TMI Tax Updates e-Newsletter
Apr 29,2026

Corporate Insolvency Resolution Process - Effect of approved resolution plan - Extinguishment of unclaimed statutory dues - Blocking of input tax credit - Moratorium on Recovery - Finality of Insolvency Proceedings - HELD THAT: - The Court recorded that the resolution plan in respect of the corporate debtor had been approved by the NCLT, that the State had not lodged its claim in those proceedings, and that its subsequent attempts to recall the approval order and pursue appellate remedies before the NCLAT and the Supreme Court had failed. On that admitted position, the Court held that the respondents were not competent or entitled to continue the impugned proceedings or to keep the petitioner's ITC blocked. The relief to unblock the ITC followed from that finding, while leaving it open to the State to take such steps for recovery as may otherwise be available in law. [Paras 7, 8, 9]

The impugned notice was quashed and the respondents were directed to unblock the ITC and release the amount admissible in law, without prejudice to any other recovery action permissible under law.

Final Conclusion: The petition was allowed. In view of the approved resolution plan and the failure of the State's challenges thereto, the notice impugned in the writ petition could not be pursued and the blocked ITC was directed to be unblocked, subject to liberty to the State to take any other recovery action available under law.

Wrongful availment and distribution of input tax credit - Failure to consider material on record - audit report - fresh adjudication -HELD THAT:- The Court noted that the petitioner had specifically relied upon an audit report under Section 65(6) which, according to the petitioner, gave it a clean chit in relation to the disputed input tax credit distributed by the ISD for 2018-19 and 2019-20. As no material had been placed by the respondents to rebut that plea, the Court held that the impact of that audit report was required to be adjudicated by the competent authority. On that ground alone, the impugned order was set aside and the matter was directed to be decided afresh after considering the submissions and material placed by both sides. The Court expressly left all merits open, including the merits of the show cause notice and the petitioner's objections. [Paras 3, 4, 7]

The impugned order was set aside and the matter was remanded to the Additional Commissioner for fresh decision after considering the audit report and all material placed on record, without any adjudication on merits by the Court.

Final Conclusion: The Court interfered only on the ground that relevant material relied upon by the petitioner had not been considered. The adjudication order was therefore set aside and the matter remitted for fresh decision, with all issues on merits kept open.

Application seeking Anticipatory bail - wrongful availment of input tax credit - Custodial interrogation- Economic Offence - Benefit of Doubt - Documentary evidence - HELD THAT: - The Court found that the allegations were predominantly founded on documentary material, all relevant records had already been furnished to the authorities, and no compelling material was shown to establish the necessity of custodial interrogation. It also noted that the petitioner had cooperated with the inquiry, had no prior criminal antecedents placed before the Court, and had already deposited the amount alleged to have been evaded. On that basis, notwithstanding the economic nature of the offence, the Court held that arrest was not warranted and protection by way of anticipatory bail could be granted subject to conditions ensuring continued cooperation with the investigation. [Paras 7, 8]

Pre-arrest bail was granted subject to surrender, execution of bond, appearance as and when required, travel restriction, and full cooperation with the investigation.

Final Conclusion: The Criminal Petition was allowed. The Court granted anticipatory bail to the petitioner in the GST investigation, holding that the matter rested substantially on documentary evidence and that no sufficient ground for custodial interrogation had been shown.

Transitional input tax credit - Scope of appellate jurisdiction under Section 140 -Non-speaking and vague findings - system-generated mismatch - HELD THAT: - The Court held that the appellate authority's observations lacked clarity and were vague. It accepted the petitioner's contention that the jurisdiction in relation totransitional credit under Section 140 is compartmentalized, and that matters falling within the domain of the MVAT authorities could not be imported into that exercise without proper examination within the parameters of Section 140. Since the impugned order did not reflect such a confined and legally structured consideration, the appeal required fresh and independent adjudication by the appellate authority on the limited issue of transitional credit. [Paras 7, 8]

The impugned appellate order was quashed and the matter was restored to the appellate authority for fresh consideration of the transitional credit issue, after hearing the parties, with all contentions kept open.

Final Conclusion: The High Court partly allowed the writ petition by setting aside the appellate order and remanding the matter for fresh decision on the limited issue of transitional input tax credit. The remand was directed because the findings recorded by the appellate authority were vague and did not reflect a proper exercise of the confined jurisdiction under Section 140 of the MGST Act.

Writ jurisdiction - Proper officer - want of competence of the officer passing it under the GST statutory scheme - Alternative efficacious remedy - HELD THAT: - The Court held that availability of an alternative remedy does not bar exercise of writ jurisdiction where the impugned order is alleged to be without jurisdiction. On the merits of jurisdiction, the Court read Section 2(91) of the CGST Act with Section 6 of the Union Territory GST Act and held that a State tax officer can act as a proper officer for the purposes of the Act only subject to the conditions specified through notification on the recommendation of the Council. As the State admitted that no such recommendation of the Council existed for authorising respondent No. 4, the impugned adjudication could not be sustained as having been passed by a competent authority. [Paras 6, 10, 12, 13, 14]

The impugned order was quashed as having been passed by an incompetent authority, with liberty to the competent authority to pass a fresh order in accordance with law.

Final Conclusion: The Court allowed both writ petitions, holding that the impugned order could be interfered with in writ jurisdiction since it was passed by an officer lacking jurisdictional competence. The order was therefore quashed, leaving it open to the competent authority to proceed afresh in accordance with law.

Entitlement to input tax credit - limitation under Section 16(4) - time for availing credit for invoices or debit - Retrospective operation of Section 16(5) - Non obstante override -HELD THAT: - The Court held that sub-section (5) of Section 16, inserted with a non obstante clause overriding sub-section (4), entitled a registered person to avail input tax credit for the specified financial years if the return under Section 39 was filed up to 30.11.2021. Since the return in the present case had admittedly been filed on 28.11.2020 and pertained to January to March 2020, the claim fell within the extended statutory window. The adjudication having proceeded only on the basis of ineligibility under Section 16(4), the impugned order could not stand in light of the subsequent legal position accepted by the Court, including its earlier order in W.P. No.6883/2026 . [Paras 5, 7, 8]

The impugned order and summary order were set aside, and the matter was remitted for reconsideration and fresh adjudication in light of Section 16(5), while keeping other contentions open.

Final Conclusion: The Court held that the petitioner's claim for input tax credit could not be rejected as time-barred under Section 16(4) when the return had been filed within the cut-off recognised by Section 16(5). The impugned orders were therefore set aside and the matter was remitted for fresh consideration in accordance with that legal position.

Rectification application against the order-in-original - Alternate Remedy - Delay Condonation - Statutory Pre-deposit - HELD THAT:- The writ petition was disposed of by granting liberty to the petitioner to file an appeal against the Order-In-Original within two weeks along with statutory pre-deposit and an application for condonation of delay, leaving all merits open. The appellate authority was directed to consider the explanation for delay and, if satisfied, decide the appeal on merits, and no coercive steps were to be taken meanwhile for the limited period granted.

Validity of the penalty order passed under the GST detention and confiscation provisions - Reasoned order on show cause notice - Payment under protest - Natural justice in detention and penalty proceedings -HELD THAT: - The Court held that the release order only recorded release of the detained goods and vehicle on payment of the proposed tax, penalty and fine, and did not record withdrawal of the show cause notice or final adjudication of the proceedings. Relying on M/s ASP Traders versus State of Uttar Pradesh and others [2025 (7) TMI 1525 - SUPREME COURT], the Court held that payment of the demanded amount does not dispense with the proper officer's obligation to pass a formal, reasoned order on the show cause notice. Consideration of the taxpayer's reply and passing of a speaking order are integral to natural justice and to preservation of the statutory appellate remedy. Since no such reasoned order had been passed, the impugned penalty order could not stand. [Paras 7, 8, 9, 10]

The impugned penalty order was set aside, and the proper officer was granted liberty to pass a fresh reasoned order in accordance with law after affording personal hearing and thereafter to upload the statutory summary.

