TMI Tax Updates e-Newsletter
Apr 15,2026

Liability on the supplier - Failure to consider relevant reply and documents - non-fulfilment of clauses (iii), (v) and (ix) of Notification No. 41/2017 Integrated Tax (Rate).

Failure to consider relevant reply and documents - HELD THAT:- The Court noted that the impugned order proceeded on the alleged violation of clauses (iii), (v) and (ix) of Notification No. 41/2017, while the petitioner had already filed a reply and asserted that supporting documents, including documents produced with the memo, were available to demonstrate compliance. In view of the contention that the material on record had not been properly examined, the Court held that the matter required reconsideration by the authority. It was therefore directed that the authority re-look into the matter in the light of the petitioner's submissions and available documents, and, if necessary, call upon the recipient for further documents relevant to adjudication. [Paras 8, 9, 10]

The impugned order was set aside and the matter was remitted for fresh consideration, with liberty to the petitioner to file an additional reply and produce further documents.

Final Conclusion: The Court did not decide the merits of the tax liability. It set aside the adjudication order and remitted the matter for fresh consideration after proper examination of the petitioner's reply and supporting documents, with liberty to seek further material from the recipient if necessary.

Breach of the mandatory requirement of granting personal hearing under Section 75(4) - Violation of Principles of natural justice - Audi Alteram Partem.

Personal hearing under Section 75(4) - Principles of natural justice - HELD THAT: - The Court held that, notwithstanding the petitioner having selected "NO" in the reply form for personal hearing, such option could not override the mandate of Section 75(4) of the GST Act. It was incumbent on the authority to follow the statutory requirement of granting personal hearing before passing an adverse order. As that requirement was not complied with, the impugned order was held unsustainable for breach of natural justice. [Paras 6, 7, 8, 9]

The impugned order was quashed and the matter was remanded for fresh decision after affording hearing within the time fixed by the Court.

Final Conclusion: The writ petition was allowed on the ground that the adverse order had been passed without complying with the mandatory requirement of personal hearing under Section 75(4) of the GST Act. The order was set aside and the matter was remitted for fresh adjudication in accordance with law.

Entitlement to regular bail in a GST prosecution - wrongful availment of input tax credit through bogus invoices - offence punishable under Sections 132 (1) (c) and (f) - Documentary evidence - Custodial interrogation.

Regular bail - HELD THAT: - The Court found that the allegations principally related to wrongful availment of input tax credit and were based largely on documentary evidence. It noted that the investigation had, to a substantial extent, already been carried out, with relevant documents seized and statements recorded, and that the applicant had remained in custody since 16/01/2026. On that basis, and without commenting on the merits, the Court held that no further custodial interrogation appeared necessary. [Paras 6]

Bail was allowed subject to furnishing personal bond and surety, and the order was directed to remain in force till disposal of the case.

Final Conclusion: The Court granted regular bail to the applicant in the GST prosecution, holding that the case was substantially documentary in nature and that further custodial interrogation was not required.

Denial of personal hearing - Violation of natural justice - Writ maintainability - Alternative Statutory Remedy.- HELD THAT:- The Court held that the appellant's challenge founded on breach of natural justice was untenable because, in the forms filed in response to the proceedings, the appellant had specifically stated that a personal hearing was not required. Once the appellant had voluntarily and consciously declined that opportunity, the resulting adverse order could not be characterised as void for want of hearing. On that basis, the Court declined to entertain the challenge under Article 226 on the premise that the order was non est, while clarifying that the appellant remained free to pursue the statutory remedy in accordance with law. [Paras 8, 9, 10]

The plea that the impugned order was void for violation of natural justice was rejected, and the appellant was left to avail the statutory remedy.

Final Conclusion: The appeal was dismissed. The Court held that, since the appellant had expressly declined personal hearing, the impugned order could not be assailed in writ proceedings as void for breach of natural justice, though statutory remedies were kept open.

Scope of writ jurisdiction in Delay and laches - Interference with the assessment order - prolonged delay - discrepancies in the returns - difference between the figures in FORM GSTR-3B and FORM GSTR-2A - availment of excess Input Tax Credit - failure to respond to statutory notices and belated production of supplier certificates.

Delay and laches in writ jurisdiction - non-interference under Article 226 - HELD THAT: - The Court found that the petitioner had not properly responded either to the discrepancy notice or to the subsequent show cause notice, and had also failed to furnish invoice details before the statutory authority. It further noted that the supplier certificates relied on by the petitioner had been obtained much earlier, yet no prompt steps were taken to seek relief on that basis. In these circumstances, and having regard to the age of the assessment and the finality already attached to the order, the Court held that no justifiable ground existed to invoke Article 226 merely to reopen the matter. [Paras 6, 7, 8]

The writ petition was dismissed, and the assessment order was not interfered with.

Final Conclusion: The Court declined to exercise writ jurisdiction against the assessment order, holding that the petitioner had been grossly negligent in responding to the statutory proceedings and had approached the Court belatedly even after obtaining the relied-on supplier certificates. The writ petition was accordingly dismissed.

Entitlement to pre-arrest bail - Conditional bail - Surrender and bail - offence under the CGST Act -HELD THAT: - The Court noted from the complaint that the petitioner was not named therein, while the alleged offences carried a maximum sentence extending up to five years. Taking into account the complaint, the nature of the alleged violation, and the decisions cited before it, the Court considered it appropriate not to accede to the request for pre-arrest bail. Instead, it directed that on surrender before the court concerned within the stipulated time, the petitioner should be released on bail subject to conditions to be imposed by that court. [Paras 3, 5]

Pre-arrest bail was declined, but protection was granted by directing release on bail upon surrender before the court below within the time fixed.

Final Conclusion: The petition for pre-arrest bail was disposed of without granting such relief. The Court instead directed the petitioner to surrender before the competent Magistrate within a fortnight and ordered that, on such surrender, he be released on bail subject to the conditions imposed by that court.

Service of orders through common portal- Electronic Portal - Delay and laches in writ jurisdiction - Availment of Alternate statutory remedy - Challenged the judgment of learned Single Bench of this Court, because it refused to exercise jurisdiction against the impugned order, under Article 226 of the Constitution of India, primarily for the reason that the appellant has chosen to approach this Court nearly three years later.

Service of orders through common portal - HELD THAT: - The Court held that the question stood concluded by the Division Bench decision in Sunil Kumar v. The Sales Tax Officer [2024 (7) TMI 915 - KERALA HIGH COURT]. Reading Section 169 with Section 146 of the CGST Act, it was accepted that decisions, orders and other communications may validly be served by making them available on the common portal. Once that position was clear, the appellant's challenge brought nearly three years later could not be entertained in writ jurisdiction on the ground that the order had not otherwise been communicated to her. [Paras 6, 7]

The dismissal of the writ petition on the ground of delay was upheld.

The Court observed that, since a statutory appellate remedy was available in law, it was always open to the appellant to invoke it. However, such recourse could only be subject to all requirements under the statutory scheme, including limitation, and no separate protective order was warranted from the Court. [Paras 9, 10, 11]

No special liberty was granted beyond leaving the appellant free to pursue the statutory remedy in accordance with law.

Final Conclusion: The appeal was dismissed. The Court affirmed that service of the order through the common portal was legally sufficient and that the belated writ challenge was rightly declined, while leaving the appellant to pursue the statutory appellate remedy subject to limitation and other statutory conditions.

Validity of the detention and continued custody of the goods and conveyance under the GST proceedings - prima facie contravention in transport - coerced statement and related objections - writ jurisdiction in disputed questions of fact.

Detention of goods in transit - prima facie contravention in transport - continuation of detention - HELD THAT: - The Court held that, at the stage of ongoing investigation, the legality of the proceedings could not be examined in detail and the relevant consideration was whether prima facie material existed. Such material was found from the fact that the detained vehicle was intercepted while travelling towards Kannur, which was opposite to the declared destination of New Delhi, and from other circumstances emerging during investigation. The Court further noticed that, after the petitioner had disowned ownership and knowledge of the transaction, summons were issued to the persons in charge of the vehicle, and on their non-appearance the detention order in GST MOV-06 was affixed on the vehicle and on the office notice board. In the facts of the case, that course was not found illegal, and the extension of time for inspection was also found to be a permissible statutory course. The decision in M/s. Authentic Metals v. Enforcement Officer [2026 (2) TMI 1150 - KERALA HIGH COURT] was distinguished because, in the present case, a detention order was stated to have been affixed, unlike the situation considered there. [Paras 15, 16, 19, 20, 21]

The challenge to the detention and the prayer for release were rejected, leaving the petitioner to pursue the statutory remedies.

