TaxTMI Updates e-Newsletter
Apr 10,2026

Detention without passing a formal seizure order and without determining ownership of the goods in accordance with the applicable departmental clarification - Entitlement to be represented before the GST authorities through an advocate and the insistence on personal appearance - Failure to proceed within statutory time in detention proceedings.

Determination of owner of goods under detention - HELD THAT: - The Court held that the manner in which the authorities dealt with the detention was unsatisfactory, particularly since the goods were perishable and the statutory process ought to have been completed within the prescribed time. Even after more than four months from interception, no formal order of seizure had been passed. The authorities' explanation that proceedings could not move forward because the petitioner did not appear personally was rejected. Since the accompanying invoices showed the petitioner's firm as consignor and Maa Kali Traders as consignee, the authorities were required to determine ownership in light of the departmental circular clarifying that where invoice or other specified document accompanies the consignment, the consignor or consignee is to be deemed the owner. On that basis, the matter was directed to be heard and decided expeditiously, with liberty to the petitioner to deposit the amount under Section 129(1)(a), and release to follow in accordance with law if such payment was accepted. [Paras 15, 17, 18, 19, 21]

The detention proceedings were directed to be carried forward forthwith after hearing the parties, and the authority was required to pass an order under Section 129(5) within the time fixed by the Court.

Entitlement to be represented before the GST authorities through an advocate and the insistence on personal appearance. - HELD THAT: - The Court held that there was no justification for the respondents' insistence on the petitioner's personal appearance. Section 116 of the Central Goods and Services Tax Act, 2017 expressly permits appearance before the officer through an authorised representative, including an advocate, in connection with proceedings under the Act. The authorities were therefore required to permit representation through the petitioner's advocate at the hearing fixed pursuant to the Court's directions. [Paras 20, 21]

The respondents were directed to permit the petitioner to be represented through her advocate at the hearing.

Final Conclusion: The writ petition was disposed of by directing an immediate hearing, notice to the consignee, and a prompt order under the statutory detention provisions. The Court held that the authorities had no justification for insisting on the petitioner's personal appearance and were bound to determine ownership on the basis of the accompanying documents and the applicable departmental clarification.

Entitlement to restoration of cancelled GST registration - compliance with statutory and procedural requirements - HELD THAT:- The writ petition was disposed of by directing the petitioner to approach the competent authority for restoration of GST registration, which was to be restored subject to completion of requisite formalities and the petitioner filing pending returns and depositing tax, penalty and interest within the stipulated time, failing which the order would cease to operate.

Legality of the Confiscation of goods and conveyance under Section 130, without giving opportunity of hearing - Compliance with statutory requirement of personal hearing - Principles of natural justice - Audi alteram partem.

Opportunity of hearing in confiscation proceedings - HELD THAT: - The Court held that Section 130 mandates that no order of confiscation of goods or conveyance can be passed without giving the affected person an opportunity of being heard. Mere consideration of the written reply does not satisfy this statutory requirement. Since the impugned order contained no indication that any personal hearing had been granted, the order suffered from non-compliance with the mandatory procedure. [Paras 4, 5]

The confiscation order was quashed and the matter was remitted for fresh decision after affording opportunity of hearing to the petitioner.

Final Conclusion: The Court quashed the confiscation order on the sole ground of failure to grant the petitioner an opportunity of hearing as required by law, and remitted the matter for fresh adjudication in accordance with that requirement.

Cancellation of GST registration for non-filing of returns - Revocation of cancellation - failure to furnish returns and the petitioner was unable to seek revocation within time.

GST registration cancellation - Revocation of cancellation - Non-filing of returns - HELD THAT:- The Court held that the controversy was covered by its earlier decision in Motaleb Bhuyan Vs. The State Of Assam And Ors [2025 (3) TMI 670 - GAUHATI HIGH COURT] and applied the same directions to the present case. On that basis, the cancellation order was quashed, the petitioner was directed to file pending returns within the time granted by the Court, and the petitioner was made liable to pay the consequential tax, penalty, interest and late fees. The Court further directed that computation of the period under Section 73(10) would run from the date of the judgment, except for the financial year 2025-26, for which computation would be governed as provided in Section 44 of the Act. [Paras 6, 7]

The cancellation of registration was set aside and the petitioner was allowed to restore compliance by filing pending returns and discharging statutory dues, with the limitation consequence under Section 73(10) directed to operate from the date of the judgment subject to the exception noted for financial year 2025-26.

Final Conclusion: The writ petition was disposed of by quashing the cancellation of the petitioner's GST registration and by granting an opportunity to file the pending returns and clear the statutory dues. The Court followed the earlier decision governing the same issue and issued corresponding consequential directions.

Cancellation of GST registration for non-filing of returns - dubious method to evade tax - Restoration of registration on compliance with statutory dues.

Cancellation of registration for non-filing of returns - HELD THAT: - The Court found that the registration had been cancelled solely on the ground of non-filing of returns and that it was not the respondents' case that the petitioner had adopted any dubious process to evade tax. It held that continued cancellation would be counterproductive to the interest of revenue, since without registration the petitioner would be unable to carry on business or raise invoices, thereby adversely affecting tax recovery. Proceeding on that basis, and following the direction issued in Subhankar Golder v. Assistant Commissioner of State Tax, Serampore Charge & Ors. [2024 (5) TMI 1262 - CALCUTTA HIGH COURT], the Court held that the order of cancellation and the appellate order were required to be set aside, with restoration made conditional upon filing returns for the entire period of default and payment of statutory dues within the time fixed, and with corresponding activation of the portal to enable compliance. [Paras 4, 5, 6, 7, 8]

The cancellation order and the appellate order were set aside, and restoration of registration was directed upon the petitioner complying with the conditions regarding filing of returns and payment of dues within the stipulated time.

Final Conclusion: The writ petition was disposed of by setting aside the cancellation of registration and the appellate order, while directing restoration only upon the petitioner's filing of returns for the default period and payment of the requisite statutory dues within the prescribed time.

Cancellation of GST registration for non-filing of returns - Restoration of registration on compliance with statutory dues.

Cancellation of GST registration for non-filing of returns - Restoration of registration on compliance with statutory dues - HELD THAT: - The Court found that the registration had been cancelled solely on the ground of non-filing of returns and that it was not the respondents' case that the petitioner had adopted any dubious process to evade tax. It held that continued suspension or cancellation of registration would be counterproductive to the interest of the revenue, since without registration the petitioner would be unable to raise invoices or carry on business, thereby affecting tax recovery itself. Adopting the pragmatic approach indicated in Subhankar Golder v. Assistant Commissioner of State Tax, Serampore Charge & Ors. [2024 (5) TMI 1262 - CALCUTTA HIGH COURT], the Court held that the cancellation order should be set aside, subject to the petitioner filing returns for the entire default period and paying the requisite dues. [Paras 5, 6, 7, 8, 9]

The cancellation order and the appellate order were set aside, and restoration of registration was directed upon the petitioner complying within the stipulated time with filing of returns and payment of the requisite tax, interest, fine and penalty, with corresponding direction for activation of the portal.

Final Conclusion: The Court set aside the cancellation of registration and the appellate order, and directed restoration of the petitioner's registration subject to filing of all defaulted returns and payment of the requisite dues within the time granted.

Cancellation of registration for non-filing of returns- dubious method to evade tax - Conditional restoration of registration - compliance with tax dues and return filing.

Cancellation of registration for non-filing of returns - HELD THAT: - The Court found that the registration had been cancelled only for non-filing of returns and that it was not the respondents' case that the petitioner had adopted any dubious process to evade tax. It held that continued cancellation would be counterproductive to the interest of revenue, since without registration the petitioner would be unable to carry on business or raise invoices, thereby affecting tax recovery itself. Adopting the direction followed in Subhankar Golder v. Assistant 6 Commissioner of State Tax, Serampore Charge & Ors. [2024 (5) TMI 1262 - CALCUTTA HIGH COURT], the Court took a pragmatic view and directed that the cancellation order be set aside subject to the petitioner filing returns for the entire default period and paying the requisite tax, interest, fine and penalty, if not already paid. [Paras 5, 6, 7, 8, 9]

The cancellation order and the appellate order were set aside, with a direction to restore registration if the petitioner complied within the stipulated time; failing such compliance, the writ petition would stand automatically dismissed.

Final Conclusion: The Court set aside the cancellation of registration and the appellate order, holding that cancellation merely for non-filing of returns, in the absence of any case of tax evasion, would operate against the interest of revenue. Restoration was made conditional upon filing all pending returns and paying the requisite dues within the time granted.

Validity of the show-cause notices and pre-intimation notices blocking Input Tax Credit - unregistered entities and availed fraudulent ITC on the strength of bogus invoices without actual movement of goods or services - Challenged to the vires of Section 16(2)(c) of the CGST Act - undue burden on the recipient of goods/services - arbitrary, irrational, and violative of their rights under Articles 14, 19(1)(g), read with Article 300A of the Constitution of India.

Prematurity of writ challenge to show cause notice - HELD THAT: - The Court held that the CGST Act and the Rules constitute a complete code and that action relating to blocking of ITC, though carrying adverse consequences, has to be tested on the facts of each case. The existence of tangible material and a rational basis for invoking the statutory machinery are matters for case-specific adjudication. Since the petitions arose from show cause notices or pre-intimation notices and involved individual factual controversies, a collective adjudication on merits in writ jurisdiction was held to be inappropriate at this stage. [Paras 6, 8, 9, 10, 11]

The petitioners were permitted to file replies to the show cause notices within the time granted, and such notices were directed to be adjudicated in accordance with law after considering all factual and legal contentions. In matters involving only pre-show cause intimations, the objections were directed to be considered after hearing the petitioners and an appropriate decision taken on whether to issue a show cause notice or drop the proceedings.

Challenge to constitutional validity - HELD THAT: - The Court recognized that validity of a statute may be challenged in an appropriate case and at an appropriate stage where facts disclose legal injury. However, in the present matters, before any decision on the show cause notices, the Court found it premature to examine the constitutional challenge. The petitioners were therefore left free to raise that challenge, if required, in appropriate proceedings. [Paras 9, 12]

The vires challenge was not adjudicated, and all contentions on Section 16(2)(c) of the CGST Act were expressly kept open.

Final Conclusion: The petitions were disposed of without examining the merits of the proposed ITC action or the constitutional challenge to Section 16(2)(c) of the CGST Act. The Court directed the statutory authorities to consider replies and objections and proceed in accordance with law, while keeping all contentions open.

Independent consideration of appellate proceedings- services rendered qualify as “intermediary services” - pre requisites to determine the export of services in terms of Section 2(6) of the IGST Act, 2017 -Advance ruling jurisdiction

Independent consideration of appellate proceedings - HELD THAT: - The Court noted that, apart from the advance ruling proceedings under challenge, a separate show cause notice had culminated in an adjudication order holding the petitioner's services to be intermediary services, and that an appeal against that adjudication order was pending. Since the advance ruling order itself recorded that it had no jurisdiction to decide the place of supply, and all issues had not been adjudicated therein, the Court held that such issues ought to be agitated in the appeal and decided by the appellate forum on its own merits and in accordance with law, uninfluenced by the advance ruling appellate order. The Court expressly kept all contentions open. [Paras 5, 6, 7]

The petitioner was permitted to raise all issues in the pending appeal, which was directed to be decided independently and without being influenced by the impugned advance ruling appellate order.

Final Conclusion: The petition was disposed of by leaving all contentions open and directing that the pending appeal against the adjudication order be decided on its own merits, without being influenced by the order of the Appellate Authority for Advance Ruling.

Parallel proceedings on same subject-matter - Provisional attachment of bank accounts - Bar against duplicate tax enforcement - Intelligence-Based Enforcement Action - Abuse of Process of Law - Arbitrary State Action - Right to Carry on Business - Property Rights.

Validity of the State Tax Authority in provisionally attaching the bank accounts inasmuch as the Central Tax Authority also seeks to assess/recover an identical tax liability for the same period and on the same subject matter - HELD THAT: - The Court held that once the Central Tax Authority had already proceeded against the petitioner in respect of the alleged fraudulent availment of ITC, the State Tax Authority could not initiate parallel proceedings on the same subject-matter for the same period. Applying the principle laid down in Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate [2025 (8) TMI 991 - SUPREME COURT], the Court held that the bar operates where two proceedings seek to assess or recover identical or overlapping tax liability arising from the same contravention, and that duplicative enforcement action by another tax administration is impermissible. On that basis, the provisional attachment of the petitioner's five bank accounts was found to be unwarranted, arbitrary, and without lawful foundation, amounting to serious prejudice to the petitioner's constitutional and business rights. [Paras 10, 11, 15]

The provisional attachment of the petitioner's bank accounts was quashed, and the petitioner was permitted to operate the accounts.

Independent investigation against suppliers - Scope of relief - HELD THAT: - The Court clarified that although parallel proceedings against the petitioner on the same subject-matter were impermissible, investigations which the State Tax Authority intended to continue against suppliers were independent in nature and could proceed in accordance with law. However, the consequence of such independent proceedings could not be the continued provisional attachment of the petitioner's bank accounts or deprivation of its ability to carry on business. [Paras 13]

Proceedings against the suppliers were left open, but they afforded no basis to sustain attachment of the petitioner's bank accounts.

Final Conclusion: The petition was disposed of by setting aside the provisional attachment of the petitioner's bank accounts, holding that the State Tax Authority could not pursue parallel coercive proceedings on the same subject-matter already taken up by the Central Tax Authority. The State's contentions to proceed independently against the suppliers were expressly kept open.

Validity of the summons issued to the petitioner No. 2 under Section 70 of the Central Goods and Services Act, 2017 - judicial Review - Administrative Fairness - Abuse of Power - Oblique Purpose - HELD THAT:- The Court held that a director is not, in all circumstances, insulated from inquiry under section 70 merely because the company has nominated a representative, and that judicial review against summons would lie where the summons is without jurisdiction, issued for an oblique purpose, or results in abuse of power or harassment; however, as the matter required examination of the record in light of the administrative circular and the existing interim order, the Court directed production of the record, continued the interim protection, and deferred further consideration.

Maintainability of writ despite the availability and expiry of the statutory appellate remedy under the CGST Act - Rectification of revised TRAN-1 and TRAN-2 - Bona Fide Mistake - denial of transitional credit under Section 140 of the CGST Act, in relation to the Input Tax Credit available to the petitioner under the Kerala Value Added Tax Act and the Central Sales Tax Act.

Maintainability of writ despite alternative remedy - Ineffective statutory remedy -HELD THAT: - The Court held that the substance of the dispute was the petitioner's request for permission to correct the revised TRAN-1 and TRAN-2 filed pursuant to the Supreme Court's directions. Such relief was found to be beyond the powers of the assessing or appellate authorities under the CGST Act, and therefore the statutory remedy was not an effective one in the facts of the case. On that basis, the bar founded on the existence of an alternate remedy was held inapplicable, and the decision in S.K. Eldhose v. State Tax Officer, Muvattupuzha and Others [2023 (11) TMI 204 - KERALA HIGH COURT] was distinguished on facts. [Paras 9]

The objection to maintainability was rejected.