Final Conclusion: The Court set aside the penalty order on the ground that the proceedings had not culminated in a reasoned adjudication on the show cause notice. It directed the proper officer to pass a fresh speaking order after granting personal hearing and to complete the consequential statutory compliance.

Refund application under Section 142(3) -pre-GST period - HELD THAT:- The writ petition was disposed of on the State's submission by directing the first respondent to scrutinize and finalize the petitioner's pending refund application under Section 142(3) of the CGST Act within six weeks.

Provisional attachment of bank accounts under section 83 of the GST law -Safeguarding revenue by substitute security- Continuation of provisional attachment - HELD THAT: - The Court noted that the respondents were already scrutinising the invoices and other material furnished by the petitioner, while the petitioner asserted that inability to operate the attached bank accounts had brought its business operations to a standstill. On the Court asking for mitigating measures to protect the revenue, the petitioner fairly offered a fixed deposit in favour of the Registrar General. Accepting that course in the interest of justice, the Court treated the deposit as adequate security for the present and permitted operation of the bank accounts, while leaving the investigation and possible issuance of show cause notice unaffected. The Court also clarified that the deposit would remain subject to adjustment against any liability finally determined, and would be returnable with accrued interest if the final order went in favour of the petitioner. [Paras 11, 12, 13, 14, 15]

The provisional attachment order was quashed to the extent necessary to permit operation of the bank accounts, subject to the fixed deposit already furnished remaining available to secure any liability that may be finally determined.

Final Conclusion: The petition was disposed of by permitting the petitioner to operate the attached bank accounts on the strength of the fixed deposit furnished as security, while leaving the respondents free to continue the investigation and issue a show cause notice. The deposit was directed to abide by the outcome of the final adjudication.

Blocking of Input Tax Credit, solely on the basis of earlier cancellation of registration - Restoration of registration - Consequential action - HELD THAT: - The Court found that the impugned communication blocking Input Tax Credit had been issued by the Deputy Commissioner solely because the petitioner's GST registration had stood cancelled. Since the registration was subsequently restored upon verification, the foundation of the blocking action ceased to exist. A measure resting entirely on such cancellation could therefore not be sustained and was liable to be withdrawn. [Paras 4]

The communication blocking Input Tax Credit was quashed, and the petitioner was held entitled to utilize the credit in accordance with law.

Final Conclusion: The petition was disposed of by setting aside the communication blocking Input Tax Credit, as that action was founded solely on cancellation of registration which had already been restored. The Court did not examine the remaining contentions on merits and kept them open.

Revocation of cancellation of GST registration - Manual filing of application - Limitation period - Natural justice - HELD THAT:- The writ petition was disposed of by directing that, if the petitioner submits an application in physical form within one week for revocation of cancellation of GST registration, the competent authority shall entertain it and decide it in accordance with law within three weeks thereafter.

Rejection of order - Condonation of delay in filing the application for revocation of cancellation of GST registration - Limitation under Rule 23 - time-barred when it had been filed within the period of 270 days permitted under Rule 23 of the Rules - Violation under Rule 21(b). - HELD THAT: - The Court held that the impugned order had been passed on the petitioner's application for condonation of delay in filing the revocation application, but Rule 23 itself permitted such application to be made within 270 days from the date of cancellation. Since the application had been filed within that statutory period, rejection on the ground of delay was erroneous. The impugned order was therefore set aside, and the petitioner was directed to file its reply to the show cause notice before the Joint Commissioner, who was directed to take a fresh decision on the revocation application. [Paras 4]

The rejection of the revocation application on the ground of delay was set aside, and the matter was directed to be reconsidered afresh after receipt of the petitioner's reply.

Final Conclusion: The writ petition was disposed of by setting aside the order rejecting the application on the ground of delay, the Court holding that the revocation application was within the 270-day period under Rule 23. The petitioner was permitted to respond to the show cause notice, and the competent authority was directed to decide the revocation application afresh.

Seeking rectification of the order-in-original and the consequential recovery notice - Manual filing where portal does not permit online application- HELD THAT: - The Court did not enter into the merits of the petitioner's claim regarding discharge of tax liability or refund. It held that the appropriate course was to seek rectification before the proper officer under the statutory mechanism, and further directed that if the portal did not permit online filing under Section 161, the application should be accepted manually and decided within the time stipulated by the Court. [Paras 4]

The writ petition was disposed of by granting liberty to seek rectification before the proper officer, with a direction to accept a manual application if online filing was not possible and to decide it expeditiously.

Final Conclusion: The Court declined to examine the merits and relegated the petitioner to the remedy of rectification before the proper officer. It directed acceptance of a manual rectification application if the portal did not allow online filing, with liberty to challenge the ensuing order in accordance with law.

Provisional attachment - Cessation on final order - Final adjudication under Section 74- Effect of a final order under Section 74 of the CGST Act on an earlier provisional attachment order -HELD THAT:- The Court recorded the agreement of counsel that the controversy stood covered by the Supreme Court decision in Om Prakash Gupta versus Principal Additional Director General [2025 (3) TMI 1393 - SC ORDER]. Applying that ruling, the Court held that a provisional attachment of bank account under the CGST Act does not survive after a final order under Section 74 is passed, and no further adjudication on the attachment was required. [Paras 2]

Once a final order is passed under Section 74 of the CGST Act, the provisional attachment order comes to an end.

Final Conclusion: Following the Supreme Court decision governing the controversy, the appeal was disposed of by holding that the provisional attachment ceased upon the passing of the final order under Section 74 of the CGST Act.

Reassessment proceedings based upon PAN not in existence - Scheme of amalgamation conceived

As decided by HC [2025 (10) TMI 1313 - GUJARAT HIGH COURT] impugned notices and order for AY 2017-18 are quashed and set aside on account of issuance based on a deactivated predecessor PAN and lack of verification by the Assessing Officer; respondents' systems affidavit accepting deficiencies and proposing remedial measures is recorded and the respondents are directed to take steps to prevent recurrence - HELD THAT:- We are not inclined to interfere with the impugned order in exercise of our jurisdiction under Article 136 of the Constitution of India.

Special Leave Petition is, accordingly, dismissed and the accompanying interlocutory application(s), if any, stands disposed of.

Rejection of Applications for settlement filed before the Interim Board for Settlement - grievance of the assessees was essentially on account of the amendments that were brought about to the I.T. Act through the Finance Act, 2021 - cut-off date prescribed in the CBDT order for satisfying the eligibility conditions for preferring applications for settlement under the I.T. Act

HC held [2025 (6) TMI 1557 - KERALA HIGH COURT] appeals are allowed in part by setting aside the Single Judge's conclusion that searches u/s 132 alone qualify as a 'case' for Chapter XIXA; the CBDT order's additional eligibility cutoff (31.01.2021, read as 31.03.2021) is held ultra vires; and applications filed on or before 30.09.2021 by assessees with live notices under Sections 153A/153C issued between 31.03.2021 and 30.09.2021 are to be considered on merits by the Interim Board for Settlement.

HELD THAT:- As submitted at the Bar that similar Special Leave Petitions have been dismissed by order VELAMMAL CHENNAI EDUCATIONAL TRUST, M/S. CHETTINAD PRODUCTS AND SERVICES PVT. LTD. [2024 (9) TMI 101 - SC ORDER].

We dismiss the instant Special Leave Petition as we are not inclined to interfere in the matter. However, question of law raised by learned counsel for the petitioners is kept open for being considered in an appropriate case.