Writ jurisdiction in disputed questions of fact - alleged coerced statement - HELD THAT: - The Court held that the petitioner's contention that his statement had been obtained under duress could not be examined in proceedings under Article 226. It noticed that no documents were produced to show that any complaint had been made against the officers and that the concerned officers were not impleaded in their personal capacity. The Court also referred to discrepancies in the petitioner's own pleadings regarding the date of interrogation, and to circumstances emerging from the investigation which tended to accord with the contents of the recorded statement. Those matters required detailed inquiry and could not be resolved in writ jurisdiction. [Paras 16, 17, 18]

No writ relief was granted on the basis of the petitioner's allegations regarding coercion in recording the statement.

Final Conclusion: The writ petition was dismissed, the Court holding that no interference was warranted at the investigation stage in view of the prima facie materials and the procedure adopted for detention. The dismissal was without prejudice to the petitioner's right to avail the statutory remedies, and a direction was issued to furnish GST MOV-06 to the petitioner if he appears before the authority.

Validity of imposition of Penalty - detention of goods in transit - Consignee as owner of goods - absence of the element of fraud - Arbitrariness - Burden of proof - goods accompanied by the tax invoice, e-way bill and transporter's consignee note - HELD THAT: - The Court found that the record itself showed sale of the goods by the Raipur seller to the petitioner and supported their movement by tax invoice, e-way bill and consignment note. Since the petitioner was the consignee and had claimed the goods as owner, the authorities were not justified in proceeding against him as another person. The Court further held that, once the goods had been released to the petitioner treating him as owner, there was no material basis to ignore the accompanying documents or to sustain the penalty order. The plea based on subsequent cancellation of registration of the petitioner and the seller was rejected, as those actions were taken after the date on which the invoice was generated and the goods were loaded for transport. In the absence of any case that the documents were fraudulent, the reasons assigned in the impugned orders were held arbitrary and contrary to the material on record. [Paras 11, 12, 13, 14, 15]

The impugned orders were set aside and the matter was remitted to the competent authority for fresh consideration after giving full opportunity of hearing to the petitioner.

Final Conclusion: The writ petition was allowed. The Court held that the penalty orders were arbitrary and unsustainable on the material available, and remitted the matter for fresh decision in accordance with law after hearing the petitioner.

Validity of reopening of assessment - change of opinion - requirement of information suggesting escapement of income -HC held petition was disposed of by holding that the matter was covered by Siemens Financial Services Private Limited [2023 (9) TMI 552 - BOMBAY HIGH COURT] and Alok Industries Ltd.[2024 (3) TMI 1083 - BOMBAY HIGH COURT] accordingly, the impugned notices and orders, including consequential notices and assessment order, were quashed and set aside.

HELD THAT:- Having heard the learned counsel appearing for the petitioners and having gone through the materials on record, we find no good ground to interfere with the impugned order passed by the High Court. SLP dismissed.

Writ jurisdiction against reassessment proceedings - as argued Jurisdictional AO has not taken into account the petitioner's reply - Whether proceedings are without jurisdiction warranting interference by this Court?

HELD THAT:- Having heard the petitioner(s) and having gone through the materials on record, we find no good ground to interfere with the impugned order passed by the High Court [2026 (2) TMI 1401 - DELHI HIGH COURT] wherein as held that interference with a notice or ongoing proceedings in exercise of jurisdiction under Article 226 is ordinarily warranted only where the action is shown to be without jurisdiction or fundamentally void.

A mere dispute by the petitioner on factual correctness of the material relied upon by the Assessing Officer, or on the accuracy of the figures forming the basis of the proceedings, does not justify writ interference at that stage.

SLP dismissed.

Refusing to condone the delay of 687 days in filing audit report in form 10B - reason given for delay, is that the Chartered Accountant of the petitioner was not aware of online filing which was newly introduced and that mistake was unintentional and oversight - genuine reason for grant of condonation of delay u/s 119(b) of the Income Tax Act.

HELD THAT:- We are not inclined to interfere with the judgment and order impugned passed by the High Court [2025 (3) TMI 1578 - BOMBAY HIGH COURT] which concluded that honest reason has been given on record for seeking condonation of delay in exercise of our discretionary jurisdiction under Article 136 of the Constitution of India.

The present petition is, accordingly, dismissed.

Condonation of delay - delay of 361 days in filing the statutory appeal - Sufficient cause - explanation for delay offered by the appellant is that they had trusted their Tax Consultant and had left it to him to take the necessary steps

HELD THAT: - The Court held that, although the explanation that the appellant had relied on its tax consultant was self-serving and not capable of cogent substantiation, the matter involved relevant legal issues requiring adjudication on merits, including the applicability of precedents bearing on the claimed benefit under Section 80P. In such peculiar circumstances, the appellant's right to pursue the first appellate remedy ought not to have been denied solely on the ground of delay. The Court at the same time clarified that delay petitions are not to be condoned casually and must be considered with due seriousness. [Paras 7, 8, 9, 10, 11]

Final Conclusion: The appeal was allowed. The orders refusing condonation were set aside, and the Tribunal was directed to consider the statutory appeal on merits, the indulgence being granted in view of the peculiar circumstances of the case.

Revision u/s 263 - taxability of on-money received -Project completion method followed - year of assessment - Order Erroneous and prejudicial to the interests of the Revenue

HELD THAT: - The Court held that the assessment order had been passed after proper verification of the relevant facts and that the Department had never disputed the assessee's adoption of the project completion method.

On the material before the AO, the view taken that the amount relating to the Spring-II project was not taxable in AY 2014-2015 was a plausible view.

The Court reiterated that section 263 can be exercised only when the assessment order is both erroneous and prejudicial to the interests of the Revenue; where the AO has made enquiries, applied his mind and adopted one permissible view, the Commissioner cannot revise the order merely because he holds a different opinion. It also accepted the Tribunal's finding that the revisional authority had no material to conclude that the amount was taxable in the year in question. [Paras 8, 9, 10, 11]

The order of the Assessing Officer was neither erroneous nor prejudicial to the interests of the Revenue, and the order under section 263 was rightly held to be unsustainable.

Final Conclusion: The appeal was dismissed. The Court held that no substantial question of law arose, since the Assessing Officer had examined the relevant material, accepted the assessee's project completion method, and taken a permissible view which could not be revised under section 263.

Taxation of agricultural income and agricultural land - Nature of land sold -capital gains taxation - Appellate Tribunal's jurisdiction - Tribunal disregarding the revenue records, official reports, photographs and sale deeds evidencing agricultural character and activity.

Agricultural land - Capital asset - Nature of land sold - HELD THAT: - The Court held that classification of land and revenue derived therefrom falls within the State's exclusive domain, and that for deciding whether land is agricultural, the records maintained by the Revenue Department must prevail over entries in guideline value records meant for stamp duty purposes. It found that the Tribunal and the appellate authority had disregarded the revenue records, misread the material, and proceeded on assumptions, including reliance on survey numbers not related to the subject land.

The Court further held that where there is clear evidence that the land stood classified as agricultural land and agricultural activity was carried on, it is to be excluded from the definition of capital asset for the purpose of capital gains tax. On that reasoning, the Tribunal's view was held contrary to the facts and to the constitutional position. [Paras 17, 18, 19, 21]

The first and third substantial questions were answered in favour of the assessee, and the finding that the land was non-agricultural was rejected.

Appellate Tribunal's jurisdiction - Appellate powers - HELD THAT: - The Court held that the Tribunal, being the final forum on questions of fact and law, is empowered to revisit the orders of the Assessing Officer as well as the first appellate authority. It therefore found no legal error in the Tribunal having entertained the appeals by both sides. The infirmity lay not in the Tribunal's competence, but in its reasoning on the merits, which was found to be contrary to constitutional provisions and the evidence on record. [Paras 20]

The challenge to the Tribunal's competence was rejected, though its reasoning on the merits was disapproved.