Entitlement to an opportunity to rectify the revised TRAN-1 and TRAN-2 and to have the transitional credit claim -HELD THAT: - The Court noted that the original transitional credit claim had already been verified by the competent authority and that the verification report found the petitioner eligible at least to a substantial extent. The denial in the assessment order proceeded solely on the footing that the lower figure shown in the revised TRAN-1 nullified the earlier claim. Accepting the explanation that the revised forms were filed under a bona fide impression that only additional claims were to be shown, the Court found the mistake plausible, particularly since the revised forms reflected a lesser claim than the original forms and TRAN-2 showed nil despite an earlier claim. Since refusal to permit correction would result in double taxation, and no tax evasion was alleged, the Court adopted a liberal approach and directed correction of the forms followed by fresh adjudication after hearing the petitioner and permitting production of supporting documents. [Paras 10, 11, 12, 13, 14]

The assessment order and consequential demand were quashed, the petitioner was permitted to rectify the revised TRAN-1 and TRAN-2, and the matter was remitted for fresh consideration.

Final Conclusion: The Court held that the writ petition was maintainable because the statutory remedy was not effective for granting permission to correct the revised TRAN-1 and TRAN-2. Treating the omission in the revised forms as a bona fide mistake, it quashed the assessment and demand and directed correction of the forms followed by fresh adjudication.

Validity of the appellate order enhancing penalty in the absence of the petitioner - Principles of Natural Justice - Audi Alteram Partem - Opportunity of hearing - Ex parte appellate enhancement.

Opportunity of hearing - Ex parte appellate enhancement - HELD THAT: - The Court noted that the petitioner had not appeared before the appellate authority and, in the facts and circumstances of the case, held that the impugned appellate order enhancing the penalty could not be allowed to stand without affording the petitioner an opportunity of hearing. The Court therefore did not enter upon the merits of the penalty dispute and directed fresh consideration by the appellate authority in accordance with law, keeping all issues open. [Paras 10, 11]

The impugned appellate order was quashed and the matter was remitted to the appellate authority for a fresh decision on merits after hearing the petitioner.

Final Conclusion: The writ petition was disposed of by setting aside the appellate order and remitting the matter for fresh adjudication after giving the petitioner an opportunity of hearing. No issue on the merits of the penalty was finally decided.

Detention and confiscation of goods in transit - Interception of conveyance - Provisional release - Non obstante clause - Interplay between seizure under section 129 and confiscation under section 130 - Intent to evade tax.

Detention and confiscation of goods in transit - HELD THAT: - The Court disposed of the petition by applying its earlier decision in Special Civil Application No. [2025 (12) TMI 941 - GUJARAT HIGH COURT] and allied matters. It accepted that, once action had been initiated on interception of the conveyance under the statutory scheme governing detention and seizure in transit, the authorities could not simply abandon that process and directly issue confiscation notice. The earlier decision, as extracted, recognised that sections 129 and 130 operate in distinct fields and that confiscation under section 130 may be invoked only where the case involves the element of intention to evade payment of tax; however, the procedure under section 129 must first be carried through to its logical end and the authorities cannot straightway jump from detention to confiscation. As the respondents had initiated action under section 129 and thereafter directly issued notice in Form GST MOV-10 proposing confiscation, such action was held unsustainable. [Paras 6, 7, 8]

The confiscation notice in Form GST MOV-10 and subsequent proceedings were quashed.

Final Conclusion: Following its earlier decision, the Court held that the respondents could not, after initiating proceedings for detention of goods and conveyance in transit, directly proceed to confiscation in the manner adopted here. The impugned confiscation notice and consequential proceedings were therefore set aside.

Maintainability of writ petition against assessment order after invoking rectification - Rectification of Mistakes Apparent on the Face of the Record - Appealability of rectification orders under GST law - Alternative statutory remedy - Limitation in writ proceedings - Condonation of delay in approaching the appellate forum.

Writ maintainability against assessment order after invoking rectification - Limitation in writ proceedings - HELD THAT:- The Court held that once the appellant had chosen to pursue rectification under Section 161 against the assessment order, it could not simultaneously maintain a writ petition against the same order. The Court treated such parallel recourse as impermissible. It further held that the writ petition, having been instituted beyond the permissible period, was independently liable to be rejected as barred by limitation. [Paras 4, 5, 6]

The dismissal of the writ petition challenging the assessment order was affirmed.

Appealability of rectification orders under GST law - Alternative statutory remedy - HELD THAT: - The Court held that Section 107, which permits appeal against any decision or order passed under the Act, is couched in wide terms and therefore covers an order made under Section 161. On that construction, the appellant had an effective statutory appeal against the rectification order. The earlier decision in State of Tamil Nadu v. Speedline Agencies [1997 (8) TMI 489 - MADRAS HIGH COURT] was distinguished on the ground that it arose under the TNGST Act, 1959, where the statutory scheme relating to rectification and appeal was materially different; under the 2017 Act, the right of appeal against an order under Section 161 is expressly available under Section 107. The Court also recorded that the appellate authority's powers were not confined to examining jurisdiction under Section 161 alone, but would extend to all aspects of the matter. Since the writ petition had been filed beyond the condonable appellate period, but the respondent did not oppose recourse to appeal, the Court condoned the delay and directed that an appeal, if filed within the time granted, be entertained subject to statutory conditions including pre-deposit. [Paras 14, 15, 16, 18, 19]

The writ appeal was dismissed, but liberty was granted to file a statutory appeal within the time fixed, without objection on limitation.

Final Conclusion: The Court dismissed both writ appeals. The challenge to the original assessment order was held not maintainable and time-barred, while the challenge to the rectification order was relegated to the statutory appellate remedy, with delay condoned and liberty granted to file an appeal within the period specified by the Court.

Clean Slate Theory - Statutory dues arising during CIRP - Binding effect of approved resolution plan - Jurisdiction u/s 60(5) of IBC

Clean Slate Theory - Statutory dues arising during CIRP - Binding effect of approved resolution plan - whether the clean slate theory applies to statutory tax dues that arise during the corporate insolvency resolution process and are not included in the resolution plan? - HELD THAT: - The Court held that the Supreme Court decisions in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and others [2019 (11) TMI 731 - SUPREME COURT], Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited [2021 (4) TMI 613 - SUPREME COURT] and Arun Kumar Jagatramka vs Jindal Steel and Power Ltd [2021 (3) TMI 611 - SUPREME COURT] were rendered in the context of dues relatable to the period prior to commencement of CIRP, and therefore were not binding precedents on liabilities arising during CIRP. On the scheme of the IBC, claims to be lodged before the resolution professional are verified as on the insolvency commencement date, whereas Sections 14, 17(2)(e) and 30(2)(e) indicate continuing compliance with laws in force during moratorium, including fiscal statutes. Section 32A also expressly limits immunity for prior offences to the period prior to commencement of CIRP, which, in the Court's view, militated against extending civil immunity to post-commencement dues by interpretation. The Court further held that extending clean slate to taxes arising during CIRP, especially indirect taxes, could result in impermissible private retention of public revenue and arbitrary consequences, and therefore such extension was not warranted.

The Court answered the principal question against the petitioners and held that dues arising during CIRP are not extinguished by Clean Slate Theory merely on approval of the resolution plan.

Precedential value - Sub silentio - Clean Slate Theory - HELD THAT: - The Court held that a decision is an authority for what it actually decides and not for what may logically follow from it. Since the Supreme Court decisions applying clean slate did not concern dues arising during CIRP, any attempt to extend them to that distinct situation would amount to impermissible logical enlargement. The Court also held that the question whether clean slate covers dues arising during CIRP had neither arisen nor been perceived in those cases, and therefore the decisions passed sub silentio on that point.

The Court held that there was no binding Supreme Court precedent compelling extension of Clean Slate Theory to dues arising during CIRP.

Correctness or otherwise of a claim or an assessment made under the GST Act - Section 238 of IBC - Article 246A- whether the authorities under the insolvency regime can adjudicate or override fiscal assessments and reassessment disputes arising under the income tax and GST laws? - HELD THAT: - The Court held that the power to tax is an attribute of sovereignty and any limitation on that power must be express. After the 101st Constitutional Amendment, Article 246A confers simultaneous legislative power on Parliament and State Legislatures in respect of GST, and its non-obstante clause must be given due effect. In that setting, Section 238 of the IBC could not be expansively read so as to impose, by interpretation, an embargo on recovery of SGST dues arising during CIRP. The Court noticed that Section 82 of the TNGST Act alone expressly yields to the IBC, and that no similar subordination was enacted in the provisions relating to levy, determination or recovery. The conflict was thus resolved by holding that an overriding clause in the IBC cannot be interpreted beyond the constitutional and statutory limits governing State GST legislation.

The Court declined to read Section 238 of the IBC as extinguishing or overriding State GST dues arising during CIRP.

Jurisdiction under Section 60(5) of IBC - Public law disputes - Tax adjudication - Jurisdiction of NCLT and authorities under the IBC under Section 60(5) to adjudicate upon the correctness of tax assessments or other disputes arising under public law statutes such as the Income Tax Act and GST enactments - HELD THAT: - Relying on Embassy Property Developments (P) Ltd. v. State of Karnataka [2019 (12) TMI 188 - SUPREME COURT] and Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta [2021 (3) TMI 340 - SUPREME COURT] the Court held that the residuary jurisdiction under Section 60(5) extends only to questions arising out of or in relation to insolvency resolution, and cannot be stretched to matters in the public law domain. Permitting the NCLT to examine the legality or correctness of assessment orders under the GST Act or the Income Tax Act would improperly elevate it into a forum exercising judicial review over statutory action and would also create the risk of conflicting adjudications by parallel forums.

The Court held that tax disputes on merits must be dealt with by the competent statutory authorities and not by invoking Section 60(5) of the IBC.

Failure to consider objections - Fresh adjudication - HELD THAT: - After deciding the principal legal question, the Court found that in the individual writ petitions the impugned orders had been passed without proper consideration of the petitioners' replies, objections, or the relevant resolution plan or scheme. The Court therefore set aside those orders and remitted the matters for fresh consideration. It expressly left open for reconsideration issues such as the terms of the resolution plan, whether the tax component could fall within CIRP cost, the effect of compromise under Section 230 of the Companies Act, the effect of sale as a going concern under the TNGST Act, the availability of reassessment for pre-CIRP years, the Section 119(2) request for condonation, and the implications for input tax credit, making clear that the scope indicated was only illustrative and not exhaustive.

The individual impugned orders were set aside and the matters remanded for fresh consideration in accordance with the legal principles stated in the judgment.

Final Conclusion: The Court held that Clean Slate Theory does not wipe out statutory tax liabilities arising during CIRP, and that Section 60(5) of the IBC does not confer jurisdiction on the NCLT to adjudicate the merits of tax assessments. The impugned orders in the individual writ petitions were set aside and the matters were remanded for fresh consideration in the light of these principles.

Reopening of assessment u/s 147 - deduction u/s 80IB(10) claimed by the petitioner was not allowable because the residential project "Venus Parkland"

As decided by HC [2025 (6) TMI 78 - GUJARAT HIGH COURT] CIT(A) had, by order allowed the deduction claimed for the earlier year. In these circumstances the Court found that the AO could not validly assume jurisdiction to disallow the deduction for AY 2016-17 merely on the basis of the earlier disallowance which had been overturned by the appellate authority. Consequently, the impugned notice issued u/s 148 was held to be without lawful foundation

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.

Reopening proceedings against company dissolved - Deemed permanent extinguishment of claims by NCLT-approved resolution plan - belated claim inclusion after resolution plan approval - clean slate principle

HELD THAT:- Special Leave Petition was dismissed, the Court stating that no good ground for interference with the impugned High Court order [2025 (8) TMI 766 - BOMBAY HIGH COURT] was made out.

Validity of reassessment proceedings beyond period of limitation - gross delay of 411 days in filing the Special Leave Petition

HC held [2025 (2) TMI 985 - DELHI HIGH COURT] period of six years for the relevant AY 2016-17, thus, expired and impugned notice has been issued thereafter, and the same is, thus, barred by limitation.

HELD THAT:- Special Leave Petition was dismissed on the ground of unexplained delay and also on merits, with pending applications disposed of.

Revision u/s 263 - Revisional jurisdiction over block assessment - Undisclosed income in block assessment - Belated return after search - Advance tax and TDS not amounting to disclosure of total income - Suppression of freight charges - Provision for lorry hire charges under mercantile system

Revisional jurisdiction over block assessment - Erroneous and prejudicial assessment - HELD THAT: - The Court held that section 263 confers plenary revisional power on the Commissioner to examine any assessment order and direct fresh assessment, modification or cancellation if the order is erroneous and prejudicial to the Revenue. That power is not confined by the nature of the assessment, and applies equally to a block assessment under section 158BC read with section 143(3). Since the record disclosed an apparent error in the block assessment arising from application of a wrong legal principle and lack of proper enquiry, the Commissioner was justified in exercising revisional jurisdiction. [Paras 34, 35]

The challenge to the validity of the order u/s 263 failed and the assessee's appeal on that issue was dismissed.

Undisclosed income in block assessment - Belated return after search - Advance tax and TDS not amounting to disclosure of total income - HELD THAT: - Applying the law declared in ACIT v. A.R. Enterprises [2013 (1) TMI 345 - SUPREME COURT] the Court held that paying advance tax or filing return, after initiating block assessment process, but before passing of block assessment order will no way help the assessee, who failed to disclose the income and filed his return with the normal period prescribed. Filing the return during the extended period of limitation, after initiation of search proceedings, without any proof for deduction of TDS, the income though disclosed later for the particular Assessment Year(AY), it has to be a drawn as the undisclosed income of the assessee during the block period under assessment. Otherwise, any evader of tax in order to escape the consequence of not disclosing the income, can file his return disclosing the bulk of his undisclosed income as income of the particular Assessment Year(AY) soon after the search commences, but before completion of search proceedings and assessment. Block Assessment as a result of search cannot be substituted by the regular assessment to dilute the effect of undisclosed income unearthed during the search proceedings.[Para 37]

The Revenue's stand on treatment of the AY 2002-2003 income as undisclosed income was upheld, and the Tribunal's contrary view was set aside.

Suppression of freight charges - HELD THAT: - The Court held that the appellate reasoning deleting the addition on the footing that unaccounted receipts would necessarily involve corresponding unaccounted expenditure was legally untenable. Acceptance of such a principle would legitimize maintenance of shadow accounts for tax evasion. The finding sustaining deletion of the freight suppression addition was therefore treated as perverse and liable to interference. [Paras 45, 46]

The deletion of the addition for suppression of freight charges was set aside and the Revenue's appeal was allowed to that extent.

Provision for lorry hire charges under mercantile system - Accrued liability - HELD THAT: - The Court accepted the concurrent view that, under the mercantile system followed by the assessee, the provision towards hire charges represented an accrued liability and not undisclosed income. Since the unpaid hire charges were reversed at the beginning of the succeeding year and the accounting treatment was accepted as one relating to accrued liability, no interference was warranted with the deletion of that addition. [Paras 41, 46]

The deletion of the addition relating to lorry hire charges was confirmed.

Undisclosed income from token booking - HELD THAT: - The Court noted that the search had yielded material showing unaccounted collections under the token booking system and that the appellate authority reduced the addition by applying a broad proposition that every unaccounted receipt must carry corresponding unaccounted expenditure. The Tribunal found that approach unsustainable and remitted the matter to the CIT(A) for fresh consideration. The High Court affirmed that course. [Paras 41, 46]

The remand directed by the Tribunal on the token booking issue was left undisturbed.

Final Conclusion: The assessee's appeal challenging the exercise of revisional power under section 263 was dismissed. The Revenue's appeal against the later Tribunal order was allowed, restoring the treatment of the AY 2002-2003 income as undisclosed income, while its earlier appeal against the original block assessment order was partly allowed by setting aside deletion of the freight suppression addition, confirming deletion of the lorry hire addition, and leaving intact the remand on the token booking issue.

