TMI Tax Updates e-Newsletter
Apr 20,2026

Cross empowerment of GST officers - Detention of goods in transit - False declaration in e-way bill - Delivery challan signed by unauthorised person

Cross empowerment of GST officers - Jurisdiction over goods in transit - Transport corridor defence - The State tax authorities in West Bengal had jurisdiction to intercept, inspect and detain the goods while in transit through West Bengal, notwithstanding the appellant's case that the State was merely a transport corridor and the movement was destined for Meghalaya. - HELD THAT: - The Court held that Section 4 of the IGST Act operates as a deeming provision authorising officers appointed under the State GST Act and the CGST Act to act as proper officers for the purposes of the IGST Act, subject only to any contrary notification. As no such notification was produced, the West Bengal officers were competent to act. The Court further held that, once the goods and conveyance were intercepted within West Bengal and contravention of Section 129 was found, the detaining authority could not be said to lack jurisdiction merely because the appellant asserted that the destination was outside the State. Since the accompanying documents themselves were defective, they could not conclusively establish that West Bengal was only a transit corridor. [Paras 28, 30, 32, 33, 43]

The objection to jurisdiction was rejected and the detention by the West Bengal authorities was upheld as being within their lawful authority.

False declaration in e-way bill - Delivery challan - Authorised signatory - Contravention of Section 129 - The declaration of the registered appellant as an unregistered person in the e-way bill, coupled with the delivery challan being signed by the driver who was not the appellant's authorised signatory, constituted contraventions justifying detention and penalty. - HELD THAT: - The Court found it undisputed that the appellant, though a registered person, described himself as a URP in the transport documents. It held that the plea of inadvertence did not assist the appellant, since the false declaration remained a material concealment and the question of intent was not decisive. On the delivery challan, the Court held that the driver was only an agent of the carrier and, in view of the appellant's own registration details and reply, could not be treated as the authorised signatory of the appellant. The Court also noted that where goods are transported otherwise than by way of supply, a proper delivery challan is statutorily required, and in the present case the document accompanying the goods did not satisfy the requirements of Rule 55 read with Rule 138. [Paras 34, 35, 37, 38, 43]

The Court upheld the finding of contravention and sustained the penalty imposed under Section 129.

Final Conclusion: The appeal was dismissed. The Court affirmed the order of the learned Single Judge and sustained the detention and penalty, holding that the West Bengal authorities had jurisdiction and that the transport documents contained actionable contraventions.

Principles of natural justice - failure to consider reconciliation statement - input tax credit mismatch

Principles of natural justice - reconciliation of GSTR-3B and GSTR-2A - input tax credit mismatch - The adjudication order on alleged ineligible input tax credit arising from mismatch in returns was vitiated by non-consideration of the reconciliation furnished by the petitioner and by absence of an effective opportunity to explain the discrepancy. - HELD THAT: - The Court noted that though the reply to the show cause notice was adverted to in the impugned order, the authority simultaneously recorded that no reconciliation statement or documents had been submitted for the differential ITC. Since the petitioner had specifically relied on Annexure-1 to its reply as the reconciliation addressing the mismatch between GSTR-3B and GSTR-2A, and the dispute was factual in nature, the authority was required to re-examine that material and afford the petitioner an opportunity to demonstrate the reconciliation. On that basis, the order could not be sustained without such consideration. [Paras 7, 8, 9, 10, 11]

The impugned order was set aside and the matter was remitted for fresh consideration after examining the reply with Annexure-1 and granting an opportunity to the petitioner; all contentions were kept open.

Final Conclusion: The writ petition was disposed of by setting aside the adjudication order on the ground of non-consideration of the petitioner's reconciliation material and directing fresh consideration after giving an opportunity to explain the ITC mismatch.

Bail in GST offences - commission of offences punishable U/Ss. 132(1)(b)/132(1)(i)/132(1)(f)/132(5) of the CGST Act, 2017 - allegation of assisting the co-accused for fraudulently availing Rs. 258 Crores of Input Tax Credit - offences are triable by Magistrate and the maximum punishment prescribed

HELD THAT: - The Court noted that the offences alleged under section 132 of the CGST Act were not punishable beyond seven years, that the maximum punishment prescribed was five years, and that the case was triable by a Magistrate. It further took into account that the petitioner had remained in custody since 17.10.2025, the prosecution report had already been filed, and that she was a woman working as a Data Entry Operator in the office of the principal accused against whom the main allegation was directed.

On these considerations, and in view of Satender Kumar Antil Vrs. Central Bureau of Investigation [2022 (8) TMI 152 - SUPREME COURT] bail was granted without expressing any opinion on the merits. [Paras 5, 6]

Final Conclusion: The bail application was allowed. Having regard to the nature of the offences, their triability by a Magistrate, the period of custody, filing of the prosecution report, and the petitioner's status as a woman employee of the principal accused, the Court directed her release on bail subject to conditions.

Composite supply of services and goods - Supply of goods and services in the process of selling Solar Panels or Installing Solar Power Generating Systems - explanation added to Sl. No. 234 of Notification No. 1/2017-Central Tax (Rate) -Retrospective operation of explanatory notification -

Retrospective operation of explanatory notification - Optional application under circular - HELD THAT: - The Court held that Circular No. 163/19/2021-GST only indicated that the benefit of the explanation could be extended prior to 01.01.2019 at the option of the taxpayer. It did not confer an absolute retrospective operation on the explanation. The assessment proceeded on the erroneous premise that the circular itself required retrospective application of the explanation to the petitioner's supplies, and that approach was found to be incorrect. [Paras 12, 13]

The assessment could not be sustained insofar as it treated the explanation as retrospectively applicable to the petitioner's turnover as a matter of compulsion.

Composite supply - Works contract resulting in immovable property - Failure to determine nature of supply - HELD THAT: - The Court found that the assessment order did not address the foundational question whether the supplies made by the petitioner culminated in an immovable property attracting the works contract rate, or whether they constituted installation of movable goods so as to attract treatment applicable to composite supply u/s 8 read with Sl. No. 234 of Notification No. 1 of 2017. The authority had also failed to determine what part of the turnover related to the period prior to 01.01.2019. Since these matters were essential to the levy, the assessment required reconsideration on a fresh examination. The Court expressly left open the question whether the explanation inserted by Notification No. 24/2018 is ultra vires Section 8 of the GST Act. [Paras 13, 14]

The assessment order was set aside and the matter was remanded for fresh assessment after determining the true nature of the supplies and the turnover pertaining to the period before 01.01.2019.

Final Conclusion: The assessment order was set aside and the matter remanded for fresh consideration. The Court held that the circular did not mandate retrospective application of the explanation from a period prior to 01.01.2019, and directed the assessing authority to first determine the true character of the petitioner's supplies and the relevant turnover.

Cross-empowerment under GST - Intelligence-based enforcement jurisdiction - Disputed classification in writ jurisdiction - Statutory appellate remedy against invocation of Section 74

Cross-empowerment under GST - Intelligence-based enforcement jurisdiction - The State tax authorities were competent to initiate enforcement action and pass the impugned assessment orders though the appellant was under the administrative control of the Central GST authorities. - HELD THAT: - The Court accepted the position that, under the GST regime, intelligence-based enforcement action may be initiated by either the Central or the State tax administration notwithstanding assignment of the taxpayer to the other administration. Applying the principle noticed from Armour Security (India) Ltd. v. Commissioner, CST, Delhi East Commissionerate and another, [2025 (8) TMI 991 - SUPREME COURT] it held that initiation of action by the State authorities did not suffer from lack of jurisdiction merely because the appellant was registered under the Central authorities. [Paras 8]

The jurisdictional challenge to the State authorities' initiation of enforcement action was rejected.

Disputed classification in writ jurisdiction - Statutory appellate remedy against invocation of Section 74 - The challenge relating to classification and to the conclusion of suppression for invoking Section 74 was not liable to be adjudicated in writ proceedings and had to be pursued before the statutory appellate authority. - HELD THAT: - The Court held that the classification dispute involved disputed questions of fact and therefore could not be examined in writ jurisdiction. It further held that where the assessing authority had reached a conclusion on suppression so as to invoke Section 74, any grievance that such conclusion was erroneous or that the reply had not been properly considered had to be raised in appeal under Section 107. On that basis, the writ court was right in relegating the appellant to the appellate remedy while leaving it open to raise all grounds, including jurisdiction, before the appellate authority. [Paras 8, 10]

The direction to avail the statutory appeal was upheld, and the challenge on merits to classification and invocation of Section 74 was left to be agitated before the appellate authority.

Final Conclusion: The writ appeals were dismissed. The Court upheld the writ court's view that the State authorities had jurisdiction to initiate enforcement action and that the appellant must pursue its objections on classification, suppression, and invocation of Section 74 before the statutory appellate authority.

Conflicting precedent - Conversion of non-bailable warrant into bailable warrant - Reference to Larger Bench

Conflicting precedent - Conversion of non-bailable warrant into bailable warrant - Fact-specific orders - The reference on the premise of conflicting decisions regarding conversion of non-bailable warrants into bailable warrants did not call for an answer. - HELD THAT: - The Court examined the three Single Bench decisions referred in the order of reference and held that none of them had decided any legal proposition that an accused in an economic or heinous offence could claim, as a matter of right, conversion of a non-bailable warrant into a bailable warrant under the relevant provisions. In Girdhar Gopal Bajoria, the issue was only the validity of issuing non-bailable warrants and refusal of interim stay on the facts of that case. In Shyam Sunder Singhvi and Ors. Vs. Union of India and Ors., the rejection of conversion was upheld on the facts considered by the court below. In PC Purohit Vs. Union of India, conversion was granted by exercising inherent jurisdiction on the overall facts and circumstances. Since these orders were rendered on their own facts and did not settle any principle on a claimed right of conversion, there was no conflict in ratio requiring resolution by a Larger Bench.

The reference was left unanswered, and the learned Single Judge was directed to decide the matter on its own merits.

Final Conclusion: The Larger Bench held that the order of reference proceeded on an incorrect assumption of conflict between earlier Single Bench decisions. As no binding legal principle on a matter-of-right conversion of non-bailable warrants had been laid down in those cases, the reference required no answer and the matter was left for decision on merits by the learned Single Judge.

Opportunity of hearing in appellate proceedings - Principles of natural justice - Alternative remedy and vires challenge - appellate order rejecting the appeal as time-barred without granting an opportunity of hearing

HELD THAT: - The Court found that the writ petition, as framed, included a challenge to the appellate rejection in Form APL-02 on the ground of violation of statutory appellate requirements and principles of natural justice.

On instructions, it was stated that no opportunity of hearing had been granted because the appeal was treated as time-barred. The Court held that, in the circumstances, the appellate order could not stand and the matter required fresh consideration by the appellate authority after hearing the petitioner. [Paras 6, 7]

The impugned appellate order was set aside and the appeal was remitted for fresh decision in accordance with law after granting an opportunity of hearing to the petitioner.

Alternative remedy and vires challenge of Section 16(2)(c) and Section 16(2)(aa) - HELD THAT: - The Court noted that the petitioner had not approached it at the stage of show cause notice or immediately after the order-in-original to assail the validity of those provisions, and that the immediate grievance before the Court was against rejection of the statutory appeal. It therefore held that the question of vires could be raised later, if the petitioner remained aggrieved after exhaustion of the appellate remedy. [Paras 6, 7]

The vires issue was left open to be raised in appropriate writ proceedings after the appellate remedy is exhausted, if the petitioner remains aggrieved.

Stay during remanded appeal - Statutory pre-deposit - HELD THAT: - Upon recording the submission that the statutory pre-deposit had already been made and that bank attachment had not been revoked, the Court directed that, during pendency of the appeal on remand, the order-in-original should remain stayed if the petitioner had already paid the pre-deposit. This was consequential protection to preserve the efficacy of the remanded appellate remedy. [Paras 8]

The order-in-original was directed to remain stayed during the pendency of the remanded appeal, subject to the petitioner having already made the statutory pre-deposit.

Final Conclusion: The writ petition was disposed of by setting aside the appellate rejection order and remitting the appeal for fresh consideration after hearing the petitioner. The challenge to the vires of Section 16(2)(c) and Section 16(2)(aa) was left open, and interim protection against the order-in-original was continued during the remanded appeal subject to pre-deposit.

Service of show cause notice - Cancellation of registration - Consideration of condonation grounds - Non-speaking order

Service of show cause notice - Cancellation of registration - Non-speaking order - The cancellation of GST registration could not be sustained where the order did not disclose the date, manner or mode of service of the show cause notice and proceeded ex parte on the assumption of service. - HELD THAT: - The Court found that the cancellation order merely recorded non-submission of reply and repeated the statutory ground for cancellation, but did not state when or how the show cause notice was served upon the writ petitioner. Since service of the notice itself was disputed, the authority was required to specifically recite the mode, manner and date of service before proceeding ex parte. In the absence of such disclosure, the order in original was held to be not in conformity with law. [Paras 15, 16, 17]

The order cancelling registration was set aside and the matter was remitted to the proper officer for fresh decision after response to the existing show cause notice and grant of hearing.

Consideration of condonation grounds - Appellate order - The appellate order rejecting the appeal was unsustainable because the specific grounds taken in the memorandum of appeal for condonation of delay were not considered. - HELD THAT: - The Court held that once a specific ground for condonation of delay is taken in the appeal memo, the appellate authority is bound to consider that ground and deal with it one way or the other. The appellate authority instead proceeded on a different assumption regarding the explanation tendered at the hearing, without examining the grounds pleaded in the appeal itself. Such non-consideration vitiated the appellate order. [Paras 16, 17]

The order rejecting the appeal was set aside.

Final Conclusion: The writ petition was allowed in part by setting aside both the cancellation order and the appellate order. The matter was remitted to the proper officer to decide the show cause proceedings afresh after receiving the petitioner's reply and affording hearing.

Statutory appeal and pre-deposit - Composite demand notice - Obstruction to appellate remedy

Statutory appeal and pre-deposit - Composite demand notice - Obstruction to appellate remedy - Bifurcation of the demand arising from a single adjudication order into two DRC-07 notices could not be allowed to compel the assessee to file two appeals and make an additional pre-deposit with respect to penalty. - HELD THAT: - The Court held that where a single adjudication order creates demand of tax and penalty, the statutory scheme contemplates one appeal on deposit of 10% of the disputed tax demand, without any obligation at that stage to deposit any amount towards the penalty demand. The adjudicating authority's act of issuing two separate DRC-07 notices for liabilities arising from the same order was found prima facie inexplicable because it created an artificial obstacle to the petitioner's appellate remedy. Accepting the statement made on behalf of the revenue, the Court permitted withdrawal of the two demand notices and issuance of a fresh composite DRC-07, and clarified that limitation for filing appeal would run from service of the fresh notice. [Paras 5, 6, 7]

The petitioner was permitted to file a single statutory appeal against the adjudication order on deposit of 10% of the disputed tax demand alone, the earlier two DRC-07 notices were to be withdrawn and replaced by a fresh composite DRC-07, and no further recovery was to be made during pendency of the appeal subject to such compliance.

Final Conclusion: The writ petition was disposed of by holding that liabilities arising from the single adjudication order could not be split through separate DRC-07 notices so as to burden the petitioner with multiple appeals and additional pre-deposit. The petitioner was allowed to pursue the statutory appeal on the prescribed deposit relatable only to the disputed tax demand, with protection against further recovery during pendency of the appeal.

Principles of natural justice - Failure to consider condonation grounds

Principles of natural justice - Opportunity of hearing - The assessment order could not be sustained where the date fixed for personal hearing preceded the last date for filing reply to the show cause notice. - HELD THAT: - The Court found from the record that while the order recited issuance of notice requiring appearance on 17.10.2023, the material on record showed the date of hearing as 4.12.2023, which was treated by the Court as a date anterior to the last date for submission of reply. On that basis, the Court held that the authority could not validly fix a hearing prior to the last date available for filing reply, and the impugned order was therefore not in accordance with law.