Assessment u/s 153C -documents seized or requisitioned from the searched person indeed belong to the “other person” - scope of section 132 - person-centric and not premises-centric - Difference between “searched person” and that of the “other person” - documents or assets seized or requisitioned belong to a person other than the searched person - separate satisfaction note for each assessment year or consolidated order

Searched person - person-centric search - Section 153A and Section 153C - warrant of authorisation - panchanama - per incuriam - HELD THAT: - The Court held that Section 132 draws a clear distinction between the reason to believe recorded against a person under clauses (a) to (c) and the reason to suspect relating to the place to be searched under clauses (i) to (v). The identity of the searched person is determined by the person against whom satisfaction is recorded and in whose name the warrant is issued, not by ownership or occupation of the premises searched. The warrant and the panchanama in the present case showed that the warrant was issued in the name of Sri K. Narayan Raju, while the respondent's residence was only the place where material was suspected to be kept. Mere search of a third party's premises, seizure of his documents, or recording of his statement does not by itself make such third party a searched person so as to attract Section 153A. On that construction, Section 153C alone applied to the respondent. The Court further held that the contrary view in Sunil Kumar Sharma [2022 (8) TMI 1233 - KARNATAKA HIGH COURT] having proceeded principally on the panchanama without considering the scheme of Sections 132, 153A and 153C, Rule 112, and earlier binding decisions of this Court, could not govern the issue and was not to be followed. [Paras 31, 33, 35, 36, 68]

Proceedings against the respondent under Section 153C were held valid, and the view that he should have been proceeded against under Section 153A was rejected.

Satisfaction note under Section 153C - jurisdictional preconditions - common Assessing Officer - separate satisfaction note for each assessment year OR a consolidated satisfaction note is sufficient - HELD THAT: - After examining Section 153C in the light of Calcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT] Super Malls (P) Ltd.[2020 (3) TMI 361 - SUPREME COURT] and IBC Knowledge Park Pvt. Ltd [2016 (5) TMI 372 - KARNATAKA HIGH COURT] the Court held that the statutory requirement is that the Assessing Officer of the searched person must record satisfaction that the seized material belongs to or pertains to a person other than the searched person. Where the same Assessing Officer has jurisdiction over both the searched person and the other person, one satisfaction note is enough, and there is no further requirement either of transmission to himself or of recording separate satisfaction assessment year-wise. Since the satisfaction note on record complied with those requirements, the challenge founded on absence of separate year-wise satisfaction was unsustainable. [Paras 52, 54, 55, 56, 57]

The consolidated satisfaction note and the notices issued under Section 153C were held to be in conformity with law.

Delay and laches in writ jurisdiction - HELD THAT: - The Court noted that the impugned notices had been issued years before the writ petition was filed, that several statutory notices had remained unanswered, and that the writ petition was instituted only shortly before expiry of the time limit for completion of assessment. In the absence of any satisfactory explanation, such belated invocation of writ jurisdiction was held unreasonable. Applying the principle that delay defeats equity in discretionary writ jurisdiction, the Court held that the learned Single Judge erred in entertaining the petition despite the delay and laches. [Paras 59, 60, 61, 62, 63]

The writ petition was held liable to dismissal on the ground of delay and laches as well.

Final Conclusion: The Court allowed the Revenue's intra-court appeal, held that the respondent was not a searched person merely because his premises were searched, and restored the notices issued under Section 153C. It further held that the consolidated satisfaction note was valid and that the writ petition was also liable to fail on account of delay and laches.

Validity of Reassessment proceedings for want of valid approval - Specified authority approval u/s 151 - Jurisdictional defect in reopening beyond three years- Prospective operation of proviso to section 151 - Computation of limitation under section 149 provisos - approval for the order u/s 148A(d) taken from the Principal Commissioner instead of the authority prescribed u/s 151(ii) - HELD THAT:- The issue is directly covered by the decision of this Court in Vodafone Idea Limited [2024 (2) TMI 1408 - BOMBAY HIGH COURT] wherein for Assessment Year 2018-19, the notice under Section 148 and the order u/s 148A(d) had been issued beyond three years and the sanction had been accorded by the Principal Commissioner. Incidentally, the notice in the said case was also dated 07 April 2022. This Court held that the sanctioning authority had to be the Principal Chief Commissioner as provided under Section 151(ii) and that the proviso to Section 151, inserted only with effect from 01 April 2023, would not apply. Consequently, the notice and order were quashed.

We are also in respectful agreement with the submission based on the decision of Rajeev Bansal [2024 (10) TMI 264 - Supreme Court (LB)] wherein as clearly explained the importance of sanction under Section 151 and has held that grant of sanction by the appropriate authority is a pre-condition for the Assessing Officer to assume jurisdiction under Section 148. Section 151 is not an empty formality. It is a statutory safeguard and check against arbitrary reopening. Non-compliance with that requirement strikes at jurisdiction itself.

In our view, the defect in the present case is not a mere procedural irregularity. It is a case of approval by a wrong authority. Therefore, the assumption of jurisdiction itself is bad.

Fifth and sixth proviso (erstwhile third and fourth provisos) to Section 149(1) are concerned, they are not applicable for the purposes of Section 151 of the IT Act. The provisos themselves make it clear that they are only for the purposes of computation of period of limitation under Section 149 of the IT Act. It was because of this reason that proviso was inserted in Section 151 of the IT Act.

Proviso inserted to Section 151 cannot be treated as retrospective. The Legislature has inserted the proviso specifically with effect from 01 April 2023. Where the Legislature intended retrospectivity, it could have said so expressly. In the absence of such indication, and particularly where the provision relates to jurisdiction, it cannot be construed so as to retrospectively validate an action which was without jurisdiction when taken.

The objection of alternate remedy raised by the Revenue does not impress us in the facts of the present case. It is well settled that where the impugned proceedings are wholly without jurisdiction, the existence of an alternate remedy is not an absolute bar to exercise of writ jurisdiction. Since, the very initiation of reassessment proceedings is vitiated on account of approval by an incompetent authority, the Petitioner need not be relegated to alternate remedies.

Final Conclusion: The Court allowed the writ petition and held that the reassessment proceedings for Assessment Year 2018-19 were initiated without jurisdiction because sanction had been granted by an authority not competent in law. Consequently, the order under section 148A(d), the notice under section 148, and the consequential assessment, demand and penalty orders were quashed.

Recovery notices for outstanding tax demand - Enforceable tax demand - Service of assessment order and notice of demand - Liability to interest - Assessee in default - respondents admitted that the assessment order and corresponding records were not traceable and the assessee had not been served with the assessment order or particulars of demand - HELD THAT: - The Court held that no recovery action could be maintained in the absence of the foundational assessment order and demand notice. Since the respondents themselves accepted that the assessment order and records were unavailable, and there was no material to show service of such order on the petitioner, no enforceable demand could be said to exist. Until the assessee is informed of the particulars of demand and supplied the assessment order, recovery proceedings cannot be initiated. [Paras 7, 8, 10, 12]

All recovery notices were set aside and the respondents were directed to delete the demand from the petitioner's income-tax portal, while being left at liberty to furnish the assessment order and supporting documents if traced.

Liability to interest - Assessee in default - HELD THAT: - The Court ruled that, in the absence of service of the assessment order along with the notice of demand, liability to pay interest cannot be imposed. For the same reason, the assessee cannot be treated as an assessee in default prior to such service. Accordingly, even if the assessment order is later traced and furnished, the petitioner would not be liable for interest up to the date of service of that order. [Paras 11]

The petitioner was held not liable for interest up to the date of service of the assessment order, if any, and could not be treated as an assessee in default for that period.

Final Conclusion: The writ petition was allowed. The recovery notices and portal demand were quashed because no assessment order or enforceable notice of demand was shown to exist or to have been served, and no interest liability could be fastened on the petitioner prior to service of such order.

Mainatanaibility of appeal - low tax effect - Monetary limits for departmental appeals - Substantial question of law - Appreciation of evidence - additions based on alleged bogus purchases, unreconciled turnover and stock discrepancy

Substantial question of law - Appreciation of evidence - HELD THAT: - The Court held that the questions proposed by the Revenue were essentially directed against the Tribunal's appreciation of evidence and findings of fact. In exercise of limited jurisdiction u/s 260A, such factual re-appreciation was not warranted, and therefore the proposed questions did not constitute substantial questions of law justifying interference. [Paras 11]

The challenge to the Tribunal's factual findings was not entertained as no substantial question of law arose on those aspects.