Validity of income tax reassessment proceedings beyond approved resolution plan - Extinguishment of pre-resolution statutory dues - Binding effect on tax authorities - Penalty as consequence of extinguished tax liability

HELD THAT: - The Court held that once a resolution plan is approved under Section 31 of the Insolvency and Bankruptcy Code, 2016, it becomes binding on all stakeholders, including the Central Government and statutory authorities, and all claims must stand confined to the resolution process. The determinative principle applied was that liabilities pertaining to the period prior to approval of the resolution plan stand extinguished by operation of law unless provided for in the approved plan.

The relevant test is the period to which the liability relates, and not the date on which the assessment, reassessment or demand order is passed. Since the impugned proceedings related to assessment years falling prior to 19th July, 2023 and the revenue had admittedly lodged its claim during the CIRP, continuation of such proceedings was held to be ex facie without jurisdiction. [Paras 11, 12, 14, 15, 16]

The assessment orders, demand notices, reassessment notices and orders passed for the pre-approval period were quashed, and the revenue was directed to withdraw such proceedings and give full effect to the resolution plan.

Penalty as consequence of assessment - HELD THAT: - The Court held that penalty is consequential to assessment. Once the underlying tax liability for the period prior to approval of the resolution plan stood extinguished, continuation of penalty proceedings in relation to that liability became wholly unsustainable and contrary to the scheme of the Code. [Paras 13, 15, 16]

The penalty proceedings for the pre-approval assessment years were also quashed along with the connected assessment and demand proceedings.

Final Conclusion: The petition was allowed. All assessment, reassessment, demand and penalty proceedings relating to the period prior to approval of the resolution plan were quashed, and the revenue was directed to treat its pre-resolution claims as extinguished and update its records accordingly.

Derecognition of income on consumers' share of efficiency gains - Disallowance of uncollected energy tax - Interest on consumer security deposit as accrued liability - Depreciation on UPS as part of computer system - Deduction under section 80-IA

Derecognition of income pertaining to consumer's portion of over achievement of minimum target or efficiency gain - HELD THAT: - The Court held that the question stood concluded against the Department by an earlier judgment of the Court in Tata Power Delhi Distribution Ltd. [2020 (3) TMI 719 - DELHI HIGH COURT] Since the controversy was already covered, no further substantial question survived on this issue. [Paras 9]

Ground A was decided against the Department.

Disallowance u/s 43B - unpayable portion of Energy Tax -HELD THAT: - The Court noted the finding of the CIT(A), affirmed by the Tribunal, that under the relevant agreements and municipal bye-laws the energy tax was payable only as and when it was collected from consumers. On that basis, the liability could not be treated as presently payable for disallowance, and the Court found no reason to interfere. [Paras 10]

Question B was decided against the Department.

Consumer security deposit - Accrued statutory liability - Contingent liability - statutory obligation to pay interest on additional consumer security deposit to consumers - HELD THAT: - The Court held that the interest was payable on the security amount under a statutory and contractual obligation, and every consumer was entitled to such interest on the money deposited with the respondent. Since the liability to pay interest had accrued on that basis, it could not be treated as contingent merely because the principal deposit amount was under dispute. [Paras 14, 15, 16]

The Tribunal's deletion of the addition was affirmed and Question C was decided against the Department.

Depreciation on UPS - Computer system - Applicable rate of depreciation - HELD THAT: - The Court held that a UPS is an integral part of the computer system and not merely an accessory, because uninterrupted power supply is essential for the functioning and operations of the computer. The Assessing Officer therefore erred in restricting depreciation to a lower rate instead of applying the rate available to computers. [Paras 17, 18, 19]

Question D was decided against the Department.

Deduction u/s 80-IA - The disallowance of deduction under section 80-IA did not give rise to a surviving question in view of the earlier binding judgment of the Court. - HELD THAT: - The Court held that this issue also stood concluded against the Department by the same earlier judgment rendered in the respondent's case Tata Power Delhi Distribution Ltd [2020 (3) TMI 719 - DELHI HIGH COURT]. The proposed question was therefore not open for reconsideration. [Paras 20, 21]

Question E was decided against the Department.

Final Conclusion: The Court held that all the proposed questions already stood concluded against the Department or were otherwise without merit. The appeal was accordingly dismissed.

Denial of concessional tax regime u/s 115BAA - 13-day delay in filing Form 10-IC - seeking Condonation of delay under section 119(2)(b) - Procedural requirement vis-a-vis substantive statutory benefit - Substantial justice and disproportionate hardship -

HELD THAT: - The Court held that the delay was short, supported by undisputed circumstances arising from the demise of the group founder/chairman, and was neither deliberate nor mala fide. It further held that the benefit u/s 115BAA is a substantive statutory benefit, while filing Form 10-IC is only the procedural mode for exercising the option; therefore, a procedural requirement could not be allowed to defeat the substantive entitlement where eligibility was not in dispute.

The authority had adopted an unduly technical and rigid approach, ignored the absence of prejudice to the Revenue, and failed to consider that refusal of condonation would impose grave and disproportionate hardship. On that reasoning, the impugned order was found to suffer from non-application of mind. [Paras 10, 11, 12, 13, 14]

The rejection of condonation was quashed, the delay in filing Form 10-IC was condoned, and the respondents were directed to process the matter on the basis that Form 10-IC had been filed within time.

Final Conclusion: The Court allowed the writ petition and held that the 13-day delay in filing Form 10-IC deserved condonation under section 119(2)(b). The assessee was directed to be considered for the concessional regime by treating the form as having been filed within time.

Business reorganization - Modified return u/s 170A - Effect of order of tribunal or court in respect of business reorganization - Completed assessment vis-a-vis pending assessment - Scope of inquiry in post-amalgamation assessment - notice issued under Section 143(2) and u/s142(1)

Whether, in a case governed by section 170A(2)(a), the Assessing Officer could issue notices under sections 143(2) and 142(1) to reopen the entire assessment, or was confined to modifying the completed assessment to give effect to the amalgamation order and the modified return? - HELD THAT: - The Court held that Section 170A(2) makes a clear distinction between completed assessments and pending assessments on the date of furnishing of the modified return. Under clause (a), where the assessment is already completed, the Assessing Officer is confined to modifying the total income already determined so as to give effect to the order of business reorganization and to take into account the modified return; this does not permit a de novo assessment.

Notices u/s 143(2) and 142(1) for reopening the entire assessment are contemplated only in the situation covered by clause (b), where assessment proceedings are pending. Though limited information may be called for to give effect to the amalgamation and the modified return, the impugned notices were not so confined and instead sought to reopen the whole assessment for A.Y. 2023-24.

They were therefore held to be without jurisdiction and unsustainable. As a consequence, the assessment order passed on the basis of those notices was also set aside, with a direction to pass a fresh order modifying the income determined under the earlier intimation by giving effect to the modified return. [Paras 13, 14, 15, 16, 17]

The impugned notices u/s 143(2) and 142(1) were quashed, and the consequential assessment order was set aside with a direction to pass a fresh modification order in terms of Section 170A(2)(a).

Final Conclusion: The Court held that the case fell under Section 170A(2)(a) since the assessment was already completed when the modified return was filed. Accordingly, the scrutiny notices and the consequential assessment order were set aside, and the Assessing Officer was directed to pass a fresh order limited to modifying the completed assessment in accordance with the amalgamation order and the modified return.

Validity of reopening of assessment - proper Sanction for reassessment notice- valid approval from Specified authority under Section 151 - Jurisdictional defect in reopening

HELD THAT: - The Court held that the controversy was squarely covered by its earlier decision in Alag Property Construction Private Limited [2025 (9) TMI 1203 - BOMBAY HIGH COURT] which had applied the law declared by the Supreme Court in Union of India vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)]

On that basis, the Court accepted that, for the assessment year in question, approval by the authority u/s 151(i) was not the approval mandated by law, and that non-compliance with Section 151 vitiated the jurisdiction of the Assessing Officer to issue the notice under Section 148. Since the impugned order under Section 148A(d), the notice under Section 148, and the consequential reassessment proceedings rested on such invalid sanction, they could not be sustained. [Paras 8, 9]

Final Conclusion: The writ petition was allowed on the ground that the reassessment notice for A.Y. 2017-18 had been issued without sanction from the statutorily competent authority under Section 151. Consequently, the entire reassessment action and consequential notices were set aside.

Book profit computation u/s 115JA - Treatment to Provision for bad and doubtful debts - Deduction under Section 80IA(7) requiring Audit report for deduction claim - Directory requirement

Book profit computationu/s 115JA -Provision for bad and doubtful debts treatment - HELD THAT: - The Court held that Section 115JA, read with the Explanation as amended retrospectively, treats any amount set aside as a provision for diminution in the value of any asset as part of book profit. Since bad and doubtful debts fall within that description, the deduction could not be allowed in computing book profits. The Tribunal was therefore in error in deleting the addition without considering the effect of the retrospective amendment. [Paras 4, 5]

The question was answered in favour of the Revenue and against the assessee.

Audit report for deduction claim u/s 80IA(7) - Directory requirement - HELD THAT: - The Court held that the requirement of furnishing the audit report for the purpose of Section 80IA(7), for the period in question, was directory and not mandatory. Consequently, failure to file the audit report before completion of assessment did not by itself defeat the claim, and submission of the audit report before the appellate authority was sufficient to substantiate the deduction claim. This issue is covered by the judgment of M/s.Ramco Cements Limited [2022 (6) TMI 189 - MADRAS HIGH COURT] [Paras 6, 7]

The question was answered in favour of the assessee and against the Revenue.

Final Conclusion: The appeal was partly allowed. The Revenue succeeded on the issue of addition of provision for bad and doubtful debts in the computation of book profits under Section 115JA, while the assessee succeeded on the issue of filing the audit report at the appellate stage for deduction purposes.

Cancellation of registration u/s 12A - Charitable purpose - general public utility - status of a trust -scope and ambit of Section 2(15) - As contented Institution is conducting educational programmes for the persons involved in the shipping industry and the Institution is the only Institution imparting such education and therefore, entitled for

HELD THAT: - The Court found that the stated objects of the institution primarily involved dissemination of knowledge relating to the profession or business of ship broking through conferences and meetings concerning professional affairs and interests.

In view of the law declared by the Supreme Court in Ahmedabad Urban Development Authority [2022 (10) TMI 948 - SUPREME COURT] on the scope of general public utility after the amendment to section 2(15), institutions of this nature require closer scrutiny to determine whether their activities are in the nature of services in relation to trade, commerce or business, and whether the statutory limits are crossed. Since that governing test now controlled the field, the respondent's case was required to be examined afresh in that light instead of allowing restoration of status on the basis adopted by the Tribunal. [Paras 9, 10]

The matter was remitted to the Directorate of Income Tax (Exemption), Chennai for fresh examination and orders in accordance with the Supreme Court principles under section 2(15).

Final Conclusion: The appeal was disposed of by directing a fresh examination of the respondent institution's status under the law laid down by the Supreme Court on section 2(15). The earlier restoration of charitable status was not allowed to stand without such reconsideration.

Non-speaking appellate orders - Non-application of mind - Admission of supporting evidence without procedural compliance - Whether Appellate Tribunal is right in holding that the land sold by the assessee as a co-owner was an agricultural land and not liable to be taxed?

HELD THAT: - The Court found that both the CIT (Appeals) and the Tribunal had merely extracted grounds and written submissions without recording any reasoning showing appreciation of the material issues arising on the claim that the land was agricultural land outside the ambit of capital asset. The orders did not deal with critical aspects referred to by the Revenue, including prior layout and planning permissions, gift of portions for roads and open space reservation, and the question of classification with reference to the statutory parameters under Section 2(14). The Court also found no proof that all supporting documents relied on by the assessees were properly on record before the appellate authorities, and observed that if such documents had been produced in appeal, their admission ought to have followed the proper procedure with opportunity to the Department. In these circumstances, the defect lay in the non-speaking and procedurally infirm appellate adjudication, making remand necessary and leaving all merits open. [Paras 15, 19, 20, 21, 22]

The Tribunal's orders were set aside and the matters were remanded to the CIT (Appeals) for fresh consideration, with liberty to the parties to produce evidence and with all questions left open.

Final Conclusion: The Court held that the appellate orders suffered from gross non-application of mind and could not be sustained. The appeals were allowed by way of remand to the CIT(Appeals), and the substantial questions of law were left unanswered.

Levy of penalty u/s 271(1)(c) - Bona fide legal claim - Concealment and inaccurate particulars - relief claimed qua the branch at Hong Kong - allegation of erroneous claim for double taxation relief in respect of its Hong Kong branch - DTAA with China extension to Hong Kong

HELD THAT: - The Court held that the assessee had disclosed the income of the Hong Kong branch and the claim for treaty relief was made on the basis of the return itself.

The disallowance arose only because the DTAA with China did not extend to Hong Kong at the relevant time. That defect was a pure error of law and interpretation, and the Court accepted that, prior to the 2009 amendment to Section 90 introducing the concept of specified territory, the assessee's understanding was a plausible one. Since the Department had neither established concealment of income nor furnishing of inaccurate particulars, the statutory pre-conditions for penalty were absent.

The Court further held that Dharmendra Textile Processors [2008 (9) TMI 52 - SUPREME COURT] did not make penalty automatic in every case of disallowance, and that the governing principle was that penalty u/s 271(1)(c) is attracted only where concealment or inaccurate particulars are shown. [Paras 27, 28, 30, 31, 32]

The deletion of penalty was upheld and the re-framed substantial question of law was answered in favour of the assessee.

Final Conclusion: The Court held that the assessee's claim for treaty relief, though legally erroneous, was a bona fide claim based on a plausible understanding of the law prevailing at the relevant time. As there was neither concealment of income nor furnishing of inaccurate particulars, penalty under Section 271(1)(c) was held inapplicable and the Revenue's appeals were dismissed.

Prior period expenditure - Allowance in the correct assessment year - HELD THAT: - On a careful examination of all the material provided before us, we find that one thing is clear, that there is no doubt in regard to the genuineness of the expenditure incurred. Even before us, learned Standing Counsel does not dispute this aspect. The Government is a public company, and having regard to the totality of the circumstances, we are of the considered view that a direction may be given to the revenue to consider the claim of expenditure for AY 2003- 2004, if the Assessee furnishes a revised computation of income for AY 2003- 2004 within four (4) weeks from today.

Final Conclusion: In view of the undisputed genuineness of the expenditure and the surrounding circumstances, the assessee was given liberty to file a revised computation for AY 2003-04 for consideration by the revenue.

Condonation of delay - sufficient cause - extended period of limitation - HELD THAT:- Delay was condoned, and the special leave petition was dismissed as the Court found no case for interference with the impugned order, having regard to the reasons accepted by the CESTAT [2020 (7) TMI 93 - CESTAT BANGALORE] and affirmed by the High Court [2025 (11) TMI 710 - KARNATAKA HIGH COURT] on non-invocability of the extended period of limitation.

Condonation of delay - delay of 144 days - sufficient cause - HELD THAT:- The civil appeal was dismissed on the ground of delay, the Court having found no bona fide and plausible explanation to condone the inordinate delay of 144 days.

Condonation of delay - HELD THAT:- Delay was condoned and the Special Leave Petition was dismissed on the ground that no good case for interference with the impugned order was made out.

