TMI Tax Updates e-Newsletter
Apr 21,2026

Non-application of mind - Failure to consider reply to show cause notice - Reasoned adjudication

Non-application of mind - Failure to consider reply to show cause notice - Reasoned adjudication - The adjudication order confirming demand under the show cause notice could not be sustained where the authority gave no cogent reasons for rejecting the petitioner's replies and proceeded on the unexplained premise that the matter was sub-judice on merits. - HELD THAT: - The Court found from the impugned order itself that no cogent reason had been recorded for not accepting the replies filed by the petitioner. The order merely stated that the disparity in the profit ratio of tax-free and taxable outward supplies remained unexplained and that the matter was still sub-judice on the applicability of ITC reversal, without disclosing the basis for such conclusion. The order also did not indicate which outward supplies were treated as tax-free and which as taxable after considering the CBIC circulars relied upon by the petitioner, and there was no discussion of all the replies filed. In view of the undisputed position, also accepted on instructions by the State, that no issue was sub-judice on merits in the petitioner's case, the Court held that the impugned order suffered from complete non-application of mind. [Paras 9, 10]

The impugned order was quashed, with liberty to the authorities to proceed afresh on the show cause notice after considering all replies, granting a fresh opportunity of hearing, and acting in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the impugned order on the ground of complete non-application of mind and failure to furnish reasons. The authority was left free to continue the show cause proceedings afresh after considering all replies and granting a fresh opportunity of hearing.

Alternative remedy in writ jurisdiction - Principles of natural justice - Non-speaking order

Alternative remedy in writ jurisdiction - Violation of principles of natural justice - Availability of statutory appeal did not bar exercise of writ jurisdiction where the impugned order was challenged for violation of principles of natural justice. - HELD THAT: - The Court held that though writ jurisdiction is ordinarily not exercised against appealable orders, the rule is not absolute. Interference is justified where there is violation of principles of natural justice, absence of jurisdiction, challenge to vires, or enforcement of fundamental rights. Since the challenge in the present case was founded on the allegation that the authority had failed to consider the assessee's reply and had passed a non-speaking order, the writ petition was maintainable notwithstanding the alternative appellate remedy. [Paras 7]

The writ petition was held to be maintainable despite the availability of appeal.

Non-speaking order - Reasoned quasi-judicial order - Consideration of reply - The demand order was unsustainable because, despite acknowledging the reply filed by the petitioner, the authority gave no reasons for rejecting it or for discarding the supporting documents. - HELD THAT: - The Court found that the impugned order itself acknowledged receipt of the reply dated 26.11.2025, but rejected it by a bare assertion that it did not adequately address the issues and that no documentary evidence had been furnished. The order neither noted nor dealt with the contentions raised or the documents uploaded by the petitioner. A quasi-judicial authority is bound to consider the reply and disclose reasons for not accepting it. In the absence of any reasoning, the order was a non-speaking order and was violative of principles of natural justice. [Paras 8, 9]

The impugned order was set aside, and the authority was directed to grant personal hearing and decide the show cause notice afresh by passing a reasoned order on the petitioner's reply and submissions.

Final Conclusion: The High Court allowed the writ petition, holding that the impugned GST demand order was a non-speaking order passed in violation of principles of natural justice. The order was set aside and the matter was remitted to the adjudicating authority for fresh decision after affording personal hearing and recording due reasons.

Recovery of outstanding dues - GST recovery circulars - statutory scheme governing further appeal to the Appellate Tribunal, the requirement of pre-deposit, and the stay of recovery upon compliance with the prescribed conditions.

HELD THAT:- There are explicit guidelines for recovery of outstanding dues in cases wherein, first appeal has been disposed of till the Appellate Tribunal comes into operation, this Courts is of the considered opinion that nothing remains for adjudication in this Writ Petition.

Accordingly, liberty is reserved in favour of the Petitioner to comply with the necessary conditions of circular No. 224/18/2024-GST of the Central Board of Indirect Taxes and Customs dated 11.07.2024 by filing an undertaking/declaration with the jurisdictional proper officer that he would file an Appeal against the order under challenge before the Appellate Tribunal as and when it comes into operation within the time lines mentioned in Section 112 of the CGST Act notification dated 17.09.2025 and shall also pay pre-deposit as per sub-section (8) of Section 112 of CGST Act within a period of 15 days from the date of receipt of copy of this order, if not already deposited.

It is ordered that as per the said circular, if the Petitioner files such undertaking with regard to the pre-statutory deposit, the recovery of the remaining amount of order dated 04.11.2022 and 28.03.2024 shall remain stayed as per sub-section (9) of Section 112 of the CGST Act.

Reference to Larger Bench - Conflict of precedent - Consolidated show cause notice - Sections 73 and 74 adjudication scheme

Reference to Larger Bench - Conflict of precedent - Consolidated show cause notice - Sections 73 and 74 adjudication scheme - The challenge to single consolidated show-cause notices covering multiple financial years under Sections 73 and 74 of the CGST Act required consideration by a Larger Bench in view of conflicting judicial views and the legal questions arising from the statutory scheme. - HELD THAT: - The Court held that, although a co-ordinate Bench decision in Milroc Good Earth Developers [2025 (10) TMI 867 - BOMBAY HIGH COURT] would ordinarily bind it, substantial legal issues raised by the Revenue, including the effect of the language in Sections 73(1), 73(3), 74(1) and 74(3), the distinction between issuance of notice and the limitation for passing orders under Sections 73(10) and 74(10), and the impact of the Supreme Court's speaking order in Mathur Polymers [2025 (11) TMI 1184 - SC ORDER], warranted examination by a Larger Bench. On a prima facie reading, the Court found that Sections 73 and 74 form a self-contained adjudicatory code; that the expressions referring to notice for any period and for such periods indicate no apparent statutory embargo against a consolidated notice for different periods; and that the limitation for passing the adjudication order does not, by itself, operate as a limitation on issuance of show-cause notice. In view of the cleavage of opinion between Milroc Good Earth Developers and the contrary views of the Delhi and Allahabad High Courts, the Court framed specific questions of law for authoritative determination and directed that existing interim orders should continue until the Larger Bench decides those questions. [Paras 28, 29, 30, 31, 32]

The matters were referred for constitution of a Larger Bench to decide the framed questions of law, and the interim orders already operating were directed to continue till such decision.

Final Conclusion: The Court did not finally decide the validity of consolidated show-cause notices for multiple financial years. Holding that the statutory issue was affected by conflicting judicial views and required authoritative resolution, it referred the framed questions to a Larger Bench and continued the existing interim protection.

Alternate remedy - non-functional appellate forum - statutory pre-deposit for appeal

Writ jurisdiction despite appellate remedy - functional GSTAT - mandatory pre-deposit - Once the statutory appellate forum under Section 112 became functional and the time for filing appeal stood extended, the writ petition challenging the appellate order ought not to be kept pending, and the assessee had to pursue the statutory appeal subject to compliance with the pre-deposit requirement. - HELD THAT: - The Court held that although a writ petition may be entertained where the statutory appellate forum is non-functional, such recourse is only to prevent the aggrieved person from being left remediless. Once the forum has become functional and a specific window for filing appeals has been notified, the dispute should be adjudicated by that forum. The Court further held that the writ jurisdiction cannot be used to bypass the condition of pre-deposit prescribed for filing the appeal, and strict compliance with Section 112(8) is required before the appeal can be entertained. [Paras 4, 5]

The writ petition was disposed of by directing the petitioner to make the required deposit and file the appeal before the GSTAT within the notified timeline, leaving the merits of the first appellate order open.

Final Conclusion: The Court declined to retain the writ petition after the GSTAT became functional and directed the petitioner to avail the statutory appeal in accordance with the notified schedule and the mandatory pre-deposit requirement. No opinion was expressed on the merits of the impugned appellate order.

Alternative statutory remedy - writ jurisdiction under Article 226 - classification of supply

Alternative statutory remedy - writ jurisdiction under Article 226 - classification of supply - The writ petition challenging the appellate order on the classification of the transaction as supply of goods or composite supply of goods and services was not entertained in view of the statutory appellate remedy under the GST Act. - HELD THAT: - The Court held that, since the petitioner had approached the High Court without exhausting the remedy of appeal to the Goods and Services Tax Appellate Tribunal under Section 112, it would not exercise jurisdiction under Article 226. It further held that determination of whether export of iron ore fines constituted supply of goods simpliciter or a composite supply involved matters falling within the domain of the fact-finding authorities empowered to decide both facts and law. Applying the principle stated in Radha Krishan Industries Vrs. State of Himachal Pradesh [2021 (4) TMI 837 - SUPREME COURT], the Court declined to bypass the statutory mechanism and left it open to the petitioner to pursue the remedy available under the Act. [Paras 4, 5, 7]

The writ petition was dismissed as not entertainable, with liberty to the petitioner to approach the appropriate forum under the GST Act and Rules.