The original order under Section 73 was quashed and the matter was remitted to the original authority for fresh hearing and fresh decision.

Condonation of delay - Reasoned appellate order - The appellate order rejecting the appeal was invalid for failure to consider the specific ground raised for condonation of delay. - HELD THAT: - The Court noted that the memorandum of appeal specifically pleaded that the original order had not been served upon the petitioner and that the appeal was filed as soon as knowledge was obtained. The appellate authority rejected the appeal without adverting to that ground or giving reasons on the request for condonation. The Court held that even if the authority was ultimately to reject the appeal, it was required to consider the ground raised and record reasons one way or the other.

The appellate order was quashed for non-consideration of the condonation ground.

Final Conclusion: The writ petition was allowed to the extent that both the original order and the appellate order were set aside. The original authority was directed to grant hearing afresh and pass a fresh order within the time fixed by the Court.

Alternative statutory remedy - Writ jurisdiction in tax matters

Alternative statutory remedy - Ex parte assessment - Interference under writ jurisdiction against the impugned demand order and show cause notice was declined in view of the appellate remedy available under the U.P. Goods and Services Tax Act. - HELD THAT: - The Court found that the statute provides an effective remedy of appeal under Section 107. It also noted that the petitioner did not assert absence of communication on the registered email, and the grievance was essentially against the ex parte proceedings. Applying the rule that, in tax matters, a party should ordinarily be relegated to the statutory remedy where such mechanism exists, the Court declined to entertain the writ petition. [Paras 5, 6, 7]

The petitioner was relegated to the appellate remedy and the writ petition was dismissed.

Final Conclusion: The Court declined to exercise writ jurisdiction against the impugned tax proceedings, holding that the petitioner had an effective alternative remedy of appeal under the statute. The writ petition was accordingly dismissed.

Pecuniary jurisdiction - Adjudication by incompetent authority - Digital signature as evidence of decision-making authority

Pecuniary jurisdiction - Adjudication by incompetent authority - Digital signature as evidence of decision-making authority - The adjudication order was invalid because it had been passed and digitally signed by the Commercial Tax Officer, though jurisdiction to pass such order lay with the Deputy Commissioner. - HELD THAT: - The Court found no denial of the fact that the impugned order bore the digital signature of the Commercial Tax Officer. It held that the digital signature constituted the primary evidence of the authority that had passed the order. Therefore, the State's explanation that the order had in fact been passed by the Deputy Commissioner but uploaded through the Commercial Tax Officer's dashboard was rejected. Since the competent authority was the Deputy Commissioner, the order stood vitiated for want of jurisdiction. At the same time, the Court declined to accept the petitioner's objection that limitation to pass the order should not stand extended, holding that the show cause notice had been issued by the competent authority and the petitioner had participated in the proceedings, and that a procedural error at the stage of passing the order could not entitle the assessee to avoid adjudication altogether. [Paras 5, 6, 7, 8, 9]

The impugned order was set aside and the matter was remitted to the Deputy Commissioner to pass a fresh reasoned order after affording opportunity of hearing and considering the petitioner's objections.

Final Conclusion: The writ petition was disposed of by setting aside the adjudication order for lack of jurisdiction and remitting the matter to the competent authority for fresh adjudication in accordance with law.

Service of notice after cancellation of GST registration - Principles of natural justice

Service of notice after cancellation of GST registration - Principles of natural justice - An order passed under Section 73 after cancellation of registration could not be sustained where no show cause notice was served except by alleged uploading on the GST portal. - HELD THAT: - The Court held that once the petitioner's registration had already been cancelled, the petitioner was not obliged to keep checking the GST portal. In such a situation, service of a show cause notice had to be effected through alternative means. Since no valid notice was shown to have been served and the order was nevertheless passed, there was a clear violation of natural justice. [Paras 4, 5, 6]

The impugned order and consequential recovery certificate were quashed, with liberty to the Department to issue a proper notice and proceed in accordance with law.

Final Conclusion: The writ petition was allowed to the extent that the assessment order and consequential recovery certificate were set aside for breach of natural justice arising from improper service of notice after cancellation of registration. Liberty was reserved to the Department to issue a proper notice and proceed afresh in accordance with law.

Service of adjudication notice after cancellation of registration - Principles of natural justice - Physical service of notice - Cancellation of registration- Breach of Natural justice - Statutory opportunity of hearing - Adjudication made after cancellation of registration

HELD THAT: - The Court held that where the taxpayer's registration already stood cancelled, adjudication proceedings could validly continue only upon physical service of notice. After cancellation, the registered person is disabled from operating the Common Portal and cannot be expected to keep checking it; therefore, service only by electronic upload was inadequate. In the absence of physical service of the show cause notice, there was substantial violation of the principles of natural justice, which may have prevented the petitioner from filing objections or reply. The Court further noted that the right of hearing is statutorily protected and, on that ground, found no reason to keep the writ petition pending for exchange of affidavits. [Paras 2, 3, 4, 5]

The adjudication order was set aside for breach of natural justice, and the matter was remitted for fresh adjudication after issuance of physical notice along with relied upon documents and grant of due opportunity to reply and be heard.

Final Conclusion: The Court set aside the impugned adjudication order on the ground that, after cancellation of registration, service of the show cause notice only through the Common Portal resulted in denial of effective opportunity of reply and hearing. The matter was remitted for fresh adjudication after physical service of notice and relied upon documents.

Summary order. The Court noted that the respondents had not addressed the petitioner's grievance regarding alleged coercive deposit in the light of Clause 5 of the Circular dated 25/5/2022 and the view noticed from the Delhi High Court decision, granted further time to the revenue to file a reply on that aspect, and directed the matter to stand over.

Depreciation claim on leased assets where the assessee is the owner but the lessee uses the asset - ownership and use for purposes of business u/s 32 - application of Supreme Court decision in I.C.D.S. Ltd. to leasing business - interest under Section 220(2) chargeable only up to the original assessment order passed u/s 143(3) - As decided by HC [2024 (8) TMI 1026 - BOMBAY HIGH COURT] Tribunal's allowance of depreciation on leased assets (for the stated assessment years) applying I.C.D.S. Ltd. is upheld, and the consequential deletion of interest under Section 220(2) is sustained.

Special Leave Petition has been filed after delay of 501 days

HELD THAT:- The petitioner before this Court is the Income Tax Department. There is hardly any explanation for justifying such a huge delay in filing a petition.

Even otherwise, a perusal of the impugned order passed by the High Court shows that a bunch of appeals were decided vide a common order and only one has been listed before this Court. There is nothing mentioned about the other cases.

The application for condonation of delay of 501 days was dismissed for want of satisfactory explanation, and the Special Leave Petition was consequently dismissed with costs.

Condonation of delay - Sufficient cause - delay of 2913 days in preferring the appeal under Section 253 - contention of appellant that the Tribunal failed to appreciate the fact that there was no effective service of notice issued by the Commissioner of Income Tax (Appeals) before dismissing the appeal.

HELD THAT: - The Court found that, in the appeal filed before the Commissioner of Income Tax (Appeals), the address furnished for service of notice and other intimations was that of the consultant who had filed the appeal on behalf of the appellant, but notices were instead issued to the appellant's address. The appellant had stated on affidavit that he had shifted from that address and therefore the notices could not be served on him. Since there was no representation when the first appeal was decided and the order was passed on merits affirming the assessment, the Court held that, despite the inordinate delay, refusal to condone it would leave the appellant remediless. The explanation was therefore accepted in the peculiar facts, subject to payment of heavy costs, and the appeal before the Tribunal was directed to be restored and decided on merits. [Paras 13, 14, 15]

The delay was condoned subject to deposit of costs, the appeal before the Tribunal was restored to its original number, and the Tribunal was directed to decide it on merits.

Final Conclusion: The appeal was allowed. The High Court directed condonation of the delay in filing the appeal before the Tribunal, subject to payment of costs, and ordered restoration of the appeal for decision on merits.

Restoration of appeal withdrawn under Vivad Se Vishwas Scheme - Default under settlement scheme - miscellaneous application u/s 254(2) - Tribunal rejecting the application for restoration of the assessee's appeal after the earlier withdrawal on account of opting for the Vivad Se Vishwas Scheme but the settlement had not been carried through - HELD THAT: - The Court held that the earlier dismissal by the Tribunal was only on withdrawal after the assessee opted for the Vivad Se Vishwas Scheme and was not an adjudication on merits. Since the dispute in the appeal remained undecided on merits and the assessee had already made substantial payment under the scheme, the restoration request ought to have been allowed. The Court also accepted that revival of the appeal was necessary so that the appeal could be decided in accordance with law and, if so advised, the assessee could again seek settlement under the prevailing scheme, for which pendency of the appeal was necessary. [Paras 8, 9]

The miscellaneous application ought to have been allowed; the impugned order was set aside and the appeal was restored for decision on merits.

Final Conclusion: The appeal was allowed. The order rejecting restoration was set aside, and the assessee's appeal before the Tribunal was revived for disposal on merits in accordance with law.

Reassessment jurisdiction under faceless scheme - Jurisdiction of Jurisdictional Assessing Officer - Notices u/s 148A and 148

HELD THAT: - The Court found, on the undisputed factual position, that in all the writ petitions the impugned proceedings had been initiated by the Jurisdictional Assessing Officer after 29.03.2022, when the Faceless Scheme had come into force. It held that the question of competence of the Jurisdictional Assessing Officer to initiate such proceedings stood concluded by the earlier decision of this Court in Kankanala Ravindra Reddy [2023 (9) TMI 951 - TELANGANA HIGH COURT] and by the consistent view taken in other High Courts.

Following the coordinate Bench order and the ratio adopted therein, the Court treated the impugned initiation as suffering from a jurisdictional defect; consequently, the notices under Sections 148A and 148 and all consequential orders were liable to be set aside. [Paras 12, 13, 14, 15]

The impugned proceedings under Sections 148A and 148, and the consequential orders, were set aside for want of jurisdiction, with liberty to the Revenue reserved on the same terms as in the earlier coordinate Bench order.

Final Conclusion: The writ petitions were disposed of by setting aside the reassessment proceedings initiated under Sections 148A and 148, as well as the consequential orders, on the ground that they had been initiated by the Jurisdictional Assessing Officer after the faceless scheme came into force. The Revenue was left at liberty in the same terms as reserved in the earlier coordinate Bench order, subject to the outcome of the pending proceedings before the Supreme Court.

Addition u/s 68 - cash deposits during demonetization - disclosed cash sales - unsecured loans - creditworthiness and genuineness not proved - no fresh credit during the year - interest on borrowed capital - double addition -

Cash deposits during demonetisation - disclosed cash sales -HELD THAT: - The Tribunal found it undisputed that the assessee's purchases were not doubted, total sales including cash sales were accepted, sufficient stock existed to support those sales, corresponding stock reduction was recorded, the cash book was produced, and no negative cash balance was found. The cash sales were already credited in the profit and loss account and included in the returned income, and the books of account had not been rejected. In these circumstances, the source of the cash deposits stood explained from the regular books themselves, and any separate addition for the same receipts would result in double addition. [Paras 5, 6]

The addition made on account of cash deposits by treating the recorded cash sales as income from undisclosed sources was deleted.

Unsecured loans - creditworthiness and genuineness - repayment of deposit - interest on borrowed capital - HELD THAT: - The Tribunal held that the amount of Rs. 26 crores received back from Gogia Leasing Ltd was not a fresh unsecured loan but repayment of a short-term deposit earlier given by the assessee through banking channels from disclosed sources, and therefore could not be treated as unexplained cash credit. As regards the remaining loan transactions, the lender was a registered NBFC, had an existing running account with the assessee, had advanced and received monies in the ordinary course through bank channels, was assessed to tax, and had disclosed the interest income. The financial statements showed sufficient shareholders' funds to support the advance. On these facts, the assessee had proved identity, genuineness and creditworthiness, and there was no finding that the borrowed funds were diverted for non-business purposes; hence the related interest was also allowable. [Paras 13, 14]

No part of the amount received from Gogia Leasing Ltd was liable to be added under Section 68, and the disallowance of interest on such borrowing was deleted.

No fresh credit during the year - addition u/s 68 - interest on borrowed capital - HELD THAT: - On examination of the confirmations, returns, statements and ledger accounts of the other lenders, the Tribunal found that the balances represented existing loans and that only interest was credited during the year. Since no fresh sum of money was found credited in the books in the relevant previous year, the foundational requirement for invoking Section 68 was absent. Once the principal amounts were not liable to be treated as unexplained cash credits, the consequential disallowance of interest on those existing loans also could not survive. [Paras 16, 17, 18, 19, 20]

The additions relating to the five existing loan accounts and the corresponding interest disallowance were deleted.

Final Conclusion: The Tribunal allowed both appeals. For AY 2017-18, the cash deposit addition based on recorded cash sales was deleted, and for AY 2018-19, the addition on account of unsecured loans and the related interest disallowance were also deleted.

Levy of penalty u/s 271(1)(c) - Penalty for furnishing inaccurate particulars - Wrong claim vis-a-vis concealment of income -Disallowance of expenditure claim - HELD THAT: - The Tribunal held that penalty u/s 271(1)(c) can arise only where the particulars furnished in the return are inaccurate. It found that the expenditure in question had been disclosed by the assessee, reflected in the books, and examined by the AO during assessment; there was no finding that the claim was bogus or that any detail furnished in the return was false.

A disallowance made in assessment, by itself, was therefore not a sufficient basis to levy penalty, since a mere unsustainable claim does not amount to furnishing inaccurate particulars or concealment of income. [Paras 6, 7, 8, 10]

The penalty was held to be not leviable and was quashed.

Final Conclusion: The Tribunal allowed the assessee's appeal and quashed the penalty under section 271(1)(c), holding that mere disallowance of a claim, in the absence of any false or inaccurate particulars in the return, does not justify penalty.

Revision u/s 263 - Excess stock surrendered during survey - Business income versus deemed income

HELD THAT: - The Tribunal found that the assessee had disclosed the surrendered amount in the trading and profit and loss account and in the relevant schedules and audit report. During assessment, the AO had specifically called upon the assessee to explain why the stock discrepancy should not be added u/s 69 and taxed under section 115BBE, and the assessee furnished the return, audit report, ledger account and books of account for verification.

On such material, the AO accepted the amount as business income after detailed examination and due application of mind. Since the issue had been inquired into and a view had been consciously taken, the assessment order could not be regarded as erroneous and prejudicial merely because the Principal Commissioner held a different view on tax treatment. [Paras 9, 10]

The assumption of revisional jurisdiction was held to be invalid and the order passed under section 263 was quashed.

Final Conclusion: The Tribunal held that the assessment had been completed after specific inquiry into the taxability of the excess stock found during survey and after due consideration of the material produced by the assessee. The revisional order u/s 263 was therefore quashed and the assessee's appeal was allowed.

Unexplained cash credit u/s 68 - Repayment of loan or advance - Addition based solely on statement - Consequential commission addition - Bogus purchases and fabricated sales bills -

Unexplained cash credit u/s 68 -Repayment of loan or advance - Consequential commission addition - HELD THAT: - The Tribunal found that the credit represented money earlier advanced by the assessee on different dates and returned by the debtor on 17.07.2010. The assessee had placed the relevant account material on record, and the nature of the transaction was thus established as mere return of funds already advanced. On those facts, the receipt was not a fresh unexplained credit exigible to addition u/s 68, and the further addition towards alleged commission had no independent basis. [Paras 6]

The deletion of the addition on account of unexplained investment and the consequential commission addition was upheld.