Monetary limits for departmental appeals - Maintainability of appeal - HELD THAT: - The Court found that, even on the question identified during hearing, the tax effect in the appeal was below the limit prescribed in CBDT Circular No. 5/2024 read with Circular No. 9/2024. On that basis, the appeal itself was liable to be dismissed on the ground of low tax effect. [Paras 12, 13]

The appeal was dismissed as falling below the prescribed monetary limit for departmental appeals.

Final Conclusion: The High Court dismissed the Revenue's appeal, holding that the proposed questions were factual in nature and did not warrant interference in appeal, and further that the appeal was barred on account of low tax effect under the applicable CBDT circulars.

Computation of capital gains - petitioner purchased a property in a slump Estimation of cost of acquisition -sale certificate issued by the appropriate authority u/s 269UD fixed the value of the land ignored

HELD THAT: - The Court held that the certificate from competent authority u/s 269UD had a necessary bearing on the controversy relating to computation of capital gain. Since that certificate was part of the assessee's case before the authorities and had been cited before the Tribunal, the Tribunal was required to pronounce upon its effect. In the absence of such consideration, the adjudication on the capital gain issue could not be sustained, and the matter required fresh consideration. The Court expressly refrained from deciding the merits or the effect of the certificate and confined itself to directing reconsideration by the Tribunal. [Paras 12, 14, 15, 16]

The Tribunal's order was set aside only on the issue relating to capital gain, and that issue was remanded to the Tribunal for fresh decision after considering the certificate and the appellant's contentions.

Final Conclusion: The appeal was partly allowed. The Tribunal's order was set aside only insofar as it concerned the capital gain issue, which was remanded for fresh adjudication after considering the certificate relied upon by the appellant, while the rest of the order was left undisturbed.

Validity of order passed by Tribunal as remanded the matter back to the AO for de novo assessment proceeding - additional documents which were filed by the assessee before the CIT(A), were not provided to the AO as mandated under Rule 46A - HELD THAT:- Tribunal ought to have considered and decided the issue as to whether the AO was justified in confining the carry forward of income to 50%, that too without books being rejected, and registration being cancelled are concerned, we feel that since the Tribunal has not decided the addition or correctness of the assessment order on merits and has remanded the same on finding an apparent breach of mandate of Rule 46A of the Rules of 1962, we are of the view that neither the Tribunal nor are we required to delve into such issue, which essentially hinges upon merits of the addition.

Appellant could not satisfy that the additional evidences which were led directly before the CIT(A) were provided to the AO. Hence, the breach of mandate of Rule 46A of the Rule of 1962 is writ large. Such being the position, we are of the view that the Tribunal has not committed any error of law in remanding the matter back to the AO.

Final Conclusion: High court decided that breach of mandate of Rule 46A of the Rule of 1962 is writ large. Such being the position, we are of the view that the Tribunal has not committed any error of law in remanding the matter back to the Assessing Officer.

Additional evidence at appellate stage - Compliance with Rule 46A - Opportunity to rebut additional evidence - Speaking order for admission of additional evidence - Rule of audi alteram partem - whether first appellate authority erred admitting and act upon additional evidence without recording in writing the reasons showing fulfilment of the conditions in Rule 46A(1), and without giving the AO a reasonable opportunity to examine and rebut that material?

HELD THAT: - The Court held that Rule 46A permits production of additional evidence before the appellate authority only in the circumstances specified in sub-rule (1), and such permission must be supported by a reasoned order in writing under sub-rule (2). Requirement under sub-rule (3) of affording the AO an opportunity to examine the additional evidence and lead rebuttal evidence is mandatory and also embodies the rule of audi alteram partem.

On examining the appellate order, the Court found no reasons recorded for admitting the additional evidence and no material showing that any opportunity had in fact been given to the AO to rebut it. The Tribunal therefore erred in upholding the order of the Commissioner (Appeals) founded on such additional evidence. [Paras 12, 13, 14, 15, 17]

The orders of the Tribunal and the Commissioner (Appeals) were set aside, and the matter was remanded to the Commissioner (Appeals) to first pass a speaking order on the request to adduce additional evidence and, if such evidence is admitted, to give the AO opportunity to examine and rebut it.

Final Conclusion: The appeal was allowed on the ground of non-compliance with Rule 46A. The matter was remanded to the Commissioner (Appeals) for fresh consideration in accordance with the mandatory requirements governing admission of additional evidence and opportunity to the Assessing Officer.

Share valuation u/s 56(2)(viib) - unquoted equity shares are issued at a premium - FMV determination of shares -Discounted Cash Flow method - no fresh valuation report was obtained for the year under consideration

HELD THAT: - Tribunal held that section 56(2)(viib) r/w Rule 11UA requires determination of fair market value each time unquoted equity shares are issued, and nowhere does the Act permit use of a valuation report obtained in the preceding year for a subsequent year.

The joint venture agreement could bind the parties inter se as to subscription and pricing, but it could not override the statutory requirement for computing income under the Act.

The earlier valuation report dated 15.12.2014, having been accepted in the assessee's own case for the preceding year, could not be discarded on the basis adopted by the AO. Since neither the assessee had obtained a fresh report for the year under appeal nor had the AO procured an independent valuation while scrutinising the issue, the matter required fresh examination in accordance with the DCF method and the governing legal position. [Paras 20, 21, 22, 23, 24]

The deletion of the addition was not sustained outright; the issue was remitted to the AO to allow the assessee to justify the premium through a valuation report and then decide the matter afresh in accordance with law.

Final Conclusion: The Tribunal held that the assessee was required to obtain a fresh valuation report for the shares issued in the year under appeal and could not rest its case solely on the preceding year's report, though that earlier report could not be rejected on the grounds adopted by the AO. The matter was accordingly remanded to the AO for fresh valuation-based examination u/s 56(2)(viib), and the Revenue's appeal was allowed for statistical purposes.

Addition u/s 68 - Cash deposits as business receipts - Unexplained cash credits - Taxability of profit element in turnover - Estimation of income -

HELD THAT: - The Tribunal found it undisputed that the assessee had carried on business during the year and that the disclosed turnover, as reflected in the tax audit report, exceeded the impugned cash deposits. In the absence of any cogent material from the Revenue to show that the deposits represented undisclosed or non-business receipts, the deposits were prima facie linked with business turnover. On that footing, invocation of section 68 was held to be unsustainable, since the deposits were part of circulating business receipts and not shown to be independent credits such as loans or accommodation entries.

Tribunal further held that even if complete books and supporting records were not produced, such deficiency could at best justify rejection of books and estimation of income, but not taxation of the entire gross receipts as income. The proper course was therefore to delete the addition of the whole deposit amount and direct estimation of a reasonable net profit on the turnover after giving due opportunity to the assessee. [Paras 7]

The addition made on the entire cash deposits was deleted, and the Assessing Officer was directed to estimate income by applying a reasonable net profit rate on the turnover.

Final Conclusion: The Tribunal held that the entire bank deposits, being linked to business receipts and subsumed in turnover, could not be brought to tax as unexplained cash credits. The impugned addition was deleted, with a direction to the Assessing Officer to determine only the reasonable profit element on the turnover.

Unexplained cash credit u/s 68 - Gift from relative - Foreign inward remittance - sum received from two partnership firms

Unexplained cash credit u/s 68 -Gift from relative - Foreign inward remittance - amount received by the assessee from his father-in-law through foreign remittance - HELD THAT:- Tribunal followed the co-ordinate Bench decision in the case of the assessee's wife on the same source of gift and found no change in material facts except that, in the present case, the donor was the assessee's father-in-law. Since the remittance stood reflected in the bank account and the gift was received from a person falling within the scope of relative, the credit was held not liable to be treated as unexplained cash credit u/s 68 since the gift received by the assessee is well within the definition of relatives u/s. 52(2)(vii). On that basis, the addition relating to the gift amount was directed to be deleted. [Paras 5, 6]

The addition to the extent of the gift remittance was deleted.