Final Conclusion: The Court declined to entertain the writ petition on the ground of availability of an effective statutory remedy before the appellate forum under the GST Act. The petitioner was granted liberty to pursue the remedy available under the statute.

Alternative statutory remedy - Exhaustion of statutory remedies - Writ jurisdiction under Article 226 - Disputed questions of fact

Alternative statutory remedy - Writ jurisdiction under Article 226 - Disputed questions of fact - Principles of natural justice - Challenge to the appellate order on the ground that the appeal was rejected for delay without hearing was not entertained in writ jurisdiction in view of the statutory remedy available under the GST law. - HELD THAT: - The Court held that the plea of violation of principles of natural justice, including whether notice had been issued before rejection of the appeal, required examination of the record and involved a disputed factual aspect appropriately falling within the domain of the appellate forum under the statute. Applying the principle stated in Radha Krishan Industries Vrs. State of Himachal Pradesh [2021 (4) TMI 837 - SUPREME COURT], the Court reiterated that where an effective statutory remedy is available, the High Court should ordinarily refrain from exercising jurisdiction under Article 226, the rule being one of policy, convenience and discretion. [Paras 7, 8]

The writ petition was declined on the ground of availability of an effective alternative remedy, with liberty to the petitioner to approach the appropriate forum under the Goods and Services Tax Act, 2017.

Final Conclusion: The High Court declined to entertain the writ petition against the appellate order, holding that the grievance as to lack of hearing and related factual matters should be pursued before the statutory forum. Liberty was reserved to the petitioner to avail the remedy under the GST enactment.

Writ against show cause notice - Binding effect of advance ruling - Jurisdictional pre-condition of fraud or suppression - Judicial discipline

Writ against show cause notice - Lack of jurisdiction - Abuse of process - The writ petition was maintainable notwithstanding that only show cause notices had been issued and statutory remedies were otherwise available. - HELD THAT: - The Court held that availability of an alternative remedy is not an absolute bar to exercise of writ jurisdiction. Interference at the show cause notice stage is permissible where the notice is alleged to be without jurisdiction, issued with a pre-determined approach, or amounts to abuse of process. On the record, the challenge was to the very assumption of jurisdiction under Section 74 on matters which, according to the petitioner, already stood adjudicated and had attained finality. Since the dispute turned on this foundational jurisdictional objection and not on any fresh factual adjudication, the preliminary objections as to prematurity and disputed facts were rejected. [Paras 21, 22, 23, 24, 25]

The writ petition was entertained and the preliminary objections of alternative remedy and disputed questions of fact were rejected.

Binding effect of advance ruling - Jurisdictional pre-condition of fraud or suppression - Re-agitation of concluded issues - Judicial discipline - The respondent could not invoke Section 74 of the CGST Act and Section 11A of the Central Excise Act on the same allegations already examined and rejected in advance ruling proceedings, in the absence of fresh material establishing fraud, willful misstatement or suppression of facts. - HELD THAT: - The Court held that under Section 103, an advance ruling is binding on the applicant and the concerned or jurisdictional officer unless there is a change in law or in the facts and circumstances on which the ruling was based. It further held that fraud, willful misstatement or suppression of facts is a jurisdictional pre-condition for assumption of power under Section 74 of the CGST Act, and the analogous requirement under Section 11A of the Central Excise Act must likewise be strictly satisfied. In the present case, the allegations of fraud, misrepresentation and suppression had already been raised by the department in proceedings under Section 104 and were rejected by the Authority for Advance Ruling; that order had attained finality. The record also showed that the use of machines and addition of aroma and menthol had already been disclosed and considered, and there was no demonstrable fresh material. The plea of fresh findings was therefore not borne out. Reopening the same issue on the same factual foundation was contrary to the statutory scheme and offended the principle that subordinate authorities are bound by decisions of competent appellate or adjudicatory authorities unless set aside in accordance with law. As no finding of fraud, willful misstatement or suppression had been recorded and no intent to evade tax could be inferred, the jurisdictional requirements for issuing the notices were not met. [Paras 35, 36, 37, 38, 39]

The impugned show cause notices were held to be without jurisdiction as they sought to reopen concluded issues contrary to the binding advance ruling and without satisfaction of the statutory pre-conditions for invoking Section 74 and Section 11A.

Final Conclusion: The Court held that the writ petition was maintainable because the challenge went to the very jurisdiction to issue the show cause notices. Since the advance ruling and the subsequent proceedings had already rejected the allegations of fraud, misrepresentation and suppression on the same facts, and no fresh material was shown, the notices under the CGST Act and the Central Excise Act were quashed as being without jurisdiction.

De novo adjudication - Personal hearing

De novo adjudication - Personal hearing - The impugned ex parte GST orders were not allowed to stand in view of the Department's statement that a fresh show-cause notice would be issued and the existing notices and orders would not be acted upon. - HELD THAT: - The Court recorded the fair stand of the Respondent Department that it would issue a fresh show-cause notice to the petitioner and would not act upon the existing show-cause notices and impugned orders. In view of that statement, and without entering into the merits of the controversy, the Court considered it appropriate to quash the impugned orders and direct fresh adjudication by issuance of a fresh notice, grant of personal hearing, and passing of a speaking order in de novo proceedings uninfluenced by the earlier orders. [Paras 7]

The impugned orders were quashed and set aside, and the matter was directed to be proceeded with afresh by issuance of a fresh show-cause notice, grant of personal hearing, and de novo determination by a speaking order.

Final Conclusion: Without examining the merits, the Court accepted the Department's stand, set aside the impugned ex parte orders, and directed fresh adjudication after issuing a fresh show-cause notice and granting personal hearing to the petitioner.

Refund rejection without deficiency memo - Opportunity of hearing under refund procedure - Fresh consideration of subsequent refund application

Refund rejection without deficiency memo - Opportunity of hearing under refund procedure - Fresh consideration of subsequent refund application - The ex parte rejection of the refund claim without issuance of a deficiency memo and without granting a hearing could not be regarded as valid, and the subsequent refund application on which a deficiency memo had already been issued was required to be considered in accordance with law. - HELD THAT: - The Court found that there was nothing on record to show compliance with the mandatory procedural requirements governing rejection of a refund claim, as no deficiency memo had been issued and no hearing had been granted before the order of rejection was passed. Relying on M/s. Knowledge Capital Services Pvt. Ltd. vs. Union of India & Ors. 2023 (4) TMI 752, the Court held that the refund application had to be dealt with strictly in the manner prescribed by the rules. The Court also noted that the petitioner had promptly sought rectification, filed a fresh refund application, and that such subsequent application had in fact been entertained by issuance of a deficiency memo, but was not taken to its logical conclusion. In these peculiar facts, including that the earlier rejection was not uploaded on the GST portal, the petitioner could not be denied consideration of its refund claim on a pedantic view of the matter. [Paras 13, 14, 15, 16, 17]

The designated officer was directed to decide the refund application dated 12 February, 2020 and subsequent refund applications, in accordance with Rules 90 and 92, without being influenced by the earlier rejection order or the appellate order dismissing the appeal on limitation; all contentions on merits were kept open.

Final Conclusion: The petitions were disposed of by directing fresh consideration of the petitioner's subsequent refund application and related applications in accordance with the prescribed refund procedure. The Court declined to allow the earlier procedurally defective rejection and the appellate dismissal on limitation to govern such consideration.

Grounds of arrest - illegal arrest - validity of remand

Grounds of arrest - illegal detention - remand order - The arrest and remand were held unsustainable for non-provision of the grounds of arrest to the petitioner in the manner required by law. - HELD THAT: - The Court held that, notwithstanding the respondents' explanation that the defects in the arrest memo were due to human clerical error, the decisive infirmity was that the respondents had not provided the grounds of arrest to the petitioner as required by the law declared by the Supreme Court and followed by this Court. Once that requirement was not complied with, the detention could not be sustained and the remand order founded on such arrest was liable to be quashed. [Paras 6, 7]

The remand order was quashed, the writ petition was allowed, and liberty was reserved to the respondents to proceed afresh in accordance with law.

Final Conclusion: The Court held that the petitioner's arrest and continued detention could not be sustained because the grounds of arrest had not been provided in accordance with law. The remand order was quashed, the writ petition was allowed, and the respondents were left free to proceed afresh in accordance with law.