Bogus purchases and fabricated sales bills - Addition based solely on statement - Absence of supporting material - HELD THAT: - The Tribunal noted that the assessee was engaged in export of auto parts and that the receipts were supported by documentary material such as ledger accounts, invoices, shipping bills and foreign exchange realisation certificates. It further found that there was no evidence on record to show that the assessee had ever engaged in garment trading during the year under appeal. Since the Assessing Officer's addition rested only on the statement of the director and not on any material connecting the impugned year with the alleged garment transactions, the addition was held to be factually unsupported. [Paras 10]

The deletion of the addition on account of alleged bogus purchases and fabricated bills was confirmed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal. It upheld the deletion of both additions, holding that one credit was merely repayment of an earlier advance and that the other addition lacked supporting material for the relevant assessment year.

Penalty u/s 270A - immunity from penalty - application in Form No. 68 u/s 270AA(2) not disposed or considered - A.Y 2017-18 - HELD THAT:- The Tribunal found that the assessee had filed Form No. 68 seeking immunity and the Revenue did not place any material to show that the application had been decided. It held that the penalty order could not stand without first considering that application. AO was therefore directed to decide the immunity application in accordance with law; if immunity is accepted, no penalty order would be required, and if it is rejected, penalty proceedings may be initiated afresh. [Paras 4]

The penalty order and the appellate order were set aside, with liberty to the Assessing Officer to proceed afresh only after disposing of the immunity application.

Immunity u/s 270AA(4) - A.Y 2018-19 - Considering the fact that Assessee has already been granted with immunity under Section 270AA(4) of the Act, the subsequent order of penalty cannot be sustained in the eyes of law. Accordingly, impugned order of penalty and the order of the Ld. CIT(A) for the year under consideration are hereby set aside.

Final Conclusion: For A.Y 2017-18, the matter was restored for prior consideration of the assessee's immunity application, with liberty to initiate penalty afresh only if immunity is rejected. For A.Y 2018-19, the penalty was set aside outright since immunity had already been granted.

Reassessment on incorrect factual foundation - Inapplicability of deemed escapement provision - Addition based on alleged accommodation entries

Reassessment on incorrect factual foundation - Inapplicability of deemed escapement provision - no return of income had been filed - HELD THAT: - The Tribunal found that the recorded reasons proceeded on a factually incorrect basis by stating that the assessee had not filed any return, whereas the return had in fact been filed and processed under section 143(1). On that incorrect premise, the Assessing Officer invoked clause (a) of Explanation 2 to section 147, which applies only where no return has been furnished. The Tribunal further held that information regarding cash deposits during demonetisation in the accounts of another person could not, without concrete material, justify treating the assessee's much earlier banking transactions of the relevant year as bogus. Since the reopening rested on wrong facts and lacked corroborative material linking the impugned receipts to any escapement of income, the reassessment was liable to be quashed. [Paras 7]

The reassessment was quashed.

Addition based on alleged accommodation entries - Recorded sales already offered to tax - addition on account of RTGS receipts and estimated commission - HELD THAT: - On merits, the Tribunal noted that the impugned receipts were against sales made by the assessee in the ordinary course of business, supported by sales invoices, stock records and receipt through banking channels, and the corresponding turnover had already been credited in the profit and loss account. In the absence of any evidence showing that these transactions were sham, the allegation that the receipts were accommodation entries remained unsubstantiated. The addition, including the estimated commission, therefore lacked evidentiary foundation. [Paras 7]

The entire addition was deleted.

Final Conclusion: The appeal was allowed. The Tribunal held that the reassessment itself was unsustainable and, independently, that the addition could not survive on merits as the impugned receipts were recorded sales already offered to tax.

Denial of foreign tax credit u/s 90/90A - Verification of foreign tax paid - assessee could not furnish its return of income filed in the USA for the Calendar Year 2023.

HELD THAT:- The Tribunal noted that the assessee had already furnished the USA return for Calendar Year 2022 covering the period from 01/04/2022 to 31/12/2022, and the appellate authority had rightly directed verification for that period and grant of proportionate relief. Since it was submitted before the Tribunal that the USA return for Calendar Year 2023 had also been filed and the details of foreign income and tax paid for the balance period from 01/01/2023 to 31/03/2023 were now available, the entire claim for the financial year 2022-23 became capable of verification.

In these circumstances, the issue was restored to the AO for de novo adjudication after verifying the foreign income and tax paid for the whole year from the USA returns for Calendar Years 2022 and 2023, and to grant relief as per law. [Paras 7, 9]

Final Conclusion: The Tribunal restored the foreign tax credit claim to the Assessing Officer for fresh verification on the basis of the USA tax returns for Calendar Years 2022 and 2023 and directed that relief be granted as per law. The appeal was allowed for statistical purposes.

Penalty u/s 271(1)(c) - Debatable issue - bonafied claim -Admission of substantial question of law - Inaccurate particulars of income - Levy of penalty on disallowance of the claim for proportionate amortisation of lease premium - HELD THAT: - The Tribunal held that the sole basis of the penalty was a claim whose allowability had already been admitted by the jurisdictional High Court in the assessee's own case, which showed that the issue was debatable and the claim was bona fide.

It applied the principle noticed in PCIT v/s Harsh International (P.) Ltd. [2020 (12) TMI 1082 - DELHI HIGH COURT] and CIT v/s Nayan Builders and Developers [2014 (7) TMI 1150 - BOMBAY HIGH COURT] that once a substantial question of law is admitted in quantum proceedings, penalty cannot survive on the same issue.

Tribunal also relied on CIT v/s Reliance Petroproducts (P) Ltd. [2010 (3) TMI 80 - SUPREME COURT] to reiterate that mere making of an unsustainable claim does not by itself amount to furnishing inaccurate particulars, in the absence of any finding that the particulars furnished were false or erroneous. [Paras 9, 11, 12, 13, 14]

The penalty levied under section 271(1)(c) for both assessment years was quashed.

Final Conclusion: The Tribunal allowed both appeals and held that penalty under section 271(1)(c) could not be sustained on a claim arising from a debatable issue already admitted by the jurisdictional High Court as a substantial question of law. Penalty set aside.

Separate undertakings for deduction u/s 10A - Export turnover and total turnover parity - Set off of losses of eligible units - Depreciation on computer peripherals - Rule 8D prospective operation - Onsite software development through foreign branches - ESOP discount as business expenditure - Foreign tax credit on section 10A income - Business profits of eligible undertaking - Foreign exchange forward cover loss

Separate undertakingu/s 10A -STPI licence and undertaking identity - Units operating under 13 STPI licences - HELD THAT: - The Tribunal held that on the same material facts already considered in the assessee's own case for the immediately preceding year, the earlier order of the Tribunal, as affirmed by the Delhi High Court [2015 (4) TMI 841 - DELHI HIGH COURT], remained binding. As no new document or distinct factual material was produced for the year under appeal, the claim that the units were separate undertakings could not be reopened merely because leave had been granted by the Supreme Court in the earlier year. The deduction was therefore to be computed by treating the undertakings in the manner accepted in the earlier year. [Paras 5]

The disallowance of the enhanced section 10A claim based on treating 31 units as separate undertakings was upheld for both assessment years.

Export turnover and total turnover parity - Technical services outside India - Link charges - Expenditure reduced from export turnover in computing deduction u/s 10A excluded only from export turnover - HELD THAT: - Following the earlier orders in the assessee's own case [2014 (10) TMI 356 - ITAT DELHI], the Tribunal accepted that the issue stood covered in favour of the assessee. It directed the Assessing Officer to grant relief in line with those orders, including the treatment of foreign currency expenditure and link charges, though the actual benefit was made consequential to the assessee succeeding on the main section 10A undertaking issue in further proceedings. [Paras 6]

The claim was allowed in principle for both years, with consequential relief to be given in accordance with the earlier orders and subject to the result of further appeal on the main section 10A issue.

Set off of losses of eligible units - Section 10A as deduction provision - HELD THAT: - The Tribunal held that after the post-2001 amendment, section 10A operates as a deduction provision and not as an exemption provision. Consequently, losses of eligible units could not be ignored at source and were available for aggregation and set off in accordance with the Act. The Tribunal relied on the Supreme Court decision in Yokogawa India Ltd [2016 (12) TMI 881 - SUPREME COURT], Hindustan Unilever Ltd. [2010 (4) TMI 206 - BOMBAY HIGH COURT], Yokogawa India Ltd [2011 (8) TMI 845 - KARNATAKA HIGH COURT], and the CBDT Circular clarifying aggregation and carry forward. [Paras 7]

The Assessing Officer was directed to allow set off of the losses of section 10A units against other taxable income after verification, for both assessment years.

Depreciation on computer peripherals - Integral part of computer system - disallowance of depreciation on certain networking equipment / peripherals forming part of the “Computer System” and allowing the deprecation on the said items @ 25% by holding the same to be in the nature of “Plant & Machinery”- HELD THAT: - Relying on the Delhi High Court decision in CIT vs. BSES Rajdhani Power Limited. [2010 (8) TMI 58 - DELHI HIGH COURT] the Tribunal held that peripherals and accessories that form an integral part of the computer system are to be treated as computers for depreciation purposes. The lower authorities' view that they were merely plant and machinery was therefore not sustainable. Assessee is entitled for depreciation of computer / integral equipment @ 60% as against 25% allowed by the AO. [Paras 8]

Depreciation at the higher rate claimed on computer and integral equipment was directed to be allowed for both years.

Section 14A disallowance - Rule 8D prospective operation - HELD THAT: - Applying the Supreme Court decisions in CIT vs Essar Teleholdings Ltd. [2018 (2) TMI 115 - SUPREME COURT] and PCIT vs Reliance Natural Resources Ltd. [2022 (2) TMI 1516 - SC ORDER], the Tribunal held that Rule 8D is prospective and applicable only from assessment year 2008-09. The disallowance computed by mechanically invoking Rule 8D for the year under consideration was therefore unsustainable. [Paras 9]

The Rule 8D based disallowance was deleted for assessment year 2006-07; the same reasoning was applied mutatis mutandis for assessment year 2007-08.

Onsite software development through foreign branches - Explanation 3 to section 10A - Eligibility of profits or losses of DSL foreign branches for section 10A deduction - HELD THAT: - The Tribunal noted that in the earlier year, the issue had been decided in favour of the assessee after a factual finding that the overseas branches merely acted as conduit for onsite software development services connected with undertakings in India. Since such factual examination had to be undertaken for the present year as well, the matter required verification whether the Singapore, USA and UK branches functioned as liaison or conduit offices for onsite development services, or were engaged in independent marketing activities. [Paras 10]

The issue was remanded to the Assessing Officer for factual verification and fresh decision in light of the earlier order in the assessee's own case, for both years.

ESOP discount as business expenditure - Mercantile system of accounting - Discount on issue of ESOPs - HELD THAT: - The Tribunal, following the Special Bench decision in Biocon Ltd. [2013 (8) TMI 629 - ITAT BANGALORE] and PVR Ltd. [2022 (8) TMI 1234 - DELHI HIGH COURT] held that ESOP discount is not a notional claim but an ascertained employee cost allowable under the mercantile system over the vesting period. It further accepted the additional ground based on the principle that, at the time of exercise of options, suitable upward or downward adjustment has to be made with reference to the difference between the market price on the date of grant and on the date of exercise. Admission of the additional ground was supported by NTPC Limited. [1996 (12) TMI 7 - SUPREME COURT (LB)] and DCM Benetton India Ltd [2008 (4) TMI 740 - DELHI HIGH COURT] [Paras 11]

The ESOP claim and the additional claim for adjustment at the time of exercise were allowed subject to verification by the Assessing Officer, for both years.

Software licence fee- Nature of expenditure -Capital or revenue expenditure - HELD THAT: - The Tribunal found that while the assessee claimed the expenditure related to off-the-shelf software giving only a limited right to use, the Assessing Officer had recorded that part of the licence arrangement, including the Microsoft agreement, conferred enduring benefit for a multi-year period. Since this factual aspect had not been satisfactorily addressed, the issue could not be conclusively decided on the existing record. [Paras 12]

The issue was set aside to the Assessing Officer for de novo adjudication after giving the assessee opportunity to produce supporting material, for both years.

Foreign tax credit on section 10A income - income eligible for deduction under section 10A - HELD THAT: - The Tribunal admitted the additional ground and additional evidence, holding that the legal issue stood covered by Wipro Ltd [2015 (10) TMI 826 - KARNATAKA HIGH COURT] as followed in HCL Comnet Systems and Services Ltd. [2020 (7) TMI 169 - ITAT DELHI] and accepted in PCIT vs HCL Comnet systems and Services Ltd [2023 (11) TMI 1238 - DELHI HIGH COURT]. It held that section 10A income remains chargeable to tax though deduction is allowed, and therefore foreign tax credit could not be denied merely because the income enjoyed section 10A deduction. However, the actual grant of credit, including the enhanced claim, required verification of supporting documents, the undertakings to which the taxes related, and the attribution of taxes to the relevant year and income. [Paras 13]

The foreign tax credit claim, including the additional claim, was accepted in principle and remitted to the Assessing Officer for verification and grant in accordance with law, for both years.

Dividend distribution tax treaty rate - Dividend distribution tax on dividend paid to non-resident shareholders - HELD THAT: - The Tribunal recorded that the issue stood covered in favour of the assessee by the decision of M/s Colorcon Asia Pvt. Ltd. [2025 (12) TMI 677 - BOMBAY HIGH COURT] and the Revenue fairly accepted that position. [Paras 14]

The additional ground regarding application of treaty rate to DDT was allowed for both years.

Business profits of eligible undertaking - Interest and investment income - deduction under section 10A - Income from deployment of internal accruals of eligible undertakings in fixed deposits, mutual funds and similar instruments formed part of profits of the business of the undertaking - HELD THAT: - The Tribunal admitted the additional ground, holding that it was essentially a recomputation claim supported by later decisions. On merits, it followed the Delhi High Court in Riviera Home Furnishing [2015 (11) TMI 1139 - DELHI HIGH COURT] and Dishman Pharmaceuticals & Chemical Ltd. [2019 (10) TMI 1195 - GUJARAT HIGH COURT] which recognised that once an income forms part of the business profits of the eligible undertaking, there is no warrant to exclude it from the formula under the special deduction provisions. The Tribunal nevertheless required verification that the income in question arose from internal accruals of the eligible units. [Paras 16]

The additional ground was allowed in principle and the Assessing Officer was directed to verify the source of funds and allow the claim accordingly, for both years.

Foreign exchange forward cover loss - Hedging transaction - Speculative transaction - Loss on premature unwinding or cancellation of forward covers taken to hedge export realisations - HELD THAT: - For assessment year 2007-08, the Tribunal found that the assessee's business was overwhelmingly export oriented and that the forward covers were entered into for hedging anticipated export receivables. Following the Delhi High Court in PCIT Vs. Simon India Ltd. [2022 (12) TMI 358 - DELHI HIGH COURT] it held that such transactions were hedging transactions falling within the exception to section 43(5), and not speculative dealings. [Paras 19]

The foreign exchange loss on premature unwinding of forward covers was allowed as business loss for assessment year 2007-08.

Cessation of trading liability - Section 41(1) - Addition of old sundry creditor balances required verification of whether the liabilities had been paid or written back and offered to tax in subsequent years - HELD THAT: - For assessment year 2007-08, the Tribunal took note of the assessee's specific plea that the outstanding balances had either been subsequently paid or written back and offered to tax in later years, along with ledger material placed before it. Since that factual assertion went to the root of the addition under section 41(1), verification by the AO was necessary. [Paras 20]

The matter was restored to the AO to verify the assessee's claim and delete the addition if the assertion was found correct.

Final Conclusion: For both assessment years, the Tribunal partly allowed the appeals. The main claim to treat 31 units as separate undertakings u/s 10A was rejected, several claims including set off of eligible-unit losses, depreciation on computer peripherals, ESOP expenditure, foreign tax credit and certain additional claims were allowed in principle or outright, while issues relating to branch profits, software licence fee and old creditor balances were remitted for verification.

