because the revisional authority prefers another view. [Paras 7, 8, 9]

The assumption of jurisdiction u/s 263 was held to be unjustified, and the revisionary orders in all three appeals were quashed.

Final Conclusion: The Tribunal held that the assessments had been completed after due enquiry and that the Principal Commissioner had invoked section 263 only to take a different view on the same material. All three appeals were accordingly allowed and the revisionary orders were set aside.

Bogus purchases - estimation of profit/profit - HELD THAT: - The Tribunal held that the AO had merely doubted the purchases and had not recorded a clear finding that no purchases had in fact taken place. Since the sales were accepted and remained undisturbed, disallowance of the entire purchase amount as bogus purchase was unjustified.

In such circumstances, only the profit element embedded in the disputed purchases was liable to be brought to tax, and estimation of profit at 8% of the total purchases was found justified. [Paras 7]

Final Conclusion: The Tribunal partly allowed the appeal and held that full addition of the disputed purchases was unsustainable. The Assessing Officer was directed to confine the addition to 8% of the total purchases.

Disallowance of deduction u/s 35(1)(ii) -Deduction for donation to approved scientific research association - Subsequent withdrawal of approval - Disallowance based on general investigation report - addition u/s 69C on the premise of a bogus donation and alleged commission payment

Deduction for donation to approved scientific research association - Subsequent withdrawal of approval - Disallowance based on general investigation report - HELD THAT: - The Tribunal found that the donation had been made through banking channels to an institution which admittedly held approval at the time of payment, and the claim had also been accepted in the original scrutiny assessment. It held that no specific incriminating material had been brought on record to show that the assessee's donation was bogus or had come back to him, and the investigation material relied upon had not disclosed any concrete adverse evidence concerning the assessee's own transaction. The Tribunal further held that, in view of the Explanation to section 35(1), a later withdrawal of approval could not by itself defeat the assessee's claim, and the authorities below were not justified in disallowing the deduction on that basis. The order of the first appellate authority was also found unsustainable because the decisions relied on there were either factually distinguishable or unrelated to the claim u/s 35(1)(ii). [Paras 9, 10, 14]

The disallowance of the deduction under section 35(1)(ii) was deleted and the Assessing Officer was directed to allow the claim.

Unexplained expenditure on alleged commission - Addition based on adverse inference - HELD THAT: - The Tribunal held that once the assessee's donation was accepted as eligible for deduction, the foundation for treating the transaction as bogus and for inferring payment of commission disappeared. It further recorded that the addition was not supported by any specific evidence and rested only on adverse inference. On that reasoning, the addition under section 69C was held to be legally unsustainable. [Paras 15]

The addition under section 69C was directed to be deleted.

Final Conclusion: The Tribunal allowed the assessee's appeal on the substantive additions by holding that the deduction under section 35(1)(ii) was wrongly denied and that the consequential addition under section 69C was unsupported by evidence.

Non-issue of any show-cause notice or any draft assessment order before making the impugned additions - No Opportunity of hearing in assessment proceedings - Year of taxability of contractual receipts - Method of accounting and revenue recognition - Form 26AS receipts

No Opportunity of hearing in assessment proceedings - no show-cause notice or draft assessment order had been issued before making the addition - HELD THAT: - The Tribunal found from the assessment order that statutory notices under section 143(2) had been issued, the assessee had furnished details and explanations, and the Assessing Officer had discussed the show-causes issued, the replies filed, and the conclusions drawn. It also noted that no such grievance had been raised before the first appellate authority. On that basis, the plea of lack of adequate opportunity was held to be factually untenable. [Paras 4]

The challenge based on alleged non-grant of opportunity was rejected and the ground was dismissed.

Year of taxability of contractual receipts - Method of accounting and revenue recognition - Form 26AS receipts - HELD THAT: - The Tribunal held that the dispute was not about the taxability of the receipts, but only about the year in which they were liable to tax. It observed that taxation depends on the method of accounting adopted, namely cash basis or accrual basis. Although the assessee claimed to follow the completed service contract method, no material was brought on record to justify its adoption in the facts of the case. The Tribunal further held that the assessee's practice of adjusting receipts, losses and shortages through work-in-progress without transparent disclosure was not supported by the prescribed method of accounting under the Act. Since the assessee admitted receipt of the amounts during the relevant year along with corresponding tax deduction, and there was no demonstrative evidence of any subsisting dispute as to those receipts, the conclusion that they were taxable in the year under consideration was upheld. The Tribunal also held that reflection of the receipts with corresponding tax deduction in Form 26AS was an indicator of their taxability in that year, particularly when the assessee had not disclosed them in the earlier years on accrual basis. [Paras 12, 13, 14]

The addition, as sustained by the first appellate authority, was upheld and the assessee's challenge to taxability in Assessment Year 2018-19 failed.

Final Conclusion: The Tribunal dismissed the assessee's appeal. It held that adequate opportunity had been afforded in assessment proceedings and that the contractual receipts received during the relevant year, as reflected in Form 26AS, were rightly brought to tax in Assessment Year 2018-19.

Penalty levied u/s 272A(1)(d) - failure to comply with the notice issued u/s 142(1) -Adjournment request and subsequent compliance - Scrutiny assessment completed under section 143(3) - HELD THAT: - The Tribunal found from the record that, against the notices in question, the assessee had sought adjournments stating that the information sought was under compilation, and the required details were subsequently furnished. The assessment was thereafter completed u/s 143(3) on the returned income itself, showing that this was not a case of persistent default leading to best judgment assessment under section 144. On these facts, the Tribunal held that penalty under section 272A(1)(d) was not exigible. [Paras 8, 10]

The penalty levied under section 272A(1)(d) was quashed.

Final Conclusion: The Tribunal held that, since adjournments had been sought, the requisite details were later furnished, and the scrutiny assessment was completed under section 143(3) accepting the returned income, penalty under section 272A(1)(d) was not warranted. The assessee's appeal was accordingly allowed and the penalty was quashed.

Cash deposits during demonetization - Source of cash deposits - Double taxation - Sale proceeds of fixed assets - onus to prove

HELD THAT: - The Tribunal found that the assessee had furnished the cash book and quantitative stock details in support of the cash sales, and the cash book reflected sufficient balance from which the deposits were sourced.

Since the books were not rejected and no defect was found in the quantitative details, the assessee had discharged the onus of explaining the source of the deposits. AO's approach of limiting October sales on the basis of average sales of earlier months was held to be a fallacious assumption, particularly when two new retail outlets had been opened during the year.

Tribunal further held that once the cash sales had already been recorded as turnover, adding the same amount again as unexplained would amount to double taxation, which was impermissible. [Paras 3]

The addition on account of cash deposits during the demonetisation period was deleted.

Sale proceeds of fixed assets - small fixed assets items viz. hot-case, refrigerator, AC, cell phone, generator, TV, water purifier etc- HELD THAT: - The Tribunal noted that the amount represented sale proceeds of small fixed asset items and had been reduced from the fixed asset schedule. Amounts are quite petty in nature - It also found that no depreciation had been claimed on those items thereafter. On that basis, the addition was held to lack substance. [Paras 4]

The addition relating to sale proceeds of fixed assets was deleted.

Final Conclusion: The Tribunal allowed the appeal and deleted both additions. It held that the cash deposits were duly explained from recorded cash sales and cash balance, and that the separate addition relating to sale of small fixed assets was unsustainable.

Transfer pricing Adjustment - comparable selection - adjustment of software development segment - Acropetal Technologies Limited, E – Zest Solutions, E Infopchips Limited, ICRA Techno analyst Ltd and Persistent systems and solutions Ltd.

HELD THAT: - The Tribunal found that the Transfer Pricing Officer had acted only on the matters actually restored to him and had not dealt with the five comparables that had been remitted to the Dispute Resolution Panel. Although the Dispute Resolution Panel later considered the assessee's objections in the course of the draft assessment proceedings and retained those comparables, the Tribunal held that the specific course directed in the earlier appellate order had not been carried out in time.

Treating this as an irregularity requiring correction, and not as a ground to annul the entire assessment, the Tribunal directed the Assessing Officer to remove those five comparables and recompute the transfer pricing adjustment for the software development services segment. No further infirmity in the assessment order was found. [Paras 30, 31, 32]

AO was directed to exclude the five comparables and recompute the arm's length price adjustment; apart from this correction, the order was left undisturbed.

Final Conclusion: The appeal was partly allowed. AO was directed to exclude the five disputed comparables and recompute the arm's length price adjustment accordingly.

Unexplained cash credit u/s 68 - undisclosed income from undisclosed source invested in the property purchased by the assessee

HELD THAT: - The Tribunal found that the sale deed itself recorded that the total consideration had been paid in cash instalments from 1990 to 2012, with particulars of part-payments mentioned in the consideration clause. Assessee had produced details of the purchase, books of account and bank statement, and had explained the cash deposits and sources.

Since the documentary record showed the payment structure and the assessee had demonstrated that the payment was reflected through its own sources, the amount referable to the property purchase could not be treated as unexplained cash credit u/s 68. AO had failed to take cognizance of these materials. [Paras 8]

The addition relating to the property purchase was deleted, and the consequential grounds were allowed.

Final Conclusion: The Tribunal allowed the appeal and held that the addition made in respect of the property purchase could not be sustained as unexplained cash credit, in view of the recitals in the sale deed and the assessee's supporting records showing the source and period of payment.

Legality of the Provisional release of seized goods - Onerous condition requiring furnishing of a bank guarantee - Binding effect of advance ruling - Reliability of laboratory test reports - Maintainability of appeal - Proportionality of Security Conditions - Reasonable Nexus - Classification of Imported Goods - Moisture Content Test - Provisional Release Conditions.

Provisional release of seized goods - HELD THAT: - In the case of Principal Commissioner of Customs/Preventive Commissionerate, New Delhi Vs N & N Traders [2024 (4) TMI 918 - CESTAT NEW DELHI]. It has been observed by the Tribunal in para 29 that Chemical Examiner in CRCL has no role to play in the classification because classification is part of assessment which is an appealable order. All that the Chemical Examiner should say is what the goods are, what is the purity etc. We therefore find that the allegation of misdeclaration of the nature of goods is not very serious especially since it is based on somewhat ambiguous test report of CRCL.