Cancellation of GST registration - Validity of show cause notice - Opportunity of hearing - Non-application of mind

Cancellation of GST registration - Validity of show cause notice - Non-application of mind - Opportunity of hearing - Cancellation of registration could not be sustained where the show cause notice merely stated that the principal place of business was not found at the time of field visit, while the cancellation order proceeded on the different ground that no business was conducted from the declared place of business, and the recorded reason was not traceable to the statutory grounds for cancellation. - HELD THAT: - The Court found that the show cause notice did not contain the allegation on which the cancellation was ultimately founded. In the absence of such allegation in the notice, the authority's opinion that the petitioner was not conducting business from the declared place of business was held to be without supporting material and therefore reflective of non-application of mind. The Court further held that the reason recorded in the cancellation order was not referable to the grounds contemplated under Section 29 of the GST Act. On that basis, the cancellation order was held to be violative of Article 14 and contrary to the statutory mandate. [Paras 7, 8]

The cancellation order was set aside, and the appellate order dismissing the appeal on limitation was also quashed as a consequence; liberty was reserved to the authority to pass a fresh order in accordance with law.

Final Conclusion: The writ petition was allowed. The order cancelling registration and the consequential appellate order were quashed, with liberty to the authority to proceed afresh in accordance with law.

Condonation of delay in filing statutory appeal - Exercise of writ jurisdiction where appeal is time-barred

Condonation of delay in filing statutory appeal - Exercise of writ jurisdiction where appeal is time-barred - Delay in filing the statutory appeal could be condoned in writ jurisdiction and the appellate authority could be directed to entertain the appeal on merits where the petitioner showed that the delay occurred for reasons beyond its control. - HELD THAT: - The Court held that though the Appellate Authority is bound by the limitation prescribed under Section 107 of the RGST/CGST Act, 2017, the reasons shown by the petitioner for not filing the appeal within time were beyond its control. The Court found that denial of adjudication on merits in such circumstances would cause grave injury and prejudice. Following the consistent view already taken by the Court in the decisions cited before it, the writ petition was allowed to the limited extent of condoning the delay and directing consideration of the appeal on merits. [Paras 6, 7, 8, 9]

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

Final Conclusion: The writ petition was allowed to the limited extent of condoning the delay in filing the appeal, and the Appellate Authority was directed to entertain and decide the appeal on merits. The challenge to the vires of Section 107(4) of the CGST Act, 2017 and the notification referred to therein was not pressed and was left open.

Condonation of delay in filing statutory appeal - Writ jurisdiction in limitation-barred GST appeal - Sufficient cause beyond control of assessee

Condonation of delay in filing statutory appeal - Writ jurisdiction in limitation-barred GST appeal - Sufficient cause beyond control of assessee - Delay in filing the appeal against the GST demand order could be condoned in writ jurisdiction where the petitioner had shown that the appeal could not be filed within time due to circumstances beyond its control. - HELD THAT: - The Court held that though the Appellate Authority is bound by the limitation prescribed under Section 107 of the RGST/CGST Act, 2017, the reasons shown by the petitioner for not filing the appeal within the stipulated time were beyond its control. The Court further held that refusal to permit adjudication of the appeal on merits in such circumstances would cause grave injury and prejudice. Following the consistent view already taken by the Court in the decisions cited before it, the delay was condoned and a direction was issued to entertain and decide the appeal on merits. [Paras 6, 7, 8, 9]

The delay in filing the appeal was condoned, and the Appellate Authority was directed to entertain and adjudicate the appeal on merits.

Final Conclusion: The writ petition was allowed to the limited extent of condoning the delay in filing the statutory appeal, and the Appellate Authority was directed to entertain and decide the appeal on merits. The challenge to the vires of Section 107(4) read with the notification was not pressed and was left open.

Bail - Parity in bail - Documentary evidence

Bail - Parity in bail - Documentary evidence - No custodial remand - Entitlement of the applicant to bail in prosecution alleging fraudulent availment and utilization of input tax credit and issuance of bogus invoices. - HELD THAT: - The Court granted bail after noting that no custodial remand of the applicant had been taken, the material against him appeared to be primarily documentary in nature, and his presence could be secured during trial. The Court also took into account the absence of criminal antecedents, the fact that the alleged offence was punishable up to five years' imprisonment, the applicant's continued incarceration, his undertaking to cooperate, and the bail already granted to the co-accused, and found these circumstances sufficient to enlarge him on bail.

The applicant was directed to be released on bail, including on the ground of parity, subject to conditions.

Final Conclusion: The bail application was allowed. Bail was granted on consideration of parity with the co-accused, the documentary nature of the evidence, absence of criminal antecedents, and the fact that no custodial remand had been sought.

Bogus purchases - Disallowance restricted to profit element - Substantial question of law - Profit element in disputed purchases - Disallowance restricted to 6% by ITAT - HC [2025 (11) TMI 1982 - GUJARAT HIGH COURT] accepted the principle that in such cases the entire purchase amount is not to be taxed and only the income component embedded in the disputed purchases can be brought to tax to prevent revenue leakage. Since the Tribunal had followed that line of authority and upheld disallowance at 6% on the facts before it, no interference was warranted.

HELD THAT:- We find no grounds to interfere with the impugned order passed by the High Court as SLP titled, “The Pr. Commissioner of Income Tax 1 Surat vs. M/s. Surya Impex” [2023 (12) TMI 228 - SC ORDER]arising out of the order relied upon by the High Court in the impugned order, was dismissed by this Court on 28.11.2023.

The special leave petition is, accordingly, dismissed.

Reopening of assessment u/s 147 - reasons to believe -Non disposal of objections - AO has not provided any documents, statements or any material to the petitioner as relied upon

As decided by HC [2025 (4) TMI 544 - GUJARAT HIGH COURT] AO has failed to consider the objections of the petitioner in the true perspective and in absence of any material pertaining to the details relating to the petitioner, so as to prove that income has escaped assessment.

HELD THAT:- The learned counsel for the petitioner fairly states that against the same impugned order, another special leave petition [2026 (2) TMI 817 - SC ORDER] was dismissed by this Court vide order dated 13.02.2026.

In view of the above, the special leave petition is dismissed.

Reopening of assessment - reasons to believe - tangible material to form a belief were available that the Petitioners, non-resident companies, had a Permanent Establishment (PE) in India - HC held [2025 (5) TMI 2058 - DELHI HIGH COURT] a plain reading of the reasons as recorded clearly indicates that there was no tangible material for forming a belief that the Petitioners had a dependent PE or a Fixed Place PE in India during the previous years relevant to the said assessment years in respect of which the impugned notices u/s 148 of the Act are issued, was sustainable.

HELD THAT:- Delay was condoned and the Special Leave Petition was dismissed as no good ground for interference with the impugned order of the High Court was found.

TCS u/s 206C - compounding fees received from illegal miners/transporters of minerals - Scope of Mines and Minerals (Development and Regulation) Act, 1957/ ‘the MMDR Act’

As decided by HC [2025 (6) TMI 2041 - CHHATTISGARH HIGH COURT] ITAT is completely unjustified in holding that compounding fee/fine (TCS) would be chargeable under Section 206C(1C) of the IT Act by relying upon the definition contained in Section 2(47) of the IT Act. Accordingly, we are unable to uphold the judgment & order passed by the ITAT relying on Section 2(47) of the IT Act.

HELD THAT:- Delay was condoned and the special leave petitions were dismissed, the Court declining to interfere with the impugned judgment(s) and order(s) of the High Court.

Fixed Place Permanent Establishment (PE) in India - taxability, the existence of a PE and attribution of income - whether NIPL would constitute a PE of Nokia OY? - gross delay of 286 days in filing this Special Leave Petition

HELD THAT:- The Special Leave Petition was dismissed on the ground of delay, the Court holding that the reasons assigned for condonation of the delay of 286 days were neither satisfactory nor sufficient in law.

Writ of mandamus - Judicial restraint in disputed allegations - Exercise of writ jurisdiction - writ petition invoking Articles 14, 19(1)(a), 21, 261 and 265 of the Constitution seeking enforcement of statutory duties against alleged tax evasion based on judicially admitted unaccounted cash transactions of approximately ₹1.80 crores, supported by an FIR, sworn testimony before the Family Court, and affidavits reflecting disproportionate declared assets

HELD THAT:- The Court noted that the Single Judge had declined to enter into the merits of the allegations and had held that, having regard to the facts of the case and the nature of the relief sought, a writ of mandamus could not be issued at that stage. On examining the impugned order and the material placed with the writ petition and writ appeal, the Court found no illegality, irregularity or jurisdictional error in that approach and therefore declined to interfere in appeal. [Paras 7, 8]

The refusal to exercise writ jurisdiction was upheld and the writ appeal was dismissed.

Final Conclusion: The Court upheld the order of the learned Single Judge declining mandamus and held that no illegality, irregularity or jurisdictional error was made out. The writ appeal was dismissed as devoid of merit.

Prima facie adjustment u/s 143(1)(a) - Debatable issue - delayed Employees' contribution to ESI and EPF

HELD THAT: - The Court held that the power under Section 143(1)(a) is confined to summary and apparent adjustments and does not extend to adjudication of contentious questions. On the date of the intimation, there existed divergent High Court views on the interplay of Section 36(1)(va) and the due dates under the welfare enactments, and the controversy was then pending before the Supreme Court in Checkmate Services Private Limited [2022 (10) TMI 617 - SUPREME COURT (LB] That issue was settled only later.