Tribunal ignoring the report of the Village Administrative Officer, the District Valuation Officer and the photographs indicating casuarina plantation in the land as well as purchase and sale deeds and agricultural income disclosed by the appellant - HELD THAT:- We find that the Appellate Authority committed a grave factual error bordering on perversity and failed to properly appreciate the evidence. As a consequence, we hold this issue in favour of the assessee.

Final Conclusion: The appeal was allowed. The High Court held that the Tribunal had wrongly treated the land as non-agricultural despite the revenue records and other evidence showing its agricultural character, while also holding that the Tribunal was otherwise competent to entertain the appeals. Appellate Authority committed a grave factual error bordering on perversity and failed to properly appreciate the evidence

Charitable Activity u/s 2(15) - General public utility - Registration for charitable institution - as alleged activity of deploying ex-servicemen as security guards and receiving payments towards such services, is only a business activity - whether, on facts, the respondent is engaged in charitable activities?

HELD THAT: - The Court held that, in assessing whether the respondent was engaged in charitable activities, the relevant test was the manner in which its income was applied, read with its stated objects in the Memorandum of Association.

Commissioner had himself accepted that two income-generating activities were in consonance with the respondent's main objects, and the Court found no rational basis to isolate the third activity of deploying ex-servicemen as security guards as standing outside those objects.

The factual findings also showed a very low net profit ratio for the relevant financial years, supporting the conclusion that the respondent was not acting for profit but for the upliftment of ex-servicemen and their families, with only a small portion retained for administrative expenses. On these concurrent factual findings, the Tribunal's conclusion that the activities were charitable was not open to interference. [Paras 16, 17, 19, 20, 21]

Tribunal's view that the respondent was entitled to registration as a charitable institution was left undisturbed.

Final Conclusion: The appeal was dismissed. The Court held that the Tribunal's finding that the respondent's activities were charitable was founded on concurrent factual findings, giving rise to no substantial question of law.

Independent adjudication by appellate tribunal - Non-application of mind - Tribunal's orders to be set aside for want of independent consideration

HELD THAT: - The Court held that the Tribunal had merely adopted the views of the AO and the Commissioner of Income Tax (A) without making its own assessment of the rival contentions. Its observation that certain contradictions noticed by the AO were not rebutted was not elaborated at all, making judicial scrutiny on merits impossible.

Since the appellant's case was that the three appeals involved issues not wholly common and that detailed pleadings and materials had been placed on record, Tribunal was bound to consider each germane contention independently and dispassionately before rendering its decision. [Paras 11, 12, 13]

The impugned orders were set aside and the matters were remitted to the Tribunal for fresh consideration of all three appeals, with all rival contentions left open.

Final Conclusion: The High Court allowed the appeals on the ground that the Tribunal had failed to undertake an independent adjudication and had disposed of the matters mechanically. The three appeals were remanded to the Tribunal for fresh consideration in accordance with law after hearing both sides.

Deduction u/s 80JJAA - Belated filing of Form 10DA - Procedural compliance and substantive deduction

HELD THAT: - The Tribunal held that the disallowance was made solely because Form No. 10DA was not furnished within the prescribed time. Following Tarasafe International (P.) Ltd. [2024 (10) TMI 363 - ITAT KOLKATA] it accepted that filing of Form No. 10DA is a procedural requirement and that mere delay in such filing cannot defeat an otherwise admissible deduction under Chapter VIA.

As the facts were found to be identical to the case relied upon, and no contrary material was placed on record by the Revenue, the deduction claimed by the assessee could not be denied merely on account of belated filing of the form. The same reasoning was applied to both assessment years since the grounds were identical. [Paras 8, 9, 11]

The order of the appellate authority was set aside and the Assessing Officer/CPC was directed to allow the deduction as claimed for both assessment years.

Final Conclusion: Both appeals were allowed. The Tribunal held that deduction under section 80JJAA could not be denied merely because Form No. 10DA was filed belatedly, and directed that the deduction be granted for the assessment years 2021-22 and 2022-23.

Deemed dividend u/s 2(22)(e) - Running current account with shareholder - Computation of net debit balance - Accrued interest adjustment

Deemed dividend - Shareholder advance or loan - Temporary debit balance - HELD THAT: - The Tribunal found no error in the appellate finding sustaining applicability of section 2(22)(e). It accepted that the assessee was a shareholder holding the requisite shareholding, that there was a debit balance in his name in the company's books, and that the company had sufficient accumulated profits. The mere fact that the debit balance remained only for a short period did not displace the character of the amount as deemed dividend for the purpose of the provision. [Paras 9]

The challenge to the applicability of section 2(22)(e) was rejected and the finding sustaining the addition on principle was confirmed.

Computation of net debit balance - Accrued interest adjustment - Day-to-day basis - determining the amount liable to be assessed as deemed dividend - HELD THAT: - The Tribunal held that the rejection of the alternate plea solely because tax was deducted on the interest at year-end was not correct. Since the assessee's case was that the debit balance subsisted only for a brief period and that for the remaining period there was credit balance on which interest was payable by the company, the benefit of such accrued interest had to be considered in working out the exact net debit balance. The matter was therefore restored for recomputation after giving the assessee a reasonable opportunity of hearing. [Paras 9]

The order on the alternate ground was set aside and the Assessing Officer was directed to recompute the net debit balance for section 2(22)(e) after allowing due benefit of accrued interest calculated on a day-to-day basis.

Final Conclusion: For AY 2021-22, the Tribunal upheld the applicability of section 2(22)(e) to the debit balance in the shareholder's account, but restored the computation aspect for fresh determination by allowing adjustment of accrued interest on day-to-day credit balances. Both appeals were partly allowed on the same terms.

Denial of exemption u/s 11/12 - Procedural defect in audit report filing - Form No. 10B was filed without accompanying audited financial statements - Bona fide belief - Directory requirement

HELD THAT: - The Tribunal found that the assessee had admittedly filed Form No. 10B before filing the return of income and that the omission to enclose the audited financial statements was only a procedural lapse. It further recorded that the audited accounts had subsequently been furnished during rectification proceedings and were available for verification.

Applying the consistent judicial view noticed by it, the Tribunal held that the requirement of filing the audit report is directory in nature and that exemption u/s 11/12 cannot be denied for a technical or procedural defect when the substantive conditions are fulfilled. [Paras 8, 9]

Final Conclusion: The Tribunal held that exemption under sections 11/12 could not be denied merely because the audited financial statements were not enclosed with Form No. 10B filed before the return. The impugned appellate order was set aside and the matter was restored to the Jurisdictional Assessing Officer for verification and grant of exemption in accordance with law after hearing the assessee.

Denial of Foreign tax credit - Delay in filing Form No. 67 - Directory procedural requirement

HELD THAT: - Tribunal found from the record that the assessee had claimed foreign tax credit in the return and had in fact furnished Form No. 67 before the AO during the rectification proceedings, contrary to the appellate finding that the form had not been filed at all. It held that, for the year under consideration, Rule 128(9) required the form to be furnished by the due date u/S 139(1), but the rule did not provide that delay would result in automatic denial of the substantive relief under section 90.

Following Sonakshi Sinha [2022 (10) TMI 107 - ITAT MUMBAI] and Venkatanarayanan Somayaji Lakshminarasimha [2025 (5) TMI 214 - MADRAS HIGH COURT] the Tribunal held that the requirement as to timing of Form No. 67 was procedural and directory, and that mere delay in filing the form could not preclude consideration of the foreign tax credit claim. [Paras 8, 9, 10, 13]

The rejection of the foreign tax credit claim on the sole technical ground of delayed filing of Form No. 67 was not sustainable, and the AO was directed to consider the claim on merits after accepting the form and related documents.

Final Conclusion: Tribunal held that foreign tax credit could not be denied solely because Form No. 67 was not furnished within the time stipulated u/Rule 128(9), once the form was filed during rectification proceedings. The matter was directed to be examined by the AO on merits after accepting Form No. 67 and the supporting documents, and the appeal was allowed for statistical purposes.