The Tribunal held that the bank guarantee condition was arbitrary and unreasonable. It found that the appellant had imported the goods after obtaining an advance ruling in its favour on classification, and that ruling had not been challenged by the department and had thus attained finality inter partes. The Tribunal further accepted that, for determining whether the goods were roasted areca nuts, moisture-content parameters recognised in the advance ruling and in later judicial pronouncements could not be ignored. It found no credence could be given to the CRCL reports, since the testing was not completed within the time contemplated under the FSSAI import regulations, the opinion was based on mere visual inspection, and the chemical examiner was neither shown to be acting as a competent food analyst nor consistent in his reports on the same product. The Tribunal also noted that earlier reports concerning the appellant's consignments and reports of the nearest accredited laboratory had treated the goods as roasted areca nuts fit for human consumption. In that background, and also noticing that reliance on Circular No. 35/2017 for insisting on bank guarantee had been disapproved by the High Court, the Tribunal held that insistence on the bank guarantee could not be sustained, while clarifying that the merits of classification and adjudication would remain open. [Paras 11, 12, 14, 15, 16]

The goods were directed to be released in terms of the provisional release order, but without the requirement of furnishing the bank guarantee.

Maintainability of appeal - HELD THAT: - The Tribunal rejected the departmental objection to maintainability. It recorded that the writ petition referred to by the department did not preclude the present appeal, since the High Court had granted liberty to the appellant to challenge the provisional release order during pendency of the writ proceedings. On that basis, the Tribunal held that the objection to its jurisdiction or maintainability had no force. [Paras 13]

The appeal was held to be maintainable.

Final Conclusion: The Tribunal held that the appeal against the provisional release order was maintainable and that the condition requiring bank guarantee for release of the goods was arbitrary and unsustainable. The goods were directed to be released on the remaining conditions of the provisional release order, without prejudice to final adjudication on merits.

CVD exemption on imported manganese ore - Deemed manufacture of concentrates- denial of the benefit of exemption from payment of CVD in terms of S.No.04/2006-CE - imported goods are not ‘Manganese Ores’ as the said goods have undergone washing, removal of waste and sizing - ‘Manganese Concentrates’.

Ore versus concentrate - CVD exemption on imported manganese ore - Deemed manufacture of concentrates - HELD THAT: - The Tribunal held that the goods supplied were not run-of-mine ore in the form in which they emerged from the mine, and that the admitted processes undertaken on them before import had to be examined in light of the chapter note and HSN explanation. Following its earlier decision in M/s Sarda Energy & Minerals Ltd & Ors Vs CC, Visakhapatnam [2026 (1) TMI 532 - CESTAT HYDERABAD], the Tribunal accepted that processes undertaken on ROM ore for removal of foreign matter and for obtaining the required quality or suitability result in conversion of ore into concentrate. Once such conversion is deemed to amount to manufacture, concentrates become distinct from ores in law, and an exemption confined to ores cannot be extended to concentrates. The Tribunal therefore rejected the contention that washing, removal of waste and sizing were merely normal preparatory processes preserving the character of ore. [Paras 11, 12, 13]

The imported goods were rightly treated as manganese concentrates and the benefit of exemption from CVD under the notification was not available.

Final Conclusion: Following its earlier decision on the same issue, the Tribunal held that the imported goods were manganese concentrates and not manganese ore eligible for the claimed exemption. The denial of CVD exemption was upheld and the appeal was dismissed.

Legality of the confiscation of the vehicle, redemption fine and penalty - Burden of proof as to foreign origin of non-notified goods - Confiscation of conveyance used for transport of alleged smuggled goods - Penalty dependent on proof of illicit importation.

Burden of proof as to foreign origin of non-notified goods - HELD THAT: - The Tribunal held that the sole basis for action against the appellant was the allegation that the vehicle was transporting green peas/yellow peas of foreign origin. On examination of the record, no document was found to support that allegation. Since the goods were not notified goods under Section 123 of the Customs Act, the burden remained on the Revenue to establish their foreign origin. In the absence of such proof, confiscation of the vehicle used for transport of those goods could not be sustained; consequently, redemption fine and penalty on the appellant also could not survive. [Paras 10, 11]

The confiscation of the vehicle, the redemption fine, and the penalty imposed on the appellant were set aside.

Final Conclusion: The Tribunal allowed the appeal and set aside the impugned order insofar as it upheld confiscation of the vehicle and imposition of penalty on the appellant, holding that the Revenue had failed to prove foreign origin of the non-notified goods.

Refund Maintainability - Appeal in Continuation of Assessment - Prematurity of refund claim - filed while the dispute regarding entitlement to the exemption notification - Cause of action for refund of duty paid under protest.

Prematurity of refund claim - Cause of action - Duty paid under protest - HELD THAT: - The Tribunal held that the determinative question was not the eventual entitlement to exemption, but whether a legally enforceable cause of action for refund had arisen when the application was filed. Applying Dena Snuff (P) Ltd. vs. Commissioner of Central Excise, Chandigarh [2003 (9) TMI 84 - SUPREME COURT], it held that where duty is paid under protest and the very basis of refund depends on a disputed issue of classification or exemption, the right to seek refund arises only after that dispute is finally settled in the assessee's own case. Since, on the date of the refund application, the controversy regarding the appellant's eligibility to the exemption notification had not yet been finally decided, the application was premature and liable to be rejected.

Section 28 of the Customs Act deals with recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. To issue a show cause notice under section 28 to recover duty not levied, not paid, short levied, short paid or erroneously refunded, the cause of action must have two elements- (a) the fact that duty was paid or refunded and (b) in the opinion of the proper officer issuing the notice more duty should have been paid or levied or that duty has been refunded erroneously. It is usually the practice of the department to keep issuing ‘show cause notices for subsequent periods or subsequent clearances’ under section 28 of the Customs Act contrary to the decisions holding the field at that time and, therefore, without a cause of action in the hope of succeeding in appeal. These, so called ‘protective demands’, i.e., show cause notices issued without cause of action will be equally covered by the judgment of the Supreme Court in Dena Snuff (Supra) and even if the cause of action arises subsequently, the show cause notice cannot be issued at a time when there was no cause of action.

The refund claim was held to be premature and its rejection was sustained.

Final Conclusion: The Tribunal dismissed the appeal and upheld rejection of the refund claim. It held that, notwithstanding the later decision on exemption in the appellant's favour, the refund application had been filed before the dispute was finally settled and was therefore premature.

Demand based on the allegation that goods were imported in excess of the quantities declared under Rule 5 of the IGCR Rules - Denial of exemption for alleged excess quantity - Burden to establish procedural irregularity - Extended Period of Limitation.

Concessional import under IGCR Rules - HELD THAT: - The Tribunal held that under the scheme of the IGCR Rules, concessional clearance at the port is granted only on the strength of the declaration transmitted by the jurisdictional officer, while the bond and end-use control also remain with that officer. Since there was no dispute that the imported goods were used for the declared purpose, recovery under the Rules on account of non-use did not arise. The sole basis of the demand was alleged excess import over the declared quantity, but the record did not show whether any irregularity was committed by the jurisdictional officer in transmitting a higher quantity or by the officer at the port in allowing clearance beyond the declared quantity. In the absence of any finding identifying such irregularity in the departmental process, the demand could not be confirmed against the importer. [Paras 14, 15, 16, 17, 18]

The demand of duty, with consequential interest and penalty founded on the same allegation, was set aside and the appeal was allowed.

Final Conclusion: The Tribunal held that the allegation of excess imports in breach of Rule 5 of the IGCR Rules was not established against the appellant. As there was no finding showing how the excess quantity was cleared within the departmental mechanism, the impugned demand, interest and penalty were set aside.

Legality of the conditions imposed for provisional release - rejection of the declared FOB transaction value - redetermination under the export valuation rules - Export incentives based on transaction value - claiming the benefit of Merchandise Exports from India Scheme [MEIS] under the Foreign Trade Policy [FTP] implemented by the Directorate General of Foreign Trade [DGFT] and also claiming drawback - Admissibility of statements under section 108 - Confiscation for alleged overvaluation of export goods.

FOB value and customs valuation - Export incentives based on transaction value - HELD THAT: - The Tribunal held that FOB value is the transaction value agreed between exporter and overseas buyer, and such contractual value cannot be altered by customs officers. Determination of value under section 14 and the Export Valuation Rules operates only for customs valuation purposes. Drawback and MEIS are linked to the FOB value under the governing scheme and policy, with separate mechanisms for ensuring realisation of export proceeds. Since no provision of the Customs Act empowered the Additional Commissioner to restrict export benefits or override the drawback schedule or the Foreign Trade Policy, the direction in the corrigendum reducing export incentives was without jurisdiction. [Paras 32, 34, 36, 37, 38]

The order reducing export benefits on the basis of re-determined customs value was illegal and could not stand.

Admissibility of statements under section 108 - Residual method of export valuation - HELD THAT: - The Tribunal found that the statements recorded under section 108 could not be used as evidence because the procedure required by section 138B had not been followed and there was no finding that the statutory conditions for their admission were satisfied. The market enquiry report was also found unreliable, as it was prepared by a chartered engineer whose expertise was not in footwear valuation and it proceeded on notions of 'fair value' and 'estimated FOB value', concepts not recognised by section 14 or the Export Valuation Rules. The Rules require sequential redetermination through the prescribed methods, and recourse to the residual method could not be sustained on such material. [Paras 42, 45, 46, 47]

Neither the rejection of the transaction value nor the redetermination of export value was legally sustainable.

Confiscation for alleged overvaluation of export goods - Penalty for false declaration - HELD THAT: - The Tribunal noted that on examination the goods were found to correspond with the declaration, and the dispute was confined to valuation. Rule 11 of the Foreign Trade Rules required declaration of value, quality and description to the best of the exporter's knowledge in accordance with the export contract, and that requirement stood satisfied. Section 113(i) could not be invoked merely because the proper officer later rejected the transaction value and fixed another value, since an exporter can only declare the transaction value in the shipping bill and cannot anticipate a value that may later be determined by the department. On that basis, confiscation failed, rendering redemption fine irrelevant, and the consequential penalties under sections 114(iii) and 114AA also could not survive. [Paras 51, 52, 53, 54]

The confiscation, redemption fine and penalties were liable to be set aside.

Final Conclusion: The appeal was allowed and the impugned order was set aside. The Tribunal held that customs redetermination of value did not authorise reduction of export incentives, the valuation exercise itself was unsustainable, and the resulting confiscation and penalties could not be maintained.