Bogus purchases - Estimated addition - Suppression of sales - Addition based on WhatsApp chats -

Bogus purchases - Acceptance of sales - addition applying 4% on bogus purchases/suppression of revenue/ income - CIT(A) deleted addition - HELD THAT: - The Tribunal found that the AO had merely treated the supplier as a shell concern on the basis of financial analysis and estimated income at 4% of the purchases, without bringing any independent evidence to show that the purchases were fictitious or made from the grey market. The appellate authority had recorded that the assessee had produced invoices, e-way bills, transportation documents, books of account and confirmation from the supplier, and that no defect had been pointed out in the books nor were the sales disputed. Applying the principle that when corresponding sales are accepted the related purchases cannot be disallowed on mere surmise, the Tribunal upheld the deletion of the addition. [Paras 3]

The deletion of the addition on account of alleged bogus purchases was upheld and the Revenue's appeal for AY 2019-20 was dismissed.

Suppression of sales - Seized dispatch slips - Unexecuted orders - Addition for alleged suppression of sales based on dispatch slips - difference between the dispatch slips and recorded sales - HELD THAT: - The Tribunal accepted the explanation that dispatch slips reflected orders at a stage prior to actual dispatch and that final invoices depended on stock availability, transport arrangements, agreed payment terms, GST component and deductions or discounts. It also noted that some dispatch slips related to orders that were never executed. On examining the dispatch slips, corresponding invoices and customer confirmations, the Tribunal held that the differences relied upon by the authorities below were explained. Since no material had been brought on record to show that the assessee received the alleged differential amount in cash or kind, the addition could not stand. [Paras 5]

The addition sustained on account of alleged suppression of sales was directed to be deleted.

Addition based on WhatsApp chats - Corroborative evidence - Suppressed sales - HELD THAT: - The Tribunal followed the co-ordinate Bench decision in Balmukund Sponge and Iron Private Limited [2025 (12) TMI 919 - ITAT KOLKATA] which had held that WhatsApp chats, by themselves, do not justify an addition unless supported by independent material evidencing the transactions. In the present case also, the addition originally made on the basis of the chats and partly sustained by treating the amounts as suppressed sales lacked corroborative evidence. As the facts were materially the same, the Tribunal set aside the appellate order on this issue and directed deletion of the surviving addition [Paras 6, 7]

The addition sustained on the basis of WhatsApp chats was deleted in full.

Final Conclusion: For AY 2019-20, the Tribunal affirmed deletion of the estimated addition on alleged bogus purchases. For AY 2023-24, it deleted both the addition for alleged suppression of sales and the addition sustained on the basis of WhatsApp chats.

Addition solely on the basis of an unsigned seized excel sheet found from a third party's premises - cross-examination and natural justice - dump documents - corroborative evidence for unaccounted receipts

Whether seized excel sheet was treated as a dump document? - HELD THAT: - The Tribunal held that where the impugned excel sheet was found from the premises of a third party, did not bear the assessee's signature or that of the counterparty, and even did not reflect the assessee's name, its contents could not by themselves be treated as conclusive evidence of unaccounted receipts. Since the Assessing Officer relied upon that adverse material, opportunity of cross-examination of the person connected with the seized material was mandatory, and denial of such opportunity vitiated the addition as offending principles of natural justice.

Tribunal further held that, apart from the excel sheet, no independent evidence was brought on record to show actual payment by the developer or actual receipt by the assessee, and mere comparison of entries with regular ledger transactions was insufficient to establish undisclosed income. Treating such unsigned and uncorroborated digital notings as dump documents, the Tribunal held that no arbitrary addition could be made in the absence of cogent material showing that the notings had crystallised into real transactions giving rise to taxable income. [Paras 20, 21, 22, 23, 24]

The entire addition was deleted; the Revenue's appeal was dismissed and the assessees' appeals on the merits of the addition were allowed.

Remand for fresh inquiry - valuation of project - second inning to the Assessing Officer - HELD THAT: - The Tribunal rejected the Revenue's request to restore the matter to the Assessing Officer for valuation of the building. It held that the assessee was only a contractor and not the owner of the project, and the controversy before it concerned alleged on-money receipts said to arise from the excel sheet, which had no connection with valuation of construction. The Tribunal also noted that the valuation aspect had not been raised by the Assessing Officer, the assessee, or the Commissioner (Appeals), and that the assessment had already been framed after notice and compliance. On that footing, remitting the matter would merely give the Assessing Officer a fresh opportunity to re-examine the same record, which was impermissible. [Paras 15]

The prayer for remand for valuation or fresh adjudication was rejected.

Final Conclusion: The Tribunal held that the impugned addition for alleged on-money receipts was unsustainable, since it rested solely on an unsigned third-party excel sheet without cross-examination and without independent corroboration. The Revenue's appeal was dismissed, the assessees' appeals were allowed on merits, and the request for remand for valuation or fresh inquiry was rejected.

Classification as Clearing & Forwarding Agent service - assessable value - gross remuneration or commission including payments called "reimbursements" - application of Rule 6(8) of the Service Tax Rules, 1994 - penalty u/s 78 - reduced mandatory penalty - penalty u/s 76 - set aside where penalty u/s 78 is imposed

Inordinate delay of 2626 & 2104 days in filing the present appeals against [2017 (2) TMI 1529 - CESTAT NEW DELHI] and [2015 (9) TMI 1477 - CESTAT NEW DELHI]

HELD THAT:- The appeals were dismissed on the ground of inordinate delay in filing, the applications for condonation of delay were rejected, and the Court also found no reason to interfere on merits.

Denial of Opportunity of personal hearing - Service of notice through website and e-mail - petitioner has not received the show cause notice or any of the notices of hearing

HELD THAT: - The Court noted the petitioner's grievance that neither the show cause notice nor the hearing notices had been received, the petitioner's case being that they were only uploaded on the respondents' website. Though the respondents disputed this and asserted that the communications had been sent to the e-mail ID furnished by the petitioner, they stated, by way of concession, that they were willing to grant the petitioner an opportunity of hearing. In view of that concession, the Court quashed the impugned order and remitted the matter to the adjudicating authority with a specific direction to hear the petitioner and receive its documents, while making it clear that failure to appear on the date fixed would result in revival of the impugned order. [Paras 10, 11]

The impugned order was quashed and the matter was remitted to the second respondent for personal hearing on the date fixed by the Court, subject to revival of the order if the petitioner failed to appear.

Final Conclusion: The writ petition was allowed by quashing the impugned adjudication order and remitting the matter to the second respondent for fresh hearing. The appellate rejection on limitation did not survive in view of that course being adopted.

Classification of ‘charging case without power supply’ provision for ‘hearing aid’ imported - Department classified the same as battery charger under Tariff Item 8504 40 30 which comes under Tariff Item 8504 40 namely “static converter”-Extended period of limitation - Confiscation and redemption fine

Classification of ‘charging case without power supply’ provision for ‘hearing aid’ - Tariff Item 9021 90 10 as parts and accessories of hearing aids, or under Tariff Item 8504 40 30 as a static converter or battery charger - HELD THAT: - The Tribunal held that the burden to displace the classification declared by the importer lay on the Department. On the material relied upon, including the bills of entry, sample invoice, product literature, Chartered Engineer's certificate, and physical examination of the goods, the imported item was found not to contain any battery, rechargeable power pack, or mechanism for converting electrical energy from AC to DC. The charging case merely acted as a medium between the wall plug adaptor with USB and the hearing aids, while also serving for safekeeping. Since the power adaptor and charger were shown to have been procured domestically and the imported article by itself did not perform the function of a static converter, classification under Tariff Item 8504 40 30 was rejected. Even otherwise, having regard to its sole and principal use with hearing aids, it fell under Tariff Item 9021 90 10 as part and accessory of hearing aids. [Paras 5, 6]

The classification adopted by the importer under Tariff Item 9021 90 10 was upheld and the reclassification under Tariff Item 8504 40 30 was set aside.

Extended period of limitation - Confiscation and redemption fine - Penalty - HELD THAT: - The Tribunal found that the goods had been subjected to assessment and, in some instances, examination by the proper officer, and that nothing had been concealed from the Department. In that view, the allegation of suppression for invoking the extended period of limitation was not in conformity with law. Once the Department failed on classification as well as on suppression or misdeclaration, the reasoning sustaining confiscation, redemption fine, and penalty also could not survive. [Paras 6]

The extended period was held to be wrongly invoked, and the confiscation, redemption fine, and penalty were liable to be set aside.

Final Conclusion: The Tribunal allowed the appeal, holding that the imported charging case without power supply was correctly classifiable as part and accessory of hearing aids. The impugned order demanding differential duty and sustaining extended limitation, confiscation, redemption fine, and penalty was set aside with consequential relief.

Misdeclaration of imported goods - Evidentiary value of unretracted admission - Penalty for customs evasion

Misdeclaration of imported goods - Unretracted admission - Penalty liability - Imposition of penalty on the importer for misdeclaration of the imported goods was sustainable notwithstanding the plea that the goods were wrongly shipped and were intended to be warehoused for re-export. - HELD THAT: - The Tribunal found that the appellant produced no material to dislodge the findings of the authorities below that the Bill of Entry was not shown to be an in-bond Bill of Entry for warehousing and that the alleged supplier's recall letter was also not on record. On the contrary, the appellant's own statement amounted to an admission that the goods found on examination were different from the declared goods and were counterfeit, and that statement had never been retracted. The Tribunal held that such admission was the best evidence and did not require further proof; consequently, the absence of cross-examination of other persons did not affect the case against the appellant. In the absence of supporting evidence for the appellant's explanation, the misdeclaration stood established and the Tribunal accepted the inference of mens rea to evade customs duty, thereby sustaining the penalty. [Paras 6, 7]

Penalty imposed on the appellant was upheld and the challenge to it was rejected.

Final Conclusion: The Tribunal upheld the order insofar as it imposed penalty on the appellant for misdeclaration of the imported goods. The appeal was dismissed.

Rejection of transaction value - Customs valuation of direct imports - High sea sale valuation - Redetermination of penalty on remand

Rejection of transaction value - Customs valuation of direct imports - Contemporaneous import price - The differential duty demand in respect of 36 Bills of Entry relating to direct import of HMS scrap and other re-meltable scrap could not be sustained. - HELD THAT: - The Tribunal found that, for the direct imports, the department had neither established any basis for rejecting the declared transaction value nor produced evidence of contemporaneous imports of identical or similar goods. The higher value had been adopted merely by taking the value determined for goods purchased on high sea sale basis, without supporting documentary material. Applying the principle that transaction value cannot be discarded without first forming and substantiating reasonable doubt and thereafter following the valuation rules sequentially, the Tribunal held that the re-determined value for these direct imports was unsustainable. [Paras 5]

The re-determined value and consequential differential duty demand for the 36 direct-import Bills of Entry were set aside.

High sea sale valuation - Transaction value - Documentary verification - The assessable value of HMS scrap purchased on high sea sale basis was required to be determined in accordance with the governing circular and on verification of the complete chain of documents. - HELD THAT: - For the Bills of Entry covering purchases on high sea sale basis, the Tribunal held that valuation had to be worked out in line with the guidelines requiring reliance on the actual high-sea-sale contract price, subject to the importer establishing the chain of documents such as the original invoice, high sea sale contract and details of commission or service charges. Since documentary evidence was stated to be available only for some Bills of Entry, the Tribunal held that correct assessable value and duty liability could not be finally determined without verification by the adjudicating authority. The Tribunal also noted the appellant's admission of undervaluation in respect of seven specified Bills of Entry. [Paras 5]

The demand relating to the high sea sale transactions was remanded to the adjudicating authority for fresh decision after verification of the relevant documents and after granting hearing to the appellants.

Penalty under customs law - Abetment - Consequential redetermination - The penalties imposed on the importer, its director and the co-appellants could not be allowed to stand in their existing form once the valuation dispute was partly set aside and partly remanded. - HELD THAT: - Since the duty demand for direct imports was set aside and the valuation dispute for high sea sale transactions was remanded for fresh determination, the basis for the penalties also ceased to be final. The Tribunal therefore directed that the penalty liability of the importer as well as the co-appellants should be reconsidered afresh with reference to their role, if any, in the undervaluation ultimately found on re-adjudication. [Paras 5]

The penalties on M/s. ASR Multimetals and the other co-appellants were directed to be re-determined afresh in the remand proceedings.

Final Conclusion: The Tribunal set aside the differential duty demand arising from the 36 direct-import Bills of Entry for want of a lawful basis to reject the declared value. The valuation dispute relating to imports on high sea sale basis, together with the connected penalties on the importer, its director and the co-appellants, was remanded for fresh adjudication on verification of the relevant documents.

Monetary limits for departmental appeals - maintainability of the appeal preferred by the Revenue, given the monetary limits prescribed as per the prevailing instructions for preferring an appeal before this Tribunal - value of the goods is relevant or duty or penalty component that is determinative

Binding nature of Board instructions - Absolute confiscation - Cross objections and maintainability objections - HELD THAT: - The Tribunal held that the objection as to maintainability was already on record through the miscellaneous applications and could not be dismissed as dehors the record. It further held that a respondent need not file cross objections merely to resist the grounds raised in the appeal. Section 129A(4) applies where the respondent seeks to object to a part of the order adverse to it, but does not prevent the respondent from contesting the appellant's appeal. The Tribunal also held that, under the procedural rules and the law declared in the decisions referred to by it, a pure question of law can be permitted to be raised even if not earlier urged, provided the other side has an opportunity to meet it. [Paras 16, 17, 18, 19]

The Revenue's objection founded on non-filing of cross objections or delayed reply was rejected.

Monetary limits for appeals - Binding Board circulars - Absolute confiscation - Determinative element of duty or penalty - HELD THAT: - On construing the Board instructions from 2010, 2011 and 2023 together, the Tribunal held that the consistent principle is that the determinative element for departmental appeals is the duty or tax under dispute and, where penalty alone is in dispute, the amount of penalty. The 2023 instruction only revised monetary thresholds and did not alter that governing principle. The Tribunal found that the instructions expressly carve out only three exceptions-challenge to constitutional validity, illegality or ultra vires of notification/instruction/order/circular, and classification or refund issues of legal and/or recurring nature-and that no exception exists for cases of absolute confiscation or alleged smuggled goods. It therefore refused to read into the instructions a further exception based on market value, seizure value or a theory that, in absolute confiscation, the value of goods is equivalent to fine. Since the case involved neither duty demand nor any of the stated exceptions, but only a penalty below the CESTAT threshold, the appeal was barred by the Board instructions. The Tribunal further held that such instructions are binding on the Department, which cannot argue contrary to its own circulars. [Paras 34, 35, 36, 37, 38]

The appeal was held to be below the prescribed monetary limit and was dismissed as not maintainable.

Final Conclusion: The Tribunal dismissed the Revenue's appeal as not maintainable under the prevailing monetary-limit instructions of the Board. It held that, in the absence of any applicable exception, the dispute had to be tested by the penalty amount under challenge and not by the value of the absolutely confiscated goods.

Classification of imported petroleum product - Burden of proof in reclassification - burden of reclassifying the imported goods from "condensate" under heading 27101990 to "light oil" under heading 27101190 on the basis of the sampling and test reports - Revenue neutrality - department failed to establish that the imported goods earlier cleared as condensate were classifiable as light oil.