Exemption u/s 11 - activity of letting out of the auditorium - Charitable purpose or business activity - Proviso to section 2(15) - Incidental commercial receipts - Predominant charitable objects

HELD THAT: - The Tribunal held that the controversy stood covered by the decision in the assessee's own case for an earlier assessment year [2018 (3) TMI 1896 - ITAT MUMBAI], and the facts for the years under appeal were identical.

Following that view, it accepted that the assessee was engaged in charitable activities relating to education and medical relief and that the letting of the auditorium was only incidental to its main objects and for augmentation of funds. On that basis, the activity could not be treated as carrying on business so as to invoke the proviso to section 2(15), and the relief granted by the Commissioner (Appeals) under section 11 called for no interference. [Paras 5, 6]

Final Conclusion: Tribunal upheld the order granting exemption under section 11 for both assessment years. The Revenue's appeals were dismissed on the ground that the auditorium-letting activity was merely incidental to the assessee's charitable objects and did not attract the proviso to section 2(15).

Validity of Reassessment proceedings for want of valid approval - Specified authority approval u/s 151 - Jurisdictional defect - approval for the order u/s 148A(d) taken from the Principal Commissioner instead of the authority prescribed under section 151(ii).

HELD THAT: - The Tribunal held that under the amended scheme, prior approval of the specified authority is a condition precedent for issuance of notice u/s 148, and where more than three years have elapsed from the end of the relevant assessment year, the approval must be of the authority mentioned in section 151(ii).

Since for A.Y. 2017-18 the extended three-year period expired on 30/06/2021, approval obtained on 28/07/2022 from the Principal Commissioner was not approval by the competent authority.

Following Alag Property Construction (P.) Ltd [2025 (9) TMI 1203 - BOMBAY HIGH COURT] the Tribunal held that such non-compliance vitiated jurisdiction and rendered the notice u/s 148 void ab initio. [Paras 13, 15, 18, 19]

The notice under section 148 was quashed as bad in law, and the consequential reopening proceedings and assessment order were also quashed.

Final Conclusion: The assessee's cross-objection was allowed on the jurisdictional issue that the reopening lacked approval from the competent specified authority u/s 151(ii). As a result, the notice u/s 148 and the consequential reassessment were quashed - Assessee appeal allowed.

Penalty u/s 271(1)(c) - Estimated addition - Bogus purchases - AO made an addition, in quantum proceedings, on account of bogus purchases by bringing to tax the entire amount of the bogus purchases but in further appeal, the Tribunal reduced the addition to 12.5% of the bogus purchases

HELD THAT: - The Tribunal noted that though the AO had added the entire amount of the alleged bogus purchases, in quantum proceedings the addition was ultimately reduced to 12.5% of such purchases. It therefore held that the surviving addition was purely estimate-based.

We find that in CIT v/s Krishi Tyre Retreading and Rubber Industries, [2014 (2) TMI 21 - RAJASTHAN HIGH COURT] held that where an addition is made purely on an estimate basis, no penalty under section 271(1)(c) of the Act is leviable. Similar view has been expressed in CIT v/s Sangrur Vanaspati Mills Ltd. [2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT] wherein held that when the addition has been made on the basis of estimate and not on any concrete evidence of concealment, penalty u/s 271(1)(c) of the Act is not leviable. [Paras 6, 7, 8]

The deletion of penalty by the Commissioner (Appeals) was upheld and the Revenue's appeal was dismissed.

Final Conclusion: The Tribunal held that since the addition on account of bogus purchases ultimately survived only on an estimated basis, penalty under section 271(1)(c) could not be sustained. The order deleting the penalty was affirmed and the Revenue's appeal was dismissed.

Provisional attachment - Benami property in converted form - attachment of alleged trail of sale proceeds - mistaken identification of the attached immovable property in the proceedings under the Prohibition of Benami Property Transactions Act - Beneficial owner - Shell company - Accommodation entrie - Bogus share premium.

Benami property in converted form - Bogus share premium - HELD THAT: - The Tribunal held that the respondent company had no real business activity over the relevant years, yet had received substantial share premium at an unusually high rate soon after incorporation. On examining the ITRs for AY 2018-19 and AY 2019-20, it found that the company had disclosed large shareholders' funds and share premium, had advanced substantial sums as loans and advances, and had thereafter acquired immovable property. The plea that the later-acquired property had been purchased out of outside financial assistance was rejected, as the financial data showed that the amounts received from other entities were in substance repayment of advances earlier made by the respondent. Applying the definition of property under the Act, the Tribunal held that share premium is a movable property capable of conversion into other movable or immovable property, and that the transformed asset or its proceeds continue to answer the description of benami property. [Paras 6]

Attachment was held sustainable to the extent of the bogus share premium of Rs. 1,96,80,000/- and its converted form or proceeds.

Misdescription of property in show cause notice - HELD THAT: - The Tribunal accepted that the specific property initially attached was not shown to have been acquired by the respondent company and therefore could not be retained under attachment. However, it found that the show cause notice had specifically referred to the infusion of bogus share premium, and that such premium had been utilised in acquiring another property which had thereafter been disposed of. Since the Act includes converted property and proceeds within the scope of benami property, the misdescription of the immovable property did not defeat the substance of the proceedings against the benami funds and their transformed form. The defect therefore did not warrant total revocation of the proceedings. [Paras 7, 8]

The impugned order was modified; the wrongly attached property was directed to be released, but the appellant was permitted to attach benami property of the respondent to the extent of the bogus share premium in whatever form it stood transformed.

Final Conclusion: The appeal was allowed in part by modifying the impugned order. The attachment of the wrongly identified immovable property was directed to be lifted, but attachment was permitted to continue against the respondent's benami property, investments or proceeds to the extent representing the bogus share premium.

Provisional attachment of additional property - search and seizure - modus operandi - involvement in online betting and gambling resulting in generation of huge cash - Effect of acquittal or discharge in criminal proceedings arising from the online betting and gambling activity barred or diluted - sufficient reasons to believe ​​​​​- Admissibility of statements and surrounding material - statements of third-party recorded in coercion, stress and threat - retraction of statement - Benami transaction through layered accommodation entries - bogus security premium, bogus partner's capital, bogus unsecured loan, bogus agriculture income, bogus commission income, bogus trading and bogus capital gain - benami arrangement falling within Section 2(9)(A).

Section 24(4)(b)(i) - Provisional attachment of additional property - No prior show-cause requirement - HELD THAT: - The Tribunal held that Section 24(4) contains two distinct parts. Where attachment had already been made under Section 24(3), the proceeding concerns its continuance; but where no such attachment had been made in respect of a property, Section 24(4)(b)(i) separately authorises provisional attachment of that property with prior approval. The Adjudicating Authority erred in reading into that provision a requirement of prior notice for such attachment. Section 24(1) contemplates notice as to why property should not be treated as benami property, but Section 24(4)(b)(i) does not itself mandate any additional show-cause before attachment. The Tribunal therefore rejected the construction adopted in the impugned order and treated the attachment as a protective interim measure pending adjudication. [Paras 27, 28, 29, 30, 31]

The finding of the Adjudicating Authority on the scope of Section 24(4)(b)(i) was set aside and the validity of the provisional attachment on that ground was upheld.

Benami transaction - Layered routing of funds - Accommodation entries - HELD THAT: - The Tribunal found that the impugned order ignored the record showing revision of returns, the belated disclosure of agricultural income, the absence of supporting material for the stated heads of receipt, and the routing of funds through other entities before reaching the concerned companies. It held that the Adjudicating Authority had overlooked the significance of the alleged receipts shown as security premium, partner's capital, unsecured loans, agricultural income, commission income, trading income and capital gains, despite failure to establish their genuine source. The conclusion that no benami transaction could arise because the beneficial owners were connected with the entities was held erroneous, since the case was not of direct introduction of funds into one's own entity but of layered movement of unaccounted cash through intermediary entities and accommodation entries. On that reasoning, the Tribunal accepted the department's case that the routed transactions attracted the benami provisions. [Paras 33, 34, 35, 36, 37]

The contrary finding of the Adjudicating Authority was held perverse, and the department's case of benami transaction through routed funds was accepted.