Unexplained credits from partnership firms - HELD THAT: - The Tribunal held that the assessee had not produced material to establish the withdrawals from the firms, their liquidity, the corresponding debit in the firms' bank accounts, or their financial position. In the absence of such supporting evidence, the explanation for those credits was not accepted. [Paras 6]

The remaining addition of Rs. 40,000/- was confirmed.

Final Conclusion: The appeal was partly allowed. Addition u/s 68 in respect of the gift received through foreign remittance from the assessee's father-in-law was deleted, while the separate addition relating to credits from two partnership firms was sustained.

Deduction u/s 10AA - Export proceeds in convertible foreign exchange - Employees' contribution to PF and ESI - Bad debts written off - Cessation of trading liability - Failure to verify revised audit report - Penalty dependent on quantum proceedings

Deduction u/s 10AA - Export in relation to Special Economic Zones - Convertible foreign exchange - deduction u/s 10AA on EPCG sales, EOU sales and zone to zone sales - proof to establish export out of India and receipt of convertible foreign exchange - HELD THAT: - Tribunal held that the assessee's own Form 56F and audit report recorded export proceeds in convertible foreign exchange as zero, and no material was produced to displace that position. Court applied the definition of export relevant to section 10AA and followed the co-ordinate Bench decision in the assessee's own case holding that supplies to domestic tariff area or to another SEZ unit do not qualify for deduction u/s 10AA unless they satisfy the statutory requirement of export out of India. The authorities cited by the assessee on sections 10A and 10B, or on facts involving proved foreign exchange realization, were held inapplicable because the assessee here failed to prove such realization. [Paras 7]

The disallowance of deduction u/s 10AA for AY 2017-18 was upheld and the assessee's ground was dismissed.

Employees' contribution to PF and ESI - Due date compliance - HELD THAT: - Tribunal accepted that a five-day grace period had been granted by the EPFO for the relevant month, but found that the assessee had made payment even beyond that extended date. On that factual position, the assessee could derive no benefit from the circular relied upon. [Paras 8]

The disallowance of employees' contribution to PF and ESI was confirmed.

Sundry balances written off - Proof of genuineness - HELD THAT: - Tribunal found that the assessee had produced only ledger extracts and had not furnished supporting material to prove participation in the tender, actual forfeiture of the deposit, the governing subsidy scheme and the reason for non-recovery of subsidy, or party-wise details and documents for the material payments written off. In the absence of substantiating evidence, the write-off was not allowable. [Paras 9]

The disallowance of the sundry balances written off was upheld.

Bad debts written off - Write-off in accounts - amounts had been written off as irrecoverable in the accounts - HELD THAT: - Tribunal held that once the bad debts were written off in the accounts, the claim was governed by the principle laid down in TRF Ltd . It noted that the AO had disallowed the claim on the footing that the items were loans and advances rather than trade debts, but had not recorded adequate basis to sustain that position. The appellate deletion was therefore found consistent with the settled law. [Paras 13, 14]

The Revenue's challenge to deletion of the bad debt disallowance was rejected.

Cessation of trading liability u/s 41(1) - Capital asset acquisition - set-off of the amount payable for patents against the assessee's investment in its subsidiary - HELD THAT:- Tribunal agreed with the appellate authority that the transaction represented acquisition of a capital asset, namely patent rights, in substitution of the assessee's investment in the subsidiary. Since the liability in question was not a trading liability, its adjustment through book entries could not attract section 41(1). [Paras 15]

The deletion of the addition made under section 41(1) was affirmed.

Deduction u/s 10AA - rejection of the claim u/s 10AA without verification of the revised Form 56F and the assessee's explanation regarding realization of foreign exchange - HELD THAT: - The Tribunal noted that the revised Form 56F filed in response to the notice asserted that, barring one amount, the export proceeds had been realized within six months, and that the auditor had certified that position. It found that this specific claim had not been verified by the lower authorities, which instead rejected the claim on technical grounds. Treating non-verification of that material explanation as contrary to the principle of natural justice, Tribunal considered it necessary to restore the matter for fresh examination on merits. [Paras 20]

The orders on the section 10AA claim for AY 2018-19 were set aside and the matter was remanded to the jurisdictional Assessing Officer for fresh adjudication after giving the assessee one more opportunity.

Penalty dependent on quantum proceedings - Section 270A penalty - HELD THAT: - The Tribunal held that, since the quantum appeal had already been set aside to the file of the jurisdictional AO the penalty order could not stand on its own and had to abide by the outcome of the fresh quantum determination. [Paras 23]

The penalty appeal was allowed for statistical purposes with a direction that penalty proceedings would be subject to the outcome of the quantum assessment.

Final Conclusion: The assessee's appeal for Assessment Year 2017-18 and the Revenue's appeal for the same year were dismissed. For Assessment Year 2018-19, the quantum issue relating to deduction under section 10AA was restored for fresh adjudication for failure to verify the revised Form 56F and supporting claim, and the connected penalty appeal was allowed for statistical purposes to abide by the result of the quantum proceedings.

Unexplained cash deposits u/s 69 -Source of cash deposits - Telescoping of cash withdrawals - assessee had declared the income from dairy products u/s 44AD - HELD THAT: - The Tribunal found from the bank statement that the assessee had both deposited and withdrawn substantial cash during the year and that there was a direct nexus between the withdrawals and redeposits, the cash being kept available for the medical needs of the assessee's son. On that basis, the cash deposits were accepted as explained to the extent of the cash earlier withdrawn.

Tribunal then considered the remaining difference between deposits and withdrawals and held that the assessee had already declared income from dairy business u/s 44AD, which constituted an available source for part of the balance cash deposits. Accordingly, only the unexplained residue after giving credit for both the cash withdrawals and the declared presumptive income could be sustained as addition. [Paras 9, 10]

The addition was sustained only to the extent of the remaining unexplained amount, and the appeal was partly allowed.

Final Conclusion: The Tribunal partly accepted the assessee's explanation for the cash deposits by allowing credit for corresponding cash withdrawals and for the income declared from dairy business. The addition under section 69A was therefore restricted to the balance amount found to remain unexplained.

Validity of reassessment proceedings - reason to believe that assessee company had obtained accommodation entry - recorded reason for reopening related to alleged accommodation entries from one entity, but no addition was ultimately made on that issue and the additions were made on different transactions.

HELD THAT: - The Tribunal found that the recorded reasons referred only to alleged accommodation entries from M/s Dishita Gems Pvt. Ltd. and did not mention M/s Gyan Gems. In the reassessment order, however, no addition was made in respect of Dishita Gems Pvt. Ltd., and the additions were made on purchases and sales involving another entity.

Applying the settled principle stated in CIT Vs. Mohamed Juned Dadani [2013 (2) TMI 292 - GUJARAT HIGH COURT] the Tribunal held that the AO can assess other issues noticed during reassessment only where the income forming the basis of reopening is itself assessed or reassessed. Since no addition was made on the very ground recorded for reopening, the basis of reopening failed and the assumption of jurisdiction u/s 147 could not survive. [Paras 8]

The reassessment proceedings were quashed and the additions made therein could not stand.

Final Conclusion: Tribunal allowed the assessee's appeal by holding that, in the absence of any addition on the issue recorded for reopening, the AO lacked jurisdiction to sustain the reassessment on unrelated issues. The reassessment proceedings were accordingly quashed.

Alternative remedy and writ jurisdiction- breach of natural justice and lack of a foundational jurisdictional finding for imposition of penalty - failure to consider the petitioner's reply, supporting materials - overvaluation of export goods - Customs broker due diligence - Penalty for attempt to export goods improperly.