Classification - HELD THAT: - The Tribunal held that, once the goods had been cleared on assessment after chemical testing and on the basis of the load port certificate and the CRCL report then available, the burden for subsequent reclassification rested entirely on the department. Applying CC Kolkata vs. Krishna Technochem P. Ltd.[2022 (4) TMI 732 - SUPREME COURT], it held that the Chapter Note required 90% or more distillation at210 C and not at a temperature below or above it. Since the departmental material showed 90% distillation at 208 C and the Intertek report showed 90% distillation at 216 C, neither report satisfied the exact statutory test. The Tribunal further noted that no basis was shown for rejecting the load port report, and that Tata Chemicals [2015 (5) TMI 557 - SUPREME COURT] supported the requirement that testing and sampling must stand legal scrutiny. In these circumstances, the evidence relied upon by the department did not displace the original assessment, and the proposed reclassification as light oil could not be sustained. Gastrade International [2025 (4) TMI 23 - SUPREME COURT] was held inapplicable because that decision dealt with an "akin to" test, whereas the present case turned on the exact expression "at 210 C". [Paras 8]

The classification proposed by the department under light oil failed, and the original clearance as condensate under the declared heading was upheld.

Revenue neutrality - Absence of intent to evade duty - HELD THAT:- The Tribunal accepted that the appellant entities were manufacturers and users of the imported material, and that any higher CVD paid at the time of clearance would have been available to them as credit. It held that this revenue-neutral position indicated absence of any intention to suppress or misdeclare for wrongful gain. Referring to the Jet Airways case [2016 (8) TMI 989 - CESTAT MUMBAI], the Tribunal treated the availability of corresponding credit as supporting the appellants' case. Having found against the department on classification and noting the existence of revenue neutrality, the Tribunal found it unnecessary to examine limitation. [Paras 8]

Revenue neutrality was held to exist, reinforcing the conclusion that the demand and consequential penal action could not survive.

Final Conclusion: The Tribunal allowed all the appeals. It held that the department had not discharged the burden of reclassifying the goods as light oil, and also noted the existence of revenue neutrality; the demand, confiscation and penalties therefore could not be sustained.

Classification of injection moulding machines - specific entry prevailing over residuary entry - classification of CKD/SKD imports as complete machinery - anti-dumping duty on plastic processing machinery - determination of clamping force in integrated multi-station systems

Classification of injection moulding machines - reaction injection moulding - specific entry prevailing over residuary entry - classification of CKD/SKD imports as complete machinery - The foam production line comprising the metering machine and dry side, imported in CKD/SKD condition with all essential components together, is classifiable as an injection moulding machine under tariff item 8477 10 00 and not under the alternative residual entries proposed. - HELD THAT: - The authority held that the machine is a complete and integrated system for manufacture of polyurethane foam products from plastic materials, and therefore falls within Heading 8477. On its functional characteristics, the system meters and mixes reactive liquid components, introduces them into mould cavities, applies clamping and heating, and forms the finished polymer article within the mould. That process satisfies the essential character of injection moulding, and the fact that polymerisation occurs in the mould as a reaction injection moulding process does not take the goods outside tariff item 8477 10 00. Since the goods answer a specific tariff description, recourse to residual entries under 8477 59 00, 8477 80 90 or 8479 89 99 was rejected. The authority further held that, as the goods were imported in CKD/SKD condition with all essential components presented together, Rule 2(a) required classification as the complete machine and not as parts. [Paras 45, 46, 47, 48, 71]

The subject goods were ruled to be classifiable under tariff item 8477 10 00 as injection moulding machines.

Anti-dumping duty on plastic processing machinery - determination of clamping force in integrated multi-station systems - scope of notification covering CKD/SKD imports - Anti-dumping duty under Notification No. 21/2025-Customs (ADD) was held applicable to the imported machine. - HELD THAT: - The authority read Note 2 of the notification as adopting a broad and technology-neutral product scope covering plastic processing or injection moulding machines, including machines imported in fully assembled, SKD or CKD form, so long as they possess the essential character of the complete machine. Having already found the goods to be an injection moulding machine, the authority rejected the applicant's contention that clamping force had to be examined per individual mould. Since the machine was an integrated 32-station cassette-based production system operating as one composite unit, the effective clamping capacity had to be assessed for the machine as a whole. On that basis, the cumulative clamping force across all stations fell within the range prescribed in the notification. The authority therefore held that the goods were covered by the notification and attracted anti-dumping duty at the applicable rate for producers not specifically named in the table. [Paras 67, 68, 69, 70, 71]

The subject imports were held liable to anti-dumping duty under Notification No. 21/2025-Customs (ADD).

Final Conclusion: The authority ruled that the imported foam production line, though presented in CKD/SKD condition, is a complete injection moulding machine classifiable under tariff item 8477 10 00. It further held that the machine falls within the scope of Notification No. 21/2025-Customs (ADD) and is liable to anti-dumping duty.

Classification for import of "Integrated Dynamic Brake" - Advance ruling - Automatic regulating or controlling instruments - Essential character of composite goods - Parts of brakes versus accessories of motor vehicles - heading 8708 or under the alternative headings 9032, 8413, or 8479 -Residual machinery classification - sole reason for rejecting the classification of ABS under HSN 9032 is the fact that operation of ABS is not varied according to the factor to be controlled (Braking).

HELD THAT: - The Authority held that heading 9032 was inapplicable because the product did not independently measure and regulate the controlled variable so as to maintain it at a preset desired value; it responded to pedal input and vehicle conditions as part of the braking mechanism, and therefore lacked the character of an automatic regulating or controlling instrument.

Heading 8413 was also rejected because the pump within the unit was only one integrated component among the ECU, sensors, valves and reservoir, and pumping did not impart the product's essential character. Heading 8479 was likewise held inapplicable since the unit did not have an individual function independent of vehicle integration, and its essential character was found to be tied to braking use in motor vehicles.

Classification under headings 9032, 8413 and 8479 was rejected.

Parts of brakes versus accessories of motor vehicles - Test of essentiality - Residual entry under heading 8708 - HELD THAT: - The Authority accepted that the product was designed solely or principally for use in motor vehicles and was classifiable within heading 8708. However, it was found not to be a brake itself, and not to be a part of brakes under tariff item 87083000, because the primary braking function could still exist through mechanical brakes even in its absence. Applying the test that a part must be an essential component without which the whole cannot function, the Authority treated the product as an ancillary or enhancement feature that improves braking efficiency, automation and driver assistance, rather than an integral brake component. Relying on the distinction between a part and an accessory, the Authority held that the appropriate classification was the residual entry for other parts and accessories of motor vehicles under tariff item 87089900.

The product was ruled classifiable under CTI 87089900 as other parts and accessories of motor vehicles, and not under CTI 87083000 as brakes and parts thereof.

Ruling: The products in question Integrated Dynamic Brake (iDB); merit classification under CTH 8708, more specifically under CTI 87089900 as "other parts and accessories of the motor vehicles of heading Nos. 8701 to 8705" of the First Schedule of the Customs Tariff Act, 1975.

Oppression and mismanagement - Estoppel by consent and participation - Financial assistance for purchase of own shares - Jurisdiction under Sections 397-398

Estoppel by consent and participation - Oppression and mismanagement - Substituted petitioner - Respondent No. 1 could not maintain oppression and mismanagement allegations against the allotment and connected transactions after having participated in and consented to them, and after being substituted in place of the original petitioners without adopting or amending the pleadings. - HELD THAT: - The Appellate Tribunal held that Mr. P. Lodha and Respondent No. 1 were represented in the relevant board and general meetings, were aware of the proposal to issue further shares, and never recorded any dissent. In the absence of dissent in the minutes, their silence operated as assent, and they were estopped from later alleging oppression in respect of acts to which they had consented. The original petition had itself alleged collusion of the Lodha group with the Roy-Sen group, yet after substitution Respondent No. 1 neither amended the body of the petition nor filed a fresh affidavit affirming a case of oppression against itself as an aggrieved member. Since the substituted petitioner sought relief on allegations originally made by the Chatterjees, which had been withdrawn and were inconsistent with Respondent No. 1's own role in the transactions, no case of oppression could be founded on such pleadings. [Paras 45, 46, 47, 49, 61]

The claim of oppression at the instance of Respondent No. 1 was held not maintainable on the existing pleadings and was barred by its own consent, participation and conduct.

Further issue of capital - Private placement - Explanatory statement - The allotment of 30,000 shares could not be invalidated on the grounds that the shares were issued at par, that valuation had not been obtained, or that the allottees were connected with existing management. - HELD THAT: - The Appellate Tribunal held that under the Companies Act, 1956 there was no statutory requirement corresponding to the later law mandating valuation before such issue, and the 2013 provision could not be applied retrospectively. It further held that the Board's power to issue capital was not dependent on proof of absolute necessity, and that the explanatory statement had stated that the issue was for expansion of the capital base. The argument that the company suffered loss because shares were issued at par was rejected on the reasoning that the company's receipt remained the same and the complaint in substance related only to inter se dilution of shareholding. The fact that some allottees were newly incorporated or connected with the Roy-Sen group was held irrelevant to validity where the allotment was duly authorised, especially when Respondent No. 1 had itself participated in approving the process. [Paras 45, 47, 48, 49, 55]

The findings invalidating the allotment on the basis of issue at par, absence of valuation, or relationship of allottees were reversed.

Financial assistance for purchase of own shares - Burden of proof - Section 77 contravention - The alleged contravention of Section 77 in relation to the allotment of shares to Respondents No. 8 to 10 and the purchase of shares by Respondent No. 20 was not proved. - HELD THAT: - The Appellate Tribunal held that Section 77 required clear proof that the company's financial assistance was given directly or indirectly for the purpose of or in connection with the purchase of its own shares. On the record, there was no definite finding establishing that the loan advanced by the company to Respondent No. 25 was granted for eventual subscription to the impugned shares, nor was there proof tracing funds from the company to Respondents No. 8 and 9 for their purchases. As regards Respondent No. 10, the relied upon transactions were separated by time and the asserted linkage remained presumptive. The Tribunal further held that Respondent No. 1 had attempted to shift the burden to the appellant to disprove the allegation, whereas the party asserting the statutory breach had to establish it. In relation to the sale to Respondent No. 20, the alleged nexus between the appellant's fixed deposit and the funds used for purchase was found unproved, and the personal borrowing by Respondent No. 2 from the bank did not attract Section 77. Having received full consideration for the shares sold, Respondent No. 1 and Mr. Lodha could not impeach the transaction on unproved allegations of secret arrangement. [Paras 54, 56, 57, 58, 59]

The finding of illegality under Section 77 was set aside for want of definite evidence establishing the statutory ingredients.

Jurisdiction under Sections 397-398 - Securities Contracts Regulation Act violation - Alleged violation of the Securities Contracts (Regulation) Act could not be examined as a ground for relief in proceedings under Sections 397-398 of the Companies Act, 1956. - HELD THAT: - The Appellate Tribunal held that any alleged breach of the Securities Contracts (Regulation) Act was a matter for the competent regulatory authority and did not fall for adjudication in a petition for oppression and mismanagement unless it was shown how the company's affairs were thereby conducted oppressively or prejudicially. It also held that Bhagwati Developers Pvt Ltd Vs PGFI [2013 (7) TMI 606 - SUPREME COURT] was inapplicable because that decision arose in the context of rectification of register proceedings and not a petition under Sections 397-398. The alleged illegality under the securities law, even if assumed, was therefore not a valid basis for the impugned reliefs. [Paras 60]

The Tribunal held that the securities law challenge was outside the scope of the present oppression and mismanagement proceedings.

Final Conclusion: The Appellate Tribunal held that Respondent No. 1, having participated in and benefited from the impugned transactions, could not sustain relief for oppression and mismanagement on the withdrawn and unamended pleadings of the original petitioners. The findings of illegality in relation to the allotment, the alleged Section 77 breach, and the securities law objections were set aside, and the impugned order was reversed.

Scope of liberty to file a fresh company petition - Res judicata - Execution of tribunal orders - Order II Rule 2 CPC

Scope of liberty to file a fresh company petition - Res judicata - Execution of tribunal orders - Order II Rule 2 CPC - The subsequent company petition founded on the earlier order was not maintainable, since the liberty reserved in the earlier judgment was confined to grievances arising from actions taken during the EGM directed thereunder and did not permit re-agitation of reliefs already refused or deemed to have been refused. - HELD THAT: - The Appellate Tribunal held that the liberty granted in clause (4) of the earlier order was not an unfettered right to reopen the entire controversy, but was restricted to objections arising out of actions taken pursuant to the EGM contemplated by clause (3). Since the earlier petition had been finally decided and the other reliefs not granted stood rejected, those reliefs were deemed to have been refused and could not be revived through a fresh company petition. The later petition, on its own pleadings, was substantially based on alleged non-compliance with the earlier order; therefore, the proper remedy was execution under the statutory mechanism and not institution of a fresh petition. The Tribunal further found that the reliefs sought in the later petition substantially overlapped with the earlier petition and the amendment application disposed of along with it, and even otherwise comprised matters which could have been claimed earlier, attracting the bar of res judicata and the principle underlying Order II Rule 2. [Paras 17, 18, 19, 21, 23]

The dismissal of the subsequent company petition was upheld, with the Tribunal affirming that any grievance as to non-enforcement of the earlier order had to be pursued through the appropriate execution remedy available in law.

Final Conclusion: The company appeal was dismissed. The Appellate Tribunal held that the later company petition was an impermissible attempt to reopen matters concluded by the earlier judgment and to use a fresh petition as a substitute for execution.

Moratorium under personal insolvency resolution process - Cessation of statutory embargo after expiry of prescribed period - Continuation of execution proceedings against personal guarantor

Moratorium under personal insolvency resolution process - Time-bound cessation of moratorium - Execution against personal guarantor - The Court decided that the moratorium under Section 101 of the Insolvency and Bankruptcy Code in a personal insolvency resolution process ceases automatically on expiry of 180 days from admission, or on an order being passed on the repayment plan, whichever is earlier, and that pendency of the repayment plan thereafter does not bar continuation of execution proceedings. - HELD THAT: - The Court held that Section 101 must be read according to its plain language. The expression 'whichever is earlier' makes the moratorium under the personal insolvency framework strictly time-bound and self-operative in its cessation. Unlike the corporate insolvency regime, the provision governing personal insolvency does not contemplate continuation or extension of the moratorium beyond the contingencies expressly stated. Once the prescribed period expires without any order on the repayment plan, the statutory embargo comes to an end and creditors regain their ordinary remedies in law. On that construction, the objection that the Court should await approval of the repayment plan was rejected as contrary to the statutory scheme, and no legal impediment survived to continue the execution proceedings and order attachment of the identified properties, except the property excluded by the decree holder. [Paras 31, 32, 33, 34, 35]

The moratorium having ceased, the execution application was permitted to proceed, and attachment was directed in respect of the listed properties except the property kept out of consideration.

Final Conclusion: The Court held that the moratorium under the personal insolvency resolution process had already ceased by operation of Section 101 of the Insolvency and Bankruptcy Code and, therefore, did not bar continuation of the execution proceedings. The application was accordingly disposed of by directing attachment of the specified properties, excluding the property kept outside the present consideration, and by appointing a Receiver for sale in accordance with law.

Commercial wisdom of the Committee of Creditors - Scope of judicial review of resolution plan approval

Commercial wisdom of the Committee of Creditors - Judicial review of approved resolution plan - Remand for reconsideration of resolution plan - The Adjudicating Authority could not remand the resolution plan approved by the CoC for reconsideration on the five grounds recorded in the impugned order. - HELD THAT: - The Tribunal held that the scope of scrutiny by the Adjudicating Authority at the stage of plan approval is confined to the statutory parameters under the Code and does not permit substitution of the CoC's commercial decision by its own assessment. Each of the five concerns relied on for remand had either already been considered by the CoC, was expressly dealt with in the plan, was subject to undertakings or pending proceedings before the competent forum, or did not legally impede consideration of the plan. The Khan property issue had been addressed by making its treatment subject to the final outcome before the Supreme Court. The provisional attachment by the Enforcement Directorate did not by itself make the plan unimplementable, particularly in view of the protection under Section 32A and the fact that both the CoC and the successful resolution applicant were aware of the position. The issue of 30 flats in Project Era Divine Court had already been the subject of proceedings in which the plan consideration was not stayed, and protective undertakings had been furnished. The DTCP licences were already provided for in the plan, including renewal-related treatment, and had been considered by the CoC. As regards homebuyers who had not filed claims, the plan itself provided parity of treatment, and reopening belated claims at that stage was unwarranted. In these circumstances, the five grounds did not disclose any material irregularity, contravention of law, or non-compliance with Section 30(2), and therefore furnished no lawful basis to send the plan back to the CoC. [Paras 13, 14, 16, 18, 19]

The remand of the approved resolution plan to the CoC was held unsustainable, as none of the five grounds constituted a valid legal basis for reconsideration.