Scope of the obligation of the customs broker under Regulation 10 - Advice to client under Regulation 10(d) - failing to exercise due diligence and ascertaining the correctness of information imparted to the exporter - Presumption of Genuineness - Reliance on Government-Issued Documents - Burden of Proof - KYC and address verification under Regulation 10(n) - violation of the Regulations 10(d), 10(e) and 10 (n) of CBLR.

Advice to client under Regulation 10(d) - Burden to prove non-compliance - HELD THAT: - The Tribunal held that for alleging breach of Regulation 10(d), the department had to produce credible material showing that the Customs Broker had not advised the exporter to comply with the Act and Rules. The show cause notice contained no such evidence. On the contrary, the appellant produced a letter from the exporter confirming that such advice had been given. The Commissioner's rejection of that letter on the ground that it did not specify the nature of due diligence or details of the advice was held unsustainable, since the Regulation does not require any such written particulars or even mandate production of a letter at all. [Paras 13, 14]

The finding of breach of Regulation 10(d) was set aside as baseless.

Due diligence under Regulation 10(e) - Non-application of mind - HELD THAT: - The Tribunal found that the Commissioner's reasoning under Regulation 10(e) was internally inconsistent with his own finding under Regulation 10(d). While one part of the order proceeded on the basis that no advice had been given, the finding under Regulation 10(e) suggested that incorrect or inaccurate information had been imparted. Neither the show cause notice nor the impugned order identified what incorrect information had actually been provided by the appellant to the exporter. In the absence of any stated material or specific information said to be wrongly imparted, the conclusion of violation could not stand. [Paras 16, 17]

The finding of breach of Regulation 10(e) was held wholly baseless and was set aside.

KYC and address verification under Regulation 10(n) - Reliance on government-issued documents - HELD THAT: - The Tribunal broke Regulation 10(n) into four components: verification of IEC, verification of GSTIN, verification of identity, and verification of functioning at the declared address through reliable, independent and authentic documents, data or information. It held that the obligation regarding IEC and GSTIN is satisfied once the Customs Broker verifies that such registrations were in fact issued by the competent authorities; the Regulation cannot be construed as requiring the broker to ensure that those authorities had correctly issued them, since that would amount to making the broker supervise governmental action under other statutes. As to identity and functioning at the declared address, the Regulation permits verification through documents, data or information and does not mandate a physical visit to the client's premises. Government-issued documents can reasonably be relied upon for this purpose, and the broker is not under a duty of continuous surveillance to ensure that the client continues to operate from the same place. If a benami or improperly issued GSTIN exists, responsibility lies with the issuing authority, not with the Customs Broker who relied upon it. Applying this construction, the Tribunal found that the appellant had verified the relevant registrations and identity documents and had fulfilled the obligation under Regulation 10(n). The Tribunal also relied on Kunal Travels [2017 (3) TMI 1494 - DELHI HIGH COURT] for the principle that a Customs House Agent is not expected to investigate the genuineness of each import/export transaction or IE code like an inspector. [Paras 27, 28, 29, 30, 31]

The finding of breach of Regulation 10(n) was unsustainable and was set aside.

Final Conclusion: The Tribunal held that none of the alleged violations of Regulations 10(d), 10(e) and 10(n) was established. The revocation of the Customs Broker licence, forfeiture of security deposit and penalty were therefore set aside, with a direction to restore the licence forthwith.

Rejection of the application for restoration of the company's name in the register - Section 252(3) requirements - sufficient proof of business operations - Consideration of material documents - power to strike off and restore a company's name under the Companies Act, 2013.

Restoration of struck off company - HELD THAT: - The Appellate Tribunal held that the impugned order proceeded on a misinterpretation of the company's status as inactive and rested on vague reasoning. It noticed that the objection of the Registrar of Companies and the documents produced by the appellant, including the balance sheet material relied upon to show continuing operations, had not been properly appreciated, and that the reasons assigned in the impugned order were contradictory to the stand taken by the Registrar of Companies. In that background, and keeping in view the principle noticed by the Appellate Tribunal in CA (AT) (CH) No. 66 / 2023 that the endeavour should be to support revival of the company rather than otherwise, the order refusing restoration could not be sustained. The matter was therefore remitted for fresh consideration of the restoration application after examining the documents said to show that the company was in operation when its name was struck off. [Paras 9, 10]

The impugned order was quashed and the matter was remitted to the Tribunal for fresh consideration of the restoration application in accordance with law, without any final adjudication on the merits of restoration.

Final Conclusion: The Appellate Tribunal set aside the order refusing restoration of the company, holding that the material on record had been misread and the reasoning adopted was contradictory and inadequate. The matter was remanded for reconsideration of the application for restoration after examining the documents relied on to show that the company was in operation at the relevant time.

Validity of an order directing investigation into the affairs of a company under Section 213(b) of the Companies Act, 2013 - Locus Standi - apparent procedural and adjudicatory vices of non-application of mind - sufficient grounds or reasons - want of reasons and due satisfaction under Section 213(b) - statutory power to order investigation under Section 213(b).

Reasoned satisfaction for investigation into company affairs - HELD THAT: - The Appellate Tribunal held that Section 213(b) requires the Tribunal to apply its mind to the circumstances stated in the provision and to record reasons justifying the necessity of investigation, since such a direction has serious consequences. In the present case, the impugned order did not disclose any reasons necessitating investigation. It also overlooked the earlier order by which the Tribunal had required the applicant to establish locus before the application could be considered on merits. Proceeding to allow the application without deciding that preliminary objection and without recording the requisite satisfaction rendered the order procedurally erroneous and vitiated by non-application of mind. [Paras 9, 10]

The impugned order directing investigation was quashed, and the matter was remitted for fresh consideration after first taking into account the earlier order requiring determination of the applicant's locus and then passing an order in accordance with law.

Final Conclusion: The appeal was allowed to the extent that the order directing investigation under Section 213(b) was set aside for want of reasons and for failure to consider the applicant's locus as earlier directed. The matter was remitted to the Tribunal for fresh consideration in accordance with law.

Entitlement to recovery of possession during the moratorium - Leased property in possession of corporate debtor - default in payment of rent for two consecutive months - sufficient proof of the ownership/landlordship - Going Concern - rejection of claim for delivery of the leased premises - Pre-CIRP Termination.

Moratorium on recovery by owner or lessor - HELD THAT:- The Appellate Tribunal held that Section 14(1)(d) is absolute in its operation so long as the property is occupied by or remains in the possession of the corporate debtor. Reading the provision with Regulation 31(b), it found that even a prior termination notice does not enable the lessor to recover the property during moratorium, and the affected lessor's dues are to be dealt with as CIRP costs. Relying on the distinction between physical occupation and possession drawn in Rajendra K. Bhutta v. Maharashtra Housing and Area Development Authority and Another [2020 (3) TMI 34 - SUPREME COURT] and on the principle that possession continuing after termination is still juridical and protected until due eviction, the Tribunal concluded that actual physical possession of the property could not be taken away during subsistence of moratorium. The authorities cited by the appellant were held inapplicable because they concerned situations where the corporate debtor or resolution professional was not in possession, or dealt with different subject-matter and statutory context. Since the resolution professional admittedly remained in possession of the leased property, recovery by the appellant was impermissible. [Paras 18, 19, 22, 23, 24]

The prayer for recovery of possession was rejected and the appeal was dismissed.

Final Conclusion: The Appellate Tribunal held that, since the resolution professional continued to be in possession of the leased premises, Section 14(1)(d) barred the lessor from recovering the property during moratorium notwithstanding prior termination of the lease. The appeal was accordingly dismissed, with a request for expeditious conclusion of the pending insolvency proceedings.

Legitimacy of the lease deed - claimed possession over the property - Eviction during subsistence of claim to lawful possession.

Lease-based possession - Alleged encroachment - Remand for joint consideration -HELD THAT:- The Appellate Tribunal held that two proceedings concerned the same property: one challenging the legitimacy of the lease deed and the appellant's right to remain in possession, and the other seeking eviction on the footing of encroachment. So long as the earlier application remained pending, a finding that the appellant was an unlawful occupant could not be sustained. The appellant's earlier lack of diligence in contesting the eviction application did not alter the position that the controversy over its right to occupy the property had not yet been adjudicated. The Tribunal therefore considered the eviction order irreconcilable with the pending adjudication of the lease-based claim and directed that the application seeking recall be considered together with the earlier pending application. [Paras 9, 10, 11]

The impugned order was set aside and the matter was remanded to the Adjudicating Authority to consider the appellant's application along with the pending application concerning the lease deed; meanwhile, the appellant was permitted to continue in possession of the property covered by the lease deed until disposal of those applications.

Final Conclusion: The appeal was allowed. The order dismissing the appellant's challenge was set aside, the matter was remanded for consideration along with the pending application concerning the lease, and the appellant's possession of the leased property was protected until such disposal.

Rejection of the section 9 application - want of proper reasoning and consideration of the record - pre-existing dispute regarding quality of goods and communications - non-speaking order.

Reasoned order - Pre-existing dispute - Material evidence - HELD THAT: - The Appellate Tribunal held that the impugned order was unsustainable because it merely recorded the existence of credit notes and a prior communication on quality issues without furnishing a proper analysis. On the record before it, the Tribunal found that the Respondent had raised a specific case of supply of sub-standard material in its reply to the demand notice and in its pleadings, supported by WhatsApp screenshots which were not specifically denied, and one debit note was found prima facie relevant while another was not. The Tribunal also noted that the alleged communication referred to in the impugned order and the lab test report relied upon by the parties were not available on record. In the absence of these documents, the Tribunal declined to finally determine the controversy on merits and held that the matter required reconsideration through a fresh reasoned order after hearing both sides. [Paras 34, 35, 36, 37, 38]

The impugned order was set aside and the matter was remanded to the Adjudicating Authority for fresh consideration and a reasoned decision after affording opportunity of hearing to the parties.

Final Conclusion: The Appellate Tribunal set aside the rejection of the operational creditor's application, holding that the impugned order was cryptic and unsupported by proper reasoning. Since material documents referred to by the parties were not on record, the controversy was remanded to the Adjudicating Authority for a fresh reasoned decision.

Entitlement for recovery of the amounts decreed by Ld. DRT by filing the application under section 7 of the Code - barred by limitation for want of a specific date of default - Limitation for initiation of CIRP - Cause of action - Recovery certificate as financial debt - Corporate guarantor liability - determination about the aspect of debt and default​​​​​​​.