Provisional attachment of bank accounts under Section 110(5) - Expiry of attachment by operation of law - Mandatory extension before expiry - Lapse by operation of law - Strict compliance.

Provisional attachment of bank accounts - Mandatory extension before expiry - Expiry of attachment by operation of law - HELD THAT: - The Court held that the impugned attachment orders themselves limited the attachment to six months. Under the proviso to Section 110(5), continuation beyond that period was permissible only if the competent authority, for recorded reasons, extended the attachment before expiry of the original period and informed the affected person. As no such order was passed, the attachment ceased by operation of law. The earlier order of the co-ordinate Bench, which had permitted limited operation of the accounts while protecting the revenue interest, could not be read as authorising automatic continuation of the attachment or as overriding the statutory mandate. The Court emphasised that judicial orders cannot dispense with or extend a statutory time-limit prescribed for exercise of such power. [Paras 6, 7, 8]

The attachment orders were held to have lapsed on expiry of six months, were rendered illegal and invalid, and the petitioners were held entitled to operate the bank accounts.

Final Conclusion: The writ petition was partly allowed. The Court held that, no extension having been granted within the statutory period, the provisional attachment orders had lapsed by operation of law and the petitioners were free to operate the bank accounts.

Duty liability on imported duty-free capital goods and raw materials/consumables by availing exemptions under the erstwhile Notification No. 53/1997-Customs dated 03.06.1997 (now Notification No. 52/2003-Customs dated 31.03.2003 - 100% Export Oriented Unit (EOU) - net foreign exchange earnings percentage - Retrospective operation of exemption notification - imposition of penalty for non-fulfilment of export obligation.

Duty liability on EOU capital goods - NFEP non-fulfilment - Conditions of exemption - HELD THAT: - The Court held that under General Exemption No. 42, as applicable to the period in question, the relevant condition for imported capital goods was their installation or use within the bonded premises within the stipulated period. The provision enabling recovery of duty for failure to achieve NFEP applied to raw materials and consumables, but no corresponding enabling provision existed for capital goods. Since procurement and installation of the capital goods were not in dispute, failure to achieve the export obligation by itself did not justify levy of duty on those capital goods. [Paras 13, 14, 15]

The Tribunal was right in setting aside the duty demand on imported capital goods.

Retrospective operation of exemption notification - Prospective application of notification - HELD THAT: - The Court rejected the Revenue's contention that the later notification was clarificatory and retrospective. It found that the default period involved was prior to the issuance of that notification and that the Revenue had not shown any retrospective effect attached to it. In the absence of such retrospective operation, the later notification could not be invoked to create a duty liability for the earlier imports. [Paras 15]

The notification dated 31.03.2003 was held inapplicable to the present dispute.

Penalty under Section 112(a) - HELD THAT: - The Court accepted the Tribunal's view that the penalty could not survive when the very demand of duty on capital goods was unsustainable. The penalty was treated as consequential to the duty demand, and on the Court's finding that no customs duty was leviable on the capital goods in the circumstances of the case, the foundation for penalty also disappeared. [Paras 16, 17]

The order setting aside the penalty under Section 112(a) was affirmed.

Final Conclusion: The High Court dismissed both appeals and upheld the Tribunal's view that, for the period in question, non-achievement of NFEP did not attract customs duty on installed and used capital goods imported by the EOU. As the duty demand itself failed, the penalty under Section 112(a) was also held unsustainable.

Post-import alteration of retail sale price - Demand of differential CVD on imported goods - retail sale price of imported cellular phones - misdeclared at the time of import and altered thereafter - Deemed manufacture by labelling or relabelling - Piercing the corporate veil.

Whether the appellants have discharged CVD wrongly on the imports made by them by mis-declaring their actual RSP or otherwise. - appellant and M/s Big C are related person or not -HELD THAT:- Any post-importation manipulation of RSP unless established to have been committed by the importer themselves cannot be brought under the purview of Customs Act, whereas, in the present case, the manipulation, etc., if any, has taken place in the premises of their distributor, who are a separate legal entity.

The Tribunal held that the dispute was not one of customs valuation between related parties, since the distributor was not the importer and the transaction between them could not be examined under the Customs Valuation Rules. The department's attempt to treat both entities as one was found unsupported by adequate evidence. The material relied upon, namely the annual report, statements and photographs, did not establish that the importer had directly engaged in post-clearance alteration of the retail sale price. The Tribunal found that any alteration shown by the record had taken place, if at all, at the distributor's premises, and there was no evidence of flow back or of the importer controlling the distributor's day-to-day affairs so as to justify piercing the corporate veil. [Paras 12]

The allegation that the importer and the distributor were effectively one entity, so as to fasten liability on the importer for the distributor's relabelling activity, was rejected.

Demand of differential CVD on altered RSP - Post-import relabelling - Deemed manufacture - Lack of machinery for redetermination of RSP - HELD THAT: - In the case of Larsen & Toubro Ltd, RN Mukhija & Prakash B Shet Vs CCE, Mumbai-I [2025 (10) TMI 498 - CESTAT MUMBAI], wherein the issue was competence of customs authority to take recourse to section 28 of the Customs Act, 1962 in respect of goods cleared domestically and in terms of authority under section 4A of Central Excise Act, 1944, the Coordinate Bench observed that there are several decisions of the Tribunal on the competence of customs authorities to take recourse to section 28 of the Customs Act in the absence of machinery provision for revision of declared sale price at the stage of assessment. They relied on the earlier judgment of Larger Bench in the case of Ocean Ceramic Ltd Vs CCCE, Rajkot [2024 (1) TMI 1280 - CESTAT AHMEDABAD - LB]. After examining various relevant case laws, it was held that there is no machinery provision for redetermination of RSP for the purpose of reassessment of additional duties of customs (CVD) and that the authority to reassess the value under Customs Act is limited to Customs duty in terms of Customs Valuation (Determination of Value of Imported Goods) Rules, 1962.

The Tribunal held that the evidence was insufficient to prove that the importer had intentionally mis-declared the retail sale price at the time of import and thereafter altered it. More fundamentally, it found that Rule 5 of the Central Excise Rules, 2008 was inapplicable because the importer was not a manufacturer of excisable goods for section 4A purposes. The Tribunal accepted the line of decisions holding that there is no machinery provision for redetermination of retail sale price for reassessment of additional duty of customs once goods are imported on an RSP basis. It further held that where post-import labelling or relabelling of mobile phones takes place, such activity would amount to deemed manufacture attracting central excise consequences, and not justify recovery of differential CVD under customs law. On that reasoning, the demand itself failed, and the confiscation and penalties, being consequential, also could not survive. [Paras 13, 14, 15, 16]

The demand of differential CVD on import was held unsustainable; consequently, confiscation and penalties were also set aside.

Final Conclusion: The Tribunal allowed the appeals and held that, on the facts found, differential CVD could not be recovered under customs law on the basis of alleged post-import alteration of retail sale price. The demand, confiscation and penalties were accordingly set aside.

Undervaluation of export goods - Cross-examination of relied upon witnesses - Burden of Proof -receipt of additional consideration over the declared FOB value -Admissibility of statements recorded under Section 108, during investigation and the electronic records relied upon by the Department - Retracted Statement - Principle of natural justice - mis-declared the value of their export consignments, resulting in non-payment customs duty​​​​​​​ - Preponderance of Probability - demand of differential duty and imposition of penalty.

Whether the appellants had exported iron ore at lower FOB value in terms of a dummy contract and also received higher consideration over and above the contracted value in cash from the buyer of the consignment. - HELD THAT: - There is nothing on record to suggest that the appellant company had received any money over and above USD 70 PDMT with regard to the said two consignments. In fact, shipments were made to the same parties with whom appellant had entered into contract and also received payment @ USD 70 PDMT through proper banking channel as evidenced by BRC. It is also noted that appellants are not party to so called second contract between two Singapore entities showing value as USD 89. First by the trading between two entities situated outside could be a trading activity in Singapore at any mutually agreed price and the trading income can flow back to seller in Singapore. The Department has also heavily relied on the statement of certain persons associated with the so called buyer or fund raiser and instrumental in sending differential money or were otherwise engaged in the entire transaction. Their statements and exchange of e-mails have been relied heavily by the Adjudicating Authority to establish that extra amount has been received by the appellant. However, neither said companies nor the persons actively associated in such alleged under valuation or transactions have been made party to the proceedings in the show cause notice. Moreover, it is also to be noted that the appellants were not allowed for cross-examinations of such person on the statements of whom the entire case has been based by Department.

The Tribunal held that though statements recorded under Section 108 are admissible, they cannot, in the facts of the case, by themselves establish undervaluation without reliable independent corroboration. The case of the Department rested substantially on statements of co-accused and of the person said to have handled the overseas arrangement, but the appellants were denied cross-examination of such key persons. The alleged second contract was between overseas entities and the appellant was not a party to it; the goods were exported to the contracted buyer and payment at the declared rate was received through banking channels. There was also no evidence showing how, by whom, and to whom any differential amount was actually paid in cash. In these circumstances, the statements lost probative value and could not sustain the allegation of receipt of extra consideration. [Paras 12, 14, 17, 18, 19]

The statements relied upon were held insufficient to prove undervaluation or receipt of any additional amount, and the consequential duty demand and penalties were unsustainable.

Admissibility of electronic evidence - Compliance with Section 138C - Computer printouts and e-mails - HELD THAT: - The Tribunal found that there was no material showing how the e-mails and printouts were retrieved or taken into custody, and no panchanama or recovery record establishing their source and authenticity. It reiterated that reliance on electronic evidence requires compliance with Section 138C of the Customs Act. The decision in SN Agrotech Vs Commissioner of Customs, New Delhi [2018 (4) TMI 856 - CESTAT NEW DELHI] was followed on this aspect. The Tribunal distinguished Additional Director General, Adjudication Vs S.K. and Company Pvt Ltd., & Others [2025 (9) TMI 76 - SUPREME COURT], noting that in that case there was due compliance on the facts recorded by the Supreme Court and no retraction of statements, whereas in the present case there was no comparable procedural foundation. The electronic material, therefore, could not be treated as good evidence. [Paras 12, 13, 17, 18, 19]

The electronic evidence was held inadmissible in the absence of compliance with Section 138C, and it could not be relied upon to revise the declared value or recover differential duty.

Final Conclusion: The Tribunal held that the Department failed to establish, by admissible and reliable evidence, that the appellant had received any additional consideration over the declared export value. The demand of differential duty and the penalties imposed on all appellants were therefore set aside and the appeals were allowed.

Classification of goods - Reliability of sample test reports received from CRCL Kandla to decide classification of goods imported - Synthetic Fabric Lots, declaring the same as “100% polyester plain dyed fabrics” and classifying under CTH 54075290 - Denial for the benefit of duty exemption under Notification No.137/2000-Cus. - chemical test report - Validity of the enhancement of assessable value - finalisation of assessment - Scope of show cause notice - SEZ duty exemption under Letter of Permission - Assent as per Member (Judicial).

Whether sample test reports received from CRCL Kandla is adequate to decide classification of goods imported by the respondent? -HELD THAT:- The Tribunal found that the declared tariff entry covered woven fabrics containing 85% or more by weight of textured polyester filaments, whereas the CRCL Kandla reports showed texturised yarn content only in the range of 60% to 63.5%. On that basis, the classification declared in the Bill of Entry was held to be incorrect. The Tribunal further held that there was no material to show that the CRCL report had ever been discarded by the department, and the plea of doubt regarding the report was unsupported by the record. The later request for retesting was made long after import and when remnant samples were unavailable. Since the test reports gave the composition of the goods, they were held adequate for classification. [Paras 5]

The finding of classification under CTH 54078290 was upheld.

Customs valuation after rejection of declared value - Comparable import data - HELD THAT: - The Tribunal held that, before proceeding to redetermine value, the department must first reject the transaction value and then determine value by following the Customs Valuation Rules on the basis of goods of similar quality and characteristics. As the value had been redetermined on the basis of imports by other units, the adjudicating authority was required to furnish the invoices, documents and data proposed to be relied upon and give full opportunity to the respondent before arriving at a valuation decision. [Paras 5]

The valuation issue was remanded to the adjudicating authority for fresh determination after disclosure of relied upon material and opportunity of hearing.

Entitlement to duty-free import - HELD THAT: - The Tribunal found ambiguity in the Letter of Permission because raw materials and finished goods were mentioned together, making it unclear what procurement was actually authorised. It therefore held that clarification had to be obtained from the office of the Development Commissioner as to whether fresh fabrics could be imported under that permission. The Tribunal also accepted the contention that, while finalising provisional assessment, the adjudicating authority could not be influenced by aspects of the DRI investigation such as statements or alleged diversion in DTA when those matters were not invoked in the show cause notice. If the Development Commissioner clarified that import of fresh fabrics was permitted, duty determination was to be made under the relevant notifications applicable to an SEZ unit, and the respondent would be entitled to produce evidence of the machinery and infrastructure for the permitted use. [Paras 5]

The issue of exemption and consequential duty liability was remanded for clarification from the Development Commissioner and fresh adjudication confined to the scope of the show cause notice.

Final Conclusion: The Tribunal upheld the classification of the imported goods under CTH 54078290, but remanded the questions of valuation and duty liability for fresh adjudication. The remand was directed for disclosure of valuation material, clarification from the Development Commissioner on the scope of the Letter of Permission, and reconsideration confined to the show cause notice.

Assent as per Somesh Arora, Member (Judicial) - HELD THAT:- While agreeing with the above order of my learned brother, I am constrained to make an observation that the permission, which is in the nature of LOP and is a kind of licence for import of duty-free goods, has been casually made by the issuing authority of Kandla SEZ. Under the heading “Activity/Item of Manufacture,” raw materials like raw wool/waste/yarns/tops for making carpet yarns have been mentioned. The way the permission has been granted, it cannot be made out whether the so-called LOP is allowing raw wool to be manufactured or it is permitting raw wool to be procured for manufacture of any item. In such serious kinds of permissions, such casual attitude cannot be appreciated. It is time that the office of the Development Commissioner takes permissions, which have a lot of implications on imports, seriously and ensures careful drafting of such permissions/letters. I agree that the matter deserves to be remanded for necessary clarification and then adjudication, as has been indicated by my learned brother. The appeal is allowed by way of remand as above.

Ordered as above. Matter remanded.

Import of Technical Grade Urea (TGU) through a State Trading Enterprise on high seas sale basis - No license for import of Urea from DGFT - Confiscation for violation of import policy - Penalty for prohibited import.

Whether or not the appellant by importing Technical Grade Urea has violated the provisions of Foreign Trade Policy? - HELD THAT: - The Tribunal held that the controversy stood covered by its earlier decisions in Sunita Commercials Pvt. Ltd. [2023 (1) TMI 814 - CESTAT AHMEDABAD] and M/s. Brightglow Ventures [2023 (3) TMI 1623 - CESTAT AHMEDABAD], which had construed the relevant ITC(HS) entry as permitting import through State Trading Enterprises and not only by such enterprises. Since MMTC, a State Trading Enterprise, imported the Technical Grade Urea and sold it to the appellant on high sea sale basis, the import remained one made through a State Trading Enterprise. On that construction, there was no violation of the Foreign Trade Policy, and consequently the goods were not liable to confiscation under Section 111(d); for the same reason, penalty under Section 112(a)(i) could not survive. [Paras 5]

The confiscation and penalties were unsustainable, and the appeals were allowed.

Final Conclusion: The Tribunal held that import of Technical Grade Urea on high sea sale basis from MMTC was an import made through a State Trading Enterprise and did not violate the Foreign Trade Policy. The orders upholding confiscation and penalty were therefore set aside and the appeals were allowed.