Final Conclusion: The appeal was allowed and the impugned order remanding the approved resolution plan to the CoC was set aside. The plan approval application was revived before the Adjudicating Authority for fresh consideration in accordance with law, with a request for expeditious disposal.

Fraudulent trading - Directors' contribution to assets - Non-deposit of deducted employee dues - Fraud without proof of personal gain

Fraudulent trading - Directors' liability - Deducted employee dues held in trust - Section 66 of the Code was rightly invoked against the appellants for deducting amounts from employees' salaries over several months and not depositing the same with the employees' co-operative society. - HELD THAT: - The Appellate Tribunal held that the admitted and continuous non-deposit of amounts deducted from employees' salaries, which were required to be remitted to the Society, attracted Section 66. The appellants themselves accepted that the deducted sums were not deposited and sought to justify the omission on the ground of financial distress and use of the money as working capital; however, the burden was on them to establish such use, and no reliable material was produced. The amount was held by them only in a trustee capacity and could not be used for any purpose other than remittance to the Society. The Tribunal further held that, for fraud in relation to the affairs of a company, proof of personal gain or wrongful loss is not indispensable; an act or omission intended to deceive or to injure the interests of the company or its creditors is sufficient. On that reasoning, even absent proof of personal appropriation, the continued withholding of deducted employee dues constituted carrying on the affairs of the corporate debtor in a fraudulent manner. [Paras 33, 35, 36, 37]

The finding of liability under Section 66 and the direction for contribution were affirmed, and the appeal was dismissed.

Final Conclusion: The Appellate Tribunal upheld the order allowing the resolution professional's application under Section 66. It held that the repeated non-deposit of amounts deducted from employees' salaries, without proof of any legitimate use and notwithstanding that such amounts were held in trust for remittance, justified contribution liability against the appellants.

Limitation for insolvency application against personal guarantor - Invocation of personal guarantee - Date of default for personal guarantor

Limitation for insolvency application against personal guarantor - Commencement of limitation on demand - The applications under Section 95 were not barred by limitation. - HELD THAT: - The Appellate Tribunal held that, for proceedings against personal guarantors, limitation commences when a demand notice invoking the guarantee is issued and the guarantor fails to pay within the stipulated time. The dates stated in the Section 95 applications showed that the debt was due on 25.10.2019 and default occurred on 24.12.2019, while the applications were filed on 31.03.2022. On that basis, the applications were within time. The non-filing of the revival letter along with the original application was held to be irrelevant, since limitation was not being computed from that document. The Adjudicating Authority therefore erred in treating the petitions as time-barred. [Paras 11, 13, 18]

The finding that the Section 95 applications were barred by limitation was set aside.

Invocation of personal guarantee - Date of default for personal guarantor - The notice dated 25.10.2019 amounted to a valid invocation of the personal guarantees, and the default date of 24.12.2019 was correctly stated against the personal guarantors. - HELD THAT: - The Appellate Tribunal distinguished the corporate debtor's default date from the personal guarantors' default date. It held that the date reflected in the NeSL certificate related to the corporate debtor, whereas, as against the personal guarantors, default arose after the bank invoked the guarantees and the payment period expired. The notice dated 25.10.2019 was addressed to the personal guarantors, referred to their guarantees, and expressly called upon them to discharge the liabilities within 60 days. This constituted invocation of the guarantees. Consequently, the date of default stated as 24.12.2019 was consistent with the record, and the Adjudicating Authority was wrong in holding that different and uncorrelated dates of default had been given or that the guarantee had not been invoked. [Paras 14, 15, 16, 17, 18]

The finding that the guarantees were not properly invoked and that the applications were defective on account of inconsistent default dates was set aside.

Final Conclusion: The Appellate Tribunal held that the Section 95 applications filed by the bank against the personal guarantors were within limitation and that the notice dated 25.10.2019 validly invoked the guarantees, making 24.12.2019 the relevant date of default against the guarantors. The impugned orders were set aside and the company petitions were revived before the Adjudicating Authority for fresh orders under Section 100 in accordance with law.

Summary order. The special leave petition was disposed of without examination on merits, in view of the subsequent developments, with liberty to the petitioner to raise all available points in the pending petition before the High Court; it was also reiterated that the observations in the impugned judgment would not be treated as binding findings on merits.

Discharge under PMLA - prima facie assessment at stage of charge - Offence of money-laundering - revisional interference - non-application of mind or perversity so as to warrant interference in revision - whether the trial court committed an error in dismissing the discharge petition thereby warranting inference in the exercise of revisional jurisdiction?

HELD THAT: - The Court held that, at the stage of considering discharge, the trial court is required only to sift and weigh the material for the limited purpose of ascertaining whether a prima facie case exists, and not to undertake a roving inquiry into the merits.

Reading the impugned order as a whole, the trial court had noticed the FIR in the predicate offence, the ECIR, the petitioner's statement recorded under Section 50 of the PMLA, the property documents and the evaluation report, and had also recorded that the prescribed procedure had been followed.

The concluding paragraphs could not be read in isolation; when read with the earlier discussion, they disclosed sufficient consideration of the materials for the limited purpose of deciding discharge. Since the petitioner did not establish any legal bar to prosecution and the question whether the assets ultimately constitute proceeds of crime was left for trial, no ground was made out for revisional interference. [Paras 27, 28, 29]

The revision petition was dismissed, and the order refusing discharge was sustained.

Final Conclusion: The Court upheld the dismissal of the discharge petition and declined to interfere in revision, holding that the trial court had undertaken the requisite prima facie consideration of the materials. It was clarified that no finding was being rendered on the ultimate merits, including whether the assets referred to in the complaint constitute proceeds of crime.

Attachment under the Prevention of Money Laundering Act, 2002 - proceeds of crime arising out of scheduled offences - HELD THAT:- Adjudicating Authority being satisfied with the allegations made in the OC coupled with the relied upon documents and statements u/s 50 of PMLA, issued the Show Cause Notice to all the defendants. After receiving their respective replies and hearing the rival submissions the Adjudicating Authority confirmed the PAO vide its order dated 17.04.2018.

Against the order passed by the Second Respondent the Appellants filed appeals u/s 26 of the Prevention of Money Laundering Act, 2002 before the Appellate Tribunal under SAFEMA, New Delhi.

Appellate Tribunal under SAFEMA, New Delhi passed the impugned Final Orders [2025 (11) TMI 1028 - APPELLATE TRIBUNAL UNDER SAFEMA, NEW DELHI] and the Final Order was received on 17-11-2025.

Though various grounds were raised by the appellants in the appeal, they raised a specific ground before this Court stating that the attachment of property acquired prior to the enactment of PMLA i.e., prior to 01-07-2005 is not valid in law. This issue, along with all other grounds, was clearly dealt with by the Appellate Tribunal in the orders impugned herein.

Pre-cognizance hearing - Applicability of Section 223 of the BNSS to PMLA complaints - Complaints under Section 44 of the PMLA

Pre-cognizance hearing - Applicability of Section 223 of the BNSS to PMLA complaints - Complaints under Section 44 of the PMLA - A complaint filed by the Enforcement Directorate after the coming into force of the BNSS could not be taken cognizance of without first giving the accused an opportunity of being heard. - HELD THAT: - The Court held that the legal position stood concluded by Kushal Kumar Agarwal v. Directorate of Enforcement, wherein the Supreme Court declared that a complaint under Section 44 of the PMLA is governed by the procedure corresponding to Sections 200 to 204, and that after 1.7.2024 the proviso to Section 223(1) of the BNSS operates as an embargo on taking cognizance without hearing the accused. Since the complaint in the present case was filed on 26.03.2025, the requirement of a pre-cognizance hearing applied. The authorities relied on by the respondent were held to proceed on a different factual premise and did not displace the binding enunciation of law by the Supreme Court. Consequently, cognizance taken without notice to the petitioners was held to be illegal. [Paras 6, 7, 8, 9]

The order taking cognizance was set aside, the complaint was restored to file, and the court concerned was directed to proceed in accordance with law.

Final Conclusion: The High Court held that where the Enforcement Directorate's complaint was filed after the BNSS came into force, cognizance could not be taken without first hearing the accused. The impugned order taking cognizance was therefore set aside and the complaint was restored for fresh proceeding in accordance with law.

Service of notice and opportunity of hearing - Attachment of value of proceeds of crime - Attachment of property held in spouse's name

Service of notice - Principles of natural justice - The challenge to the attachment order on the ground of denial of notice and hearing was rejected. - HELD THAT: - The Tribunal found from the acknowledgment signed by Dr. Jagdeesh Sagar that he had received the show cause notice, the original complaint and the relied upon documents while in custody. His objection questioned the authenticity of the acknowledgment, but he did not categorically deny his signatures or receipt of the documents. The document was taken on record pursuant to the Tribunal's direction, and the appellants were given opportunity to object. In the case of Dr. Sunita Sagar also, service was held proved and written submissions through counsel had in fact been considered by the Adjudicating Authority. On these facts, the plea of breach of natural justice was held untenable. [Paras 10, 11, 12, 13]

No violation of the principles of natural justice or denial of hearing was established.

Proceeds of crime - Value thereof - The attached properties were liable to attachment even though they had been acquired earlier, because the attachment was as proceeds of crime or the value thereof. - HELD THAT: - The Tribunal held that where property is attached as the value of such property, the period of its acquisition is immaterial. On examining the impugned order, it found that the Adjudicating Authority had treated the properties as 'proceeds of crime or value thereof'. It further held that the statutory definition does not draw any distinction between direct proceeds of crime and the value thereof, and both are equally amenable to attachment and confiscation under the Act. [Paras 16, 17, 18]

The contention that the properties could not be attached because they were acquired before the alleged offence period was rejected.

Property held in spouse's name - Person connected with proceeds of crime - Properties jointly held with Dr. Sunita Sagar were validly attachable notwithstanding that she was not an accused in the scheduled offence. - HELD THAT: - The Tribunal relied on the material noted in the prosecution complaint showing that Dr. Sunita Sagar could not explain the source of funds for properties standing in her name or jointly with her husband, and that the case of the Directorate was that such properties had been acquired from funds provided by Dr. Jagdeesh Sagar. It held that the reach of attachment under the PMLA is not confined to a person arrayed as an accused in the scheduled offence, but extends to any person involved in any process or activity connected with the proceeds of crime. Accordingly, the mere absence of allegations of direct wrongdoing against the spouse did not invalidate attachment of properties held in her name or jointly held by her. [Paras 20, 21, 22, 23]

The objection to attachment of the spouse's properties was decided against the appellants.

Final Conclusion: The Tribunal upheld the confirmation of provisional attachment and dismissed both appeals. It held that notice and relied upon documents had been served, that the attached assets were liable as proceeds of crime or value thereof, and that joint or spouse-held properties were not immune from attachment under the PMLA.

Scheduled offence as foundation of PMLA proceedings - maintainability of appeal - appellate jurisdiction - Money-laundering - closure report.

Scheduled offence as foundation of PMLA proceedings - HELD THAT:- The Tribunal held that the legal position settled in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] is that where a person stands absolved in the scheduled offence case, proceedings under the PMLA cannot continue against that person. In the present case, the acceptance of the closure report by the trial court was an admitted fact and no contrary order of any competent criminal court had been shown. The pendency of a proceeding before the Supreme Court, without any stay or reversal of the closure order, did not alter the existing legal position. The authorities cited by the Directorate were found inapplicable on their own facts and did not displace the governing principle that, in the absence of a surviving scheduled offence, the PMLA action could not continue. [Paras 10, 13, 14, 18, 20]

The appeal was not found fit for admission since, in the absence of a surviving scheduled offence, the PMLA case could not be sustained.

Maintainability of appeal - appellate jurisdiction - HELD THAT: - While considering the Madras High Court decision relied upon by the Directorate, the Tribunal noted that the said decision arose from proceedings before a High Court exercising criminal jurisdiction to test the legality of acceptance of a closure report. The Tribunal expressly held that it had no jurisdiction to go into the merits of the criminal court's order in the scheduled offence case, unlike the High Court. Since the Directorate had chosen to challenge the consequence of the closure order through an appeal in the PMLA matter instead of pursuing the appropriate criminal remedy, the appeal before the Tribunal was held not maintainable for that purpose. [Paras 12, 18]

The Tribunal declined to entertain the appeal as a vehicle to assail the closure order in the scheduled offence case, leaving it open to the Directorate to seek appropriate relief before the competent forum and to apply for revival if the closure order is later reversed.

Final Conclusion: The Tribunal dismissed the appeal at the admission stage, holding that with the closure report in the scheduled offence having been accepted and remaining operative, the PMLA proceedings could not survive. Liberty was reserved to the Directorate to seek revival if a superior court later reverses the closure order.

Proceeds of crime - amount received by the appellant from the project company in relation to the land transaction - Money laundering - Equivalent value attachment - Retention of consideration after cancellation of transaction

Proceeds of crime - Sham justification of consideration - The excess amount received by the appellant in relation to the two-acre land transaction - HELD THAT: - The Tribunal found that the appellant's reliance on the Agreement to Sale dated 01.03.2019 could not justify receipt of Rs. 14 crore, since the document did not bear signatures of both parties on all pages and was found untenable. Once the subsequent registered sale deed for the same land parcel reflected consideration of Rs. 3 crore, the earlier agreement could not prevail to support retention of any higher amount. The amount received over and above the sale deed consideration was therefore treated as proceeds of crime passed on by the accused company. [Paras 18]

The appellant's explanation for receipt of Rs. 14 crore in the two-acre transaction was rejected, and the excess over the registered sale deed value was held to be proceeds of crime.

Equivalent value attachment - Property acquired prior to crime - Cancellation of sale agreement - HELD THAT:- The Tribunal held that, after cancellation of the agreement for sale of 9 acres, the appellant retained the amount that was required to be refunded, and failed to justify such retention. Applying the principle stated in Sadananda Nayak [2024 (10) TMI 1619 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI] the Tribunal held that the definition of proceeds of crime includes not only property directly or indirectly derived from criminal activity, but also property of equivalent value where the actual proceeds are unavailable or siphoned off.

On that interpretation, attachment can extend to property acquired prior to the commission of the crime, provided it is attached as equivalent value. The appellant's reliance on the addendum and on the prior acquisition of its properties did not displace the finding that the retained amount represented proceeds of crime or their equivalent value. [Paras 20, 21, 22]

The attachment to the extent of the retained amount was upheld as lawful attachment of equivalent value, notwithstanding that the attached properties had been acquired earlier.

Final Conclusion: The Tribunal found no ground to interfere with the confirmation of the provisional attachment. The appeal was dismissed, holding that the appellant had failed to justify the impugned receipts and that attachment of equivalent value was permissible under the Act.