Limitation for initiation of CIRP - That the principal borrower for whom the Respondents herein stood as Corporate Guarantors has already been determined to be a defaulter by commencement of the CIRP against the principal borrower resulting into the liquidation order. because there happens to be a determined default and liability to pay on account of the orders passed by the DRT.

Because the liability arising out of the Recovery Certificate issued by the DRT upon its adjudication would be a financial debt within the meaning of Section 5(8) of the Code, and holder of such certificate would be entitled to initiate CIRP, if initiated within a period of three years from the date of issuance of the recovery certificate,

Because, the finding recorded by the Tribunal based upon an incorrect interpretation of the contents of the application preferred under Section 7 of the I & B Code, that the date of default has not been mentioned, is not correct,

HELD THAT: - The Appellate Tribunal held that, where the debt had already been adjudicated by the DRT and a recovery certificate had been issued, the liability arising therefrom constituted a financial debt, and the right to initiate CIRP could be exercised within three years from the date of the recovery certificate, or at the highest from the date of the DRT order. The section 7 applications, filed on the basis of the DRT orders and recovery certificate, were therefore not barred by limitation. It was further held that the corporate guarantors, who had contested the DRT proceedings and against whom liability had been fastened jointly and severally, could not in the subsequent CIRP proceedings reopen limitation on the footing that the original default dated back to the NPA. The Tribunal also found that Part IV of the applications did contain the material particulars by specifically referring to the DRT orders, the recovery certificate and the quantified default, and that the Adjudicating Authority erred in holding that there was no pleading or document showing default. The fact that CIRP had already been admitted against the principal borrower on the same debt and default also reinforced that the same claim against the corporate guarantors could not be discarded on the ground of limitation. [Paras 22, 23, 24, 25, 26]

The rejection of the section 7 applications on the grounds of limitation and non-mention of date of default was held erroneous; the impugned orders were quashed and the matters were remitted for decision on merits without being influenced by those grounds.

Final Conclusion: The Appellate Tribunal held that the section 7 applications against the corporate guarantors were not barred by limitation when founded on the DRT adjudication and recovery certificate, and that the applications could not be rejected for want of a separately stated date of default. The impugned orders were quashed and the matters were remitted to the Adjudicating Authority for fresh decision on merits.

Professional misconduct of insolvency professional - Challenged to the adverse findings and recommendation for investigation against the resolution professional - Resolution Professional failed to ensure that the selected plan satisfied the conditions laid down by Section 29A of the Code, as well as Section 30(2) of the Code to be read with Regulation 38(3)(e) of the CIRP Regulations, 2016 - Code of Conduct - Insolvency professional discipline - Binding effect of earlier affirmed order - Contravention and imposition of penalty.

Professional misconduct of insolvency professional - HELD THAT:- The Appellate Tribunal held that the findings recorded against the appellant could not be treated as malicious, perverse or contrary to record, since they rested on the earlier order of the coordinate Bench which had already noticed lapses on his part and which stood affirmed by the Hon'ble Apex Court. It further relied on the independent disciplinary proceedings initiated under the regulatory framework, in which misconduct had already been found established and penalty imposed. In that situation, the Tribunal held that it would not be proper to re-examine the same allegations or take a view contrary to the earlier order as affirmed, and therefore no ground for interference with the impugned remarks and consequential referral was made out. [Paras 13, 14, 15]

No interference was warranted with the impugned findings against the appellant resolution professional, and the appeal was dismissed.

Final Conclusion: The Appellate Tribunal declined to interfere with the adverse findings and recommendation made against the appellant resolution professional. Holding that the matter stood supported by the earlier affirmed order and by the disciplinary committee's finding of misconduct, it dismissed the appeal.

Settlement and full compliance with the payment undertaking - Admission of Section 7 application, as against the Corporate Debtor - barred by limitation - debt due is below the prescribed limit of the threshold as prescribed under Section 4 of the I & B Code - HELD THAT:- Owing to the settlement, which has been submitted by the Appellant vide its email communication of 20.01.2026 and, because of the fact that in compliance with the interim order passed by us on 28.01.2026, the entire amount has already been remitted, no amount is now standing due to be paid by the Appellant and as a consequence to the terms of the settlement referred to in the email communication, no controversy as such as of now survives to be adjudicated on merits in the company appeal.

In view of the settlement and the recorded remittance of the agreed amount, the appeal was allowed, the impugned order admitting the Section 7 application was quashed, and the matter was disposed of in terms of the settlement.

Export realisation and repatriation of export proceeds - failing to realise export proceeds within the prescribed period and by not taking reasonable steps to recover outstanding amounts - Vicarious liability of directors - Burden of proof - non-shipment against advance remittances within one year attracted contravention under the Export Regulations.

It is the case where export proceeds amounting to US $117,315,207.13 with respect of 417 export invoices remained unrealized beyond the prescribed period and the appellants failed to take reasonable and effective steps to realize the said proceeds. The respondent contended that M/s J.B. Diamonds Ltd. failed to export goods against the receipt of advance amounting to a total sum of INR 3,77,21,139/- from its overseas buyers within twelve months from the date of receipt of such advance thereby contravening section 7 of FEMA, 1999 read with Regulation 16(1)(i) of Export regulation.

Realisation and repatriation of export proceeds - Reasonable steps for recovery - HELD THAT: - The Tribunal held that Section 7 of FEMA read with the export regulations casts an obligation on the exporter to realise and repatriate the full export value within the stipulated period, with extension being permissible only on sufficient cause shown to the Reserve Bank of India or the authorised dealer. On the material on record, the outstanding export proceeds had remained unrealised for several years, and there was no satisfactory documentary evidence showing effective recovery action during the period when the overseas buyers were still in business. The appellants also failed to establish that any extension had in fact been obtained, and the material relied upon to show liquidation of overseas buyers was not supported by official records or by proof of claims before liquidators or other concrete recovery proceedings. The plea based on recession and financial distress of foreign buyers was therefore found insufficient to establish due diligence or reasonable steps. [Paras 15, 16, 17, 18]

The finding of contravention in relation to non-realisation of export proceeds was sustained.

Advance payment against exports - Shipment within one year - HELD THAT: - The Tribunal rejected the contention that Regulation 16(1)(i) would be attracted only if advance amounts were refunded after one year without Reserve Bank approval. It held that, on a plain reading, the regulation imposes a primary obligation on the exporter to ensure shipment of goods within one year from receipt of advance payment, and the proviso concerning refund after expiry of that period does not dilute that basic requirement. Since it was admitted that exports were not made against certain advances received from overseas buyers, and no satisfactory explanation was furnished for non-shipment within the prescribed time or for adjustment of those advances against other export obligations, the adjudicating authority's conclusion was held to be justified. [Paras 19]

The finding of contravention of Section 7 read with Regulation 16(1)(i) was affirmed.

Vicarious liability of directors - Persons in charge of and responsible for the conduct of business - All directors except one appellant were liable under the provision governing contravention by companies, as they were shown to be responsible for the conduct of the company's business and failed to prove lack of knowledge or due diligence. - HELD THAT: - The Tribunal held that where the contravention is by a company, every person who was in charge of and responsible for the conduct of its business at the relevant time is deemed guilty unless that person proves lack of knowledge or due diligence. On the record, it stood admitted that the named directors were responsible for the conduct of the company's business, and no material was produced to displace that position or to show that they had exercised due diligence to prevent the contraventions. However, in the case of one appellant, the Tribunal found that she was only a housewife, was not concerned with the day-to-day affairs of the company, and there was nothing to show her knowledge of the exports or the non-realisation of proceeds. [Paras 20, 21]

Liability under the provision relating to contravention by companies was upheld against all appellant directors except Smt. Kalavatiben V. Surani, whose appeal was allowed.

Final Conclusion: The Tribunal upheld the findings of contravention against the company's responsible directors in relation to non-realisation of export proceeds and non-shipment against advances received. The appeal of Smt. Kalavatiben V. Surani alone was allowed, and the appeals of the other directors were dismissed.

Foreign remittances -Proof of import - High sea sale documentation - Contravention of remittance compliance obligations - failure on the part of the Appellant to deposit Bill of Entry as proof of import of teak logs - Whether the Bill of Entry No. 12180 dated 13.11.1997 covers the impugned remittances of US $ 15000, US $ 15000 and US $ 41,537.88 for the imports by the Appellant.

Proof of import - High sea sale documentation - HELD THAT: - The Tribunal found that the Bill of Entry was filed by the purchaser under the appellant's asserted high sea sale and that it related to the same Bill of Lading. However, the crucial noting relied upon by the appellant to show that the total of the three remittances was covered was handwritten, partly illegible, and unsupported by anything showing that it was made by authorised personnel. The Bill of Entry also reflected customs assessment on the CIF value and high sea sale expenses, but there was nothing on record to show that customs duty had been charged on the total amount claimed by the appellant. In addition, RBI had confirmed that the Bills of Entry for the three remittances had not been submitted to the Authorised Dealer. On that basis, the finding of contravention was sustained. [Paras 5]

The challenge to the finding of contravention failed, but the penalty was reduced to Rs. 2,50,000/- and the pre-deposit was directed to be adjusted towards the reduced penalty.

Final Conclusion: The Tribunal upheld the finding that the appellant had failed to establish submission of proof of import in respect of the three remittances and, consequently, the contravention stood. The appeal was partly allowed only to the extent of reducing the penalty, with adjustment of the amount already deposited.

Admissibility of electronic evidence - Pen-drive data and printouts seized from the premises of a third party - Retracted statement and corroboration - Unauthorized foreign exchange transactions - powers of search and seizure, the officers of the Directorate of Enforcement - Non-banking channel - contravention of Section 3(b), Section 3(c) and Section 3(d) of FEMA, 1999 various provisions of Foreign Exchange Management Act, 1999.

Admissibility of electronic evidence - Presumption as to seized documents - HELD THAT: - The Tribunal held that under the statutory presumption applicable to documents produced, furnished or seized, the contents of such material are presumed to be true unless disproved. It further held that the same principle extends to electronic material found in a pen-drive. On the record, the seizure, retrieval and printout of the data were treated as having been done in the presence of the concerned persons and witnesses, with passwords being supplied at the time of access, and no contemporaneous dispute as to the contents having been raised. In that view, the allegation of tampering or inadmissibility was rejected, and the electronic data was accepted as authentic evidence. [Paras 5]

The objection to the admissibility and authenticity of the pen-drive data was rejected.