Classification of goods - imported rotary gas meters - classifiable under CTI 9028 10 00 as gas meters Or under CTI 9026 10 10 as flow meters - Suppression of facts - Extended period of limitation - Penalty under section 114A.

Tariff classification - Gas meters - Flow meters - HELD THAT: - The ‘Introduction’ states “The FMG series of rotary gas meters are designed to meet the highest demands of reliable and accurate measurement of gas flow….” Under the heading ‘Principle’, it is said ‘The FMG rotary gas meter is a displacement type gas meter. The actual measurement is performed by two figure 8-shaped impellers (rotors) rotating within a measurement chamber…. The volume is displayed on a direct read counter type index….’ Further, under the heading ‘Applications’ it is mentioned ‘The FMR series of rotary meters is suitable for custody transfer gas measurement of all non-corrosive gases such as natural gas, propane, butane, air hydrogen, etc

On examination of the undisputed product brochure, the nature of the buyers and the meter readings, the Tribunal found that the instrument was designed for custody transfer measurement, i.e. for determining the total volume of gas transferred or consumed. The brochure itself described the product as a rotary gas meter, stated that the actual measurement performed was of volume, and showed direct readout in cubic metres. Such function corresponded to gas supply or production meters under CTI 9028 10 00. The fact that the instrument also had operating specifications relating to pressure or flow did not alter its essential function, since the meter was not meant to bill on rate of flow but on the total quantity of gas passed through it. [Paras 9, 11, 12, 13, 14]

The classification adopted in the impugned order was upheld and, consequently, the exemption claimed on the basis of the alternative classification was held unavailable.

Extended period of limitation - Suppression of facts - Wilful misstatement - HELD THAT: - The Tribunal held that the extended period can be invoked only where non-payment or short-payment of duty is attributable to collusion, wilful misstatement or suppression of facts. In the present case, the appellant had filed all the documents, and the dispute was one of wrong classification and consequent wrongful claim of exemption. In the absence of evidence showing collusion, wilful misstatement or suppression, the statutory conditions for invoking the extended period were not satisfied. [Paras 17]

The demand for the extended period was set aside, though the demand within the normal period was left undisturbed.

Penalty under section 114A - Conditions precedent for penalty - HELD THAT: - The Tribunal held that the ingredients required for imposition of penalty under section 114A are the same as those necessary for invoking the extended period under section 28(4). Since the finding of collusion, wilful misstatement or suppression could not be sustained, the basis for penalty also disappeared. [Paras 18]

The penalty imposed under section 114A was set aside.

Final Conclusion: The appeal was partly allowed. The Tribunal upheld the classification of the imported meters under CTI 9028 10 00 and sustained the duty demand only within the normal period, but set aside the invocation of the extended period and the penalty under section 114A.

Condonation of Delay - HELD THAT:- Delay was condoned, and the special leave petition was dismissed as the Court found no ground to interfere with the impugned judgment/order [2025 (11) TMI 1211 - DELHI HIGH COURT] of the High Court.

Beneficial ownership and maintainability - Validity of notice of extraordinary general meeting - Transfer of shares subject to transferee assuming transferor's obligations - business of supply, installation, commissioning, etc. of electro mechanical equipment for setting- up of small and medium hydro power projects - Binding effect of shareholders' agreement consistent with articles - Non-compete obligation on auction purchaser of shares.

Beneficial ownership - Maintainability under sections 241-242 and 59 - HELD THAT: - The Appellate Tribunal held that Flovel had paid the full consideration for the shares, the sale had been confirmed in the French liquidation proceedings, and the judicial liquidator had expressly communicated that all legal rights and financial interest in the shares vested in Flovel. Since the company itself had withheld issuance of duplicate share certificates and thereby prevented completion of the transfer formalities, it could not defeat the petition on the ground that Flovel was not yet a registered member or did not possess the share certificates or transfer form. On that basis, Flovel's beneficial and financial interest was sufficient to sustain the petition. [Paras 19, 20, 21]

The objection to maintainability was rejected and the finding of maintainability was affirmed.

Notice of extraordinary general meeting - Service by official email - The notice of the EOGM dated 04.06.2021 - HELD THAT: - The Appellate Tribunal found that the notice and VC link had been sent to the liquidator's official email address and that there was no legal requirement to separately send the notice to the secretary of the liquidator. It also noted that the same email address had been used for communications by Flovel and that the liquidator never stated that the notice or link had not been received. The NCLT was therefore held to be in error in treating service as defective merely because the notice was not sent to the secretary. [Paras 25, 26, 27]

The finding invalidating the EOGM was set aside and the service of notice for the EOGM dated 04.06.2021 was held valid.

Transfer of shares subject to charter restrictions - Deeming fiction in case of insolvency - Successor bound by transferor's obligations - Non-compete obligation - HELD THAT: - The Appellate Tribunal held that Article 22 made transfer to an affiliate or third party conditional upon the transferee agreeing to be bound by the rights, obligations and liabilities of the transferring party pertaining to the transferred shares, and that the use of the word including showed that such obligations were not confined to the memorandum and articles alone. Article 25 created a deeming fiction in cases of insolvency, so the transfer had to be tested as though Mecamidi France itself were transferring the shares; consequently, what could not be directly transferred without compliance could not be indirectly acquired through liquidation. The Tribunal further held that a shareholders' agreement remained binding so long as its terms were not contrary to the articles, and the non-compete clause was not repugnant to the articles. Flovel, having acquired 47% shares, stepped into the shoes of Mecamidi France and could not disclaim the predecessor's obligations merely because the purchase occurred in a court auction. In considering the company's interest as paramount, the Tribunal also found that permitting a direct competitor to hold the shares without being bound by the non-compete would prejudice the company. [Paras 39, 40, 41, 42, 45]

The NCLT's view that Flovel was not bound to sign the non-compete clause was set aside; Flovel was directed to be admitted as member/shareholder, but only subject to signing the non-compete clause under the JVSPA, and until such signing it was held bound by that non-compete by the appellate order itself.

Final Conclusion: The Appellate Tribunal upheld Flovel's locus to maintain the proceedings, reversed the finding that the EOGM notice was invalid, and modified the impugned order by holding that registration of Flovel's shareholding could not be divorced from the obligations attached to those shares. Flovel was directed to be admitted as shareholder, but subject to the non-compete obligation binding on the transferor, and was held bound by that obligation until formal execution.

Jurisdiction of the NCLT to entertain the company petition on the basis of business presence or business activity in India - Foreign company status -business in India or not - Place of Business - Electronic Mode - definition of a foreign company - maintainability application on the ground they are not the foreign companies under the provisions of Companies Act, 2013.

Foreign company - Place of business in India - Business activity in India - Jurisdictional facts - HELD THAT: - The Appellate Tribunal found that the decisive controversy was whether the appellants had any place of business in India or were conducting any business activity in India so as to answer the description of a foreign company under Section 2(42). Since documents relied upon by the respondent on that aspect were placed for the first time before the Appellate Tribunal and were disputed by the appellants, the impugned order could not stand when it remained silent on that foundational issue. The question required fresh examination by the NCLT after permitting the respondent to file the documents and the appellants to rebut them. [Paras 7, 8]

The impugned order was set aside and the maintainability application was restored for fresh decision by the NCLT on whether the appellants fall within Section 2(42) of the Companies Act, 2013.

Final Conclusion: The appeal was disposed of by setting aside the order on maintainability and remanding the matter to the NCLT for a fresh determination of the appellants' status as foreign companies under Section 2(42), after giving both sides an opportunity to place and rebut documents.

Moratorium - Commencement of corporate Insolvency Resolution Process - Asset of the corporate debtor - Encashment of bank guarantee - Continuation of proceedings barred - Pre-deposit under MSME Act - Maintainability of writ petition.

Asset of corporate debtor - Moratorium under IBC - Pre-deposit under MSME Act - HELD THAT: - The Court held that the direction to encash the bank guarantee was issued only to secure compliance with the earlier order requiring deposit of part of the award amount as a condition for stay. In that sense, the amount lying in Court was treated as a deposit in compliance with a court order and not as money belonging to the decree-holder. The case relied on by the supplier concerning encashment of bank guarantees was found inapplicable because, here, the Court had never directed furnishing of a bank guarantee as the substantive relief, but had directed deposit of the amount, and the later encashment only effectuated that direction. Since CIRP had commenced and the supplier had itself lodged its claim before the resolution professional as a creditor, its claim had to be dealt with under the IBC. Following the principle that money deposited by the corporate debtor in Court as security does not cease to be its asset merely because it is in Court custody, the Court held that the deposited amount, with accrued interest, formed part of the assets of the corporate debtor and had to be released to the resolution professional for distribution in accordance with the IBC. [Paras 18, 19, 20, 21, 23]

The amount deposited in Court, along with accrued interest, was directed to be released to the resolution professional, and the supplier's application for withdrawal was rejected.

Maintainability of writ petition - Alternative statutory remedy - The writ petition challenging the MSME award was not maintainable in view of the statutory remedy under Section 19 of the MSME Act, and continuation of proceedings also stood affected by the commencement of CIRP. - HELD THAT: - The Court held that the petitioners had an available statutory appellate remedy under the MSME Act, and even the jurisdictional objection raised against the award could be urged before the appellate forum. Though the petition could also have been dismissed for non-compliance with the earlier deposit condition, the Court declined to do so in view of the manner in which the Supreme Court had dealt with the interim proceedings after noticing that the writ petition had already been heard and reserved. The determinative ground, however, remained that the writ petition was not maintainable because of the alternate remedy, and, additionally, commencement of CIRP created a bar against continuation or institution of proceedings against the corporate debtor under Section 14(1) of the IBC. [Paras 22, 23]

The writ petition was disposed of without examining the merits of the award, leaving the deposited amount to be dealt with within the CIRP framework.

Final Conclusion: The Court held that the amount lying in Court pursuant to the pre-deposit direction formed part of the assets of the corporate debtor and had to be released to the resolution professional under the IBC framework. The supplier's claim for withdrawal was rejected, and the writ petition was disposed of as not maintainable in view of the statutory remedy and the intervening CIRP.

Condonable of delay - Determination of relevant date for reckoning limitation​​​​​​​ - Limitation for appeal under the Insolvency and Bankruptcy Code - barred by limitation - Knowledge of impugned order as commencement point - Outer limit of condonable delay.

Limitation for appeal under the Insolvency and Bankruptcy Code - Knowledge of impugned order as commencement point - Outer limit of condonable delay - HELD THAT:- The Appellate Tribunal held that even if the appellant's plea of non-receipt of the copy of the impugned order were accepted, the appellant had, at the latest, knowledge of that order when the application complaining of non-receipt was disposed of on 04.01.2021. The limitation period for filing the appeal therefore had to be reckoned from that date. On that basis, the initial 30-day period expired on 03.02.2021 and even the further condonable period of 15 days under the proviso to Section 61(2) stood exhausted on 18.02.2021. Since the appeal was filed only on 25.02.2021, it was beyond the statutory outer limit and could not be entertained. The Tribunal also found no plausible basis in the appellant's stand of non-receipt, particularly when the IRP had already received the order. [Paras 6, 7, 8]

The appeal was dismissed as barred by limitation.

Final Conclusion: The restoration applications were allowed and the appeal was restored, but on consideration of limitation the Appellate Tribunal held that the appeal had been filed beyond the maximum period permissible under Section 61(2) of the Code and dismissed it as time-barred.

Validity of Admission of insolvency application - Invocation of bank guarantee - Finality of unchallenged findings - Acknowledgment of debt through one time settlement - Corporate guarantee and default - sanctioning of credit facility to the principal borrower and execution of the BGs by the CD.

Finality of unchallenged findings - Acknowledgment of debt through one time settlement - HELD THAT:- The Appellate Tribunal found no dispute as to the sanction of the non-fund based facility to the principal borrower, the execution of the corporate guarantee and mortgage by the corporate debtor, and the remittance made by the bank to the beneficiary upon invocation of the bank guarantees. It treated the challenge to the invocation as untenable because that question had already been examined by the DRT, which held that the guarantees had been invoked before expiry, and that order was never challenged and had attained finality. The Tribunal further held that the subsequent one time settlement constituted a formal acknowledgment of the outstanding debt, and the failure to pay in terms of that settlement amounted to default. In these circumstances, the appellant could not reopen the same technical objection to resist insolvency admission. [Paras 15, 20, 21]

The appeal was dismissed and the admission of the insolvency application against the corporate debtor was upheld.

Final Conclusion: The Appellate Tribunal upheld the admission of the Section 7 application. It held that the corporate debtor could not reopen the issue of invocation of the bank guarantees after the DRT's unchallenged finding, and that the one time settlement independently acknowledged the debt and default.

Full export value of goods - Repatriation of foreign exchange due or accrued - Commission paid by overseas buyer to overseas agent - Applicability of Master Circular contemplated remittance or deduction of commission at the instance of the exporter and presupposed a commission arrangement attributable to the exporter - Hearsay statement - statement/admission concerning the export transactions - Extraterritorial Application - absence of any authentic source for acquiring this knowledge - Imposition of penalty - Settlement Commission Finality - Proportionality Of Penalty - Independent Evidence - Export Valuation.

Whether Section 127J of Customs Act prohibits reopening of proceedings under FEMA on the same facts and circumstances as the Settlement Order? - HELD THAT: - The Tribunal held that Section 127J of the Customs Act did not restrict the Enforcement Directorate from proceeding under FEMA on the strength of independent evidence gathered in a FEMA investigation. FEMA was treated as a self-contained code for adjudication of contraventions under that enactment, and the bar against reopening matters covered by a customs settlement order was therefore not accepted as disabling such action. The Tribunal, however, expressly left aside the question of the quality of the evidence while answering this legal objection. [Paras 7]

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

Whether selective reliance can be placed on statements of Mr. Saglani while disregarding statements of Mr. Arjun Salgaocar? -HELD THAT: - The Tribunal found that the export transactions in question had taken place before Mr. Mukesh Saglani became a director. In that situation, any assertion by him about those transactions lacked personal knowledge; and in the absence of any authentic source for such knowledge, that part of his statement was held to be hearsay. The Tribunal further held that such statement could not be selectively relied upon, especially when the person who was director at the relevant time had not been examined on the material circumstances now relied upon. [Paras 5, 11]

The statement of Mr. Mukesh Saglani, to the extent relied upon for the alleged contravention, was discarded.

Caluation of 'full export value of goods' under FEMA - Repatriation of foreign exchange due or accrued - Commission paid by overseas buyer to overseas agent - Export Regulations - Master Circular - contravention of Regulations 3, 9 and 13 of the Export Regulations -HELD THAT: - The Tribunal recorded as an admitted position that the commission was paid by the foreign importer to the overseas agent and not by the appellants. It further found no material to show that the overseas agent had been engaged by the exporter for certification or that the exporter had any liability to reimburse such amount. On that basis, the Tribunal held that where commission was not payable to the exporter, the question of its realization or repatriation by the exporter did not arise, since it was never foreign exchange due or accrued to the exporter. The Tribunal also accepted that the RBI Master Circular governing remittance of commission by an exporter had no application where the exporter itself had made no such payment. For the same reason, contravention of the Export Regulations was not made out. The Tribunal additionally held that, on the record, FEMA provisions could not be invoked in respect of a transaction wholly between non-residents, there being no material to show involvement of the appellants in any indirect payment of commission. It also observed that even on the respondent's own version there was no loss of foreign exchange, as the invoice value had been realized in India and the commission, if brought in, would still have been payable to the overseas agent. [Paras 8, 9, 10, 12, 13]

The charge based on alleged non-declaration and non-repatriation of the commission amount was decided in favour of the appellants, and the alleged contraventions under FEMA and the Export Regulations were held not established.