Contradictory findings - Perverse appreciation of record - Acquittal in criminal proceedings - HELD THAT: - The Tribunal noted that several issues, including the effect of acquittal, reasons to believe, reliance on statements, field verification and the inapplicability of the statutory exception, had already been decided against the respondents and had not been challenged by cross-appeal or cross-objection. Yet, while dealing with the merits, the Adjudicating Authority adopted a conflicting approach and returned conclusions contrary to the record and to its own earlier order. The Tribunal held that acquittal or discharge in criminal proceedings did not conclude the benami proceedings, which rest on a different standard, and found the contrary reliance in the impugned order to be self-contradictory. Such inconsistent treatment of the same material rendered the impugned adjudication unsustainable. [Paras 24, 25, 26, 33, 38]

The impugned order was held unsustainable for perversity and contradiction in its treatment of the record and the legal issues.

Final Conclusion: The appeals were allowed. The Tribunal set aside the order refusing confirmation and confirmed the Provisional Attachment Order, holding that the Adjudicating Authority had misconstrued Section 24(4)(b)(i) and returned perverse findings contrary to the record.

Provisional attachment - Entitlement to rely on income-tax search material in benami proceedings - absence of a separate independent enquiry - Benami transaction through routed accommodation entries - Burden of proof - Retracted statements corroborated by electronic evidence - Distinct scope of income-tax assessment and benami adjudication.

Use of income-tax search material in benami proceedings - Independent enquiry - HELD THAT:- The Tribunal held that neither the Act of 1988 nor the Income-tax Act barred reliance on evidence collected in proceedings under the other statute. The decisive question was not whether the material originated in an income-tax search, but whether such material could lawfully be used to examine the existence of a benami transaction. Since no statutory prohibition was shown, the Initiating Officer was competent to act on the documentary and statement material supplied by the Income Tax Department. [Paras 19]

The challenge founded on lack of an independent enquiry was rejected.

Benami transaction through routed accommodation entries - HELD THAT: - The Tribunal found that the beneficial owners had not directly infused funds into the concerned entities, but had routed money through other entities before it ultimately reached the alleged benamidars, which attracted the benami prohibition. The statements of persons connected with the transactions described the routing of cash and the arrangement of bank entries, and those statements stood corroborated by electronic records such as the "Hisab" and "Octonwards Final" data, for which the necessary certificate had been obtained. The Tribunal further held that mere retraction did not erase those statements, particularly when no satisfactory basis for retraction was shown and the statements were supported by electronic evidence. On that material, the Tribunal accepted the respondent's case that unaccounted cash generated from the alleged gambling and betting activity had been channelized into the ARC group entities through accommodation entries for the benefit of the beneficial owners. [Paras 28, 29, 30, 31, 32]

The finding of benami transaction and the confirmation of provisional attachment were upheld.

Distinct scope of income-tax assessment and benami adjudication - Undisclosed income and benami proceedings - HELD THAT: - The Tribunal held that income-tax assessment and benami adjudication operate in different fields and pursue different statutory purposes. The Income Tax Department may use the material to determine taxability of undisclosed income, whereas the benami authority may use the same material to determine whether the transaction falls within the benami prohibition. Therefore, the fact that the amounts were assessed for tax purposes did not bind the respondent to treat them as non-benami, nor did it prevent a separate conclusion that the routed funds were involved in benami transactions. [Paras 24, 25]

The plea that income-tax assessment barred or contradicted the benami action was rejected.

Final Conclusion: The Tribunal found no merit in the common grounds raised by the appellants. The confirmation of provisional attachment was sustained and all the appeals were dismissed.

Restrictions on Amendment of shipping bills under Section 149 - time limit prescribed in the departmental circular -Duty Free Import Authorisation (DFIA) Scheme as against free shipping bill - wrong mention of billing code - Inadvertent error in export scheme code - Section 149 and overriding effect over circular limitation - Conversion of free shipping bill to DFIA scheme.

Amendment of shipping bills - HELD THAT: - The Court held that the power to amend documents flows from Section 149 of the Customs Act, and where that provision does not prescribe any limitation period, a circular cannot impose a restrictive time bar so as to curtail the statutory right. On that reasoning, the Tribunal was justified in rejecting the department's objection founded on delay and in holding that the request could not be denied merely because it was made beyond three months. [Paras 16]

The objection based on the three-month limitation contained in the circular was rejected.

Inadvertent error in export scheme code - Conversion of free shipping bill to DFIA scheme - HELD THAT: - The Court found from the record that applications for DFIA licence had been made, DFIA file numbers had been allotted, and the shipping bills themselves showed that the exports were under DFIA licence. In that background, the erroneous entry of code "00" by the Customs Broker, instead of code "26", was treated as a clerical or inadvertent mistake. The Court further held that the fact that the consignment had not been opened for physical examination at the time of export did not by itself establish a conversion from one scheme to another. Since the contemporaneous documentary material existed at the time of export and the request was only to correct the mistaken code, the bar under the first proviso to Section 149 did not apply. [Paras 18, 19, 20, 21]

The amendment sought was held to be a permissible correction of an inadvertent error, and not a barred conversion of scheme.

Final Conclusion: The High Court upheld the Tribunal's order permitting amendment of the shipping bills. It held that the statutory power under Section 149 could not be cut down by the circular-imposed limitation, and that the error in mentioning the export scheme code was only an inadvertent mistake supported by contemporaneous DFIA records, not an impermissible conversion of scheme.

Seeking provisional release of imported goods - Pending adjudication of tariff classification - Security for safeguarding revenue - genuineness and financial credibility - Delay in initiation of customs adjudication.

Quantum of security for release of the goods - Whether the goods were roasted areca nuts or dried areca nuts -HELD THAT: - The Court held that the dispute whether the goods were dried areca nuts or roasted areca nuts required adjudication by the competent authority, and any final view on classification at the appellate stage would prejudice either side. It noted that, for purposes of interim arrangement, the ICAR report prima facie indicated that the goods had not undergone roasting, and that if the goods were to be valued as areca nuts, the notified tariff value under Section 14(2) would govern instead of the transaction value under Section 14(1). On examining the respondent's financial material, the Court found that the bank balances and asset position did not adequately safeguard possible revenue dues. At the same time, since the goods were perishable and the classification issue was still pending, the Court balanced both interests by modifying the release conditions and permitting release only on deposit of 50% of the determined amount together with a bank guarantee for 25% of that amount, pending adjudication. [Paras 7, 8]

The direction for release on a bank guarantee of 25% of the invoice value was modified, and release pending adjudication was made conditional on deposit of 50% of the determined amount and a bank guarantee for 25% of that amount.

Delay in initiation of customs adjudication - Administrative inaction - HELD THAT: - The Court found that the authorities had the benefit of the expert report long earlier and yet had not even issued a show cause notice for more than one year. It rejected the explanation that adjudication was not commenced because of pendency of the writ proceedings, observing that the case before the Single Judge concerned release of goods and there was no order preventing initiation of adjudication. The Court held that such lack of diligence, particularly in relation to perishable goods, was unjustifiable and should not prejudice the importer; however, that lapse could not result in unconditional advantage to the respondent while the classification dispute remained undecided. The appropriate course was therefore to compel expeditious adjudication within a fixed schedule. [Paras 7, 8]

The Revenue was directed to issue a show cause notice within two weeks, the respondent was granted time to reply, and the competent authority was directed to complete adjudication within the time fixed by the Court.

Final Conclusion: The writ appeal was disposed of by modifying the Single Judge's order. The Court directed immediate initiation and completion of adjudication and permitted release of the goods pending such adjudication only on enhanced monetary safeguards to protect the Revenue.

Maintainability of application Under Section 9 - Pre-existing dispute - Entitlement to initiate proceeding for operational debt as per the scheme as provided under Sections 8 & 9 - Operational creditor on occurrence of default - Reconciliation of accounts - Violation of principles of natural justice - Whether the application under Section 9 has been wrongly rejected or ought to have been admitted by adjudicating authority.

Principles of natural justice - HELD THAT: - The Tribunal found that, on the first listing itself, the Adjudicating Authority had expressly permitted only a short note confined to the objection on maintainability and had not issued notice for a substantive reply to the Section 9 application. Since the note was limited to maintainability and the corporate debtor was not required to file a full reply, no procedural unfairness was made out merely because the note was filed on affidavit. [Paras 7]

The challenge based on breach of natural justice was rejected.