Retracted statement and corroboration - Identification despite spelling variation - HELD THAT: - The Tribunal held that a bare retraction or denial, without material showing that the statement was involuntary, carries no value. It found that the appellant's statements stood corroborated by other material on record, including the statements of Ratan Das and the electronic records recovered during investigation. Relying on A. Tajudeen Vs. Union of India [2014 (10) TMI 367 - SUPREME COURT], the Tribunal accepted that a retracted statement can be acted upon when supported by independent material. It further held that the different spellings of the appellant's name in the mobile data and pen-drive were merely phonetic or clerical variations and did not negate that the reference was to the appellant. [Paras 6]

The retraction and the objection based on name variation were rejected.

Violation of section 16 (6) of FEMA - The Tribunal held that the provision relied upon by the appellant was advisory in nature and not mandatory. Consequently, delay in conclusion of the adjudication did not, by itself, invalidate the proceedings or the order passed therein. [Paras 7]

The challenge founded on alleged violation of section 16(6) of FEMA was rejected.

Contravention under FEMA - Reduction of penalty - HELD THAT: - After accepting the statements of Ratan Das, Srinivas and the appellant, along with the corroborative electronic and documentary material, the Tribunal held that the record established contravention of the FEMA provisions invoked against the appellant. However, on the facts and circumstances of the case, it considered the quantum of penalty excessive and reduced the penalties to 20% of what had been imposed by the adjudicating authority. [Paras 8, 9]

The contraventions were upheld, but the penalties were reduced to 20% of the amounts originally imposed.

Final Conclusion: The Tribunal rejected the appellant's objections to the admissibility of the seized electronic record, the retraction of his statements, and the alleged breach of the time requirement under section 16(6) of FEMA. The finding of contravention was maintained, but the appeal was partly allowed by reducing the penalties to 20% of those imposed by the adjudicating authority.

Export of service - services rendered as General Sales Agent - Taxability of receipt of commission including Overriding Commission (ORC) - Exemption conditioned on receipt in convertible foreign exchange - Scope of Circular No.56/5/2003 dated 25.04.2003 and Notification No.21/2003 dated 22.11.2003 to Notification No.9/2005 dated 03.03.2005 under which Export of Service Rules, 2005 - Strict construction of exemption notification - Extended period of limitation - Suppression of facts - Wilful misstatement -levy of service tax.

Translanka and ETA, collectively referred to as appellants, are engaged in the business of managing a travel agency. Translanka had been appointed by Srilankan Airlines as a General Sales Agent (GSA) for the States of Tamil Nadu, part of Kerala and Union Territory of Puducherry, vide agreements dated 27.03.2003 and 07.11.2003. Likewise, ETA had been appointed as a GSA by Malaysian Airlines vide agreement dated 02.11.2000 for the territory of India.

Export of service - Receipt in convertible foreign exchange - The services rendered by Translanka for the period June, 2005 to March, 2006 constituted export of service. - HELD THAT: - The Court held that once the Export of Service Rules, 2005 applied, the relevant test was whether the service was provided to a recipient located outside India, delivered and used outside India in business outside India, and the consideration was received in convertible foreign exchange. On the admitted facts, the services to Srilankan Airlines were delivered outside India, utilised in business outside India and the payment was received in convertible foreign exchange. In that situation, the Tribunal was not justified in holding that the services had been rendered only in India. [Paras 17, 18, 19]

Question of law on export of service for Translanka for June, 2005 to March, 2006 was answered in favour of the appellant.

Exemption conditioned on receipt in convertible foreign exchange - Strict construction of exemption notification - Distinguishing precedent on facts - Receipt of overriding commission in Indian currency by credit notes did not satisfy the condition for exemption applicable to export of service for the pre-2005 period. - HELD THAT: - The Court held that both the Board Circular and Notification No.21/2003 made exemption conditional upon receipt of payment in India in convertible foreign exchange, and that such a pre-condition in an exemption notification must be strictly construed. The appellants admittedly received the overriding commission in Indian rupees by credit notes issued by the Indian offices of the airlines. The decision in J.B.Boda & Co. Pvt. Ltd. V. Central Board of Direct Taxes [1996 (10) TMI 70 - SUPREME COURT] was held inapplicable because, in that case, the transaction was expressed and effected in foreign exchange through the Reserve Bank of India and the retained commission was itself in foreign currency; here, the commission was received in INR. Suprasesh General Insurance Service & Brokers Private Limited was also distinguished since there the brokerage was retained out of premiums admittedly received in convertible foreign exchange. Arafaath Travels Pvt. Ltd., though factually similar, was not followed as it proceeded on Suprasesh without noticing the distinction in the remittance mechanism. The Court therefore affirmed the denial of exemption for the periods in which the commission was received in INR. [Paras 28, 30, 31, 32, 33]

The claim to exemption failed wherever the overriding commission was received in Indian currency, and the Tribunal's order on that aspect was confirmed.

Extended period of limitation for suppression - Knowledge of taxability - Wilful non-compliance - HELD THAT: - The Court accepted the revenue's case that the appellants were aware of the service tax implications of the manner in which the overriding commission was being received. The investigations revealed correspondence with the airline companies and legal opinions obtained by the appellants showing knowledge that the services were taxable as Business Auxiliary Services and that receipt in INR would jeopardise the exemption claim. Despite such knowledge, they neither altered the manner of receipt in time nor complied with registration and payment requirements, but continued to claim exemption. On that basis, the Court held that suppression stood attracted within the meaning of the proviso, since the surrounding circumstances showed conscious continuation of a claim known to be vulnerable to tax. Stemcyte India Therapeutics Pvt. Ltd. V. Commissioner of Central Excise and Service Tax, Ahmedabad-III [2025 (7) TMI 1007 - SUPREME COURT] was distinguished on facts because in that case the Court found no suppression with intent to evade tax. [Paras 38, 39, 40, 44, 45]

The substantial questions relating to extended limitation were answered in favour of the revenue.

Final Conclusion: The Court held that Translanka's services for June, 2005 to March, 2006 qualified as export of service under the Export of Service Rules, 2005. In all other respects, including the claim to exemption where the overriding commission had been received in Indian currency and the challenge to invocation of the extended period of limitation, the appellants failed and the revenue succeeded.

Adjudication within reasonable period - Inordinate delay in service tax proceedings - Call Book pendency - short payment of service tax -Arbitrary revival of show cause notices - fabrication and erection of structures at the sites of principal employers using materials supplied by them and is registered under the Service Tax laws.

Section 73(4B) time discipline - Reasonable period for adjudication -HELD THAT:- The Court held that Section 73(4B) reflects a legislative expectation that adjudication of service tax notices be completed expeditiously. Though the expression "where it is possible to do so" makes the prescribed period directory and not mandatory, it does not permit the Department to keep proceedings dormant for an inordinate and unexplained period. For the first two financial years, the limitation had already run out before the matters were placed in the Call Book, and for the third year, even assuming pendency of similar proceedings furnished a reasonable explanation, the order was still not passed within one year after withdrawal of the Department's appeal. Pendency of another matter on a similar issue before the CESTAT or the High Court was held not to justify keeping each show cause notice in abeyance, since every notice is an independent proceeding and adjudication could have continued subject to appellate remedies. The prolonged administrative inaction, followed by revival after nearly a decade, was therefore treated as arbitrary, prejudicial, and contrary to the statutory scheme requiring diligent exercise of power. [Paras 14, 16, 17, 18, 20]

The impugned common order was set aside as having been passed after an unreasonable and unjustified delay; the underlying question whether fabrication falls within "erection, commissioning or installation" was expressly left open.

Final Conclusion: The writ petitions were allowed and the common order confirming service tax demands, interest and penalties for the three financial years was set aside on the ground of inordinate and unexplained delay in adjudication. The Court left open the substantive taxability issue regarding fabrication for decision in an appropriate future proceeding.

Entitlement to refund of service tax paid on legal consultancy services under reverse charge mechanism - Unjust Enrichment - turnover threshold - Meaning of turnover of business entity - benefit of exemption of Notification No. 25/2012-ST dated 20.06.2012.

Threshold exemption for legal services - HELD THAT: - The Tribunal held that, for availing the exemption in respect of legal services received from an advocate or law firm, the recipient business entity had to establish that its turnover in the preceding financial year did not exceed the prescribed threshold. Following the earlier order in the appellant's own case [2018 (12) TMI 874 - CESTAT NEW DELHI], the Tribunal accepted that the expression turnover in the notification is not confined to taxable services alone, but covers the entire proceeds of the business entity as reflected in its accounts. On the facts recorded, the appellant's turnover, including nursery sales, exceeded Rs. 10 lakhs in the relevant preceding financial years. The appellant therefore did not qualify for the exemption, and once refund was found to be inadmissible on merits, the Tribunal held that no further examination of the remaining submissions was necessary. [Paras 6, 7]

The refund claim was rightly rejected, as the appellant was ineligible for the exemption on account of turnover exceeding the prescribed limit.

Final Conclusion: The Tribunal upheld rejection of the refund claim and dismissed the appeal. It held that the appellant's turnover in the relevant preceding financial years exceeded the threshold, rendering the exemption for legal services unavailable and the claimed refund inadmissible on merits.

Works contract service exemption - Denial for Benefit of Sub-contractor exemption under Mega Exemption Notification No. 25/2012 - payment received from the authorised sister concern of the main contractor - Service of construction of roads/canals for the governmental authorities through their main contractor - suppression of fact with an intent to evade tax.

Whether the amount of consideration for rendering the exempted services received by the appellant from M/s ECP Housing (India) Private Limited instead of it from the service recipient of appellant viz. M/s Jain Irrigation Systems Limited will render appellant not eligible for the said exemption. - HELD THAT: - The Tribunal held that under the statutory definition of service, the source from which consideration is paid is not made a determinative condition. The record contained a certificate from M/s Jain Irrigation Systems Ltd certifying that the relevant work had been awarded to the appellant and that its sister concern, M/s ECP Housing (India) Private Limited, was authorised to execute the payment arrangement relating to that work. Since the Department produced no material to discredit that certificate, the Tribunal accepted it as admissible evidence and treated the payment from the sister concern as payment on behalf of the service recipient. On that basis, the appellant remained a sub-contractor providing exempt works contract service, and the exemption available to the main contractor under entry No. 12 of Notification No. 25/2012-ST extended to the appellant under entry No. 29(h). The decision in Akasha Electronics Limited vs. Commissioner of Customs, Mumbai was relied upon for admissibility of certificate evidence, while Warsi Buildcon versus Principal Commissioner, Customs, Central Excise & Service Tax, Indore [2024 (3) TMI 286 - CESTAT NEW DELHI] was held inapplicable on facts. [Paras 6, 7, 8, 9]

The denial of exemption on the sole ground that payment was received from the authorised sister concern of the main contractor was held unsustainable, and the demand confirmed on that basis was set aside.