Final Conclusion: The Tribunal allowed the appeals and set aside the penalties imposed on both appellants. It held that the alleged commission paid abroad by the overseas buyer to the overseas agent was not shown to be part of the export proceeds due to the exporter, and the evidentiary basis relied upon by the adjudicating authority was insufficient.

Hawala transactions - Admissibility of Retracted statements - Corroborative evidence - Penalty imposed on contravention of Section 3 (b) and Section 3 (c) of the Foreign Exchange Management Act, 1999 (FEMA) vide the Impugned Order.

Whether the statements made by the Appellants and those by other persons against them can be admitted as evidence, in the face of the retractions made by them subsequently. - HELD THAT: - The Tribunal held that a retracted statement is not to be discarded merely because it is later withdrawn. The controlling requirement is that the statement must be shown to be voluntary, the retraction must be considered on its own merits, and reliance on the statement must be supported by independent and cogent material. On the record, the adjudicating authority had specifically examined the allegation of coercion, considered the retractions, gave reasons for rejecting them, and found that no material had been produced by the appellants to establish involuntariness. The Tribunal therefore accepted that statements recorded under Section 37 of FEMA remained admissible and could be acted upon. [Paras 5]

The challenge to the use of the retracted statements failed.

Contravention of FEMA - Independent corroboration - HELD THAT: - The Tribunal found that the statements were not the sole basis of liability. In the case of the first appellant, the seized notebooks, diaries, phone book, loose sheets and cash recovered from the premises constituted independent material, and his statements were treated as explaining those recoveries. The record also showed corroboration from statements of other persons and from the broader investigation. As regards the second appellant, his name appearing in the seized documents, the first appellant's statement naming him, and the separate confirmation regarding use of the telephone number appearing in the seized record were treated as sufficient corroborative links. On that basis, the Tribunal affirmed the finding that both appellants had contravened Section 3(b) and Section 3(c) of FEMA. [Paras 6, 7, 8]

The liability of both appellants for contravention under FEMA was upheld.

While sustaining the finding of contravention, the Tribunal considered the complete waiver earlier granted to the first appellant at the pre-deposit stage on grounds of financial hardship and also noted his physical disability. It further took into account that the second appellant's involvement was in relation to a much lesser amount. The Tribunal therefore held that the ends of justice would be met by reducing the penalties imposed on both appellants, with adjustment of the second appellant's pre-deposit against the reduced penalty. [Paras 9]

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

Final Conclusion: The Tribunal upheld the finding that both appellants had contravened Section 3(b) and Section 3(c) of FEMA, holding that the retracted statements were duly considered and were corroborated by independent material. The appeals were partly allowed only by reducing the penalties, with adjustment of the pre-deposit made by the second appellant.

Validity of the retention and continuation of freezing of the bank accounts - Retention beyond 180 days under the Prevention of Money-Laundering Act - Prima facie involvement in money-laundering - Proceeds of crime - Source of funds.

Continuation of freezing of bank accounts - HELD THAT: - The Tribunal held that section 20 does not provide that a freezing order automatically lapses on expiry of 180 days in every case. Where, within that period, the Adjudicating Authority permits retention or continuation of freezing, the freezing survives by virtue of section 20(3). On facts, the order permitting retention had been passed within 180 days, and therefore the appellant's objection founded on the alleged outer limit of 180 days was rejected. The Tribunal further found that the investigation material, including the appellant's own statement, disclosed his role in facilitating false inspection reports, verification of bank guarantees and processing of proposals connected with the scheduled offence, and that he had failed to disclose the source of the accumulated amount lying in the frozen accounts. That material was treated as sufficient to justify seizure and continued retention of the bank accounts. [Paras 15, 18, 19]

The challenge to retention of the frozen bank accounts was rejected and the impugned order was upheld.

Final Conclusion: The Tribunal dismissed the appeal and sustained the order permitting retention of the frozen bank accounts. It held that the freezing did not lapse after 180 days because the Adjudicating Authority had authorised continuation within that period, and the material on record disclosed prima facie involvement of the appellant and justified retention.

Provisional Attachment Order - Bona fide purchaser claim - seeking release of the attached properties, being the bona fide purchaser and financer respectively - proceeds of crime - adjudication of disputed facts in PMLA proceedings

Bona fide purchaser claim - adjudication of disputed facts in PMLA proceedings - HELD THAT: - The Appellate Tribunal held that the controversy turned on a disputed question of fact, namely, whether the first appellant was a bona fide purchaser or whether the amount paid for the properties had been sourced, directly or indirectly, from the proceeds of crime. Since that issue required examination and cross-examination of rival witnesses, the Tribunal found that it was to be decided by the Special Judge under the PMLA and not finally determined in the present appeals. [Paras 5, 6]

The appeals were disposed of by granting liberty to the appellants to raise their claim before the Special Judge under the PMLA, with a direction to maintain status quo as to ownership of the properties in the meantime.

Final Conclusion: The Tribunal did not decide the appellants' claim to the attached properties on merits. It left the issue of bona fide purchase and source of consideration to be determined by the Special Judge under the PMLA, while directing maintenance of status quo regarding ownership in the interim.

Provisional attachment - Proceeds of crime - sale consideration received for transfer of immovable property - Bona Fide Transaction - registered Agreement of Sale-cum-Irrevocable General Power of Attorney and physical possession of the land - Provisional attachment of equivalent value - attachment of cash seized from the appellants' residence.

Proceeds of crime - Provisional attachment of equivalent value - Agreement to sell with possession - HELD THAT: - The Tribunal found that the appellants were not accused in the scheduled offence and that their original purchase of the larger land parcel was undisputedly lawful. It further noted that the sale of a substantial portion of the land to M/s SA Builders was accepted as genuine and that, in relation to the remaining 2 acres and 39.22 guntas, an agreement to sell had been executed, full consideration had been received, and possession had already been handed over, though the formal sale deed could not be registered because of pending civil litigation. In these circumstances, the amount received by the appellants arose as consideration for transfer of that land and the controversy centred on that specific property. The Tribunal therefore held that, to avoid controversy, the Enforcement Directorate could proceed against the land itself after following due procedure and issuing notice to M/s SA Builders, and that on the appellants furnishing an undertaking that they would have no claim over that land, the amount deposited by them and the provisionally attached movable property were liable to be released. It was clarified that, if no such undertaking was furnished, the existing attachment would continue. [Paras 13, 14, 15, 17, 18]

The attachment was modified by directing that, upon the appellants giving the required undertaking disclaiming any claim over 2 acres and 39.22 guntas, the respondents may proceed against that land in accordance with law and release the attached movable property; failing such undertaking, the attachment would continue.

Attachment of seized cash - Lack of justification - HELD THAT: - The Tribunal recorded that the seized cash had been attached despite the fact that the full amount treated as proceeds of crime in the hands of the appellant company had already been secured in relation to the land transaction. As no separate justification was shown for provisional attachment of the cash, continuation of that attachment could not be sustained. [Paras 16]

The impugned order was interfered with to the extent it confirmed attachment of the seized cash.

Final Conclusion: The appeals were allowed with directions that the respondents may, after due procedure, proceed against the land covered by the agreement to sell, and that the provisionally attached movable property be released on the appellants furnishing the undertaking directed by the Tribunal. The attachment of the seized cash was separately set aside.

Initiation of the Corporate insolvency resolution process on an application under Section 9 - Immunity of corporate debtor's property in liquidation - Provisional attachment of the corporate debtor's property after commencement of liquidation - barred by Section 32A.

Section 32A(2) of the IBC - sale of liquidation assets - attachment of corporate debtor's property - HELD THAT: - The Tribunal held that Section 32A(2) of the IBC restrains action against the property of the corporate debtor in relation to offences committed prior to commencement of the insolvency process, and the statutory explanation expressly includes attachment within such prohibited action. Since the corporate debtor had already been directed into liquidation before the provisional attachment order was issued, the subsequent attachment of its property was barred by that provision. The Tribunal therefore treated both the provisional attachment order and its confirmation as being hit by Section 32A(2). [Paras 8, 9]

The provisional attachment order and the confirming order were interfered with and set aside as barred by Section 32A(2) of the IBC.

Final Conclusion: The appeal was allowed. The Tribunal held that once the corporate debtor had entered liquidation, subsequent provisional attachment of its property was impermissible under Section 32A(2) of the IBC, and the attachment order along with its confirmation could not stand.

Denial for non-compliance with certain procedural requirements - export of goods, realization of export proceeds, payment of commission to the overseas agent, and production of supporting documents - Eligibility for Benefit of Notification No. 42/2012-Service Tax dated 29.06.2012 - Procedural infractions vis-a-vis export-related service tax exemption.

Substantial compliance - Export-related exemption - Procedural conditions - HELD THAT:- The Tribunal found that export of goods and realization of export proceeds were not in dispute, and that payment of commission to the foreign commission agent stood established and certified. It also recorded that EXP-3 had been filed and that original invoices, certification regarding receipt and use of taxable services for export, bank advices, and the agreement with the overseas commission agent had been produced. On these findings, the Tribunal held that the appellant had made itself eligible for the exemption and had substantially complied with the requirements of the notification. The benefit could not, therefore, be denied for minor procedural infractions having no bearing on eligibility or substantive compliance. [Paras 5]

The appellant was held entitled to the benefit of Notification No. 42/2012-Service Tax, and the denial of exemption on procedural grounds was set aside.

Final Conclusion: The Tribunal held that the appellant had substantially complied with the requirements of the exemption notification and that the benefit could not be denied for minor procedural lapses. The appeal was accordingly allowed.

Taxability of services rendered to Naval Authorities - exigible to service tax under Management, Maintenance or Repair Service, Works Contract Service, and Technical Testing and Analysis Service - Non-commercial use and service tax liability - Extended period of limitation - Imposition of penalty.

Whether the appellants were required to pay any service tax when they provided certain services to the Naval Authorities at Naval Dockyard or onboard Navy Vessels in relation to repair and maintenance etc., of the navy vessels. - HELD THAT:- The Naval Authority and Naval Dockyards are not engaged in any commercial activity. A fine distinction being made that Naval Dockyard is different than Port service is not proper as even the Naval Dockyard is very much part of Port and in any case, it would have no meaning as the intention of the Government was to provide exemption only to Naval ships which can be repaired in Port and not at Naval Docks then only such a view can be formed.

The Tribunal found that the entire set of services covered by the show cause notice had been rendered only to Naval Authorities and within the Naval Dockyard. Reading the clarification dated 01.07.2010 together with Notification No. 31/2010-ST, it held that repair of ships or vessels belonging to the Navy could not be treated as taxable merely because of the later comprehensive entry relating to port services. The determinative principle applied was that repair, maintenance and allied activities connected with establishments or structures not used for commercial activities are not taxable. The Tribunal further held that no artificial distinction could be drawn between a Naval Dockyard and a port for denying that position. On that basis, even the turn-key and fabrication-related activities undertaken for naval purposes, as well as the alleged testing activity performed within the dockyard in the manner noted, could not be brought under MMRS, WCS or TTAS. The demand therefore failed on merits. [Paras 7, 8, 11]

The service tax demand on merits was held unsustainable as the services were rendered only in relation to naval vessels and Naval Dockyard, which were not engaged in commercial or industrial activity.

Bona fide belief - Extended limitation - Penalty under Sections 76, 77 and 78 - HELD THAT: - The Tribunal accepted that the appellant could entertain a bona fide belief that no service tax was payable since the activities involved supply of goods and services to Government naval establishments and related to non-commercial use. In the absence of cogent material showing deliberate or intentional evasion, the conditions necessary for invoking the extended period were held not to exist. For the same reason, penalty under Section 78 was found inapplicable, and the reasonable cause shown by the appellant warranted waiver of penalties under Sections 76, 77 and 78 by applying Section 80. [Paras 10, 11]

Demand beyond the normal period was held time-barred, and penalties under Sections 76, 77 and 78 were held not imposable.

Final Conclusion: The Tribunal allowed the appeal and held that the services rendered by the appellant to Naval Authorities in relation to Naval Dockyard and naval vessels were not exigible to service tax. It further held that the extended period was unavailable and that penalties were liable to be waived.

Denial of Service tax exemption for supplies made to SEZ units or developers - non-furnishing of prescribed notification conditions and documents - Special economic zone in contravened of the conditions of exemption provided in Notification No. 9/2009-ST dated 03.03.2009, 17/2011-ST dated 01.03.2011, 40/2011-DT dated 20.06.2012 and 12/2013-ST dated 01.07.2013 - procedural non-compliance with notification conditions - Cum-tax benefit - Valuation of works contract service.

Whether in this case the appellant were required to pay any Service Tax on supply units to SEZ Units or otherwise and also a small issue of short payment of Service Tax on supply of non SEZ Units. - HELD THAT: - The Tribunal held that, in view of the jurisdictional High Court decision in GMR Aerospace Engineering Ltd. [2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT], non-furnishing of documents required under the notifications could not by itself defeat the appellant's substantive claim to exemption for supplies to SEZ units or developers. The determinative requirement, however, remained proof that the services were actually provided to the SEZ unit or developer. Since the authorities had observed that the appellant had not conclusively evidenced such supplies, the matter required fresh examination limited to verification of that foundational fact, after giving the appellant liberty to produce supporting material from the SEZ recipients. [Paras 7, 9]

The issue was remanded to the Commissioner (Appeals) to verify whether the services were in fact provided to SEZ units or developers, and to re-decide the demand on that basis without rejecting the claim solely for procedural non-compliance with the notifications.

Cum-tax benefit - Valuation of works contract service - HELD THAT:- The Tribunal found that the dispute on this aspect was not about taxability as such, but about the manner of computation. The appellant's contention was that cum-tax benefit had not been granted and that the liability had been calculated by applying an incorrect abatement. As these aspects had not been adequately addressed by the Commissioner (Appeals), the computation had to be reconsidered under the Service Tax Valuation Rules. [Paras 8, 9]

The matter was remanded for re-computation of service tax liability after considering cum-tax benefit and the applicable valuation provisions, and only the properly determined demand, if any, could be sustained.

Final Conclusion: The Tribunal set aside the impugned order and remanded the matter. It held that exemption in respect of services to SEZ units or developers could not be denied solely for procedural lapses, subject to proof of actual supply to such units, and that the non-SEZ demand also required fresh computation after considering cum-tax benefit and the valuation rules.

Refund of Cenvat credit under transitional provisions - Service tax paid under reverse charge mechanism after introduction of GST - Invocation of Section 142(8)(a) - Applicability of Rule 9(1)(bb) of the Cenvat Credit Rules to service recipients - unjust enrichment under Section 11B(2) - Suppression of Facts.