Applying the principles stated in Kvaverner John Brown Engg. (India) Pvt. Ltd. [2008 (4) TMI 38 - SUPREME COUR] and Rajesh Jhaveri Stock Brokers Pvt. Ltd. [2007 (5) TMI 197 - SUPREME COUR] the Court held that a highly debatable issue could not be adjusted summarily under Section 143(1)(a). The fact that the audit report disclosed delayed deposits did not convert the controversy into an apparent inadmissible claim.

The Court also held that reliance by the Tribunal on M/s. BPS Infrastructure [2024 (4) TMI 1006 - CHHATTISGARH HIGH COUR] was misplaced, since that matter had been dismissed on limitation without deciding the present question. The Revenue's plea on the retrospective effect of Checkmate was held to be beside the point, because the controversy before the Court concerned the permissibility of resorting to Section 143(1)(a) when the issue was still debatable. [Paras 14, 15, 16, 17, 18]

Final Conclusion: The appeal was allowed. The Court held that the disallowance could not validly be made through summary processing under Section 143(1)(a) when the issue was then debatable, and accordingly set aside the intimation and the appellate orders, while reserving liberty to the Revenue to act in accordance with law.

Scope of prima facie adjustment u/s 143(1)(a) - Debatable issue - Disallowance of employees' contribution - delayed deposit of employees' contribution towards ESI and EPF

HELD THAT: - The Court held that the power under section 143(1)(a) is summary in nature and is confined to adjustments apparent from the return. On the date of the intimation, the question whether delayed deposit of employees' contribution, though made before filing of return, was allowable was a highly debatable issue, and the matter was then pending authoritative resolution.

Since conflicting judicial views existed, the Assessing Officer could not decide that controversy by way of prima facie adjustment. The mere disclosure of delayed deposit in the audit report did not convert the claim into an apparent disallowance. The Tribunal also erred in relying on a decision that had only dismissed an appeal on limitation and had not answered the question involved here. The later settlement of law by the Supreme Court did not justify resort to section 143(1)(a) for an adjustment made at a time when the issue was still debatable; if at all, the matter had to be examined in regular assessment in accordance with law. [Paras 14, 15, 16, 17, 18]

The intimation u/s 143(1)(a), and the appellate orders affirming it, were set aside, with liberty to the Revenue to proceed in accordance with law.

Final Conclusion: The Court held that the impugned disallowance could not have been made through summary processing under section 143(1)(a), because the underlying deductibility issue was debatable on the date of intimation. The appeal was allowed, the orders of the Assessing Officer, CIT(A), and ITAT were set aside, and liberty was reserved to the Revenue to proceed in accordance with law.

Substantial question of law - international transaction of AMP expenses Depreciation on block of assets - Consistency in accepted earlier years

Depreciation on block of assets - Consistency in accepted earlier years - disallowance of depreciation on plant and machinery and building - HELD THAT: - The Court held that the Tribunal had deleted the disallowance by following earlier orders in the assessee's own case on the same issue. It noted that, for prior years, denial of depreciation had been overturned by the appellate authorities and that position was accepted by the Department. Since the Revenue sought to raise the same issue for the present year without any change in circumstances, no substantial question of law arose for consideration. [Paras 4, 5]

Question (B) was held not to raise any substantial question of law and was not admitted.

TP adjustment - Advertising, marketing and promotion expenditure - International transaction or not? - HELD THAT: - The Court noted that the Tribunal had relied on its decision in Thomas Cook (India) Ltd [2016 (7) TMI 318 - ITAT MUMBAI] and that an appeal from that decision had already been admitted by the Court. On that basis, it admitted the appeal on this question. [Paras 2]

Question (A) was admitted for consideration as a substantial question of law.

Expenditure prohibited by law - allowability of payments made to doctors - violation of clause 6.8 of IMC Regulations - HELD THAT: - The Court found that this question required consideration in light of the decision of the Supreme Court in Apex Laboratories (P) Ltd [2022 (2) TMI 1114 - SUPREME COURT] It therefore treated the issue as a substantial question of law fit for admission. [Paras 3]

Question (C) was admitted for consideration as a substantial question of law.

Final Conclusion: The appeal was admitted only on the questions concerning AMP expenditure and payments made to doctors. The challenge to deletion of the depreciation disallowance was rejected at the threshold, the Court holding that no substantial question of law arose on that issue.

Make available test - Fees for technical services under India-UK DTAAservices provided by the Assessee under the Intra Group Service Agreement - Enduring benefit - HELD THAT: - The Court held that the arrangement reflected a commercial agreement for centralized support and supervision, while the ultimate control, supervision and technical know-how continued to remain with the parent company.

Mere guidance, support or the possibility that employees of the Indian entity may incidentally develop some skill in the course of implementation did not establish that technical knowledge, skill, know-how or processes had been made available to the Indian entity.

In the absence of material showing that scientific or technical know-how was in fact transferred so as to enable the Indian entity to independently apply it, the essential condition for treating the receipts as fees for technical services was not satisfied. [Paras 11, 12, 13]

The receipts from cross-charged services were rightly held not taxable as fees for technical services under Article 13 of the India-UK DTAA.

Final Conclusion: The Court upheld the Tribunal's view that the intra-group support services did not satisfy the make available requirement and therefore were not taxable as fees for technical services under the India-UK DTAA. As no substantial question of law arose, the Revenue's appeal was dismissed.

Reopening beyond four years - Failure to disclose fully and truly all material facts - Recorded reasons cannot be supplemented - Vagueness in reasons for reopening

HELD THAT: - The Court found that, in the original scrutiny assessment, the AO had specifically called for details of unsecured loans, the assessee had furnished the confirmations sought, and the assessment u/s 143(3) was completed without any addition on that account. In such a case, reopening beyond four years could be sustained only if the recorded reasons themselves disclosed a failure on the part of the assessee to fully and truly disclose material facts.

The recorded reasons merely stated that survey information showed bogus unsecured loans from shell companies, but did not identify the loans, the entities, or the material connecting the conclusion with the alleged escapement.

The Court held that such reasons were vague and lacked the material particulars necessary to satisfy the first proviso to Section 147. It further held, following Hindustan Lever Ltd. V/S R. B. Wadkar [2004 (2) TMI 41 - BOMBAY HIGH COURT] that reasons for reopening must stand or fall as recorded and cannot be improved through the order rejecting objections or a subsequent notice. On that basis, the statutory condition for reopening after four years was not met. [Paras 14, 15, 16, 18]

The impugned notice under Section 148 was held to be unsustainable and was quashed.

Final Conclusion: The Court held that the reassessment notice issued after four years from the end of A.Y. 2013-14 did not satisfy the condition of failure to fully and truly disclose material facts, and that the recorded reasons were vague and could not be supplemented later. The notice under Section 148 was therefore quashed.

Bogus purchases - Estimation of profit element - HELD THAT: - The Tribunal found that neither the AO nor the appellate authority had cited any comparable case or material to justify adoption of 25% as the additional profit on the alleged bogus purchases.

It further noticed that the assessee had already disclosed profit in the return and that the assessee, being a trader, accepted estimation of the extra profit at 10% of the alleged bogus purchases. On that basis, the addition was confined to the profit element embedded in such purchases at 10%, and the balance disallowance was directed to be deleted. [Paras 6]

The addition was sustained only to the extent of 10% of the alleged bogus purchases, and the remainder of the disallowance was deleted.

Final Conclusion: Tribunal partly allowed the appeal by holding that the 25% disallowance of alleged bogus purchases was excessive and unsupported by any comparable basis. The addition was restricted to 10% of such purchases as the extra profit embedded therein.

Reopening on borrowed satisfaction - Non-application of mind in recording reasons - Addition beyond reasons recorded - reopening was on account of alleged transaction with one entity and the addition has been made on account of another entity - HELD THAT: - The Tribunal found that the very foundation of reopening was the alleged receipt from M/s Super Commotrade Pvt. Ltd., whereas the record showed that the assessee had received the amount from M/s Simplex Commosale Pvt. Ltd.

The reasons themselves indicated only a reproduction of the investigation report, without any independent inquiry, analysis of material, or live link drawn by the Assessing Officer between the information received and escapement of income. Since the original assessment had already examined the receipt from M/s Simplex Commosale Pvt. Ltd., a proper examination of the record before recording reasons would have revealed the factual position. The reopening was therefore based on borrowed satisfaction and suffered from clear non-application of mind.

The recorded reasons were held unsustainable and incapable of supporting the reassessment.

Rather it is a settled position that where no addition is made on the issue for which the case was reopened, no addition can be sustained on any other issue. Here the reopening was on account of alleged transaction with one entity and the addition has been made on account of another entity. Certainly without there being anything in the reasons at the time of reopening or otherwise during the assessment that the two entities are not actually separate the additions cannot be considered to be one arising out of the reasons recorded.