Final Conclusion: The Tribunal allowed the appeal and set aside the impugned order. It held that receipt of consideration from the authorised sister concern of the main contractor did not disentitle the appellant, as sub-contractor, from the exemption available for the exempted works contract services.

Levy of service tax - Consideration for service - non completion of notice period by outgoing employees - unclaimed bonus - non achievement of sales targets by dealers/ distributors - forfeiture in lieu of tolerating an act of it’s employees and the dealers/distributors - Declared service.

Declared service - Tolerating an act - Consideration for service - HELD THAT: - The Tribunal held that recovery of notice pay from outgoing employees does not involve rendition of any service by the employer, and such recovery cannot be treated as consideration for a declared service of tolerating an act. It further held that recoveries arising from non-achievement of sales targets are likewise not consideration for any service, since a taxable service under the concept of tolerating an act requires a specific agreement to undertake such obligation for consideration, which was absent. Following the earlier decisions GE T and D Indian Limited versus Deputy Commissioner of Central Excise, Chennai [2020 (1) TMI 1096 - MADRAS HIGH COURT], Girnar Software Pvt Ltd versus Commissioner Service Tax, Jaipur [2024 (5) TMI 368 - CESTAT NEW DELHI] and The Lalit Mumbai versus Commissioner, CGST [2025 (3) TMI 680 - CESTAT NEW DELHI], noticed in the order and the departmental clarification referred to, the Tribunal concluded that the impugned amounts were not towards any taxable declared service. [Paras 6, 7, 8, 9]

Department’s Circular No.214/1/2023-ST dated 28.02.2023 analysing the provisions of Section 66E(e) read with 66B(44) and clarified that the activities contemplated under Section 66E(e), ‘when one party agrees to refrain from an act, or to tolerate an act or a situation, or to do an act, are the activities where the agreement specifically refers to such an activity and there is a flow of consideration for this activity’. In view thereof, the amount in question is not a consideration for providing any service.

The demand of service tax and the equal penalty were held unsustainable, and the impugned order was set aside.

Final Conclusion: The Tribunal held that the amounts in question were not consideration for any declared service of tolerating an act. The impugned order confirming tax and penalty was therefore set aside and the appeal was allowed.

Classification of goods - 100% Export Oriented Unit (EOU) engaged in manufacture of granite slabs, dimensional blocks and other articles of granite - imported as well as domestically procured capital goods, raw materials, inputs, etc., - Demand for non-fulfilment of condition under Notification No. 52/2003-Cus and Notification No. 22/2003CE - Exemption conditions for duty-free procurement - Invocation of B-17 bond.

Whether the clearances made by the appellant in DTA are classifiable under Chapter 25, as claimed by them or under Chapter 68, as confirmed by the adjudicating authority. - HELD THAT: - The appellants are claiming that they have only roughly trimmed or cut the blocks quarried from the mines and the emerging goods were dimensional cut and dressed granite blocks/slabs, which are well within the purview of CETH 2516. Therefore, since the appellant’s granite was not polished granite block, it will not fall under CETH 6807 and there being rough granite blocks, which are produced by mere sawing dimensionally and rough dressing, it will fall under CETH 2505. They have relied on certain trade notices issued by Bombay-I collectorate i.e., Trade Notice No.7/87 and Bombay-II Collectorate’s Trade Notice No. 66/86. They have submitted that they have not carried out any sizing or polishing or any other process for converting of stone blocks into slabs. They have also submitted that the department itself in the past in respect of certain SCNs., has held that their product would be classifiable under Chapter 25 and therefore, they cannot now take a stand that the same would be now covered under Chapter 68.

The Tribunal held that duty liability turned on the nature and extent of processing undertaken on the quarried granite. If the goods were cleared after polishing and proper sizing, they would fall under Chapter 68; otherwise, if they remained only roughly cut or dressed, they could continue under Chapter 25. Since this factual and technical aspect had not been conclusively determined, the classification issue was remitted for fresh examination on the basis of the manner in which the goods were actually cleared. [Paras 13]

The question of classification was remanded to the adjudicating authority for redetermination, and the consequential duty liability was left to be worked out afresh.

Whether the clearances from the appellant’s unit to sister unit, which was also a 100% EOU is proper and therefore, no demand can be made on such clearance or otherwise. - HELD THAT: - The Tribunal found that the lapse in not obtaining prior approval for transfer to another EOU was, in the circumstances, a procedural breach, particularly when post facto approval had been obtained. Such irregularity by itself could not justify a demand of duty. At the same time, since there was a dispute as to whether the entire quantity cleared had been duly received and accounted for by the sister concern, the appellant was required to establish complete receipt and accountal before the adjudicating authority. [Paras 14]

The demand on inter-EOU clearances was set aside to the extent it was founded merely on procedural breach, and the matter was remanded for verification of full receipt and accountal by the sister EOU.

Demand for non-fulfilment of condition under Notification No. 52/2003-Cus dt.31.03.2003 and Notification No. 22/2003-CE dt.31.03.2003 - HELD THAT: - The Tribunal noted that there was no allegation that the imported or indigenously procured duty-free goods had not been used in the appellant's unit for production or processing. It held that denial of the notification benefits would not be proper merely on the basis of irregular clearance to another EOU without approval, but the appellant still had to establish fulfilment of the other applicable conditions, including NFE and related requirements. The adjudicating authority was therefore directed to reconsider whether the conditions of the notifications stood satisfied and, only thereafter, whether the B-17 bond could be invoked; the computation of duty and redetermination of penalties were also to be undertaken afresh in that exercise. [Paras 15]

The findings on denial of exemption, invocation of the bond, consequential duty computation and penalties were set aside and remanded for fresh decision subject to verification of compliance with the notification conditions.

Final Conclusion: The impugned order was set aside and the matter was remanded for fresh adjudication. The adjudicating authority was directed to redetermine classification, verify the accountal of inter-EOU clearances, and reconsider the availability of notification benefits, bond liability and consequential penalties in accordance with the Tribunal's findings.

Admissibility of statements recorded under Section 14 of the Central Excise Act, 1944 - Mandatory compliance with section 9D - denial of cross-examination - Clandestine procurement of raw tobacco and clandestine manufacture and clearance of finished goods - Liability to Confiscation -Imposition of Penalty under rule 26.

Admissibility of statements - HELD THAT:- The Tribunal held that section 9D is mandatory. Where the case does not fall within clause (a), the maker of the statement must first be examined before the adjudicating authority, the authority must then form an opinion on admissibility in the interests of justice, and only thereafter can the statement be used, with opportunity of cross-examination following once the statement is admitted in evidence. Since the adjudicating authority neither examined the witnesses nor admitted their statements in accordance with section 9D, and yet relied on them while denying cross-examination on the premise that it was not an absolute right, the statements were not relevant evidence for proving the allegations. [Paras 37, 38, 39, 40, 41]

The findings resting on statements recorded under section 14 were held unsustainable.

Clandestine manufacture and removal - Corroborative evidence - Burden of proof - HELD THAT:- Applying the settled requirement that clandestine manufacture and removal must be proved by positive and clinching evidence, the Tribunal found no documentary or corroborative material to support the charge. The allegation based on check-post data was rejected because the appellant's explanation of data-entry error due to similarity of registration particulars was supported by the record, and the department had not produced corresponding physical invoices or transport documents to sustain the theory of repeated movements. The allegations regarding procurement through other firms and clandestine clearances through dealers were found to rest substantially on statements which were themselves inadmissible for non-compliance with section 9D. Apart from those statements, there was no evidence of excess raw material, excess packing material, unrecorded manufacture, additional labour, production beyond normal shifts, or any discrepancy in stock. In these circumstances, the department failed to discharge the burden of proving clandestine manufacture or removal. [Paras 51, 53, 54, 55, 56]

The demand founded on alleged clandestine procurement, manufacture and clearance was set aside.

Penalty under rule 26 - Liability to confiscation - HELD THAT: - The Tribunal noted that the impugned order contained no discussion or finding that the goods were liable to confiscation; it merely stated so at the stage of imposing penalty. Since liability to confiscation is an essential ingredient for invoking rule 26(1), penalty on the individuals could not be sustained without such a finding. [Paras 61, 62, 63]

All penalties imposed under rule 26 were held unsustainable and were set aside.

Final Conclusion: The Tribunal held that the adjudicating authority had wrongly relied on statements without complying with section 9D and that the allegations of clandestine procurement, manufacture and removal were not proved by legally admissible corroborative evidence. The duty demand, interest and all penalties, including penalties under rule 26, were accordingly set aside and all the appeals were allowed.

Legality of the panchnamas drawn during search -Evidentiary value of panchnama - Non -habitants panch witnesses of the locality and were not examined or cross-examined - Mandatory procedure for admissibility of statements - non-compliance of the provisions of section 9D - Manufacturer identification in clandestine manufacture of pan masala and gutkha - Search witness locality requirement - invoking the extended period of limitation contemplated under section 11A(4) - demand for duty on such goods with interest from the appellant and imposition of penalty.

Whether the appellant is the “manufacturer” of pan masala and gutkha alleged to have been clandestinely manufactured in and cleared from an unregistered factory located at Khasra No. 1340, Village Balenga, District Bastar, during the period April, 2016 to January, 2017 and consequently, whether the demand for duty on such goods with interest from the appellant and imposition of penalty on the appellant are sustainable in law.

Whether the Panchnamas dated 30.01.2017 and 24.01.2018 drawn at Khasra No. 1340, Village Balenga, District Bastar can be considered as reliable. - HELD THAT: - The Tribunal held that, by virtue of section 18 of the Central Excise Act read with section 100(4) of the Code of Criminal Procedure, search witnesses had to be independent and respectable inhabitants of the locality, or persons from another locality only if local inhabitants were unavailable or unwilling. In the present case, the panch witnesses were from places more than 300 kilometres away, the Panchnama did not record that local witnesses were unavailable or unwilling, and no reason was stated for associating such distant witnesses. The department also did not examine the panch witnesses, and they were not made available for cross-examination, though the case itself was founded on these Panchnamas. The appellant was held entitled to challenge the Panchnamas because the duty demand rested on them. The Tribunal therefore excluded both Panchnamas from consideration. [Paras 63, 64, 65, 66, 67]

Both Panchnamas were discarded and could not be relied upon for sustaining the demand.