Pre-existing dispute- Reconciliation of accounts - Insolvency not a recovery mechanism - HELD THAT: - It is settled law that what the adjudicating authority is to see as to whether there is a plausible contention which requires further investigation and dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence. Hon’ble Supreme Court has laid down that at this stage, the adjudicating authority is not to conclusively decide as to whether the defence taken shall ultimately succeed or not. Looking to the materials on record including the notice of dispute, we are of the view that what was raised by the respondent was a plausible contention and cannot be said to be spurious dispute or illusionary. Section 9 proceedings are not there to resolve above contractual issues which are to be determined in appropriate proceedings.

Applying the principles in Mobilox Innovations Private Limited Vs. Kirsua Software Pvt. Ltd. [2017 (9) TMI 1270 - SUPREME COURT] and Sabarmati Gas Limited Vs. Shah Alloys Ltd. [2023 (1) TMI 195 - SUPREME COURT] the Tribunal held that the relevant test is whether the defence raises a plausible contention requiring investigation and is not spurious, hypothetical or illusory. The reply to the demand notice asserted that the dues had been settled, the principal amount had been paid, credit notes had been issued, an advance towards interest had been paid, and nothing further remained payable; the rejoinder in turn disputed the alleged settlement and described the relied-on material as part of inconclusive discussions. These pleadings themselves showed an existing controversy on reconciliation and settlement well before the demand notice. Such a dispute could not be treated as a patently feeble defence, and Section 9 proceedings could not be used to determine those contractual issues. The subsequent consensual reference of disputes under all the contracts to arbitration was also noticed as covering the same subject matter. [Paras 17, 18, 20, 22, 23]

The rejection of the Section 9 application was upheld and the appeal was dismissed.

Final Conclusion: The Appellate Tribunal upheld the dismissal of the Section 9 application, holding that the materials on record disclosed a genuine pre-existing dispute relating to reconciliation and settlement of contractual dues. The appeal was consequently dismissed.

Bid rigging cartel - contravention of Section 3 of the Competition Act, 2002 - tacit acquiescence - Presumption of appreciable adverse effect on competition - liability of the partner under Section 48 of the Competition Act, 2002 and the penalty based on income - Preponderance of Probability - individual liability of person in charge - penalty on individual income - vacancy in adjudicatory composition - Denial of cross-examination under principles of natural justice.

Bid rigging cartel - tacit acquiescence - concerted practice - HELD THAT: - The Tribunal found direct and circumstantial evidence of collusion in the form of repeated email communications showing allocation of shares, tender distribution, price discussions, revision of sharing patterns, induction of members, complaints of undercutting and directions to withdraw bids. The Appellants did not deny receipt of the emails and never protested or distanced themselves from the communications. Their continued receipt of confidential cartel communications without dissociation established knowledge of and assent to the arrangement. The Tribunal held that cartel conduct, by its nature, is often proved through such surrounding circumstances, and in the present case the emails themselves furnished direct evidence of coordinated bidding. [Paras 44, 52, 53, 57, 58]

The finding of contravention under Sections 3(3)(a), (b), (c) and (d) read with Section 3(1) against the firm was affirmed.

Presumption of appreciable adverse effect on competition - rebuttable presumption - distinction from circumstantial evidence cases - HELD THAT: - The Tribunal held that once an agreement of the kind covered by Section 3(3), including cartelisation, is established, a presumption of appreciable adverse effect on competition arises. That presumption is rebuttable, but the burden lies on the contravening parties. No material was shown to rebut it. The Tribunal further held that the decision in Rajasthan Cylinder [2018 (10) TMI 229 - SUPREME COURT] was inapplicable because that case turned on circumstantial evidence in a different market setting, whereas the present matter involved direct email evidence of coordination among a small number of approved vendors participating in multiple railway tenders. [Paras 45, 46, 47, 48, 54]

The plea that no appreciable adverse effect on competition was shown failed, and the reliance on Rajasthan Cylinder was distinguished.

Individual liability of person in charge - penalty on individual income - punished accordingly - HELD THAT: - The Tribunal accepted the Commission's reasoning that the firm had first been found guilty and only thereafter the liability of the partner was analysed. It held that the expression 'punished accordingly' in Section 48, as it stood prior to amendment, required that the individual found liable be visited with punishment or penalty on the same scale as the enterprise under Section 27. Since an individual does not have turnover in the sense applicable to an enterprise, applying the same percentage to the individual's average income was held to be legally proper. The objection founded on the distinction between 'punishment' and 'penalty' and on the absence of the word 'income' in Section 27 was rejected. [Paras 48, 49, 56]

The liability of Keshav Bihani under Section 48 and the penalty computed on his average income at the same rate as that of the firm were upheld.

Vacancy in adjudicatory composition - validity of proceedings despite vacancy - HELD THAT: - Relying on the Delhi High Court decision in Cadd Systems and Services Private Limited v. Competition Commission of India [2019 (7) TMI 1119 - DELHI HIGH COURT], the Tribunal held that though appointment of a judicial member had been held necessary, there was no direction restraining the Commission from functioning in such absence. It further held that Section 15 protects proceedings from invalidation merely on account of a vacancy or defect in constitution. The challenge to the orders on this ground alone was therefore not accepted. [Paras 59]

The objection founded on the absence of a judicial member was rejected.

Denial of natural justice on account of non-supply of material - HELD THAT: - The Tribunal found that the emails forming the basis of the finding were placed on record, that the Appellants did not deny receipt of the incriminating emails, and that no material was shown to establish dissociation from the cartel communications. As to cross-examination, the Tribunal held that no request had been made before the Commission. Under the statutory scheme, the Commission is guided by principles of natural justice and is not bound by the Code of Civil Procedure, while cross-examination under the Regulations is discretionary and not mandatory. In that background, the complaint of denial of cross-examination was held untenable. [Paras 55, 58, 60]

The natural justice challenge was rejected.

Final Conclusion: The Tribunal upheld the Commission's findings that the firm participated in a bid-rigging cartel and that its partner was rightly held liable under Section 48. The challenges based on absence of appreciable adverse effect on competition, invalidity of penalty on the individual, absence of a judicial member, and alleged breach of natural justice were rejected, and both appeals were dismissed.

Provisional attachment - Diversion of funds - proceeds of crime - Bogus consultancy-fee payments - delayed payment in the dairy transaction - Antecedent commercial transactions - Inter-connected transactions - Jurisdiction to examine commercial viability.

Antecedent commercial transactions - HELD THAT: - The Tribunal found that the agreement between the appellant's entity and the entity of Sanjay Chhabria was executed in 2014, nearly four years before the alleged scheduled offence and the subsequent fund flow from Yes Bank to DHFL and onwards. No material was shown to establish that, at the time of entering into that agreement, the parties had any knowledge of a future crime or had designed the arrangement to layer future illicit funds. The transaction was not shown to be part of the FIR or ECIR, and no complaint by either contracting party questioned the bargain. In that background, the respondents had no jurisdiction to brand the bargain as commercially irrational and then isolate part of the return as proceeds of crime, particularly when the agreement itself provided for interest and other commercial benefits. The attachment based on this transaction was therefore held to be irrational and without jurisdiction. [Paras 27, 28, 29, 30]

Attachment founded on the first transaction was set aside.

Layering of proceeds of crime - Antecedent commercial transactions - Foundational facts - HELD THAT: - The Tribunal held that the consultancy and related agreements were entered into before the alleged crime and substantial payments had also been made before the alleged offence. Even assuming the respondents relied on a statement that no services were rendered, that by itself did not establish that agreements entered earlier were designed to layer proceeds of a crime not yet committed. The respondents failed to place foundational material connecting those agreements with the later alleged offence or showing that the prior transactions were intended in anticipation of future criminal proceeds. The Tribunal also noted that the respondents relied upon one statement while ignoring other material and statements indicating consultancy work and invoices raised before the alleged offence. In the absence of material establishing such prior design or nexus, the attachment on this count was held untenable. [Paras 32, 33, 34]

Attachment founded on the second transaction was rejected.