Reliance in this regard has been made on the judgement of Hon’ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd. . [2010 (4) TMI 431 - BOMBAY HIGH COURT] and Ranbaxy Laboratories Ltd. [2011 (6) TMI 4 - DELHI HIGH COURT] wherein it has been categorically held that if the AO does not make any addition on the issue forming the basis of reopening, he cannot proceed to make additions on other issues. [Paras 6 and 7]

Final Conclusion: The Tribunal quashed the reassessment on the ground that the reopening was founded on borrowed satisfaction and a factual premise inconsistent with the record. Since the addition was made on a matter different from the one forming the basis of reopening, the impugned reassessment order was set aside.

Unsecured loans u/s 68 - Identity, creditworthiness and genuineness - Source of source - NBFC lender - Additions on account of unsecured loans and corresponding interest

HELD THAT: - The Tribunal held that, for the lenders in question, the assessee had produced confirmations, PAN, returns, financial statements, ledger accounts and bank records, and several of the lenders were NBFCs or listed entities carrying on financing activity in the ordinary course. The objections relied upon by the AO, such as allegations of dummy directors, incorrect or disputed e-mail linkage, absence of commercial expediency, low returned income, or reliance on additions made in the hands of the lenders in earlier years, were held to be insufficient once the primary onus stood discharged.

Tribunal further held that, in the absence of any material found in search showing any cash component or accommodation entry, the additions could not rest on surmises; repayment through banking channels and the financial strength of the lenders reinforced genuineness. It was also held that the principle of source of source was not attracted in the facts of the case. Applying these principles, the additions sustained by the first appellate authority in respect of Sundram Consultants Pvt. Ltd., Jorehaut India Ltd., Sesun Marketing Pvt. Ltd. and Manikaran Mercantile Pvt. Ltd. were deleted, while the deletions granted by the first appellate authority in respect of Dolf Leasing Ltd., Sky Box Investment Ltd., Quasar India Ltd. and Rita Finance and Leasing Ltd. were upheld. [Paras 9, 10, 11, 12, 13]

The assessee's appeals were allowed and the Revenue's appeals were dismissed.

Final Conclusion: The Tribunal held that the impugned additions relating to unsecured loans and interest were unsustainable where the assessee had established identity, creditworthiness and genuineness and the Revenue had failed to produce incriminating material to show accommodation entries. Consequently, the assessee's appeals were allowed and the Revenue's appeals were dismissed.

Capital gains exemption on investment in new residential house - Unexplained money u/s 69A - Presumption of validity of registered sale deed

Capital gains exemption on investment in new residential house - Unexplained money - Presumption of validity of registered sale deed - HELD THAT: - The Tribunal found that the sale of the original flat and the purchase of the new flat stood evidenced by registered instruments, and the payment of stamp duty and registration charges fortified the genuineness of the acquisition. The vendor had confirmed that the consideration was received through banking channels in August 2017, and the assessee had sufficient bank balance when the cheques were issued at the time of registration. The lower authorities had proceeded on an incorrect factual premise by treating the purchase amount as unexplained merely because the cheques were encashed later, and by allowing suspicion regarding the lease agreement to overshadow the registered purchase transaction itself. Since there was no case that the registered purchase deed was sham or fraudulent, and the investment was made within the period contemplated for the exemption, denial of the claim and the addition as unexplained money were held to be unsustainable. [Paras 11, 12, 13, 14]

The addition relating to the purchase of the new flat was deleted, and the deduction claimed for reinvestment was directed to be allowed.

Unexplained money - Cash deposits - Source of cash deposits - HELD THAT: - The Tribunal held that the cash component received on sale of the original flat was directly verifiable from the registered sale deed and had already been accepted as part of the sale consideration while computing capital gains. As regards the balance cash deposits, the assessee had furnished bills and vouchers showing sale of household items and electronic goods, and the surrounding circumstances supported the explanation that these items were disposed of on sale of the flat. The individual sale values being below the prescribed threshold, failure to retain PAN particulars of the purchasers did not discredit the explanation. On the overall facts, the explanation for the deposits was found plausible, including the small remaining amount explained from current income and cash balance. [Paras 17, 18]

The entire addition on account of cash deposits was held unjustified and was directed to be deleted.

Final Conclusion: The Tribunal allowed the appeal and held that the denial of the reinvestment claim and both additions made as unexplained money were unsustainable. The assessee's claim was accepted and the impugned additions were directed to be deleted.

Reason to believe - Seizure of goods - Foreign origin of goods - Lack of jurisdiction

Reason to believe - Seizure of goods - Foreign origin of goods - Jurisdictional defect - Seizure and continued detention of the areca nuts could not be sustained in the absence of any material giving rise to a reason to believe that the goods were of foreign origin. - HELD THAT: - The Court held that seizure of goods by the customs authorities had to rest on some objective material indicating foreign origin. On the record, the first laboratory report stated that the goods resembled areca nuts of India and were fit for human consumption, while the second report also stated that the goods were fit for human consumption but expressly recorded that the country of origin could not be ascertained. Even in the other connected matters, though the second report differed on fitness for consumption, it remained identical on inability to ascertain origin. Since the authorities could not place any material before the Court to justify the formation of a reason to believe that the goods were of foreign origin, the seizure lacked foundation and any proceedings under the Customs Act, 1962 were without jurisdiction. [Paras 11, 12, 13, 14]

The seizure orders were quashed and the authorities were directed to release the goods to the petitioners in accordance with law within one week.

Final Conclusion: The Court held that, in the absence of any material to support a reason to believe that the seized areca nuts were of foreign origin, the customs authorities had no jurisdiction to seize or continue to detain the goods. The seizure orders were therefore set aside and release of the goods was directed.

Mandatory pre-deposit - Bank guarantee vis-a-vis pre-deposit - Maintainability of appeal

Mandatory pre-deposit - Bank guarantee vis-a-vis pre-deposit - Provisional release security - An unencashed bank guarantee furnished pursuant to an order of provisional release does not satisfy the mandatory pre-deposit requirement for filing an appeal under Section 129E of the Customs Act, 1962. - HELD THAT: - The Tribunal held that Section 129E requires the mandatory pre-deposit to be made before the appeal can be entertained. It further held that an amount deposited during investigation cannot be equated with a bank guarantee furnished as security under the provisional release order. The authorities relied upon by the appellant were found inapplicable because those decisions dealt with cases where the bank guarantee had already been encashed, or where the liability stood admitted, whereas in the present case the bank guarantee had not been encashed and the liability itself was being contested in appeal. [Paras 4, 5, 6]

The objection of the Registry was upheld, and the appellant was directed to make the statutory pre-deposit within the time granted before the appeal could be admitted for hearing on merits.

Final Conclusion: The Tribunal held that the statutory requirement of pre-deposit under Section 129E had not been satisfied by the subsisting bank guarantee furnished for provisional release. The appeal could not be entertained on merits unless the appellant made the prescribed pre-deposit within the period granted.

Classification-linked IGST levy - Residual entry in rate notification - Extended limitation for suppression

Classification-linked IGST levy - Residual entry in rate notification - Self-assessment acceptance - The higher IGST demand under the residual entry could not be sustained when the show cause notice did not challenge the classification adopted at import. - HELD THAT: - The Tribunal held that, for IGST purposes, the tariff heading mentioned in the rate notification is inseparably linked with the description of goods in that entry, and the same goods cannot carry one heading for basic customs duty and another for IGST. Since the importer had classified the goods under heading 8432 at the time of self-assessment and the notice did not propose reclassification or dispute that classification, the Department could not bypass that position and merely contend that the goods were not specifically covered by Serial No. 196 of Schedule II and therefore fell under the residual Serial No. 453 of Schedule III. The Tribunal further noted that even if a more appropriate tariff entry might exist elsewhere, that case was never made out in the show cause notice. On that basis, the appellate remand directing fresh adjudication on the competing IGST entries was unwarranted. [Paras 11, 12, 13, 14, 16]

The remand order was set aside and the adjudicating authority's order dropping the demand on merits was upheld.

Extended limitation for suppression - Absence of wilful misstatement - The extended period under Section 28(4) was not available in the absence of any material showing wilful misstatement, collusion or suppression. - HELD THAT: - The Tribunal found that the notice invoked the extended period on allegations of wilful misstatement and suppression, but contained no averment establishing mala fides on the part of the importer. As there was nothing to show misdeclaration, collusion or suppression of facts, the invocation of the extended period was held unsustainable. The demand was therefore barred by limitation. [Paras 15, 17]

The Revenue failed on limitation as well, and the demand could not survive on the extended period.

Final Conclusion: The Tribunal held that the Department could not demand higher IGST under the residual entry without first challenging the classification adopted at import, and that the extended period had also been wrongly invoked. The order of remand passed by the Commissioner (Appeals) was set aside and the adjudicating authority's order dropping the demand was restored.