Reverse charge taxability of services received from abroad - Validity of vague show cause notice - Taxability of TDS component - Cenvat credit on rented premises used for business - Extended period of limitation

Reverse charge taxability of services received from abroad - Validity of vague show cause notice - Taxability based on profit and loss account - The demands under reverse charge on services allegedly received from foreign service providers were unsustainable where the notices neither disclosed the applicable limb of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 nor isolated and quantified the consideration service-wise, and were raised merely on figures taken from the profit and loss account. - HELD THAT: - The Tribunal held that Section 66A and the rule identifying the recipient as the person liable only create the charge and the deeming fiction, but taxability of a service received from abroad had to be examined with reference to the applicable limb of Rule 3 of the 2006 Rules. Since the notices did not put the assessee to notice of the specific limb under which the services became taxable, they suffered from a fundamental defect. The Tribunal further held that a service tax demand cannot rest on consolidated foreign currency expenditure drawn from the profit and loss account without identifying the taxable service, the agreed consideration for each service, and its quantification. A notice lacking such particulars was vague and incapable of sustaining the confirmed demand. [Paras 18, 20, 21, 23]

The reverse charge demands on the foreign services were set aside as vitiated by incurable defects in the notices and by presumptive quantification.

Taxability of TDS component - Architect service under reverse charge - The TDS amount paid to the Income Tax Department over and above the invoice value for architect services received from abroad did not form part of the taxable value for service tax under reverse charge. - HELD THAT: - Apart from the defect in the notices regarding the applicable Rule 3 of the 2006 Rules, the Tribunal found that there was no allegation that service tax had been paid only on the amount net of TDS. The assessee's stand that service tax had been discharged on the gross amount charged by the foreign service provider, while TDS was separately deposited to the Government, remained uncontroverted. On that basis, the Tribunal accepted that the TDS remittance, being separate from the consideration charged for the service, was not liable to be included in taxable value. [Paras 22]

The demand founded on alleged non-payment of service tax on the TDS component in respect of architect service was held untenable.

Cenvat credit on rented premises used for business - Input service not confined to registered premises - Cenvat credit of service tax paid on renting of immovable property could not be denied merely because the leased premises was not included in the registration certificate, where the premises was used as a godown for the assessee's business and for providing output service. - HELD THAT: - The Tribunal accepted the assessee's explanation, supported by the lease deed, that the premises had been taken on lease as a storage facility for its business. Having regard to the nature of the assessee's output services, the Tribunal found no reason to disbelieve that the premises was used for business purposes. It therefore held that credit was admissible if the input service was used for rendering output service, and that there was neither any requirement of one-to-one correlation of credit with tax paid nor any legal requirement that the input service must be received only within registered premises. [Paras 24]

The denial of cenvat credit on renting of the leased premises was set aside.

Extended period of limitation - Audit knowledge of department - Absence of suppression - The extended period of limitation was not invocable for the impugned demands where the case arose from audit, the department was already aware of the assessee's activities from the earlier notice, and no positive act of suppression or wilful misstatement with intent to evade tax was established. - HELD THAT: - The Tribunal held that the objection to limitation in respect of the later statement of demand for the period October 2014 to September 2015 was misconceived because, after the statutory amendment, the notice was within the enlarged normal period. However, as regards the earlier notice dated 15-10-2012, the Tribunal held it to be wholly time-barred. The reasoning was that the demands originated in audit of the assessee's records, which negatived suppression; once an earlier notice had already invoked the extended period, the department could not again invoke extended limitation for the subsequent period on the same facts; and there was no evidence of any positive act of suppression or wilful misstatement with intent to evade tax. The Tribunal also noted that the cenvat credit dispute was interpretational in nature, rendering the allegation of mala fides and the consequential penalties unsustainable. [Paras 25, 26, 27, 28]

Extended limitation was held unavailable, and the consequential interest and penalties were also held untenable.

Final Conclusion: The Tribunal held that the reverse charge demands were vitiated by fundamentally defective notices, the TDS component was not includible in taxable value, the cenvat credit on the leased premises was admissible, and extended limitation was unavailable. All impugned orders were set aside and the appeals were allowed with consequential relief.

Classification of service rendered by Biswal to Beekay as ‘Manpower Recruitment and Supply Agency Service’ (Revenue) or as ‘Job Workers’ used for manufacturing Bright Bars and not falling under the Service Tax net -Control test - Tax mitigation - Sham transaction

Contract for service - Manpower recruitment or supply service - Control test - Multifactor test - activity undertaken by Biswal for Beekay was job work for manufacture of goods OR manpower recruitment or supply service - HELD THAT: - The Tribunal examined the contractual terms in the light of the tests noticed by the Supreme Court and held that the arrangement was output-oriented, with remuneration fixed per metric tonne of goods produced and not with reference to manpower supplied, time spent, or wages paid. The contractor bore the economic risk and reward, raised monthly job bills, undertook statutory compliances, and remained responsible for the labour engaged. Most importantly, the contract expressly provided that the labour would remain under the contractor's control and that the principal would exercise no control over such labour. Alignment with factory timings and ancillary obligations regarding machinery upkeep were held to be only operational features and not indicative of control over the manner of work. Applying the control, remuneration, integration, and multifactor tests cumulatively, the arrangement was held to be one of job work or contract for service, and not a master-servant or manpower supply arrangement. [Paras 10, 11]

The classification adopted by Revenue was rejected and the service tax demands founded on manpower supply were held unsustainable.

Tax mitigation - Sham transaction - Burden of proof - change in business model from an earlier manpower arrangement to job work could - colourable device as it reduced tax liability - HELD THAT: - The Tribunal held that even if the pattern of business was altered deliberately, a lawful change in commercial arrangement resulting in lower tax incidence is not by itself suspicious. Tax mitigation through arranging affairs within the framework of law is legitimate unless Revenue establishes fraud, sham, or artificial structuring inconsistent with the real intent of the parties. Since the contractual arrangement was found genuine and no evidence of fraudulent intention was shown, the allegation that the job work agreement was only a device to evade service tax could not be sustained. [Paras 12, 13]

Revenue failed to establish that the job work arrangement was sham or fraudulent, and the consequential penal and tax consequences could not survive.

Final Conclusion: The Tribunal held that the contractual arrangement was genuine job work for manufacture and not manpower supply, and further held that a lawful restructuring resulting in tax mitigation cannot be condemned as a sham in the absence of proof of fraud. The impugned orders were set aside and all appeals were allowed with consequential relief as per law.

Burden to establish the taxability of a service - Non-production of material documents - suppression of material facts - appellant's failure to furnish invoices, work orders and other primary material despite repeated requisitions - latin maxim ‘nullus commodum capere potest de injuria sua propria’

HELD THAT: - The Tribunal held that although the Revenue bears the burden to establish taxability, the assessee is obliged to disclose fully and truly the material facts and documents lying within its exclusive knowledge, especially when specifically called upon to do so. Where the appellant repeatedly ignored summons and withheld primary records, the Department was justified in proceeding on the basis of bank information and an adverse inference could be drawn against the appellant.

The situation at hand is squarely covered by the latin maxim ‘nullus commodum capere potest de injuria sua propria’, which means that no man can take advantage of his own wrong. However, it is in the interest of justice that truth be allowed to prevail. Determination of an issue on merits necessarily involves appreciation of facts and evidence, which we would have to call for afresh from the appellant.

At the same time, since determination on merits required appreciation of complete facts and evidence which were still not fully before the Tribunal, and the foundational issue of non-submission of material facts remained unresolved, the proper course was to remit the matter to the original authority so that the truth could be ascertained on a full factual record in compliance with natural justice. [Paras 8, 9, 10, 11, 12]

The matter was remitted to the original authority for fresh adjudication after giving the appellant opportunity to file documents, submissions and relevant data, with a direction to cooperate fully in the proceedings.

Final Conclusion: The Tribunal did not decide the taxability dispute on merits. It held that the appellant's failure to disclose primary material justified adverse inference, but since proper adjudication required a complete factual examination, the matter was remitted to the original authority for fresh decision in accordance with natural justice.

Classification of services - Global Account Manager services taxable as Business Auxiliary Service - Service tax on Royalty payments made to its holding company for receiving business know-how - Service tax on Misc. payments under the head of "Other Expenditures" in the books of account paid by it to its holding company for "software license access and maintenance expenses" to its holding company - Excess and Short payment of tax under cargo handling service - Wrong utilization of cenvat credit

Business Auxiliary Service - Classification of services - Leased circuit service - Demand on Global Account Manager expenses and leased circuit charges - HELD THAT: - The Tribunal followed its earlier order in the appellant's own case and held that, even if the activities of Global Account Managers were taxable, the show cause notices had proposed levy under Business Auxiliary Service, and the demand could not be sustained beyond the allegations so made. On leased circuits also, the issue stood covered by the earlier order holding that the demand could not survive. [Paras 6]

The demands relating to Global Account Manager expenses and leased line circuit were set aside.

Supply of technical know-how - Management consultancy service - Royalty payments - Royalty paid for business know-how taxability as management consultancy service - HELD THAT: - The Tribunal accepted that the payment was for supply or transfer of know-how and not for rendering consultancy. Relying on the decisions noticed by it, the Tribunal held that consideration for transfer of technical know-how cannot be subjected to service tax under management consultancy service. [Paras 7]

The demand on royalty payment was decided in favour of the appellant and set aside.

Cost sharing arrangement - Service provider-recipient relationship - Sharing of common expenses between group entities - HELD THAT: - The Tribunal held that the arrangement was a pure cost-sharing mechanism for mutual benefit and did not involve any transaction between a service provider and a service recipient. Applying the principle stated by the Supreme Court, it concluded that reimbursement of a participant's share of expenditure cannot, by itself, be treated as consideration for service. [Paras 8]

The sharing of expenses was held not exigible to service tax.

Online Information and Data Base Access or Retrieval Services - Taxability of payments described as software license access and maintenance expenses - HELD THAT: - The Tribunal agreed that payment towards software license could not be equated, merely on that basis, with Online Information and Data Base Access or Retrieval Services. Since the demand had been confirmed for want of supporting details, the matter required re-adjudication after giving the appellant an opportunity to produce the relevant documents. [Paras 9]

This issue was remanded to the original adjudicating authority without final adjudication on merits.

Short payment of tax - Excess adjustment - Demand relating to short payment of tax and excess adjustment - HELD THAT: - The Tribunal noted that the demand had been confirmed on the ground that no evidence had been produced. As the claim required documentary reconciliation, the matter was remitted for fresh adjudication after affording the appellant an opportunity to substantiate its case. [Paras 10]

The issue of short payment and excess adjustment was remanded to the original authority.

CENVAT credit - wrong utilization of CENVAT credit - HELD THAT: - The Tribunal recorded that the demand had been confirmed on the view that the invoices did not show the break-up of service tax, whereas the appellant asserted that the invoices contained such particulars. Since this required factual verification, the issue was remanded for fresh decision. [Paras 11]

The demand relating to incorrect utilization of CENVAT credit was remanded for fresh adjudication.

Extended period of limitation - Suppression of facts - HELD THAT: - The Tribunal held that mere detection during departmental audit is not a ground to allege suppression. As the appellant was registered, had been filing returns, and its records had been audited by the department, the ingredients necessary to sustain invocation of the extended period of limitation were not established. [Paras 12, 13]

Invocation of the extended period was held unsustainable.

Final Conclusion: The Tribunal set aside the demands relating to Global Account Manager expenses, leased line circuit charges and royalty payments, and also held that the extended period was not invokable. The disputes concerning software license and maintenance payments, short payment and excess adjustment, and alleged wrong utilization of CENVAT credit were remanded for fresh adjudication after giving the appellant an opportunity to produce the relevant documents.

Exemption of works contract services - demand of service tax raised against the appellant on the basis of Form 26AS as best judgement assessment as the appellant has failed to furnish the ST-3 Returns and could not pay the service tax properly - Sub-contractor service tax liability - Extended period of limitation -

Exempted services - Works contract - Use other than for commerce, industry or business - liability to service tax on works executed by the appellant depended on what? - HELD THAT: - The Tribunal held that the adjudicating authority had not examined the nature of the services rendered by the appellant, though the appellant's case was that part of the works fell within the exempt category. It held that where the works were for use other than for commerce, industry or any other business or profession, the services would be exempt, and therefore the taxability had to be determined only after verification of the relevant work orders and supporting documents. [Paras 9, 10, 11]

The matter was remanded for verification of the work orders and for fresh determination of taxability after considering the claim of exemption.

Sub-contractor liability - Revenue neutrality - Larger Bench decision in the case of Melange Developers Pvt. Ltd. [2019 (6) TMI 518 - CESTAT NEW DELHI-LB] - HELD THAT: - The Tribunal noted that the issue whether a sub-contractor remained liable where the main contractor had already discharged service tax was itself in dispute and stood settled only by the Larger Bench decision in Melange Developers Pvt. Ltd. . On that basis, it held that, till that decision, the appellant as sub-contractor was not liable to pay service tax in respect of such work, and also recorded that there was no revenue loss where the main contractor had already paid the tax. [Paras 9]

The appellant's claim based on payment of tax by the main contractor was accepted for the period prior to the Larger Bench ruling, subject to verification in remand.

Extended period of limitation - Suppression of facts - demand raised beyond five years in the first show cause notice and the further question of invocation of the extended period - HELD THAT: - The Tribunal recorded that a part of the demand raised through the first show cause notice was admittedly beyond five years and could not be sustained. As regards the appellant's plea that there was no suppression of facts and therefore the extended period was not invocable, the Tribunal did not finally adjudicate the issue on merits but directed the adjudicating authority to examine it on the basis of the documents produced by the appellant. [Paras 7, 12]

The demand beyond five years was held unsustainable, and the issue of extended limitation for the remaining period was remanded for fresh examination.

Final Conclusion: The impugned orders were set aside and the matter was remanded for fresh adjudication after verification of the work orders and supporting documents. The Tribunal held that demand beyond five years was unsustainable, directed reconsideration of extended limitation, and required fresh examination of the appellant's exemption claim and liability as sub-contractor.

Business Auxiliary Service- levy of service tax - Sales promotion of client's goods - Commission from multi-level marketing distributors - Commission received by the appellant from Amway, being linked to the appellant's performance and that of the sales group

HELD THAT: - The Tribunal found that the facts of the present appeal were identical to those considered in Harvinder Kaur Malhotra [2025 (4) TMI 1395 - CESTAT NEW DELHI] and the earlier decision in Charanjeet Singh Khanuja [2015 (6) TMI 585 - CESTAT NEW DELHI]

It accepted the principle that while profit on resale of goods purchased by a distributor is not taxable as service, commission linked to the performance of the distributor's sales group represents consideration for sales promotion of Amway's goods and therefore falls within Business Auxiliary Service. Since the present commission was of that character, there was no reason to take a different view.

Appellant was liable to pay service tax on the gross amount of commission received from the company for marketing their products, it being the amount of consideration for rendering ‘Business Auxiliary Service’.[Paras 5, 6, 7]

The demand as sustained by the order under challenge was upheld and the appeal was dismissed.

Final Conclusion: Applying the earlier Tribunal view on identical facts, the Tribunal held that the commission received from Amway, being linked to sales promotion through the appellant and the sales group, was taxable as Business Auxiliary Service. The order under challenge was therefore upheld and the appeal dismissed.

CENVAT credit on imported coal - Countervailing duty and equivalent excise duty - Restriction under concessional excise notification

CENVAT credit on concessional CVD - Imported steam coal - Rule 3 of the Cenvat Credit Rules - Availment of CENVAT credit on the additional duty of customs paid on imported steam coal was held to be permissible, and the restriction applicable to concessional excise duty on domestic goods was not accepted as extending to such CVD. - HELD THAT: - The Court found that the controversy stood covered by the Calcutta High Court decision in Commissioner of CGST and C. Ex. Bolpur Commissionerate Vs. Shyam Steel Industries Limited, which had examined Rules 3 and 4 of the Cenvat Credit Rules, 2004 and held that credit of CVD on imported coal was available. The Court also noted that the Tribunal had relied on the Supreme Court decision in SRF Limited Vs. Commissioner . Proceeding on that basis, the Court held that the Department's contention that the bar attached to concessional excise duty should also govern CVD on imported coal did not warrant reconsideration, and no substantial question of law arose. [Paras 11, 12]

The Tribunal's view allowing CENVAT credit on the imported steam coal was left undisturbed and the appeal was dismissed for absence of any substantial question of law.