Entitlement to cash refund of the Cenvat credit relatable to service tax paid under reverse charge mechanism after the GST regime for services pertaining to the pre-GST period. - HELD THAT: - The Tribunal held that Section 142(3) of the CGST Act protects refund claims relating to Cenvat credit accrued under the existing law and permits payment of the amount in cash. Since the service tax in question related to the erstwhile regime, its payment entitled the appellant to Cenvat credit, and the mere fact that such payment was made on 02.03.2022, after the coming into force of GST, was not a valid ground to deny the statutory benefit. The contention that the claim was barred by Section 142(8) was rejected, as once tax stood paid under the existing law, the resulting credit entitlement remained protected under the transitional provision. The plea of suppression was also negatived for want of evidence, the Tribunal holding that payment along with interest and penalty after audit objection, by itself, did not establish intent to evade tax. It was further held that Rule 9(1)(bb) of the Cenvat Credit Rules, 2004 had been wrongly invoked, as that provision did not apply to a service recipient who had discharged tax liability under reverse charge mechanism. [Paras 6, 7, 8, 9]

The rejection of refund was held unsustainable, the impugned order was set aside, and the appeal was allowed.

Final Conclusion: The Tribunal held that service tax paid under reverse charge mechanism after the introduction of GST, in respect of the pre-GST period, gave rise to a protected Cenvat credit entitlement refundable in cash under Section 142(3) of the CGST Act. The contrary view of the authorities below, including reliance on Rule 9(1)(bb) and the allegation of suppression, was rejected.

Levy of service tax - taxable declared service under section 66E(e) - grant-in-aid received under a government scheme for setting up and modernising a rice milling unit - Service provider-recipient relationship - Reimbursement of capital expenditure -demand along with interest u/s 75 and penalty under Section 78.

Grant-in-aid - HELD THAT: - The Tribunal held that the sanction orders showed the amount to be a reimbursement of expenditure already incurred for setting up the rice milling unit, and not a payment made in return for any service. The conditions attached to the grant were treated as general conditions governing release and utilisation of public funds and not as contractual or counter-obligations creating a taxable arrangement. The appellant was not shown to be engaged in research or development generating intellectual property for the Government, and the Revenue produced no evidence that any knowhow or IPR had in fact been created and transferred as a service. In the absence of any consideration flowing from the Government for a service, and in the absence of a service provider-recipient relationship, the amount could not be brought to tax under the Finance Act, 1994. The Tribunal followed its earlier decisions, including Checkmate Services Private Limited versus Commissioner of Central Excise and Service Tax, Vadodara [2022 (10) TMI 617 - SUPREME COURT (LB)] and Ahmedabad Management Association versus Commissioner of Service Tax, Ahmedabad [2024 (12) TMI 532 - CESTAT AHMEDABAD], treating grant-in-aid or reimbursement, without anything over and above such grant, as non-taxable. [Paras 7, 11, 12]

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

Final Conclusion: The Tribunal held that the amount received by the appellant from the Ministry was only reimbursement of expenditure already incurred for setting up the rice milling plant and did not constitute consideration for any taxable service. On that basis, the impugned order confirming service tax, interest and penalty was set aside and the appeal was allowed.

Additional grounds in appeal - New factual plea at appellate stage - fabrication and erection activities of structural steel at several sites as per work orders.

Additional grounds in appeal - Factual grounds requiring prior adjudication - HELD THAT:- The Tribunal found that, before the original authority, the appellant had contested liability only on the footing that as a sub-contractor it was not liable where service tax had already been paid by the principal contractor. The proposed plea that the activity amounted to manufacture was held to be a new ground dependent on factual determination, not a pure question of law. Since such a plea required prior adjudication at the lower level and departmental verification of the underlying facts, allowing it at this stage would alter the nature of the case and permit the appellant to fill lacunae left in the earlier proceedings. The Tribunal reiterated that while pure legal grounds may be raised at any stage, fresh grounds turning on facts cannot be introduced for the first time in second appeal. [Paras 6, 7]

The miscellaneous applications for raising additional grounds and producing supporting documents were dismissed.

Final Conclusion: The Tribunal held that the proposed plea of manufacture was a fresh factual ground incapable of being raised for the first time in second appeal. Accordingly, the applications seeking to add that ground and place supporting documents on record were rejected.

Threshold exemption - service tax demand raised solely on the basis of a mismatch between Income Tax Returns and ST-3 Returns, without verification of eligibility for basic exemption - Invocation of extended period of limitation - Suppression or wilful mis-statement.

Threshold exemption - Demand based on Income Tax Return and ST-3 mismatch - Independent verification - HELD THAT: - The Tribunal found that the total value declared by the appellant for the relevant period was well within the threshold exemption limit and, therefore, filing of nil returns was justified. It further held that the investigation had not verified the appellant's eligibility to the basic exemption and that a demand raised merely on the basis of mismatch between Income Tax Returns and ST-3 Returns, without any independent verification as to the nature of the services rendered, was not legally sustainable. [Paras 8, 9]

The confirmed demand was held to be unsustainable on merits.

Extended period of limitation - HELD THAT:- In the case of M/s. Nanu Shome & Co. v Commissioner of C.G.S.T & C.Ex., Siliguri [2026 (1) TMI 1015 - CESTAT KOLKATA], wherein it has been categorically held that the difference between the Income Tax Returns and ST-3 Returns cannot be the sole basis for raising the demand; there must be an independent verification conducted to ascertain the nature of service rendered during the concerned period. The above ratio squarely applies to the facts.

The Tribunal recorded that no substantive material had been brought on record to show that the appellant had indulged in suppression or wilful mis-statement. In that view, and particularly when the turnover was within the exemption limit, the Revenue had no basis to invoke the extended period for raising the demand. [Paras 9, 10]

The demand was held barred by limitation and was set aside along with interest and penalties.

Final Conclusion: The Tribunal allowed the appeal and set aside the Service Tax demand, interest and penalties. It held that the appellant's turnover was within the basic exemption limit, that the demand based solely on mismatch of Income Tax Returns and ST-3 Returns was unsustainable without independent verification, and that the extended period of limitation was not available to the Revenue.

Validity of Service tax demand raised solely on the basis of ITR/Form 26AS data, without independent verification or corroborative evidence of taxable service - invocation of the extended period of limitation - Wilful Misstatement - Suppression of facts.

Form 26AS mismatch - Independent verification - Extended limitation - Suppression - HELD THAT: - The decision in the case of M/s. Nanu Shome & Co. v Commissioner of C.G.S.T & C.Ex., Siliguri [2026 (1) TMI 1015 - CESTAT KOLKATA], wherein it has been categorically held that the difference between the Income Tax Returns and ST-3 Returns cannot be the sole basis for raising the demand; there must be an independent verification conducted to ascertain the nature of service rendered during the concerned period. No finding that any evidence has been brought on record by the Revenue to show that the appellant has indulged in any activity amounting to suppression or wilful mis-statement.

The Tribunal found that the entire demand had been computed solely from CBDT data and that no independent enquiry had been conducted to ascertain the nature of taxable service allegedly rendered by the appellant. It held that mere entries in income tax returns or Form 26AS do not by themselves establish liability under the Finance Act, 1994 unless supported by material showing rendition of taxable service. The record also did not disclose any evidence of wilful suppression or mis-statement. In the absence of the ingredients necessary to invoke the extended period under Section 73, the demand confirmed by relying mechanically on such data was held to be barred by limitation. [Paras 8, 9]

The demand of service tax with interest and penalty was held unsustainable as time-barred.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal, holding that the demand founded solely on Form 26AS/ITR data without independent verification could not support invocation of the extended period and was barred by limitation.

Levy of service tax - Classificationof taxable service - activity of transporting coal with incidental loading, unloading, supervision, and liaisoning - Classifiable as clearing and forwarding agent service, or as goods transport agency service - statutory definition of clearing and forwarding agent under Section 65(25) - Service tax liability on recipient.

Activity of transportation, loading, unloading and supervision of coal for clients -HELD THAT: - The Tribunal found from the purchase order and the nature of work that the appellant's principal activity was transportation of coal on behalf of its clients, with incidental loading, unloading and supervision, and charges were paid on a per metric ton basis. On the plain terms of the definition of clearing and forwarding agent, the service must relate to clearing operations and thereafter forwarding the goods on behalf of the principal. Since the appellant was not engaged in clearing and forwarding operations in that sense, and was essentially transporting coal, the activity could not be brought under clearing and forwarding agent service. The Tribunal applied the principle stated by the Supreme Court in M/s Coal Handlers Pvt. Ltd. [2015 (5) TMI 249 - SUPREME COURT]. [Paras 7, 8]

The activity was held to be Goods Transport Agency service and not clearing and forwarding agent service.

Service tax liability on recipient - Goods Transport Agency service - HELD THAT: - Having classified the activity under Goods Transport Agency service, the Tribunal held that the liability to pay service tax was on the service recipient and not on the appellant. On that basis, the demand raised against the appellant under clearing and forwarding agent service was held to be unsustainable. [Paras 8]

No service tax was payable by the appellant and the demand could not be sustained.

Final Conclusion: The Tribunal held that the appellant's activities were properly classifiable as Goods Transport Agency service and not as clearing and forwarding agent service. Since the tax liability in such case was on the service recipient, the demand against the appellant was set aside and the appeal was allowed.

Seeking approval of the Adjudicating Authority for the Resolution Plans submitted by UV Asset Reconstruction Company Limited for resolution of the corporate applicants -Extinguishment of statutory dues - Continuation of pending tax appeals - Applicability of Section 35C of the Central Excise Act, 1944 -Primacy of the Insolvency and Bankruptcy Code - Functus officio - Different views by Member (Technical) And Member (Judicial).

ORDER PER AJAYAN T.V. - HELD THAT:- It is clear from the decision of the Hon'ble Supreme Court in the case of Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. [2021 (4) TMI 613 - SUPREME COURT], that once the Resolution Plan is approved by the Adjudicating Authority under Section 31 (1) of Insolvency and Bankruptcy Code 2016 (IBC), then “no person will be entitled to initiate or continue any proceedings in respect to a claim which is not part of the resolution plan’’. We make it clear that neither side has informed us as to whether or not the statutory dues owed to the Central Government, under contest in these appeals before us, are part of the said resolution plan or not. Be that as it may, as the conclusions of the Apex Court has also elucidated that all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants their approval under Section 31 could be continued, to our mind, it is clear that, in any event, the present proceedings in these appeals cannot be continued before us. Ordered accordingly.

PER M. AJIT KUMAR - I have had the benefit of going through the order prepared by my Learned Brother Shri Ajayan T.V. (Member, Judicial), above. I whole heartedly agree with the conclusion arrived therein, that in the light of the Resolution Plan approved by the Adjudicating Authority under Section 31(1) of the IBC in this case, the present proceedings in this appeal cannot be continued before us. I would however like to state my views on the legal issues involved.

HELD THAT:- A reading of the provisions under section 13 and 14 of the IBC along with the decision in Ghanashyam Mishra And Sons (supra), clearly shows that once the proceedings have commenced under the IBC, a moratorium in terms of Section 14 of the Code is to be declared by the adjudicating authority. With this the continuance of the pending suits or proceedings against the corporate debtor in any court of law, tribunal, arbitration panel or other authority, is prohibited until the matter reaches a logical conclusion with due approval of the resolution plan. The exceptions to the said provision and not relevant to this discussion and need not detain us here. Immediately after the adjudicating authority approves the resolution plan, the moratorium order passed by the authority shall cease to have effect. The objective is to ensure that all claims against the corporate debtor, including statutory tax dues, are dealt with comprehensively within the IBC framework. It is settled law that a consolidating and amending act like the IBC forms a code complete in itself and is exhaustive of the matters dealt with therein. [See: Supreme Court judgment in M/S. INNOVENTIVE INDUSTRIES LTD. Vs ICICI BANK & ANR [2017 (9) TMI 58 - SUPREME COURT].

The fate of the pending tax appeal depends on the contents of the approved resolution plan. If the approved plan expressly permits continuation of the tax appeal, the appellate proceedings may continue. Otherwise, the Appellate Tribunal loses jurisdiction to proceed further and becomes functus officio. (one whose duty has ceased)

The three Judge Bench of the Hon’ble Supreme Court in SUNDARESH BHATT, LIQUIDATOR OF ABG SHIPYARD Vs CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS [2022 (8) TMI 1161 - SUPREME COURT] would equally apply to orders passed under the Central Excise Act 1944 and the Finance Act 1994. Any attempt by this Tribunal to examine the grounds of the appeal/ prayer, in the light of the IBC, including the entitlement to initiate or continue appeal proceedings in respect of claims not forming part of the resolution plan, or the survival or extinguishment of statutory dues once the resolution plan is approved, or to interpret the NCLT decision in terms of the aforesaid issues, would transgress the legislative mandate and must therefore be eschewed. Moreso for after becoming functus officio.

In fine, the IBC temporarily halts the processing of the tax appeals filed before this Tribunal involving a corporate debtor once the insolvency resolution process has commenced and permanently concludes them when the resolution plan is approved by the NCLT. With this the Tribunal loses its jurisdiction to proceed further - unless the approved resolution plan specifically allows the continuation of the appeal.

We find that the appellant has drawn our attention to a Coordinate Bench decision of this Tribunal in Final Order in the case of Aircel Limited, Coimbatore [2025 (6) TMI 1729 - CESTAT CHENNAI], where in a similar issue the Bench after finding that the Resolution Plan had been approved by the Adjudicating Authority under section 31(1) of the IBC had held that the appeals stand closed/disposed of accordingly.

Since the resolution plan does not specifically provide for continuation of the appeals pending before us, it stands concluded by the operation of law as stated in the IBC, and is disposed of accordingly.

Rejection of time-barred rebate claims in respect of exports on payment of duty - Payment of duty under Rule 18 of the Central Excise Rules, 2002 read with Notification No. 21/2004-C.E. (N.T.) - seeking re-credit or cash refund in writ proceedings under the transitional provisions, or was required to file a substantive application before the designated officer under Section 142(3) of the Central Goods and Services Tax Act, 2017.

Separate substantive claim under transitional refund provisions - Re-credit claim after rejection of rebate as time-barred - HELD THAT: - The Court noted that the petitioners no longer disputed that their rebate claims were barred by limitation, and that their present case was an alternate claim for return of the amount paid on exports in the form in which it was paid. The Court held that such claim was required to be specifically raised by a substantive application before the designated officer invoking Section 142(3) of the CGST Act, and could not be treated as incidental to the proceedings which had culminated in rejection of the rebate claims. Since that entitlement had not been independently asserted and adjudicated, the Court did not decide the merits and directed the petitioners to pursue that claim before the competent authority, with all contentions kept open. [Paras 12, 13, 14, 15, 16]

The petitioners were permitted to file a substantive application before the designated officer for return of the amount claimed, to be decided independently, after hearing, without being influenced by the impugned rebate rejection orders.

Final Conclusion: The Court did not adjudicate the petitioners' entitlement to re-credit or cash refund on merits. It disposed of the petitions by permitting a separate application under Section 142(3) of the CGST Act before the designated officer, to be decided independently, with all contentions kept open.

Scope of remand - Reversal of CENVAT credit before utilization - misappropriated quantity of nickel and the corresponding CENVAT credit - Extended period of limitation - existence of internal reports, committee findings, non-disclosure to the Department​​​​​​​ -Penalty for suppression of facts - Vicarious liability of employer.

Scope of remand - Finality of unchallenged findings - Misappropriated inputs - HELD THAT:- The Tribunal held that the earlier remand was essentially for examining the consequence of reversal of credit before utilization in the light of the precedents referred to in the earlier order. The earlier adjudicating authority had, on the basis of the committee report and accepted method of accounting, determined the misappropriated quantity at 5411 kg, and that finding had not been challenged by the Department. Merely because the remand order stated that all issues were left open, the adjudicating authority could not reopen and enhance the quantity to 15944 kg in the absence of any departmental appeal against the earlier order. The demand therefore had to remain confined to the credit relatable to 5411 kg. [Paras 9]

The demand was restricted to the credit attributable to 5411 kg of nickel, namely the amount already reversed and appropriated.