Import through State Trading Enterprises - High Seas Sale - Confiscation and penalty for policy violation

Whether the appellant is liable to be penalized for having filed Bill of Entry for seeking clearance of Technical Grade Urea imported by State Trading Corporation / MMTC and which was procured by the appellant on High Sea Sales basis from them and cleared in the domestic territory? - HELD THAT: - The Tribunal held that the controversy stood covered by its earlier decision in Sunita Commercial Pvt Ltd and Balaji Action Wooddecor Pvt Ltd. [2023 (1) TMI 814 - CESTAT AHMEDABAD] where it was found that the policy requirement was that Technical Grade Urea should be imported through the State Trading Enterprise and not necessarily by the end-user directly through its own licence. Since the goods had been imported through MMTC/State Trading Enterprise and were thereafter sold on High Seas basis, mere filing of the Bill of Entry by the appellant did not render the import contrary to law. On that basis, the goods were not liable to confiscation and the penalty imposed as a consequence could not survive. The Revenue's reliance on Marico Industries Ltd [2006 (11) TMI 420 - CESTAT, MUMBAI] was rejected as inapplicable because that case turned on a materially different factual and legal situation. [Paras 4, 5]

The penalty was held unsustainable and the appeal was allowed.

Final Conclusion: The Tribunal held that import of Technical Grade Urea through MMTC/STC remained compliant with the applicable policy notwithstanding its High Seas Sale to the appellant and filing of the Bill of Entry by the appellant. Accordingly, the penalty could not be sustained and the appeal was allowed.

Dismissal for non-prosecution - Adjournment beyond statutory limit

Dismissal for non-prosecution - Adjournment beyond statutory limit - Rule 20 of CESTAT Procedure Rules - The appeal was liable to be dismissed for non-prosecution when the appellant remained absent repeatedly and no justification existed to grant adjournment beyond the statutorily permissible limit. - HELD THAT: - The Tribunal noted that the matter had already been listed repeatedly and that there was neither appearance on behalf of the appellant nor any request to have the appeal decided on merits. Referring to the statutory restriction that adjournment cannot be granted more than three times, and to Rule 20 permitting dismissal where the appellant does not appear when the appeal is called on for hearing, the Tribunal held that no further adjournment was justified. The determinative basis of the order was the appellant's repeated default coupled with the statutory bar against continued adjournments. [Paras 4, 5]

The appeal was dismissed for non-prosecution under Rule 20 of the CESTAT Procedure Rules, 1982.

Final Conclusion: Holding that repeated absence could not justify adjournment beyond the statutory limit, the Tribunal declined any further indulgence and dismissed the appeal for non-prosecution.

Fraudulent or malicious initiation of CIRP - Scope of Section 65 of the IBC - Forensic audit directions

Fraudulent or malicious initiation of CIRP - Scope of Section 65 of the IBC - Re-agitation of debt and default - The materials relied on by Canara Bank did not justify termination of the CIRP under Section 65 on the ground that the Section 7 proceedings had been initiated fraudulently or with malicious intent. - HELD THAT: - The Appellate Tribunal held that a Section 65 application is maintainable notwithstanding finality of the Section 7 admission order, since the adjudicating authority may terminate proceedings if their initiation is shown to be fraudulent or malicious. However, that jurisdiction must rest on specific pleadings and material establishing such fraud or malicious intent. In the present case, the foundation of Canara Bank's application was the same contention already raised by the corporate debtor in the Section 7 proceedings, namely that the debt had been assigned to ABC Pvt. Ltd. and no creditor-debtor relationship survived. That issue had already been considered while admitting the Section 7 petition. The impugned order also examined the addendum and found no material showing that the conditions for assignment under Clause 3 had arisen. The Tribunal further noted that the financial creditor's debt stood reflected in the corporate debtor's financial statements for earlier years, that the financial creditor was not party to the alleged assignment, and that there was no sufficient material to infer collusion, fraud or malicious initiation. The application was therefore only an attempt to reopen the earlier finding on debt and default, which could not by itself sustain action under Section 65. [Paras 15, 16, 17, 25, 26]

The refusal to exercise jurisdiction under Section 65 was upheld and Canara Bank's appeal was dismissed.

Forensic audit directions - Relief beyond pleadings - The direction to the resolution professional to conduct a forensic audit could not be sustained once the adjudicating authority had declined to grant relief under Section 65 and no such relief had been sought in the application. - HELD THAT: - The Appellate Tribunal held that the forensic audit direction was issued in proceedings arising out of the Section 65 application. Once the adjudicating authority declined to exercise jurisdiction under Section 65, no further consequential direction of that nature was required in that application. The Tribunal also found that the application itself did not contain any prayer seeking a direction for forensic audit. The direction was therefore unsustainable. [Paras 28, 29]

The appeal filed by the financial creditor was allowed and the direction for forensic audit was set aside.

Final Conclusion: The Appellate Tribunal held that no case of fraudulent or malicious initiation of CIRP was made out under Section 65, since the plea sought to reopen issues already examined at the stage of admission and was unsupported by sufficient material. While dismissing Canara Bank's appeal, it set aside the separate direction for forensic audit as being unwarranted and outside the relief sought.

Pre-existing dispute - Operational debt - Insolvency not a debt recovery mechanism

Pre-existing dispute - Operational debt - Reconciliation of dues - Pending labour proceedings - The rejection of the Section 9 application on the ground of pre-existing dispute was justified. - HELD THAT: - The Appellate Tribunal held that the absence of a reply to the Section 8 demand notice did not preclude the corporate debtor from placing material before the Adjudicating Authority to show a dispute existing prior to the notice. On the record, the corporate debtor had specifically pleaded in its reply that wage payments had been made on different bases, that the balance dues required reconciliation, and that disputes regarding wage entitlement and quantification were already pending before the Industrial Court and had also travelled to the Bombay High Court before issuance of the demand notice. Those proceedings showed that the very basis, extent and quantification of the wage claim had not attained finality. Applying the principle in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. [2017 (9) TMI 1270 - SUPREME COURT] the Tribunal held that the Adjudicating Authority was only required to see whether a plausible contention showing dispute had been raised and not to examine its ultimate correctness. Since the dispute was not hypothetical, illusory or spurious, the requirement of an undisputed operational debt was not satisfied. The Tribunal further held that the insolvency process cannot be invoked as a substitute for recovery proceedings, particularly where wage-based claims are disputed. [Paras 16, 17, 18, 19, 20]

The Section 9 application was rightly rejected, and the appeal was dismissed.

Final Conclusion: The Appellate Tribunal upheld the dismissal of the Section 9 application, holding that the wage claim was already the subject of a bona fide pre-existing dispute as to entitlement and quantification. Since the insolvency process cannot be used to recover disputed dues, the appeal was dismissed.

Perjury proceedings - Binding effect of approved resolution plan - Frivolous applications - Costs for abuse of process

Perjury proceedings - False statements in affidavit - Deliberate falsehood - The statements made by the resolution professional in the reply affidavit did not warrant initiation of perjury proceedings. - HELD THAT: - The Appellate Tribunal accepted the finding that initiation of perjury proceedings requires prima facie satisfaction of a deliberate falsehood on a matter of substance, established by distinct evidence, and not by suspicion. The reply affidavit complained of had been filed by the resolution professional in answer to the application seeking to reopen the approved resolution plan, and the statements therein were only a presentation of his version in defence of the CIRP steps taken by him. On that basis, no mala fide intent, deliberate attempt to mislead the Tribunal, or deceptive statement amounting to perjury was made out. [Paras 9, 11, 12, 13]

The rejection of the application seeking perjury action against the resolution professional was upheld.

Binding effect of approved resolution plan - Finality of resolution plan - Frivolous applications - Costs for abuse of process - Applications filed after implementation of the resolution plan to unsettle its approval, when the approval order had never been challenged, were frivolous and justified imposition of costs. - HELD THAT: - The Appellate Tribunal held that once the resolution plan was approved under section 31 of the IBC, it became binding on all stakeholders. Since the order approving the plan had never been challenged by the suspended director, it had attained finality. The subsequent applications filed long after implementation of the plan, seeking to set aside the approval and followed by the perjury application founded on the reply filed to such proceedings, were rightly treated as a misguided attempt to keep the litigation alive and delay the matter. In that background, the finding of frivolousness and the award of costs were found justified. [Paras 7, 8, 10, 12, 13]

The finding that the proceedings were frivolous was affirmed, and the costs imposed on the appellant were sustained.

Final Conclusion: The Appellate Tribunal found no error in the order rejecting the application for perjury against the erstwhile resolution professional. Holding that the reply affidavit did not disclose any deliberate falsehood and that the appellant's repeated attempts to reopen an unchallenged and implemented resolution plan were frivolous, it dismissed the appeal and left the costs undisturbed.