Provisional attachment of proceeds of crime - HELD THAT: - The Tribunal found no substance in the appellants' explanation that the later payment made after about three years under the dairy sale arrangement was to be adjusted against other commercial dealings. If the payment was genuinely towards the sale consideration, it ought to have followed the agreed transaction within a reasonable time and led to completion of the sale. The attempt to justify the delayed payment as adjustment towards other transactions was not accepted, particularly when the payment continued to be linked to the dairy purchase arrangement. On that reasoning, the respondents were held justified in maintaining attachment to the equivalent value of that amount. [Paras 35, 36, 37]

Attachment was sustained to the extent of Rs. 25 Crores in equivalent value.

Inter-connected transactions - Scope of Section 23 - HELD THAT: - The Tribunal held that Section 23 applies where inter-connected transactions form part of the commission of crime or the layering of its proceeds. Independent transactions between parties not named in the predicate offence cannot be retrospectively inter-linked solely because they occurred between the same parties. Since the 2014 and prior arrangements were neither part of the FIR nor the ECIR and were not shown to have formed the framework of the offence or of the laundering activity, the respondents exceeded their jurisdiction in treating them as inter-connected transactions under Section 23. [Paras 38]

The plea based on Section 23 was rejected except to the extent of the transaction independently found attachable.

Final Conclusion: The appeals were partly allowed. The Tribunal set aside the provisional attachment in respect of the first and second sets of transactions, but sustained attachment to the equivalent value of Rs. 25 Crores arising from the dairy transaction, with attachment continuing only over the specified properties to that extent.

Condonation of delay- appeal before the Commissioner (Appeals) - barred by limitation - sufficient cause - Statutory bar on condonation beyond prescribed period - exclusion of section 5 of the Limitation Act - Date of service of adjudication order.

Limitation for appeal - HELD THAT: - The Tribunal found from the record, including the postal tracking report, that the order-in-original was delivered at the appellant's address on 22.09.2018. It also noticed contradiction in the appellant's own grounds regarding the reason for non-receipt on that date, and held that such contradiction destroyed the credibility of the explanation for delay. On that basis, the Tribunal treated 22.09.2018 as the relevant date of receipt/service and held that the appeal filed before the Commissioner (Appeals) was beyond the permissible period. [Paras 4, 5, 6]

The plea that the order was actually received only on 07.10.2018 was rejected, and the appeal was held to have been filed beyond limitation.

Statutory bar on condonation beyond prescribed period - Condonation of delay - HELD THAT: - Interpreting Section 85 of the Finance Act, 1994, the Tribunal held that an appeal must be filed within two months from receipt of the order, and only a further period of 30 days can be condoned in the appellate authority's discretion. Once the delay travels beyond that outer limit, the appellate authority becomes functus officio so far as condonation is concerned. The Tribunal further noted that no application for condonation had been filed before the Commissioner (Appeals). Relying upon Singh Enterprises versus Commissioner of Central Excise, Jamshedpur [2007 (12) TMI 11 - SUPREME COURT], it held that delay beyond the statutorily condonable period could not be condoned even by a day. [Paras 7, 8]

The dismissal of the appeal as barred by limitation was upheld since the delay exceeded the condonable statutory limit and no sufficient or procedurally proper request for condonation had been made.

Final Conclusion: The Tribunal upheld the order dismissing the appeal before the Commissioner (Appeals) as barred by limitation. It held that service of the adjudication order was proved on the earlier date claimed by the department, the appellant's explanation for delay was contradictory, and delay beyond the statutory condonable period could not be condoned.

Wrongly availment of the CENVAT Credit on raw materials, capital goods and input services as their final product - clearance of the final product - Activity of polishing S.S. sheets/coils and pasting paper or adhesive plastic film - Manufacture - Revenue neutrality - Commercially distinct product - Extended period of limitation - Bona fide belief - Suppression of facts.

Whether the different processes undertaken/carried out by the Respondent, i.e. polishing S.S. Sheets/Coils and thereafter pasting the paper or adhesive plastic film coating amounted to manufacture or not? - HELD THAT:- As per the Department, the Respondent have contravened the provisions of Rule 9 of the Cenvat Credit Rules, 2004. Further, as per the Department, the Respondent were purchasing the raw materials i.e. S.S. Sheets/Coils under Tariff Item 72199013 of the Central Excise Tariff Act, 1985 and after polishing and coating the paper or PVD coating thereto, they were clearing the S.S. Sheets/Coils under the same Tariff Item i.e. 72199013 and therefore, no new product with distinct name, characteristics and use had emerged out of the processes carried out by the Respondent, and hence, the Respondent were not manufacturing any final product and not entitled to avail the CENVAT Credit and the CENVAT Credit availed by them is inadmissible.

The Tribunal found that, after the processes undertaken by the respondent, the final product emerged with different characteristics and use as satin finish, mirror finish and PVD coated sheets/coils. It further noted that, in any event, the respondent had cleared the goods on payment of excise duty and the duty so paid was more than the CENVAT credit availed on inputs, capital goods and input services. On that basis, the credit already stood effectively reversed through utilization for payment of duty and could not be demanded again. The Tribunal therefore accepted the Commissioner's view that recovery under the Cenvat Credit Rules was unwarranted. [Paras 7, 8, 9]

The finding that no further reversal or recovery of CENVAT credit was required was upheld.

Extended period of limitation - Suppression of facts - Subsequent show cause notice - HELD THAT: - For the period December 2014 to March 2016, the Tribunal held that there was no suppression of material facts or intent to evade duty, since the respondent had been paying duty on the final product under a bona fide belief and that fact was already within the Department's knowledge; the question whether the activity amounted to manufacture was also one of legal interpretation. For the subsequent period April 2016 to June 2017, the Tribunal held that extended period could not be invoked again when it had already been invoked in the earlier show cause notice. [Paras 10]

The extended period was held to be unavailable for both periods covered by the show cause notices.

Final Conclusion: The Tribunal upheld the order dropping the demands and dismissed the Revenue's appeal. It held that recovery of the CENVAT credit was not permissible in the facts of the case and that the extended period of limitation had also been wrongly invoked.

Duty demand on 4 gram and 9 gram pouches of branded spit tobacco - MRP-based valuation - Exemption for packages of 10 grams or less under Rule 34(1)(b) - manufacture and clearance of 15 gm pouches failed for want of evidence and quantification - benefit of doubt - packaged commodities exemption.

Whether the 4gm/ 09 gm pouches are chargeable to duty under Section 4A -HELD THAT:- The Tribunal held that the determinative question was not the tariff classification of the product but whether the small pouches were liable to assessment on MRP-based valuation. Since packages containing 4 gm and 9 gm were within the exemption under Rule 34(1)(b) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, they stood outside the packaged commodities requirements attracting Section 4A. The Tribunal also noted the CBEC circular affirming that multi-piece packs containing individual pieces of 10 grams or less would not attract MRP-based assessment on that basis. As the Department had not alleged any independent under-valuation under Section 4, the classification controversy was treated as having no bearing on the outcome. [Paras 6, 8]

The demand founded on Section 4A in respect of 4 gm and 9 gm pouches was held unsustainable, and the question of classification was left unexamined as unnecessary.

Burden to establish dutiable clearances - Lack of quantifiable evidence - HELD THAT: - The Tribunal found that, apart from making an allegation that 15 gm pouches had been manufactured and cleared, the Department produced no quantifiable data showing the quantity of such pouches or the duty payable thereon. The record itself disclosed absence of pouch-wise breakup and inability to compute duty liability. The show cause notice also did not furnish the necessary particulars. In these circumstances, the Tribunal accepted the appellants' version and held that any doubt had to enure to their benefit. [Paras 7]

The alleged clearances of 15 gm pouches were not proved, and no duty demand could be sustained on that basis.

Final Conclusion: The Tribunal allowed all the appeals, holding that 4 gm and 9 gm pouches were outside the scope of Section 4A by reason of the exemption applicable to packages of 10 grams or less. In the absence of proof and quantification of any dutiable 15 gm clearances, the demands and consequential liabilities were unsustainable.

Imposition of Penalty under Rule 26(2) - Broker not in possession of excisable goods Or transported excisable goods - Act of omission and commission and for helping the traders in selling excisable invoices without supply of goods.