Whether the statement made by the appellant under section 14 of the Central Excise Act and the statements made by other persons under section 14 of the Central Excise Act can be considered as relevant if the procedure contemplated under section 9D of the Central Excise Act has not been followed. - HELD THAT:- Section 14 of the Central Excise Act deals with power to summon persons to give evidence and produce documents. It provides that any Central Excise Officer empowered by the Central Government shall have the power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry, which such officer is making under the Central Excise Act.

In M/s. Drolia Electrosteel P. Ltd. vs. Commissioner, Customs, Central Excise & Service Tax, Raipur [2023 (11) TMI 10 - CESTAT NEW DELHI], a Division Bench of the Tribunal examined the provisions of section 9D of the Central Excise Act and after placing reliance upon the decision of the Punjab and Haryana High Court in Jindal Drugs Pvt. Ltd. vs. Union Of India [2016 (6) TMI 956 - PUNJAB & HARYANA HIGH COURT] observed that if the mandatory provisions of section 9D(1)(b) of the Central Excise Act are not followed, the statements cannot be used as evidence in proceedings under Central Excise Act.

The Tribunal held that section 9D is mandatory in adjudication proceedings. Where the circumstances in clause (a) do not exist, the person whose statement was recorded must first be examined as a witness before the adjudicating authority, the authority must then form an opinion that the statement should be admitted in evidence in the interests of justice, and only thereafter can cross-examination arise. Since neither the appellant nor the other persons whose statements were relied upon had been examined by the adjudicating authority in the manner required by section 9D, the statements recorded under section 14 could not be treated as relevant evidence. The Tribunal also disapproved the adjudicating authority's view that cross-examination could be denied on the apprehension that a witness may change his version. [Paras 77, 78, 79, 80, 81]

All statements relied upon by the department under section 14 were held inadmissible for proving the facts stated therein.

Manufacturer identification in clandestine manufacture - Burden of proof - Clandestine removal - HELD THAT:- The Tribunal held that, once the Panchnamas, the section 14 statements and the pocket diary were excluded, no evidence remained to establish that the appellant had manufactured goods in the unregistered premises or clandestinely cleared them without payment of duty. It further observed that even on the material referred to by the adjudicating authority, there was no evidence that the appellant financed the purchase of land, set up the factory, or paid labour employed there. On the definition of manufacturer, the Tribunal found that the material rather indicated that others had purchased the land, set up the factory and employed labour. The appellant's own statements, properly read, did not establish his connection with the manufacture alleged at Bastar, and portions relied upon in the show cause notice and the adjudication order were found to have been selectively or incorrectly read. The demand for the period April, 2016 to January, 2017 therefore failed, and once that demand itself was unsustainable, the department's appeal against dropping of demand for April, 2015 to March, 2016 also had to fail. [Paras 89, 90, 91, 92, 93]

The duty demand with interest for April, 2016 to January, 2017, as well as penalty and confiscation, was set aside, and the department's appeal for April, 2015 to March, 2016 was dismissed.

Final Conclusion: The appellant's appeal was allowed as the Panchnamas, the statements recorded under section 14, and the diary relied upon by the department were held incapable of establishing that he was the manufacturer of the goods allegedly produced in the unregistered factory. Consequently, the demand with interest, penalty and confiscation for April, 2016 to January, 2017 were set aside, and the department's appeal concerning April, 2015 to March, 2016 was dismissed.

Beneficial Legislation - Purposive Construction - Application of the Land Acquisition Act, 1894 (“the 1894 Act”) as against the 2013 Act in cases where land acquisition proceedings were initiated under the 1894 Act, but the award has been passed after the commencement of the 2013 Act - Scope of Section 24(1)(a) of the 2013 Act - interplay of Section 74 read with Section 103 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“the 2013 Act” and Sections 5 and 29(2) of the Limitation Act, 1963 (“the 1963 Act”) - Condonation of Delay - first appeals filed under Section 74 of the 2013 Act as being barred by limitation - Functus Officio.

Section 24(1)(a) of the 2013 Act - Determination of compensation - Applicability of the 2013 Act - HELD THAT: - The Court held that Section 24(1)(a) preserves acquisition proceedings initiated under the 1894 Act up to the stage before award, but where no award had been passed as on the commencement of the 2013 Act, all provisions relating to determination of compensation under the 2013 Act apply. This includes procedural and substantive provisions connected with compensation, though not rehabilitation and resettlement entitlements, since those are not retrospectively imported in the absence of statutory prescription. Consequently, awards made in such cases are to be treated as awards under the regime of the 2013 Act for compensation purposes, and appeals therefrom are to be treated as appeals under Section 74 of the 2013 Act and not under Section 54 of the 1894 Act. [Paras 17, 23, 34, 97]

Section 24(1)(a) applies where the award was passed after the commencement of the 2013 Act; compensation had to be determined under the 2013 Act, excluding rehabilitation and resettlement entitlements, and the first appeals were maintainable under Section 74 of the 2013 Act.

Applicability of Section 5 of the Limitation Act - Section 29(2) of the Limitation Act - Appeal to High Court - Express exclusion - Section 5 of the Limitation Act applies to appeals under Section 74 of the 2013 Act, there being no express exclusion of Sections 4 to 24 of the Limitation Act. - HELD THAT: - When the issue of compensation is decided by the Authority, who is a legally trained person entitled to exercise the powers of a Civil Court, followed by the declaration of an award deemed to be a decree, does an out-and-out judicial forum enter the picture. The proceedings before him are original in nature, with two parties appearing before him, of which even the Collector is a party, since it is his award that is under challenge. There is a reason why the Authority is expected to exercise an element of fair play by following the principles of natural justice which would otherwise inhere in a party before it. It is only the Court that is given the inherent power of formulating its own procedure when it is not provided under the statute. Thus, the reference made by the Collector to the Authority, which is akin to the institution of a suit before a Civil Court, does not attract the application of Section 5 of the 1963 Act. However, an application filed during the pendency of the reference, being akin to an application filed during the pendency of a suit, would attract the application of Section 5 of the 1963 Act.

Section 74 of the 2013 Act provides for a first appeal, both, on facts and on law. This appellate proceeding before the High Court is nothing but a continuation of the original proceedings before the Authority. As already discussed earlier, Section 74 provides a period of 60 days for filing an appeal before the High Court, with an additional period of 60 days as per the proviso. The proviso does not extend the period of limitation, but merely brings a delayed filing within the ambit of the main provision. Being a mere proviso, it cannot be interpreted to mean an extension of the period of limitation.

As Section 74 of the 2013 Act does not exclude the application of Sections 4 to 24 of the 1963 Act, a limited interpretation of Section 5 of the 1963 Act alone cannot be given. What applies to exclusion shall apply to extension as well. In our considered view, the High Court, while exercising the power under Section 74 of the 2013 Act, is certainly entitled to draw its power from the sources available under the 1963 Act. We cannot introduce words that are not available in Section 74 through an imaginary interpretation in holding the existence of an express exclusion. It is a conscious decision made by the Legislature, and its knowledge must be inferred and implied. Thus, we are inclined to hold that there is not much difference between the main provision contained in Section 74(1) and its proviso. There is only one period mentioned for filing the appeal, meaning thereby that the other one mentioned under the proviso gets subsumed within the period provided under Section 74(1).

The 1963 Act applies to the 2013 Act. Any interpretation to the contrary would result in a situation as if both Section 29(2) of the 1963 Act and Section 103 of the 2013 Act have vanished from the respective statutes, which is wholly impermissible in law. We must also remain conscious that any interpretation having the impact of destroying a right in seeking an adjudication on merits, should be eschewed unless it appears so on the very face of it. Even when two interpretations are possible, the one that facilitates the filing of an appeal must be approved.

The Court held that Section 74 prescribes a 60-day period for appeal with a further period of 60 days under the proviso, but this does not by itself exclude the operation of Section 5 of the Limitation Act. Under Section 29(2) of the Limitation Act, Sections 4 to 24 apply to a special law unless expressly excluded. No such express exclusion is found in Section 74 or elsewhere in the 2013 Act. On the contrary, Section 103 declares that the provisions of the 2013 Act are in addition to and not in derogation of other laws, which permits borrowing from the Limitation Act. The Court rejected the view that implied exclusion could be inferred from the scheme of the 2013 Act, holding that such interpretation would render both Section 29(2) of the Limitation Act and Section 103 of the 2013 Act ineffective. Since appeals under Section 74 are continuations of the original proceedings before the Authority, the High Court can invoke Section 5, and a liberal approach is warranted in condoning delay in matters concerning just and fair compensation. [Paras 80, 81, 82, 83, 97]

The High Courts erred in holding that Section 5 of the Limitation Act stood excluded; delay in filing the first appeals under Section 74 was condoned, the impugned judgments were set aside on that issue, and the appeals were directed to be decided on merits.

Final Conclusion: Section 24(1)(a) of the 2013 Act is applicable to all those cases where awards are passed after the commencement of the 2013 Act.

For passing the award under Section 24(1)(a), the provisions of the 2013 Act alone will have to be followed, except for the rehabilitation and resettlement entitlements.

The first appeals before the High Courts should be treated as ones under Section 74 of the 2013 Act and not under Section 54 of the 1894 Act.

Section 74 of the 2013 Act does not bar the application of Section 5 of the 1963 Act.

Consequently, all the applications seeking condonation of delay in preferring the first appeals before the High Courts under Section 74 of the 2013 Act stand allowed.

All the impugned judgments are set aside insofar as the issue of application of Section 5 of the 1963 Act is concerned.

The respective State Governments will have to take necessary measures and issue appropriate directions to the officers dealing with the appeals under Section 74 of the 2013 Act against the awards passed after the commencement of the 2013 Act to ensure that the appeals are filed as provided under Section 74 of the 2013 Act.

High Courts shall avoid a pedantic approach as against a pragmatic one in dealing with the applications seeking condonation of delay.

Accordingly, the appeals stand disposed of in the aforesaid terms.

Maintainability of subsequent Section 11 application - scope and ambit of Section 11 - Abandonment of arbitral proceedings - Same cause of action - Application of Order 23 Rule 1 CPC to Section 11 proceedings - Arbitrability threshold - Existence of arbitration agreement.