Alternative remedy and writ jurisdiction. - HELD THAT: - The Court held that availability of an appeal under Section 128 did not bar interference in writ jurisdiction where the impugned order fell within recognised exceptions, including breach of principles of natural justice and action without jurisdiction. Since the adjudicating authority had imposed penalty without properly addressing the petitioner's material defence and without recording the necessary factual basis required for such penalty, the matter attracted those exceptions. [Paras 7, 20, 31]

The existence of an alternative statutory remedy was held not to preclude writ interference in the facts of the case.

Customs broker due diligence - Regulation 10(n) - Penalty for attempt to export goods improperly - HELD THAT: - The Court read Regulation 10(n) as requiring verification of the client's identity and functioning at the declared address by using reliable, independent and authentic documents, data or information, and not as mandating physical verification or personal meeting. The impugned order proceeded on the premise that failure to meet the exporter or physically verify the address established culpability, but it gave no finding on the petitioner's specific case that he had verified the exporter's IEC, GSTIN, bank details and other KYC documents. For penalty under Section 114(iii), there had to be a finding of fact that the person had committed or abetted an act or omission rendering the goods liable to confiscation. Mere non-physical verification, in the facts found, was insufficient to furnish that jurisdictional basis, and the conclusion recorded was founded only on possibility rather than fact. [Paras 17, 18, 20, 21, 22]

The finding of culpability based solely on absence of physical verification or personal meeting was held unsustainable.

Consideration of binding precedent - Principles of natural justice - Customs broker liability for valuation - HELD THAT: - The Court found that the petitioner had specifically relied on decisions including World Cargo Movers [2001 (10) TMI 139 - CEGAT, NEW DELHI] and Kunal Travels (Cargo) [2017 (3) TMI 1494 - DELHI HIGH COURT] to contend that valuation of goods was not within the customs broker's domain and that misdeclaration could not, without more, be attributed to the broker. The adjudicating authority neither followed nor distinguished those authorities, though World Cargo Movers was binding on him unless shown inapplicable. Applying the principle recognised in Artee Overseas Pvt. Ltd.[2013 (7) TMI 1011 - CALCUTTA HIGH COURT], the Court held that a quasi-judicial authority cannot brush aside a cited judgment without giving reasons as to why it does not apply. Since the impugned order did not consider those authorities and also did not examine the factual aspect now urged by the revenue in court, the matter required fresh consideration by the proper officer. [Paras 26, 27, 29, 30, 31]

The non-consideration of the petitioner's cited precedents amounted to a violation of natural justice, and the matter was remanded for a fresh reasoned decision.

Final Conclusion: The penalty imposed on the petitioner was set aside insofar as it related to him, since the adjudicating authority proceeded on an incorrect understanding of the customs broker's obligations, failed to record the factual foundation necessary for penalty, and did not consider the cited binding authorities. The matter was remanded for a fresh reasoned decision after notice to the petitioner and upon consideration of the material on record.

Rejection of the appeal for non-compliance with the mandatory pre-deposit requirement - Conditional relief - HELD THAT:- The order rejecting the appeal for non-compliance with the statutory pre-deposit requirement was set aside, and the petitioner was permitted to make the required pre-deposit within the time granted, subject to payment of costs, whereupon the appellate authority was directed to hear and decide the appeal on merits. In default of compliance, the writ petition was directed to stand automatically dismissed and the impugned order to revive.

Smuggling gold in paste - Validity of the show-cause notice and penalty - prohibited goods - Non-quoting of Provisions; Alternative Remedy - Principles of Natural Justice - penalty under Section 112(a) and Section 112(b).

Section 112(a) and 112(b) - Exact nature of contravention - Validity of show-cause notice - HELD THAT: - The Court held that Section 112(a) covers acts or omissions rendering goods liable to confiscation, including abetment, while Section 112(b) covers possession or dealing with goods known or believed to be liable to confiscation. On the facts recorded in the notice and the order, the petitioner was alleged not merely to have aided and abetted the smuggling but also to have dealt with the smuggled gold; therefore, both clauses were attracted. The show-cause notice specifically set out the petitioner's role and the exact contravention, namely participation in smuggling gold without declaration before the customs authorities, and expressly referred to Section 112(a) and (b). The Court held that the principle in Amrit Foods vs. Commissioner of Central Excise, U.P. [2005 (10) TMI 96 - SUPREME COURT] did not invalidate the notice, since the petitioner had been put to notice of the precise nature of the contravention and had in fact replied to it. Gopal Saha vs. Union of India [2016 (5) TMI 83 - CALCUTTA HIGH COURT] was held inapplicable because, in the present case, the petitioner's acts fell within both clauses. [Paras 6]

The challenge founded on alleged non-specification or improper invocation of Section 112(a) and (b) was rejected.

Prohibited goods - Smuggling of gold - Penalty under Section 112(i) - HELD THAT: - Rejecting the contention that the case fell only under sub-clause (ii) as involving dutiable goods, the Court applied the principle that goods imported in contravention of the Customs Act and the statutory restrictions governing import assume the character of prohibited goods. Relying on Abdul Hussain Saifuddin Hamid vs. State of Gujarat [2020 (12) TMI 1396 - GUJARAT HIGH COURT], which in turn noticed Om Prakash Bhatia v. Commissioner of Customs, Delhi [2003 (7) TMI 74 - SUPREME COURT], the Court held that smuggled goods liable to confiscation under the Act fall within the definition of prohibited goods. Since the case involved concealment and smuggling of gold paste without declaration, and the petitioner had played an active role in facilitating and dealing with it, invocation of penalty under sub-clause (i) could not be said to be unwarranted. [Paras 6]

The plea that only sub-clause (ii) applied was rejected, and the penalty referable to sub-clause (i) was sustained.

Final Conclusion: The Court dismissed the writ petition and upheld the penalty order. It held that the petitioner had been adequately put to notice of the contravention, that his conduct attracted both Section 112(a) and Section 112(b), and that smuggled gold in the facts of the case was liable to be treated as prohibited goods for purposes of penalty under Section 112.

Imposition of Penalty under Section 112 - Knowledge or Reason to Believe - director of the Customs Broker -Evidentiary value of statements under Section 138B. - HELD THAT: - The Tribunal found that the adjudicating authority had merely reiterated the show cause notice and had given no independent reasoning to conclude that the appellant had rendered himself liable to penalty. It also relied on the earlier finding of the Bench in proceedings concerning the Customs Broker that the appellant was not aware of the alleged undervaluation and that the incriminating material pointed only to other persons. Further, the statements relied upon for penalty had not been subjected to the requirements of Section 138B and therefore had no evidentiary value, and no incriminating documents were recovered from the appellant or from the Customs Broker firm to connect him with the alleged contravention. In these circumstances, the Revenue failed to establish the factual foundation necessary for penalty under Section 112. [Paras 5, 7, 8, 9, 10]

The penalty imposed on the appellant was held unsustainable and the impugned order was set aside.

Final Conclusion: The Tribunal held that no case had been made out for imposition of penalty on the appellant under Section 112. The impugned order was set aside and the appeal was allowed with consequential relief.

Levy of interest on IGST - Redemption fine and penalty on IGST demand - Prospective operation of amended section 3(12) of the Customs Tariff Act. - HELD THAT: - Following A.R. Sulphonates Private Limited vs. Union of India [2025 (4) TMI 578 - BOMBAY HIGH COURT], which applied Mahindra & Mahindra Ltd. (Automotive Sector) vs. Union of India [2022 (10) TMI 212 - BOMBAY HIGH COURT], the Tribunal held that prior to the amendment of section 3(12) of the Customs Tariff Act with effect from 16.08.2024, the provisions of the Customs Act relating to interest, offences and penalties were not made applicable to IGST chargeable under section 3(7). The subsequent amendment having been held to be prospective, levy of interest, redemption fine and penalty for the period governed by the unamended provision was without authority of law. The demand and recovery of IGST itself, however, was not disturbed. [Paras 5, 6]

The impugned order was set aside to the extent it demanded interest, imposed penalty and granted redemption on payment of fine, while the confirmation and recovery of IGST was upheld.