Unutilized CENVAT credit - Interest on reversed credit - HELD THAT: - The Tribunal found it admitted on record that sufficient surplus credit was available throughout the material period and that the disputed credit was not actually utilized toward payment of duty. The credit had initially been taken on receipt of inputs with authority, and the proportionate amount was later reversed when it was found that part of the nickel had not been used in manufacture. In such circumstances, reversal of unutilized credit was treated as equivalent to non-availment for the purpose of interest, and interest was therefore held not leviable. [Paras 10, 15]

No interest was payable on the reversed amount.

Extended period of limitation - Penalty for suppression of facts - Vicarious liability of employer - HELD THAT: - The Tribunal held that the material on record, including the internal reports and committee findings, showed that the assessee was aware of the shortage and misappropriation much earlier, yet did not inform the Department or reverse the credit immediately. The non-disclosure of the theft or missing quantity and the delayed reversal constituted suppression of facts with intent to avoid reversal of inadmissible credit, thereby justifying invocation of the extended period. The plea that the misconduct was that of employees and that no vicarious liability could be fastened on the company was rejected, the Tribunal holding that in the factual matrix the company remained answerable for the consequences of evasion resulting from acts of its employees. The decisions cited on behalf of the assessee were held distinguishable on facts. [Paras 14, 15, 16, 17]

The extended period was held invocable, the claim for refund of the appropriated amount was rejected, and liability to penalty was sustained notwithstanding deletion of interest.

Final Conclusion: The appeal was partly allowed. The demand was confined to the already reversed credit relatable to 5411 kg of nickel, interest was set aside, but invocation of the extended period and rejection of the refund claim were upheld.

Assessable value - definition of "place of removal" - freight and insurance charges collected separately from customers - invoices stipulated door delivery at the buyer's premises - Extended period of limitation - Penalty under Section 11AC.

Assessable value - Place of removal - HELD THAT: - The Tribunal held that under Section 4 and Rule 5 of the Central Excise Valuation Rules, transportation cost is includable where the factory is not the place of removal and the sale takes place at the buyer's premises. The invoices in the present case specifically mentioned "door delivery", showed separate recovery of freight and insurance, and indicated payment terms of 60 days, which supported delivery and completion of sale at the customer's premises. There was no material to show any separate contract, purchase order, or buyer's letter establishing ex-factory sale or that transportation and insurance were arranged merely on behalf of the buyer. The decisions relied on by the appellant were distinguished on the ground that in those matters there existed contractual material showing factory-gate delivery or separate arrangements for transport and insurance, whereas here the invoice terms themselves established buyer-premises delivery. Applying the principle stated in CCE, Aurangabad Vs. Roofit Industries Ltd. [2015 (4) TMI 857 - SUPREME COURT], the Tribunal concluded that ownership and risk remained with the appellant till delivery and, therefore, freight and insurance formed part of the transaction value. [Paras 5]

The demand based on inclusion of freight and insurance charges in assessable value was upheld.

Invocation of the extended period and imposition of penalty -HELD THAT: - The Tribunal accepted the reasoning of the Commissioner (Appeals) that the relevant particulars regarding non-inclusion of freight and insurance charges were discovered during audit from sales invoices and financial records, and were not reflected in the monthly ER-1 returns. As no additional evidence was produced to displace that reasoning, the extended period was held invocable. On the same basis, penalty under Section 11AC was also sustained. The Tribunal, however, extended the statutory option of payment of reduced penalty at 25% subject to payment of duty, interest and reduced penalty within the prescribed period. [Paras 5]

The extended period and penalty were upheld, with the statutory option of reduced penalty made available.

Final Conclusion: The Tribunal dismissed the appeal and upheld inclusion of freight and insurance in the assessable value on the footing that delivery was at the buyer's premises. It also sustained invocation of the extended period and penalty, while granting the statutory option of reduced penalty on timely payment.

Levy of central excise duty - Assessable value - VAT remission as industrial subsidy - exemption of Central Excise Duty on manufacture of Goods, Income Tax on income derived out of manufacture activities for a period not exceeding ten (10) years from the date of commencement of commercial production - Retention of 99% of VAT under the State Industrial Policy formed part of the assessable value of the goods for levy of central excise duty.

Assessable value - VAT remission as industrial subsidy - Includability of retained VAT - HELD THAT: - The Tribunal held that the controversy stood covered by its earlier decisions in United Packagers and Sundaram Foods Pvt. Ltd. [2025 (8) TMI 1550 - CESTAT KOLKATA]. It accepted that the 99% VAT retained by the appellant under the Assam industrial incentive scheme was in the nature of a State Government subsidy under the industrial policy and not an amount required to be added to the transaction value of the goods. On that basis, such retained VAT was held not includable in the assessable value, and the duty demand founded on its inclusion could not be sustained. [Paras 7, 8]

The retained VAT remission was held to be a subsidy and not part of assessable value; accordingly, the demand was set aside.

Final Conclusion: The Tribunal allowed the appeal, holding that the 99% VAT remission retained by the appellant under the Assam industrial incentive scheme was a subsidy and not includable in assessable value. The excise demand based on alleged undervaluation was therefore set aside with consequential relief.

Maintainability of post-disposal interlocutory application - seeking modification, clarification or rectification of the earlier order - Functus officio - Clerical Or Arithmetical Error.

Maintainability of post-disposal interlocutory application - HELD THAT: - The Court held that observations made while considering grant of stay during pendency of the second appeal were purely interlocutory and tentative, intended only for assessing the prima facie case and balance of convenience, and could not bind the Tribunal on merits. Since the writ petition had already been finally disposed of, the Court had become functus officio and could not revisit the final order through an application styled as one for modification, clarification or rectification. Relying on the legal position stated by the Supreme Court in State of Haryana Vrs. M.P. Mohla [2006 (11) TMI 696 - SUPREME COURT] and Ajay Kumar Jain vs. State of Uttar Pradesh and another [2024 (12) TMI 1725 - SUPREME COURT] the Court held that such a post-disposal application is not maintainable except in limited situations such as correction of clerical or arithmetical errors or rare cases involving executory directions that have become impossible to implement due to subsequent events. As the present application in substance sought a review of the final order and no error apparent on the face of the record was shown, the application was rejected as impermissible in law. [Paras 7, 8]

The interlocutory application was dismissed as not maintainable, the Court holding that it could not reopen or alter the final order under the guise of clarification or modification.

Final Conclusion: The Court dismissed the interlocutory application, holding that after final disposal of the writ petition it had no jurisdiction to entertain a request for modification or clarification which in substance sought review. It further clarified that its earlier stay-related observations were only interlocutory and could not govern the merits of the pending second appeal.

Entitlement to stay of recovery of the balance assessed entry tax during pendency of the second appeal - non-production of relevant documents and non-appearance of the dealer during the course of the audit assessment as well as at the stage of hearing of the first appeal - Discretion in grant of interim protection - Non-production of supporting documents.

Refusal of stay of recovery during pendency of the second appeal -HELD THAT:- The Court held that the material on record showed repeated failure of the petitioner to furnish the documents necessary to substantiate its claim, and no plausible explanation for such default was shown either before the Commissioner or before the Court. It further held that under sub-section (7) of Section 17 of the OET Act, grant of stay is a matter of discretion, and the Commissioner, having noticed absence of supporting evidence before the authorities below, could not be faulted for declining stay. However, considering that 20% of the demanded tax had already been deposited during the first appeal, the Court, to maintain balance of convenience, granted protection against coercive recovery subject to deposit of 30% of the balance tax during pendency of the second appeal. [Paras 7, 8]

The challenge to the Commissioner's refusal of stay was not accepted on merits; nevertheless, recovery of the remaining demand was stayed during pendency of the second appeal subject to deposit of 30% of the balance tax within the time fixed by the Court.

Final Conclusion: The writ petition was disposed of without interfering with the Commissioner's exercise of discretion in refusing stay, but the petitioner was granted conditional interim protection. On deposit of 30% of the balance tax, no coercive recovery was to be made for the remaining demand during pendency of the second appeal.

Negotiable Instruments Act, 1881 - Dishonour of cheque - legally enforceable debt or liability - compliance with basic ingredients of Section 138 - rebuttal of statutory presumption by the drawer - Statutory presumption under Section 139 - Issuance of process under Section 138 - Pre-trial dismissal of cheque dishonour complaint.

Statutory presumption under Section 139 -HELD THAT:- In Rangappa Vs. Sri Mohan [2010 (5) TMI 391 - SUPREME COURT], it has been explicitly reiterated that the presumption mandated by Section 139 of the N.I. Act includes the presumption as regards existence of a legally enforceable debt or liability. It has been held that Section 139 is an example of a reverse onus clause that has been included in furtherance of the legislative object of improving the credibility of negotiable instruments. The presumption is rebuttable and the accused can raise a defence wherein the existence of a legally enforceable debt or liability can be contested.

The Court held that at the stage of issuance of process, the Magistrate is only required to see whether the cheque was issued by the drawer in favour of the complainant, whether it was dishonoured on presentation, whether the statutory notice was issued, and whether the complaint was filed within time. Once issuance and signature on the cheque are not disputed, the presumption under Section 139 comes into operation, including the presumption of a legally enforceable debt or liability. That presumption can be rebutted only at trial on the basis of evidence led by the drawer or material brought on record, and cannot be displaced summarily at the threshold. The Sessions Court erred in giving determinative weight to the unsigned settlement document and in concluding, before trial, that no enforceable debt existed, thereby ignoring the statutory presumption and foreclosing the complainant's opportunity to prove the case. The High Court also erred in affirming that approach. [Paras 8, 9, 10, 11]

The orders of the Sessions Court and the High Court were set aside, and the complaint was restored for trial on its own merits in accordance with law.

Final Conclusion: The appeal was allowed. The Court held that the complaint under Section 138 had been wrongly scuttled at the threshold despite satisfaction of the foundational requirements and the operation of the statutory presumption, and therefore restored the complaint for adjudication on merits.

Negotiable Instruments Act, 1881 -Vicarious liability of directors under Section 141 of the Negotiable Instruments Act - Specific averments as to being in charge of and responsible for conduct of business - Inherent powers under Section 482 CrPC despite prior revision under Section 397 CrPC - HC refused to exercise its inherent powers under Section 482, Code of Criminal Procedure.

Whether the appellant is indeed conversant with the day-to-day management of the Company, thereby justifying the issuance of summons to her. - HELD THAT: - The Court held that, for fastening vicarious liability on a Director, the complaint must contain the essential averment that the person was in charge of, and responsible for, the conduct of the business of the company at the relevant time. Mere status as a Director does not create deemed liability. The only material relied upon against the appellant was that she had signed Board Resolutions. The Court held that signing such resolutions does not by itself establish participation in the company's day-to-day affairs, since Board Resolutions relate to decisions placed before the Board and do not imply awareness of every transaction in the ordinary course of business. Further, there was no direct allegation in the complaint against the appellant satisfying the statutory requirement under Section 141. [Paras 8, 11]

The summoning and consequential proceedings against the appellant were quashed.

Scope of inherent jurisdiction - Bar against second revision - Miscarriage of justice - HELD THAT: - The Court held that the prohibition on a further revision does not extinguish the High Court's inherent jurisdiction under Section 482 CrPC. Relying on the settled position by the bench of three judges in Krishnan & Anr. v. Krishnaveni & Anr. [1997 (1) TMI 529 - SUPREME COURT] with reference to earlier decision of this Court in Madhu Limaye v. State of Maharashtra [1977 (10) TMI 111 - SUPREME COURT] and V.C Shukla v. State through CBI [1979 (12) TMI 159 - SUPREME COURT] that inherent power remains available to prevent miscarriage of justice, the Court found the High Court's statement of law incorrect. The existence or prior invocation of revisional jurisdiction does not, by itself, bar or curtail the exercise of inherent power where interference is otherwise justified. [Paras 10, 11]

The High Court's view restricting recourse to Section 482 CrPC after revision was set aside as legally erroneous.

Final Conclusion: The appeal was allowed to the extent of quashing the proceedings against the appellant. The Court held both that the complaint lacked the requisite foundation for fastening vicarious liability on her under Section 141 of the Negotiable Instruments Act and that the High Court had incorrectly restricted its jurisdiction under Section 482 CrPC merely because a revision had been pursued.

Right of a borrower to a personal hearing before an account is classified as fraud under the RBI Master Directions - principles of natural justice is to ensure fairness in action and prevent miscarriage of justice - non-compliance with the agreed terms of the loan documents, commission of irregularities in financial conduct suggesting fraudulent activity - Audi Alteram Partem - Regulatory deference - entitlement to disclosure of the forensic audit report or only its conclusions before fraud classification.

Principles of natural justice - Personal hearing - Fraud account classification - HELD THAT: - The process of a show cause notice with the supply of the evidentiary material, consideration of the representation and the mandate to pass a reasoned order are more than adequate safeguards. This balances the need for promptitude with the requirement to maintain fairness in action.

The Court held thatnatural justice is a flexible concept and does not invariably require an oral hearing. On a proper reading of State Bank of India and Others vs. Rajesh Agarwal and Others [2023 (3) TMI 1205 - SUPREME COURT] what was read into the 2016 Directions was the requirement of notice, disclosure of material, an opportunity to submit a written representation, and a reasoned order; it did not confer a right to personal hearing. The 2024 Directions correctly embodied that position by mandating a detailed show cause notice, reasonable time to respond, consideration of the response, and a reasoned decision. The Court accepted that fraud classification is largely based on documentary material and that making personal hearing mandatory in every case would convert a swift administrative risk-mitigation process into a protracted one, impair timely reporting, burden banking operations, and prejudice public interest. It also held that the regulator's differentiation between wilful defaulter proceedings and fraud classification could not be faulted, since the two operate in distinct fields and are not comparable for insisting upon identical procedural content. [Paras 103, 107, 108, 109, 126]

The directions of the High Courts requiring grant of personal hearing were set aside, and the legal position was declared that notice, opportunity to reply, and a reasoned order satisfy natural justice in fraud classification proceedings.

Disclosure of forensic audit report - Relevant material - Third-party rights - HELD THAT: - The Court held that Rajesh Agarwal, required furnishing of the audit report and not merely its findings or conclusions. Since fraud classification entails civil consequences, the borrower is entitled to disclosure of the material relevant to the proceeding, including the forensic audit report, so as to effectively answer the proposed action. The contention that only conclusions of the report suffice was rejected, because the reasons supporting those conclusions lie in the body of the report. Relying on T. Takano vs. Securities and Exchange Board of India and Another [2022 (2) TMI 907 - SUPREME COURT] the Court held that the right of disclosure is the rule, though not absolute: if the bank records reasons that disclosure of particular portions would affect third-party rights, those portions alone may be withheld, after communicating that position and allowing the borrower to state why such information is necessary for an effective representation. Save such exceptional situations, supply of the full report, including in digital form, is mandatory. [Paras 122, 123, 124, 125, 126]

The directions requiring furnishing of the forensic audit reports were upheld, and the banks were directed to supply the reports, invite representation, and then pass fresh orders in accordance with the RBI Master Directions.

Final Conclusion: The appeals were partly allowed. The Supreme Court held that borrowers are not entitled as of right to a personal hearing before fraud classification, but upheld the requirement that forensic audit reports relevant to such classification must be furnished, subject only to limited withholding of portions affecting third-party rights, and directed fresh decisions after inviting representation.