Recall jurisdiction - Inherent power to recall - Review in the guise of recall

Recall jurisdiction - Inherent power to recall - Review in the guise of recall - The application for recall of the appellate order was not maintainable on the grounds urged by the applicant. - HELD THAT: - The Appellate Tribunal held that its power to recall is confined to the limited categories recognised in Union Bank of India v. Dinkar T. Venkatasubramanian and Ors. [2023 (7) TMI 209 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] drawing from Budhia Swain v. Gopinath Deb [1999 (5) TMI 596 - SUPREME COURT] namely patent lack of jurisdiction, fraud or collusion, mistake of the court prejudicing a party, or absence of service or representation of a necessary party. On examining the grounds raised, the Tribunal found that they had already been considered in the earlier appellate judgment and that no case of lack of jurisdiction, fraud, collusion, court-caused prejudice, non-joinder of a necessary party, or violation of natural justice had been established. The application was therefore found to be an attempt to seek review in the garb of recall, which was impermissible, particularly when the applicant's remedy, if any, lay in appeal against the earlier order. [Paras 7, 8]

The recall application was dismissed as not disclosing any legally sustainable ground for recall.

Final Conclusion: The Appellate Tribunal declined to recall its earlier order, holding that none of the recognised grounds for recall had been made out. The application was treated as an impermissible attempt to reopen the merits by seeking review under the guise of recall and was accordingly dismissed.

Operational debt - Interest on delayed payment - Invoice stipulation - Threshold default under Section 4 - Pre-existing dispute

Operational debt - Interest on delayed payment - Invoice stipulation - Threshold default under Section 4 - Interest mentioned only in invoices, without a contractual stipulation or established course of dealing showing mutual acceptance, could not be added to the principal amount for determining whether the minimum default threshold was met. - HELD THAT: - The Appellate Tribunal held that mere mention of interest in invoices does not by itself make that amount part of the enforceable operational debt. For interest on delayed payment to be included, there must be either a contractual term between the parties or conduct and past practice evidencing mutual acceptance of such liability. In the present case, the appellant admitted that there was no formal agreement governing payment of interest and also admitted that no interest had ever been paid earlier by the corporate debtor. In those circumstances, the invoice clause was treated as a unilateral stipulation incapable of enlarging the debt. Consequently, only the admitted principal outstanding could be considered, and that amount fell below the statutory threshold required for a Section 9 application. [Paras 9, 10, 11, 12, 13]

The interest component was excluded from the operational debt, and the Section 9 application was held to be below the minimum threshold.

Pre-existing dispute - Enforceability of interest claim - Summary insolvency proceedings - The corporate debtor's denial of liability to pay interest, in the absence of any mutually agreed term for such payment, constituted a dispute which could not be adjudicated in summary insolvency proceedings. - HELD THAT: - The Appellate Tribunal observed that the corporate debtor had specifically disputed the interest claim in reply to the demand notice. Once payment of interest was not shown to be founded on any mutually accepted arrangement, the very enforceability of that interest claim became a live dispute between the parties. The Tribunal held that such a question could not be resolved in summary proceedings under Section 9 and would have to be examined by a competent court. This furnished an additional reason for declining admission of the insolvency application. [Paras 14]

The dispute regarding liability to pay interest was held sufficient to non-suit the appellant in Section 9 proceedings.

Final Conclusion: The Appellate Tribunal upheld the dismissal of the Section 9 application. It held that the interest claimed solely on the basis of invoice stipulations, without contractual backing or proof of mutual acceptance, could not be added to the principal outstanding, and the claim therefore remained below the statutory threshold; besides, the interest claim itself was disputed and not fit for determination in insolvency proceedings.

Proceeds of crime - Equivalent value attachment - Reason to believe - Reverse burden of proof

Proceeds of crime - Equivalent value attachment - Statutory interpretation - - HELD THAT: - The Tribunal held that the plain language of section 2(1)(u) expressly includes not only property derived or obtained from criminal activity relating to a scheduled offence, but also the value of any such property. Read with the definition of value, this permits attachment of alternate property of equivalent value where the directly derived property is not available. The contention that equivalent-value attachment is permissible only when property is held outside India was rejected as contrary to the statutory text and to the interpretation accepted in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] and the later High Court decisions noticed by the Tribunal. The Tribunal also declined to follow Seema Garg, [2020 (3) TMI 460 - PUNJAB & HARYANA HIGH COURT] noting that it had been held to be no longer good law in Dilbag Singh [2024 (11) TMI 833 - PUNJAB AND HARYANA HIGH COURT] and had been disapproved in the reasoning referred to from Prakash Industries [2022 (7) TMI 877 - DELHI HIGH COURT] [Paras 26, 27, 28, 29, 30]

Untainted property of equivalent value could validly be attached when the proceeds of crime were not traceable, and the appellant's challenge to the scope of section 2(1)(u) failed.

Property acquired prior to offence - Equivalent value attachment - Proceeds of crime - HELD THAT: - The Tribunal held that once the attachment is founded on the "value of such property" limb of the definition, the date of acquisition of the attached property loses significance. Relying on its earlier decision in Sadananda Nayak [2024 (10) TMI 1619 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI] and the authorities discussed therein, the Tribunal accepted that the definition covers attachment of equivalent-value property even if such property had been acquired before commission of the scheduled offence, provided the directly tainted property is unavailable or has been siphoned off. The appellant's reliance on Pavana Dibbur [2023 (12) TMI 49 - SUPREME COURT] and similar decisions was not accepted in view of the binding interpretation attributed to Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] and the reasoning approved in Axis Bank [2019 (4) TMI 250 - DELHI HIGH COURT] and Prakash Industries [2022 (7) TMI 877 - DELHI HIGH COURT] [Paras 31, 32]

The objection based on prior acquisition of the attached properties was rejected.

Reason to believe - Reverse burden of proof - Attachment proceedings - HELD THAT: - The Tribunal found that the material referred to in the provisional attachment order and in the adjudicating authority's order furnished sufficient basis for the statutory satisfaction under sections 5(1) and 8(1). It further held that under the scheme of the Act, particularly sections 8(1), 23 and 24 as noticed by it, the burden lies on the noticee to establish that the property is not proceeds of crime. The Tribunal also rejected the submission that attachment required proof that the holder knowingly dealt with the proceeds of crime, observing that the Act is directed at reaching proceeds of crime in whosever name they are kept or by whosoever they are held. On the facts recorded in the respondent's reply regarding transfers and gifting of the properties, no infirmity in the attachment was made out. [Paras 33, 34, 35, 36]

The statutory reasons to believe were held to be adequate, the appellant failed to discharge the burden cast under the Act, and the challenge to the confirmed attachment was rejected.

Final Conclusion: The Tribunal upheld the confirmation of attachment and dismissed the appeal. It held that property of equivalent value falls within the definition of proceeds of crime, such attachment is not restricted to property held abroad, prior acquisition of the attached property is no bar, and the statutory reasons to believe were adequately made out.

Taxability of hospital services under Government welfare scheme - Extended period of limitation - Penalty waiver for reasonable cause

Taxability of hospital services under Government welfare scheme - Denovo adjudication - The question whether treatment provided under the Kalaignar Kapitu Thittam was taxable as health services required fresh adjudication after examining the true nature of the scheme and the underlying arrangement. - HELD THAT: - Following M/s. Ganga medical Centre and Hospitals Pvt Ltd v. CCE, Coimbatore, [2018 (1) TMI 168 - CESTAT CHENNAI] and the Madras High Court decision in M/s Arvinth Hospital vs. The Additional Commissioner Central Excise, [2016 (11) TMI 238 - MADRAS HIGH COURT], the Tribunal held that taxability could not be concluded without first examining whether the scheme operated as an insurance policy or as a Government welfare scheme. Since that foundational inquiry had to precede any conclusion on the taxable character of the services, the merits were not finally decided and were remitted for fresh consideration, confined to the period falling within normal limitation. [Paras 14]

The impugned order was set aside on merits and the matter was remanded for fresh adjudication on taxability, limited to the period, if any, within the normal period.

Extended period of limitation - Penalty waiver for reasonable cause - The extended period could not be invoked and the penalties were not sustainable in view of the interpretational nature of the dispute and the confusion prevailing during the short-lived levy. - HELD THAT: - The Tribunal accepted that the levy operated only for a limited period and that there was considerable confusion on whether services rendered under the Government scheme were taxable health services or part of a welfare scheme. Treating the dispute as debatable and interpretational, it held that the assessee had shown reasonable cause. On that basis, Section 80, as then in force, was applied to delete the penalties, and for the same reason invocation of the extended period was held impermissible. [Paras 13, 14]

Penalties under sections 77 and 78 were set aside in toto under section 80, and denovo adjudication was directed only for the normal period as the extended period was held inapplicable.