Final Conclusion: The appeal filed by the Department was dismissed. The Court held that the issue was already covered by precedent and, therefore, no substantial question of law arose for consideration.

Clandestine removal - Corroborative evidence - reliability on Private records - Relevancy of statements - Admissibility of electronic evidence - Stock shortage by eye estimation - Penalty

Clandestine removal - assumptions and presumptions without providing any corroborative evidence - Burden of proof - HELD THAT: - The Tribunal held that, for establishing clandestine removal, the Revenue had to produce tangible evidence regarding excess procurement of raw materials, actual unaccounted clearances, identified buyers, receipt of sale proceeds, excess electricity consumption, transport of goods, and other links connecting the recovered material with illicit production and clearance. In the present case, no such investigation was carried out and the allegation was drawn only from differences between private records and statutory records. In the absence of proof of actual removal, buyers, sale consideration, production capacity, excess electricity use, or transportation, the charge rested only on assumptions and presumptions and could not stand. [Paras 7, 15]

The issue was answered in favour of the appellants and the allegation of clandestine removal on that basis was rejected.

Clandestine removal can be established on the basis of private records -HELD THAT: - Relying on its earlier decision of Sharda Re-Rollers Pvt. Ltd. [2025 (5) TMI 1281 - CESTAT KOLKATA] Tribunal held that private notebooks and similar internal records are not conclusive proof of clandestine removal unless supported by independent evidence showing procurement of raw materials, manufacture, movement, sale, and receipt of consideration. Since the present case lacked such corroboration, the recovered private records could not legally sustain the demand. [Paras 8]

The issue was answered in favour of the appellants and the private records were held insufficient to prove clandestine removal.

Evidentiary Relevancy of statements - Section 9D compliance - reliance on various statements recorded under Section 14 of the Central Excise Act, 1944 to allege clandestine removal of goods and to raise the impugned demand - HELD THAT: - The Tribunal held that statements recorded under Section 14 could be relied upon only after compliance with the mandatory procedure under Section 9D, namely examination of the maker as a witness before the adjudicating authority, formation of opinion regarding admissibility in the interest of justice, and thereafter offering cross-examination. Since the Revenue did not follow that statutory process, the statements could not be treated as relevant or admissible evidence for proving clandestine removal. [Paras 9]

The statements were held to have no evidentiary value against the appellants.

Admissibility of electronic evidence - print-outs taken from electronic equipment/pen-drives - conditions prescribed under Section 36B of the Central Excise Act, 1944 - HELD THAT: - The Tribunal held that computer printouts and data retrieved from personal computers, hard disks, or pen-drives are admissible only if the statutory requirements, including the prescribed certificate and other safeguards as to source and authenticity, are satisfied. As those conditions were admittedly not fulfilled in the present case, the printouts could not be treated as admissible evidence and could not be used to corroborate the allegation of clandestine removal. [Paras 10]

The electronic printouts were held inadmissible and unusable against the appellants.

Stock shortage by eye estimation - Clandestine removal -HELD THAT: - The Tribunal found that such a large quantity could not have been weighed within the short period available and, therefore, the alleged shortage had only been determined by eye estimation. In the absence of documentary support or weighment slips, the shortage itself was not established and could not be used as a ground to infer clandestine clearance. [Paras 11]

The alleged stock shortage was rejected as a basis for the demand.

PenaltyImposed - main allegation against the appellants is that they were involved in the clandestine manufacture and removal of excisable goods without payment of applicable duties - HELD THAT: - The Tribunal held that the penalties were founded entirely on the charge of clandestine manufacture and removal. Since that charge was not established on the evidence relied upon by the Revenue, no penalty could be imposed on the appellants. [Paras 12]

The penalties imposed on the appellants were held unsustainable.

Final Conclusion: The Tribunal held that the demand of duty and interest was unsustainable because the allegation of clandestine manufacture and removal was not supported by legally admissible and corroborative evidence. The impugned order was set aside and, the principal demand having failed, the penalties on the appellants also could not survive.

Eligibility of refund - amount paid by the assessee was a revenue deposit made under protest or payment of duty - contention of the Department that the Appellants paid duty and sought refund of the same - entitlement for refund of interest

HELD THAT: - The Tribunal found that the Revenue's challenge on classification had lost force because the appeal against the earlier Tribunal order on that issue stood dismissed by the Hon'ble Supreme Court. It further noted that the respondent had never accepted the classification adopted by the Department and had continuously contested it, while the amount in question had been deposited under protest and was later sought to be appropriated through the show cause notice.

Since the proceedings for such appropriation ended against the Department, the payment could not be treated as duty. The Assistant Commissioner's order itself recorded eligibility for refund of an amount and not of duty, and that finding had not been challenged by the Revenue. On that basis, the Tribunal held that the payment retained the character of a revenue deposit, making the principles governing refund of deposits and grant of interest applicable. [Paras 6, 7, 8]

The Revenue's contention that the respondent had paid duty and was not entitled to the relief granted was rejected, and the order allowing refund with consequential relief was sustained.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, holding that the payment made by the respondent was only a deposit under protest and not duty. Consequently, the order granting relief on refund and interest was upheld.

Assessable value calculation - point of sale - expenses incurred and collected till the buyer’s premises - whether FOR destination contract, freight, insurance and allied transport-related expenses incurred up to delivery at the buyer's premises were includible in the assessable value?

HELD THAT: - The Tribunal followed its earlier final order in the appellant's own case [2025 (5) TMI 1526 - CESTAT HYDERABAD] and held that the determinative test was the point at which ownership in the goods passed to the buyer. On the factual matrix already examined in the earlier order, the contracts were treated as FOR destination contracts under which acceptance of goods was at the buyer's destination and the appellant retained responsibility during transit.

Consequently, the sale stood concluded only at the buyer's premises, and all expenses incurred and recovered up to that point formed part of the assessable value. [Paras 5, 6]

The demand sustained in the impugned order was upheld and the appeal was dismissed.

Final Conclusion: Following the earlier order in the appellant's own case, the Tribunal held that in FOR destination sales the sale was completed at the buyer's premises and the related freight, insurance and delivery charges were includible in assessable value. The appeal was accordingly dismissed.

Manufacture and clearance of Non-Norcotic products - penalties imposed under Rule 25 and Rule 27 of the Central Excise Rules, 2002 - Government undertaking - Classification dispute - Bona fide belief - Ignorance of the statutory provisions

HELD THAT: - The Tribunal found that the appellant was a Government of India factory and that the dispute leading to short payment of duty was one of classification and interpretation. In such circumstances, mere ignorance of the statutory provisions could not by itself justify penal action, since imposition of penalty requires something more than default and ordinarily rests on deliberate defiance, contumacious conduct, conscious disregard of obligation, or intent to evade duty. The Tribunal also noted the parity pleaded with a similarly placed Government Opium factory and treated the case as one where penal consequences were unwarranted despite confirmation of duty and interest. [Paras 4]

The impugned order was modified by setting aside the penalties imposed on the appellant.

Final Conclusion: The Tribunal sustained the duty and interest position as accepted by the appellant, but held that the penalties were not justified in the facts of the case. The appeal was accordingly partly allowed by setting aside the penalties alone.

Cenvat credit on inputs exclusively used in the manufacture of exempted products - Rule 6 option for non-maintenance of separate accounts - recovery of cenvat credit alleging that it has been exclusively used in the manufacture of exempted goods Exclusive use of inputs - Reversal of CENVAT credit on inputs alleged to have been exclusively used in exempted goods - demand as barred by limitation.

CENVAT credit on exempted goods - Rule 6 option for non-maintenance of separate accounts - Exclusive use of inputs -recovery of cenvat credit alleging that it has been exclusively used in the manufacture of exempted goods Exclusive use of inputs -HELD THAT: - The Tribunal recorded that the appellant had not maintained separate records of receipt, consumption and inventory of inputs used in dutiable and exempted goods and had, therefore, adopted the statutory option of paying 5%/6% of the value of exempted goods. Having exercised that option, a further direction to reverse credit on inputs allegedly used in exempted final products was held to be untenable. The Tribunal followed its earlier order in the appellant's own case . [Paras 8]

The demand for reversal of credit on this ground was set aside on merits.

Extended limitation and suppression - Disclosure in ER1 returns - Bona fide conduct - HELD THAT: - The Tribunal found that the appellant had been paying 5%/6% of the value of exempted goods and had regularly disclosed the same in ER1 returns filed with the Department. It also noted that departmental audits had taken place from time to time without objection. In those circumstances, the allegation of suppression of facts with intent to evade payment of duty could not be sustained. [Paras 8]

The demand was also held to be barred by limitation.

Final Conclusion: The Tribunal allowed the appeal, holding that after payment of 5%/6% of the value of exempted goods under Rule 6(3), the Department could not additionally compel reversal of credit on the alleged exclusive inputs. The demand was, in any event, held barred by limitation for want of suppression.

Arbitration agreement - Permissive dispute resolution clause - Contractual interpretation

Arbitration agreement - Permissive wording - Party autonomy - Clause 25 of the bill of lading, which stated that disputes can be settled by arbitration, did not amount to a binding arbitration agreement enforceable through appointment of an arbitrator. - HELD THAT: - The Court held that, at the stage of appointment of an arbitrator, the enquiry is confined to the prima facie existence of an arbitration agreement. Interpreting the clause in its contractual setting, the word can was treated as denoting only a possibility or choice, and not a mandate or binding obligation to arbitrate. The Court emphasised that party autonomy is the foundation of arbitration, and a clause which merely contemplates a future possibility of arbitration, requiring further consent when disputes arise, is not an arbitration agreement in law. Applying the principles stated in K.K. Modi [1998 (2) TMI 566 - SUPREME COURT] and Jagdish Chander, [2007 (4) TMI 624 - SUPREME COURT] and distinguishing the authorities relied on by the appellant, the Court found that Clause 25 did not disclose a definitive agreement to submit disputes to arbitration. [Paras 10, 11, 12, 13, 14]

The clause was held to be non-mandatory and insufficient to compel arbitration, and the request for appointment of an arbitrator was rightly refused.

Final Conclusion: The Supreme Court held that the disputed clause did not embody a binding agreement to arbitrate, but merely preserved arbitration as a possible mode of settlement subject to further consent of both parties. The appeal was therefore dismissed and the refusal to appoint an arbitrator was upheld.

Bar of suit by unregistered firm - Compensation for non-gratuitous supply - Summary suit maintainability - Interest on quantum meruit claim

Summary suit maintainability - Statement of truth - preliminary objections based on non-adherence to summary suit procedure and alleged non-filing of the statement of truth - HELD THAT: - The Court held that the suit had in fact been proceeded with as an ordinary commercial suit, and the departure from the summary procedure caused no prejudice to the defendant because the plaintiff was still required to prove its claim. The Court further found from the record that a statement of truth had been filed on re-presentation of the plaint. It was also held, while dealing with the merits, that the claim was not one falling within the classes of suits to which the summary procedure under Order VII of the Original Side Rules applied. [Paras 16, 17]

The suit was not liable to be rejected on either preliminary ground.

Bar of suit by unregistered firm - Compensation for non-gratuitous supply - Quantum meruit - compensation under Section 70 of the Contract Act - HELD THAT: - On examining the invoices, e-way bills, communications and the evidence of PW1, the Court found that there was no written or oral agreement on material terms such as price, margin, credit period or other terms of supply. Since the plaintiff was not enforcing a right arising from a contract, the embargo under Section 69(2) of the Partnership Act did not apply. The Court then held that the requirements of Section 70 stood satisfied because the plaintiff delivered goods lawfully, the supplies were plainly non-gratuitous, and the defendant enjoyed the benefit of the supplies without returning the goods. The claim was therefore maintainable on the principle of quantum meruit, and for that reason the suit was also outside the scope of the summary procedure. [Paras 28, 29, 30, 31, 32]

The suit was maintainable as a claim for compensation under Section 70, and the statutory bar applicable to contractual claims by an unregistered firm was held inapplicable.

Reasonable compensation - Proof of supply - HELD THAT: - The Court found that each invoice contained the particulars of the goods, quantity, rate and tax component, and that the invoices were supported by corresponding e-way bills evidencing despatch and delivery. The plaintiff had also produced GST returns supporting the supplies and tax payment. In the absence of any evidence that the goods were returned, not delivered, or not put to use, and there being no defence evidence to show that the amount claimed was unreasonable, the Court accepted the invoice values as the basis for compensation. [Paras 33, 34]

The principal claim was decreed in full as reasonable compensation.

Interest on quantum meruit claim - Micro, Small and Medium Enterprises Development Act, 2006/MSMED interest - HELD THAT: - The Court held that, in an action for compensation under Section 70 of the Contract Act, the claim is not for a debt due under agreed terms but for reasonable compensation where there is no contract. On that footing, interest at 24% per annum, whether simple or compounded with monthly rests, could not be claimed by invoking the MSMED Act or otherwise. Taking into account the commercial nature of the transaction, the receipt and likely use of the goods by the defendant, and the absence of any contractual stipulation for interest, the Court awarded simple interest at 9% per annum from the date of plaint until realisation. [Paras 36, 37]

The claim for MSMED-based compound interest was rejected, and simple interest at 9% per annum from the date of plaint till realisation was granted.

Final Conclusion: The suit was held maintainable notwithstanding that it was instituted by an unregistered partnership firm, because the claim did not arise from a contract but from non-gratuitous supplies attracting Section 70 of the Contract Act. The plaintiff was awarded the principal amount claimed with simple interest at 9% per annum from the date of plaint till realisation, together with costs.

Lease expiry and recovery of possession - Rental arrears and contractual interest - Damages for unlawful use and occupation - GST liability on lease rent - Future mesne profits

Lease expiry and recovery of possession - Rental arrears - Admissibility of document marked without objection - plaintiff entitled to recovery of vacant possession and to rental arrears with interest or not? - HELD THAT: - The Court found that the lease was for a fixed term and had come to an end, and that in the absence of any agreed extension the defendant had no right to continue in possession. It further held that the defendant produced no evidence of payment of rent, while her own cross-examination showed default from August 2021. The objection founded on discrepancy in the extent of the property was held immaterial, since the defendant had occupied the premises for commercial purpose on the agreed rent and failed to prove any cash payments. The challenge to Ex.P.8 was also rejected, as no objection as to its admissibility or credibility had been put in cross-examination at trial. [Paras 18, 19, 20, 21, 22]

Vacant possession and rental arrears with interest were decreed in favour of the plaintiff.

Damages for unlawful use and occupation - GST liability on lease rent - Future interest on the principal sums awarded - HELD THAT: - The Court held that after default in payment of rent and after termination of the tenancy, the defendant continued in occupation of the premises and carried on business therefrom without clearing arrears or handing over possession. That continued occupation was treated as unlawful and as having caused loss and hardship to the plaintiff. On that basis, the claims for damages for unlawful use and occupation, the GST amount claimed, and future interest on the principal amounts were allowed. [Paras 23, 25]

The claims for damages, GST, and future interest were allowed.

Future mesne profits - future mesne profits claimed monthly rate. - HELD THAT: - The Court rejected the claim for future mesne profits on the ground that it was without basis. [Paras 25]

The claim for future mesne profits was refused.

Final Conclusion: The suit was decreed substantially in favour of the plaintiff by directing delivery of possession and awarding rental arrears, damages for unlawful use and occupation, GST and future interest. The claim for future mesne profits was rejected, and no costs were awarded.