Maintainability of subsequent Section 11 application - HELD THAT: - The jurisdiction under Section 11 of the Act is primarily confined to determining existence of an arbitration agreement. The issue of res judicata does not arise for consideration in a Section 11 proceeding [Indian Oil Corporation Limited [2013 (5) TMI 375 - SUPREME COURT]. Order 23 Rule 1 of the Code provides that if the plaintiff either abandons the suit or part of the claim or withdraws the same without leave of the court, then he is precluded from instituting a fresh suit in respect of such subject matter or such part of the claim. The plaintiff on abandoning a suit or part of the claim or withdrawing the same without leave of the court, also becomes liable to pay such costs as may be imposed by the court as provided under Order 23 Rule 1(4) of the Code. This Court in HPCL Bio-Fuels Ltd. [2024 (11) TMI 352 - SUPREME COURT], dealt with the issue, whether a fresh application under Section 11(6) of the Act would be maintainable, when no liberty to file a fresh application was granted at the time of withdrawal of the first application under Section 11(6) of the Act. A two-Judge Bench of this Court held that principles of Order 23 Rule 1 of the Code prohibiting the institution of fresh proceeding on the same cause of action without seeking leave of the court to file a fresh application, would apply to proceeding under Section 11(6) of the Act. It was further held that in the absence of any liberty at the time of withdrawal of the first application, the fresh application under Section 11 of the Act is not maintainable.

Another two-Judge Bench of this Court [Dani Wooltex Corporation and Ors., v. Sheil Properties Pvt. Ltd. and Anr. [2024 (5) TMI 844 - SUPREME COURT] has held that the abandonment of the proceedings cannot be readily inferred and only if the established conduct of the claimant is such that it leads to only one conclusion that he has given up the claim, any inference of abandonment can be drawn.

The Court held that the jurisdiction under Section 11 is primarily confined to examining the existence of an arbitration agreement, and the issue of res judicata does not arise at that stage. At the same time, the bar embodied in Order 23 Rule 1 CPC, as applied to Section 11 proceedings, precludes a fresh proceeding on the same cause of action where the earlier proceeding has been abandoned without liberty. On the facts, the respondent had himself invoked arbitration, obtained appointment of an arbitrator, and thereafter expressly communicated that he would not participate further; such conduct clearly established abandonment. The later reliance on this Court's judgment concerning validity of the auction did not create any fresh cause of action, since that appeal concerned the validity of the auction and not the inter se disputes between the parties arising from their agreements. Consequently, the subsequent Section 11 application was based on the same cause of action and was barred. [Paras 15, 16, 17, 18, 19]

The subsequent application under Section 11 was held to be not maintainable, and the High Court erred in appointing an arbitrator.

Final Conclusion: The Court held that the respondent had abandoned the earlier arbitral proceedings and could not maintain a fresh Section 11 application on the same cause of action. The High Court's order appointing an arbitrator was therefore quashed and the appeal was allowed.

Entitlement to exemption from octroi under the State SEZ policy and the SEZ statutory framework - SEZ policy exemption from local taxes - Refund of octroi - State Government’s Policy regarding setting up of the Special Economic Zones in Maharashtra - failure of the Corporation to implement its own policy through available statutory powers.

Promissory estoppel - SEZ policy exemption from local taxes - Refund of octroi - HELD THAT: - The Court held that clause (6) of the State policy made a clear and definite promise that developers of SEZs would be exempted from all State and local taxes including octroi, and that the policy also contemplated reimbursement where direct exemption was not feasible. This promise was consistent with the object of the policy and with the scheme of the SEZ Act and the SEZ Rules, particularly the obligation of the State Government to endeavor to make available exemption from local taxes levied by local bodies on goods required for authorised operations. The State itself admitted in its affidavit that the petitioner was entitled to octroi exemption. The Court further held that the doctrine of promissory estoppel applied, since no overriding public interest was shown for denying the benefit; on the contrary, refusal to honour the promise would defeat the policy objective of encouraging SEZ development. The plea of delay was rejected because the petitioner had continuously pursued the claim and approached the Court after rejection of its request. [Paras 33, 39, 40, 41, 42]

The petitioner was held entitled to refund of octroi paid, with interest, and the liability to make such refund was fastened on the State Government, subject to verification of the exact refundable amount on record.

Municipal liability for refund - Absence of statutory exemption - Rule-making power of State Government - HELD THAT: - The Court accepted the submission that levy and exemption from octroi were governed by the Maharashtra Municipal Corporations Act and the rules framed thereunder, and that without a specific amendment providing exemption in relation to the petitioner's SEZ, the Corporation could not be compelled to refund the octroi already collected. At the same time, the Court found that the State Government had not discharged its own obligation, since it merely called upon the Corporation to send a proposal for amendment and thereafter took no effective follow-up action. On the statutory scheme referred to in the judgment, the State possessed powers to issue policy directions and to require framing of rules, and could itself act on failure of the Corporation. Since the octroi rules had ceased to exist, relief for amendment of those rules could no longer be granted. [Paras 34, 35, 36, 37, 42]

Refund could not be ordered against the Pune Municipal Corporation for want of the necessary statutory amendment, but the State Government remained liable to satisfy the petitioner's claim because of its failure to implement its own policy through available statutory powers.

Final Conclusion: The petition was allowed in part by holding that the petitioner was entitled to refund of octroi paid during the relevant period as an SEZ developer, but such refund was payable by the State Government and not by the Pune Municipal Corporation. The exact amount was left to be determined on representation by the petitioner, and the prayer for amendment of octroi rules was declined since those rules were no longer in force.

Validity of the award of interest on the amount withheld for non-achievement of milestones - extension of time and rescheduling of milestones - Reimbursement of post-GST tax incidence - penalty imposed for delay in completing the sample flat - Compensation for breach of contract -grant of loss of on-site and off-site expenses for the prolongation period - Severability of arbitral award.

Rescheduling of milestones - Extension of time - Withholding for non-achievement of milestones - HELD THAT: - The Court held that the delay in completion had not been attributed to the contractor and extensions of time were granted from time to time. The contractor had in fact sought rescheduling of milestones, and in any event the contract expressly provided that non-application by the contractor would not bar fair and reasonable rescheduling by the competent authority. In these circumstances, the arbitrator's view that, once time was extended, the milestones ought to have been correspondingly rescheduled was a plausible view and did not warrant interference under Section 34. [Paras 7]

The direction to release the withheld amount for non-achievement of milestones was sustained.

Interest on withheld amount - Contractual bar on interest - HELD THAT: - The Court found that the award contained no reasons for granting interest on the withheld amount. Under the contract, withholding on failure to achieve milestones operated automatically and the clause expressly stipulated that no interest whatsoever would be payable on such withheld amount. Since the contractual bar admitted of no exception, the award of interest contrary to that term was unsustainable. [Paras 8]

The award of interest on the withheld amount was quashed.

The Court recorded the respondent's concession that the amount awarded under the final bill claim contained a clerical mistake and that the correct amount due was lower. As the correction did not involve modification on merits but only rectification of an admitted clerical error, the amount was corrected accordingly. [Paras 9]

The award under the final bill claim stood corrected to the admitted due amount.

Reimbursement of post-GST tax incidence - Proof of actual payment - HELD THAT: - The Court held that, under the contract, taxes imposed after the last date of tender could be reimbursed only to the extent actually paid. While GST was a future levy falling within the reimbursement clause, there was no evidence that the claimed three percent difference had in fact been paid. The arbitrator's bifurcation of GST to treat part of it as service tax was held to be without basis, since service tax had ceased to be leviable after introduction of GST. The award on this claim was therefore contrary to the contractual scheme and unsustainable. [Paras 11]

The claim awarded towards the alleged three percent differential tax burden was disallowed.

Refund of penalty imposed for delay in completion of the sample flat. - HELD THAT: - The Court noted that, although there was delay in completion of the sample flat, the arbitrator had found that the hindrances leading to the delay had not been considered by the petitioner and that no opportunity had been afforded to explain the delay. The arbitrator further proceeded on the principle that, in the absence of proof of loss flowing from breach, the penalty could not be sustained. As no substantiated loss was shown, the view taken by the arbitrator was held to be plausible and not open to interference. [Paras 12]

The award directing refund of the penalty for delay in completion of the sample flat was maintained.

Award of damages for on-site and off-site expenses during the prolongation period -HELD THAT: - The Court held that a claim for damages under Section 73 required proof of actual loss, or at least a legally sustainable basis for assessing reasonable compensation where such loss could not be precisely proved. The only material produced was a chartered accountant's certificate setting out expenses, but it did not certify or establish the actual loss caused by prolongation of the contract. Mere expenditure after the stipulated completion date was not proof of compensable loss, and the arbitrator's quantification rested on assumptions without foundation. The award was therefore contrary to Section 73 and against public policy. [Paras 14]

The damages awarded on account of prolongation of the contract were annulled.

Arbitrator's discretion on interest and costs - HELD THAT: - The Court found no ground, within the limited jurisdiction under Section 34, to interfere with the simple interest awarded at nine percent. It also held that the arbitrator's determination of costs fell within the discretion conferred by statute and that the quantified costs were reasonable in the circumstances. [Paras 15, 16]

The award of interest, save on the withheld amount, and the award of costs were sustained.

Severability of arbitral award - Partial setting aside - HELD THAT:- The Supreme Court in Gayatri Balasamy v. ISG Novasoft Technologies Ltd [2025 (5) TMI 566 - SUPREME COURT (LB)] held that while an arbitral award cannot be modified under Section 34 of the Act, a severable part of the award may be set aside.

The Court accepted that, although an arbitral award cannot be modified under Section 34, separable portions of the award may be set aside independently. The components relating to interest on the withheld amount, correction of the final bill figure, the post-GST differential claim, and damages for prolongation were found to be distinct and not so interdependent with the remaining claims as to require the award to be upset in its entirety. [Paras 17, 18, 19]

Only the severable parts found unsustainable were interfered with; the rest of the award was preserved.

Final Conclusion: The petition was partly allowed. The award was upheld insofar as it directed release of the withheld milestone amount, refund of the sample-flat penalty, interest other than on the withheld amount, and costs; but the award of interest on the withheld amount, the post-GST differential claim, and damages for prolongation was set aside, and the amount under the final bill claim was corrected as an admitted clerical error.