Final Conclusion: The Tribunal set aside the impugned order and remanded the matter for fresh decision on taxability in the light of the law laid down in Arvinth Hospital, restricting the exercise to the normal period. It further held that the dispute was interpretational, and therefore the extended period was unavailable and the penalties were liable to be deleted under section 80.

Service tax on Construction of residential complex service - Composite works contract - Binding effect of assessee's own case

Demand of service tax with interest for April 2009 to June 2010 - HELD THAT: - The Tribunal found that the impugned demand for the later period arose out of the very same project and had been confirmed by substantially adopting the reasoning of the earlier commissioner order. Since that earlier order concerning the same project had already been set aside by the Tribunal in the appellant's own case [2018 (7) TMI 434 - CESTAT CHENNAI] the foundation on which the present demand rested no longer survived. Respectfully following that earlier decision on the same project, the Tribunal held that the demand for this period was liable to be set aside. [Paras 9, 10, 13, 14]

The demand of service tax with interest for April 2009 to June 2010 was set aside.

Composite works contract - Construction of residential complex service - Abatement as indicator of composite nature - For July 2010 to March 2011, the demand confirmed under construction of complex service - HELD THAT: - The Tribunal held that the departmental objection that there was no evidence of a composite works contract was misconceived, because the show cause notice itself had granted abatement while quantifying the demand, thereby acknowledging the composite character of the activity. On that factual basis, the service could not be taxed under construction of complex service as a simpliciter service. The decision relied on by the Revenue was distinguished since that case turned on absence of the agreement and denial of abatement, whereas here abatement had already been extended by the Department. The Tribunal also accepted the appellant's reliance on Pragati Edifice [2019 (9) TMI 792 - CESTAT HYDERABAD] for the proposition that after 01-07-2010, a composite contract is chargeable only under works contract service and not under construction of complex service. Since the present demand had been raised under the latter category, it could not be sustained. [Paras 11, 12, 13, 14]

The demand of service tax with interest for July 2010 to March 2011 under construction of complex service was set aside.

Final Conclusion: The Tribunal allowed the appeals and held that the impugned service tax demands with interest were wholly untenable. The earlier decision in the appellant's own case governed the same project for the prior period, and for the later period the activity, being composite in nature, could not be sustained under construction of complex service.

Refund claim - Doctrine of unjust enrichment - Works contract service - Refund proceedings vis-a-vis self-assessment.

Unjust enrichment - HELD THAT: - The Tribunal held that the contract value quoted by the appellant to Rajasthan Housing Board was inclusive of taxes and the contract itself stipulated that service tax was to be borne by the contractor. The impugned order also noted that part of the tax was deducted by Rajasthan Housing Board from payments made to the appellant. In the absence of documentary evidence showing that the incidence of tax had not been passed on, the appellant failed to discharge the burden required for refund. Applying the principle of unjust enrichment, the Tribunal held that refund, even if otherwise admissible, could not be granted. [Paras 6]

The finding that the refund claim was hit by unjust enrichment was upheld.

Works contract service - Taxability of composite construction contracts - HELD THAT: - On examining the nature of the contracts, the Tribunal found that the appellant had undertaken development work, construction and interlocking tile work involving both supply of material and rendition of services in relation to movable or immovable property. Since transfer of property in goods was involved in execution of the contracts, the activity squarely fell within the definition of works contract. The service tax paid on such contracts was therefore correctly paid, and the claim for refund on that basis was not maintainable. [Paras 6]

The claim for refund in respect of the contracts treated as works contract services was rightly rejected.

Refund proceedings vis-a-vis self-assessment - Finality of assessment - HELD THAT: - Relying on M/s Jagdamba Phosphates versus Commissioner of CGST, Udaipur [2024 (10) TMI 1547 - CESTAT NEW DELHI] which in turn applied ITC Ltd [2019 (9) TMI 802 - SUPREME COURT (LB)] and BT (INDIA) Private Limited [2023 (11) TMI 478 - DELHI HIGH COURT], the Tribunal reiterated that refund proceedings are in the nature of execution proceedings and cannot be employed to modify assessments that have attained finality. Since the appellant had not assailed the self-assessments, refund could not be granted by re-examining the taxability position in the refund proceedings themselves. [Paras 7]

The appellant was not entitled to seek refund by using refund proceedings to unsettle unchallenged self-assessments.

Final Conclusion: The Tribunal upheld rejection of the refund claim. It held that the claim was barred by unjust enrichment, that the services in question were taxable as works contract services, and that refund proceedings could not be used to reopen unchallenged self-assessments.

Cum-duty benefit - De novo adjudication on quantification

Cum-duty benefit - Inclusive value of taxable service - The appellant was entitled to cum-duty benefit where no service tax had been collected separately. - HELD THAT: - The Tribunal held that Section 67(2) applies where the gross amount charged is inclusive of service tax. Since service tax had not been collected separately, the amount received had to be treated as inclusive of tax and the taxable value had to be reworked on that basis. The Tribunal followed the principle recognised in CCE, Patna v. Advantage Media Consultant, and noted that the said view stood maintained by the Supreme Court in Commissioner v. Advantage Media Consultant . [Paras 7]

Cum-duty benefit was held to be available to the appellant.

De novo adjudication on quantification - Factual verification of additional evidence - The dispute on quantification of liability, interest and penalties required fresh adjudication on verification of the additional documents produced by the appellant. - HELD THAT: - The Tribunal found that the appellant had produced additional documents bearing on the correct quantification of liability and had also raised contentions regarding penalties. Since those materials had not been examined by the adjudicating authority, and the controversy involved factual verification of documents, records and connected evidence, the Tribunal held that it was not appropriate for it to undertake that initial fact-finding exercise. A fresh determination by the adjudicating authority was therefore necessary, with a reasoned order after considering the admitted liability, the additional evidence, the claim for recomputation and the consequential interest and penalties, while granting cum-duty benefit. [Paras 8, 9, 10, 11]

The impugned order was set aside and the matter was remitted for de novo adjudication, with direction to reconsider quantification, interest and penalties after examining the additional evidence and granting cum-duty benefit.

Final Conclusion: The Tribunal held that cum-duty benefit was available to the appellant. As the quantification dispute and consequential interest and penalty issues required factual verification of additional evidence, the impugned order was set aside and the matter was remanded for fresh adjudication.

Rectification of mistake apparent from record - Maintainability of second rectification application - Clerical error in appellate order. - HELD THAT: - The Tribunal found that the original appellate order, though founded on earlier decisions in the assessee's own case and on Nirma Ltd [2018 (2) TMI 476 - CESTAT AHMEDABAD], had erroneously allowed the assessee's appeal despite the discussion being in favour of the Revenue. The first rectification application corrected part of that error, but the contradiction still persisted because the impugned order was upheld while the assessee's appeal was nevertheless shown as allowed. Considering the decisions cited before it, and noting that only correction of an obvious clerical inconsistency was sought and no substantive re-adjudication was required, the Tribunal held that a second rectification application could be entertained to remove the surviving mistake apparent from the record. [Paras 8, 9]

The second rectification application was allowed, and the operative portion of the earlier appellate order stood corrected to uphold the impugned order and reject the assessee's appeal.

Final Conclusion: The Tribunal held that the surviving contradiction in the earlier rectified order constituted a mistake apparent from the record and could be corrected in a second rectification application. The application filed by the Revenue was accordingly allowed, and the earlier appellate order stood corrected to reject the assessee's appeal.

Section 4 and Section 4A valuation - Industrial or institutional consumer packages - Extended period of limitation - Penalty under section 11AC

Section 4 and Section 4A valuation - Industrial or institutional consumer packages - MRP declaration - Valuation of the impugned goods was required to be made under section 4 and not under section 4A of the Central Excise Act, 1944. - HELD THAT: - The Tribunal held that packages meant for industrial or institutional consumers fall outside the requirement of MRP declaration under Rule 3 of the LMPC Rules, 2015. Since the goods were cleared to industrial or institutional consumers and were labelled as not for retail sale and for industrial or institutional use only, they were not liable for MRP declaration. Consequently, MRP-based valuation under section 4A was held to be inapplicable and the declared transaction value under section 4 could not be rejected. [Paras 12, 13]

Adoption of section 4A was held unsustainable and the differential duty demand based on MRP valuation was set aside.

Extended period of limitation - Penalty under section 11AC - Invocation of the extended period and the consequential penalty were not sustainable. - HELD THAT: - The show cause notice was issued on 06.03.2020 for clearances covering the period from 23.09.2015 to 30.06.2017. On that basis, the Tribunal held that invocation of the extended period for recovery of duty was not sustainable. Since the demand itself could not be sustained on limitation, the penalty imposed also could not survive. [Paras 13]

The extended period was held inapplicable and the penalty was set aside.

Final Conclusion: The Tribunal held that the goods, having been cleared as packages meant for industrial or institutional consumers and marked as not for retail sale, were assessable under section 4 and not under section 4A. The demand, interest and penalty were accordingly set aside, and the appeal was allowed.