Final Conclusion: The Tribunal held that, under the unamended section 3(12) of the Customs Tariff Act, interest, redemption fine and penalty could not be imposed in relation to the IGST demand. The order was modified accordingly, while the demand and recovery of IGST was maintained.

Classification of goods - food seasoning materials - classifiable under Customs Tariff Item 3302 10 10 Or under Customs Tariff Item 2103 90 40 - Mixtures of odoriferous substances - HSN Explanatory Notes. - HELD THAT: - The Tribunal held that Heading 3302 covers mixtures of odoriferous substances and mixtures with a basis of one or more such substances, of a kind used as raw materials in industry. On the material noticed in the record, the goods contained parsley and spearmint, which were treated as essential oils or resinoid oils listed for the purpose of Heading 3302, and also paprika in the form of extracted oleoresin. The appellate authority had proceeded on an erroneous understanding that, for classification under Heading 3302, the odoriferous substance had to be the main or predominant constituent. The Tribunal found that this was not a correct reading of the HSN Explanatory Notes, which referred to the presence of one or more such odoriferous materials as the basis of the mixture. Relying on Symrise Pvt. Ltd. [2023 (6) TMI 1258 - CESTAT CHENNAI], the Tribunal held that Heading 3302 covers both natural and synthetic mixtures of odoriferous substances and that the impugned goods answered that description. [Paras 9, 10, 12, 13, 14]

The reclassification under CTI 2103 90 40 was held unsustainable; the impugned order was set aside and the appeal was allowed.

Final Conclusion: The Tribunal held that the imported seasoning material was properly classifiable under CTI 3302 10 10 as a mixture based on odoriferous substances. The contrary view adopted in the impugned order was found to rest on an incorrect appreciation of the HSN principles of classification, and the appeal was allowed.

Classification of goods - Marble Or limestone - Misdeclaration of imported goods - technical opinion of the Geological Survey of India - benefit claimed under the advance licence and Notification No. 203/92.

Classification of marble and limestone - Expert test report - Advance licence exemption - HELD THAT: - The Tribunal accepted the Geological Survey of India report as a categorical and technically reliable determination that the goods were crystalline limestone and not marble, and held that dictionary meanings could not prevail over such expert opinion. It further found that the cross-examination of the GSI scientists did not discredit the report and, on the contrary, supported the conclusion that the sample showed no metamorphic recrystallization so as to qualify as marble. The decisions in Just Marble and Stone Man Marble Industries & Ors [2009 (1) TMI 156 - CESTAT NEW DELHI] were distinguished because, in those cases, the reports were not categorical or arose on different factual foundations, whereas in the present case the report clearly identified the goods as limestone. Since the advance licence was for marble, the exemption claim was rightly rejected. [Paras 10, 12, 13, 14]

The classification adopted by the department was upheld and the denial of exemption under Notification No. 203/92 was sustained.

Misdeclaration of imported goods - Confiscation - Redemption fine and penalty - Misdeclaration of both the nature and quantity of the imported goods justified confiscation, redemption fine and penalty. - HELD THAT: - Having found that the goods were not marble as declared and that first check also revealed excess quantity, the Tribunal held that the appellant had committed clear misdeclaration in respect of description and quantity. On that basis, the confiscation of the goods and the consequential levy of redemption fine were held to be justified. The Tribunal also held that, in view of such clear misdeclaration, the penalties imposed were warranted. [Paras 13, 14, 15]

The confiscation, redemption fine and penalties were affirmed.

Final Conclusion: The Tribunal upheld the finding that the goods imported under declaration as marble were in fact limestone and that there was also excess quantity. The denial of exemption under the advance licence scheme, as well as the confiscation, redemption fine and penalties, was therefore sustained and the appeal was dismissed.

Report on inspection made - Investigation into affairs of company by SFIO - Fraud - statutory scheme under Chapter XIV of the Companies Act, 2013 - Registrar proceeds on allegations of fraudulent or unlawful business - Jurisdictional error - power conferred under Section 212(1)(a) of the Companies Act, 2013.

Report on inspection made - Inquiry under section 206 - Procedural compliance - HELD THAT: - The Court held that a report under section 208 must be preceded by inspection of books or an inquiry under section 206 and consideration of the company's books and papers under section 207. Where the Registrar proposes to proceed on allegations of fraudulent or unlawful conduct or failure to address investor grievances, the company must first be informed of the allegations in writing and given an opportunity to furnish its explanation. In the present case, no notices under section 206(1) or 206(3) were issued, no order under section 206(4) informing the companies of the allegations was made, and the report itself recorded that the earlier inspection was old and that a fresh inspection was required. The report was thus not founded on the statutory inquiry contemplated by the Act and was therefore ex facie illegal. [Paras 24, 25, 28]

The report dated 27/9/2018 was held not to be in conformity with sections 206 to 208 and was quashed.

Investigation into affairs of company by SFIO - Fraud - Jurisdictional error - HELD THAT: - The Court held that SFIO is a specialised office constituted to investigate frauds relating to a company. Fraud under the Companies Act carries a distinct connotation and necessarily involves intent to deceive, gain undue advantage, or injure the interests of the company, its shareholders or creditors. Persistent default in repayment of deposits, even if coupled with non-compliance with orders of the CLB or NCLT and multiple depositor complaints, does not by itself amount to fraud. The impugned report only referred to defaults in repayment and the fact that SFIO was already investigating another group company; that material did not disclose circumstances justifying exercise of power under section 212 for investigation by SFIO. The order directing SFIO investigation therefore suffered from absence of jurisdictional foundation and arbitrariness. [Paras 26, 27, 28]

The order dated 7/1/2019 assigning investigation to SFIO, and the consequential summons and notices issued to the petitioners, were quashed.

Final Conclusion: The Court held that the foundational report purportedly made under section 208 was illegal for want of compliance with the statutory inquiry procedure, and that the material relied upon disclosed only deposit repayment defaults, not fraud warranting investigation by SFIO. The impugned order directing SFIO investigation, together with the report, summons and notices issued pursuant to it, was therefore quashed.

Condonation of delay - Sufficient Cause - delay of 36-day in filing the petition under Section 58(3) of the Companies Act, 2013 - Appeal against refusal of registration of transfer - Inherent powers of Tribunal - Applicability of Limitation Act to Companies Act proceedings.

Condonation of delay - HELD THAT:- It is a settled principle of law that "sufficient cause" contemplated under any law need not mean a "good cause". It's only a prima facie satisfaction, which is required to be recorded for the purposes of rendering a substantial justice, for adjudicating a dispute on merits rather than on technicalities of limitation, and it has to be liberally construed in the interest of dispensation of justice on merits. Sufficient ground should apparently show to be reasonable and acceptable under a common and reasonable prudence, which would be generally acceptable by simple rationale.

The Appellate Tribunal held that the appellant, despite opportunity, had filed no objection to the delay condonation application, with the result that the medical grounds and supporting documents relied on for explaining the delay remained uncontroverted. It further held that illness disclosed through undisputed medical material constituted sufficient cause, and that such material could be considered in a miscellaneous condonation proceeding even if the appellant later raised a technical objection to the mode of its production. On the legal question, the Tribunal held that Section 58(3) does not prescribe any non-condonable outer limit; the limitation under that provision is itself variable depending on whether refusal notice was received. In such a situation, Section 433 of the Companies Act read with Section 29 of the Limitation Act attracted the principles governing condonation, and Rule 11 could also be invoked to advance substantial justice. The decision in The Property Company (P) Ltd vs Rohinten Daddy Mazda [2026 (1) TMI 400 - Supreme Court], was held not to bar condonation in the facts of the case, since the impugned order was not an impermissible exercise of inherent power contrary to the statute but was within the statutory framework. [Paras 24, 25, 27, 28, 29]

The challenge to the condonation order was rejected, and the delay of 36 days remained condoned.