Penalty under Rule 26(2) - Issuance of invoices without delivery of goods - HELD THAT:- The Tribunal noted that Rule 26 contemplates penalty against a person concerned with excisable goods liable to confiscation, or against a person issuing or abetting issuance of invoices without delivery of goods. On the facts recorded, the appellant was acting only as an intermediary between seller and purchaser, did not possess or deal with the goods at any stage, and was not responsible for delivery of invoices without actual supply of material. In the absence of possession of goods or any established role attracting the ingredients of the rule, the penalty provision was held inapplicable. [Paras 7, 8]

The penalty imposed on the appellant under Rule 26(2) was held unsustainable.

Derivative penalty on agent - HELD THAT:- The Tribunal found that the case against the main noticees, namely the dealers alleged to have issued invoices without actual supply of goods, had already been decided by this Tribunal and the impugned order against them had been set aside. Since the appellant was sought to be penalised only on the footing that he was working as an agent for those dealers, the penalty against him could not independently survive after exoneration of the principal noticees. [Paras 6, 9]

The penalty was set aside and the appeal was allowed.

Final Conclusion: The Tribunal held that the appellant, being only an alleged broker without possession or dealing in the excisable goods, did not attract penalty under Rule 26(2). Since the order against the main dealers had already been set aside, the penalty on the appellant was also set aside and the appeal was allowed.

Imposition of penalty - Compliance with the ingredients of rule 26(1) - Pre-requisite Condition for penalty on third parties - Knowledge of liability to confiscation - Admissibility of statement recorded under section 14 without following section 9D.

Penalty under rule 26 - Knowledge or reason to believe - Statements under section 14 - HELD THAT: - The Tribunal held that knowledge or reason to believe that the goods were liable to confiscation is an essential condition for levy of penalty under rule 26, and the impugned order did not record such a finding against the appellant. Relying on the principle stated in Rakesh Kumar Garg Vs. Commissioner of Central Excise [2015 (12) TMI 592 - DELHI HIGH COURT], it held that the ingredients of rule 26 must be specifically established qua the person sought to be penalised. It further held that the allegation that the appellant had purchased the goods was recorded only on the basis of his statement under section 14, and such statement could not be treated as relevant in the absence of compliance with section 9D, as noticed in Natwar Lal Sharda [2026 (4) TMI 427 - CESTAT NEW DELHI]. On either count, the penalty was not sustainable. [Paras 11, 12, 13]

The penalty imposed on the appellant under rule 26 was set aside.

Final Conclusion: The Tribunal held that the statutory ingredients for penalty under rule 26 were not established against the appellant and that the sole statement relied upon was not legally usable without compliance with section 9D. The impugned order, to the extent it imposed penalty on the appellant, was set aside and the appeal was allowed.

Central excise duty - Place of removal - FOR destination contracts - Inclusion of freight and insurance in assessable value - Whether certain payments being received by the appellant from their customers towards certain activities like loading, transportation, insurance, etc., are required to be included in the assessable value for the purpose of payment of Central Excise duty or otherwise - HELD THAT:- The Tribunal examined the contractual terms and found that the delivery was on FOR basis, the date of delivery was linked to certification of receipt at the customer's stores, and ownership of the goods remained with the appellant until receipt in good condition at destination. On that factual matrix, the sale stood concluded only at the buyer's premises and not at the factory gate. The Tribunal held that, in such cases, the determination of place of removal depends on the contract and the point at which sale is completed; and where the sale is completed at the buyer's premises, transportation, insurance and similar charges up to that point form part of the assessable value. The appellant's reliance on its earlier orders founded on Ispat Industries [2015 (10) TMI 613 - SUPREME COURT] was held inapplicable because those decisions proceeded on a different factual basis of ex-works sales, whereas the present contracts showed destination sales. Following its earlier view in Pawan Power and Telecom Ltd [2025 (5) TMI 1526 - CESTAT HYDERABAD] the Tribunal treated Roofit Industries [2015 (4) TMI 857 - SUPREME COURT] and EMCO Ltd [2015 (8) TMI 200 - SUPREME COURT] as governing the present factual situation. [Paras 7, 8]

The demand as sustained on merits was upheld and the appeal was dismissed.

Final Conclusion: The Tribunal held that, on the terms of the contracts, the sale was completed at the buyer's premises and not ex-works. Consequently, freight, insurance and related charges up to destination were includable in the assessable value, and the appeal was dismissed.

Entitlement tointerest or compensation for the period after the refund of the pre-deposit till the later date on which interest actually paid - compensatory interest -refund of the pre-deposit - Statutory interest - Interest on interest.

Interest on delayed refund of pre-deposit - HELD THAT:- Reading of Section 244A ibid, makes the position amply clear that if the refund amount is due to the assessee, if not paid within the stipulated time, then in addition to such amount, the assessee should be entitled to interest. Applicability of the provisions under Section 244A ibid is entirely in a different footing inasmuch as the effect of non-payment of pre-deposit amount and subsequent payment of interest as envisaged under Section 35FF of the Act of 1944 was not the subject matter, dealt with in the said Income Tax statue. Since, 35FF ibid clearly provides for payment of interest on delayed refund of the pre-deposit amount, the provision of Section 244A ibid cannot straightaway be applied for deciding the present appeal differently.

The Tribunal held that Section 35FF of the Central Excise Act, 1944 clearly limits entitlement to interest on the amount deposited under Section 35F from the date of deposit till the date of refund of that amount. Since the pre-deposit stood refunded on 07.08.2017 and interest attributable to the delayed refund was paid up to that date, the statutory requirement stood satisfied. The further claim for interest from 07.08.2017 to 07.02.2023 was in substance a claim for interest on statutory interest or compensation, which the statute does not provide. Sandvik Asia Ltd.[2006 (1) TMI 55 - SUPREME COURT] was distinguished as it arose under Section 244A of the Income Tax Act, 1961, which operates on a different footing, and in any event the Larger Bench decision in Commissioner of Income Tax, Gujarat vs. Gujarat Fluoro Chemicals [2013 (10) TMI 117 - SUPREME COURT (LB)] clarified that only such interest as is provided by statute can be claimed from the Revenue and no further interest on such statutory interest is admissible. The other decisions relied upon by the appellant were also held distinguishable as Section 35FF was not the provision in issue there. [Paras 9, 10, 11, 12, 13]

The restriction of interest up to the date of refund of the pre-deposit was upheld, and the claim for further compensatory interest was rejected.

Final Conclusion: The Tribunal held that Section 35FF exhaustively governs interest on refund of pre-deposit and permits interest only up to the date of refund of the deposited amount. As no further statutory basis existed for awarding interest on such interest or compensatory interest thereafter, the appeal was dismissed.

Discharge of the burden of proof under Section 70 - Denial of input tax credit for want of proof of genuine purchase transactions and physical movement of goods - Genuineness of Transactions - erroneous or prejudicial to the interests of the revenue - revisional interference with the appellate order called for reconsideration.

Burden of proof for input tax credit - Discharge of burden under Section 70 - HELD THAT: - The Court held that the controversy turned on the manner in which the burden under Section 70 is to be discharged for claiming input tax credit. Relying on State of Karnataka vs. Ecom Gill Coffee Trading Private Limited [2023 (3) TMI 533 - SUPREME COURT], it found that genuineness of the transaction and actual physical movement of goods must be established by relevant supporting material, and that invoices or payment particulars alone are not sufficient. As the findings of the Assessing Authority, the Appellate Authority and the revisional authority were all found not to be in conformity with the parameters laid down by the Supreme Court, the matter was required to be remitted for re-adjudication, with opportunity to the assessee to establish discharge of the statutory burden. The Court therefore declined to answer the framed questions of law at that stage. [Paras 8]

The reassessment order and the revisional order were set aside to the limited extent indicated, and the matter was remanded to the Assessing Authority for fresh consideration of the input tax credit claim in accordance with the Supreme Court decision.

Final Conclusion: The appeal was allowed in part. Since the claim for input tax credit had not been examined by any of the authorities in accordance with the legal standard governing discharge of burden under Section 70, the relevant orders were set aside and the matter was remanded to the Assessing Authority for fresh adjudication.