Final Conclusion: The Appellate Tribunal upheld the order condoning the delay in instituting the Section 58 proceedings. The appeal was dismissed, leaving the main company petition to be considered on its own merits.

Condonation of delay - Application of Limitation Act through Section 433 - Appellate interference with discretionary orders - Violation of Principles of Natural Justice (Audi Alteram Partem) - Delay in filing a petition under Section 58(3) of the Companies Act, 2013 - 36 days delay -HELD THAT: - The Appellate Tribunal held that Section 58(3) does not create an absolute bar against condonation of delay, and that the Tribunal could invoke Section 433 of the Companies Act, 2013 so as to apply the Limitation Act, 1963 for that purpose. On the challenge founded on alleged denial of opportunity, it found that the appellant had not specifically disputed the genuineness of the medical documents filed to support the plea of illness, either before the Tribunal or in appeal. It further held that, in interlocutory proceedings of this nature, a rejoinder is not an indispensable part of pleadings, particularly when the appellant had not even questioned the veracity of the documents relied on for condonation. Since the medical certificates substantiated the plea of illness and the delay was not inordinate, the Tribunal's view that each day's delay need not be meticulously explained was accepted. Condonation being a matter of judicial discretion requiring a pragmatic approach so that disputes are decided on merits rather than technicalities, the order condoning delay was found to be rational and justified. [Paras 5, 6, 7, 9, 10]

The condonation of 36 days' delay was upheld and the appeal against that interlocutory order was dismissed.

Final Conclusion: The Appellate Tribunal affirmed the order condoning 36 days' delay in filing the Section 58 petition and declined to interfere in appeal. It clarified that the appellant's objection on maintainability of the main company petition remained open for consideration on merits before the Tribunal.

Restructuring of credit facilities - Modification of charge - Proof of security interest in liquidation - Consent decree and creation of security interest - Pari passu charge - Harmonious construction - Non obstante clause.

Restructuring of credit facilities - Modification of charge - HELD THAT: - The Tribunal found that the original charges had been duly created and registered, and that the later restructuring merely reorganised the existing term loan, working capital, overdue principal and unpaid interest into differently named facilities such as WCTL and FITL. The securities themselves remained unchanged, the secured amount was not disturbed, and all consortium lenders were aware of the existing and specific charges of each lender. In that background, the restructuring was held not to amount, in the strict sense, to such a modification of charge as would defeat the subsisting security interest of the existing lenders. [Paras 84, 85, 86, 87, 88]

The finding that SBI and IDBI continued to rank as secured creditors notwithstanding non-registration of a fresh modification of charge after restructuring was upheld.

Proof of security interest in liquidation - Regulation 21 - CERSAI registration - In liquidation, security interest can be proved by any of the modes recognised in Regulation 21, including registration with CERSAI, and is not confined only to proof through a certificate of registration of charge issued by the Registrar of Companies. - HELD THAT: - Affirming the approach of the Adjudicating Authority and following Bizloan Pvt. Ltd. vs. Mr. Amit Chandrashekhar Poddar (Liquidator for Autocop) (India) Pvt. Ltd. [2025 (7) TMI 289 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI - LB], the Tribunal held that Regulation 21 provides three alternative modes for proving security interest. It accepted the view that, in the liquidation framework under the Code, proof of security interest is not completely dependent on registration with the Registrar of Companies and may also rest on CERSAI registration. The Tribunal thus accepted the harmonised construction adopted by the Adjudicating Authority and found no error in treating Regulation 21 as permitting proof of security by any of the prescribed modes. [Paras 89, 90, 91, 92]

The conclusion that security interest could be established through CERSAI registration under Regulation 21 was sustained.

Consent decree and creation of security interest - Pari passu charge - Priority of charge - The DRT order founded on consent terms did not create a fresh first security interest in favour of Kotak Mahindra Bank. - HELD THAT: - The Tribunal held that the consent terms before the DRT were themselves founded on the earlier security documents of 26.03.2008 and acknowledged the pre-existing first charge of SBI and IDBI over the specified assets, while showing only a second pari passu charge in relation to those assets. In that situation, the consent decree could not be treated as creating a fresh first charge in favour of the appellant; even if any security interest were assumed, it would remain subordinate to the already existing security interests. [Paras 93]

Kotak Mahindra Bank's claim to secured status on the strength of the DRT consent decree was rejected to the extent it was asserted as creating a fresh or superior charge.

Final Conclusion: The Appellate Tribunal upheld the orders under challenge and held that the restructuring of the facilities did not extinguish the subsisting registered securities of SBI and IDBI, that security interest in liquidation could be proved through the modes recognised by Regulation 21, and that the appellant's DRT consent decree did not create any fresh first charge. All the appeals were dismissed.

Provident fund dues - Exclusion from liquidation estate - Waterfall distribution - absence of a separately maintained provident fund account - Resolution Professional toward EPF dues - Priority of employee dues - Beneficial legislation - employees of the corporate debtor.

Provident fund dues - Exclusion from liquidation estate - Waterfall distribution -HELD THAT: - The Appellate Tribunal held that Section 36(4)(a)(iii) excludes all sums due to workmen or employees from provident fund, pension fund and gratuity fund from the liquidation estate, and assets so excluded cannot be brought within Section 53. After considering its earlier decisions and the decisions noticed by it, the Tribunal accepted the principle that the absence of a separately maintained fund does not defeat the statutory protection, and that such dues have to be provided for out of the available funds of the corporate debtor. On that basis, it found merit in the appellant's objection to the treatment of the claim as a distribution claim under the waterfall and remitted the matter for fresh examination in accordance with law. [Paras 45, 46, 47, 48, 52]

The issue was decided in favour of the appellant, and the impugned order was set aside with a direction for fresh consideration by the Adjudicating Authority in accordance with law.

Separate legal entity - Admissibility of claim - HELD THAT: - The Appellate Tribunal noted that the appellant's claim included provident fund dues relatable to M/s Laxmi Enterprises and held that such liability was not exclusively attributable to the corporate debtor. Since both concerns were separate legal persons with distinct assets and liabilities, the dues of that other entity could not be equated with or fastened upon the corporate debtor. [Paras 50]

The component of the claim relating to the separate entity was held not to be recoverable as a liability of the corporate debtor.

Final Conclusion: The Appellate Tribunal held that provident fund, pension fund and gratuity fund dues are to be kept outside the liquidation estate and cannot be subjected to distribution under Section 53 on the reasoning adopted in the impugned order. The order of dissolution was therefore set aside and the matter was remitted to the Adjudicating Authority for fresh examination in accordance with law, while clarifying that dues pertaining to a separate entity could not be treated as liability of the corporate debtor.

Operational debt - Pre-existing dispute - Refund of advance payment for supply of goods - Limitation under Article 137 - Forfeiture clause - definition of "default" given under sub-section (12) of Section 3. - HELD THAT: - The Appellate Tribunal held that the amount sought to be recovered was essentially a refund of advance paid under a purchase arrangement, and not an undisputed operational debt due and payable by the corporate debtor. The material on record showed that the parties had continued negotiations, entered into a subsequent settlement arrangement, revived business dealings, and that the corporate debtor had asserted forfeiture of the advance on account of failure to lift the contracted stock within time. In that background, the liability itself was disputed and the claim assumed the character of a pre-existing dispute. The Tribunal further held that for invoking Section 9, debt and default must coexist in relation to a crystallized liability; where the very existence and payability of the amount is disputed, and the claim is governed by a forfeiture stipulation, the remedy under the Code cannot be used for recovery. Any challenge to forfeiture would lie elsewhere and not in insolvency proceedings. Applying the principle stated in Mobilox Innovations Pvt Ltd Vs Kirusa Software Pvt Ltd. [2017 (9) TMI 1270 - SUPREME COURT] and referring to the contrast between Sections 7 and 9 noticed in M/s. Innoventive Industries Ltd vs. ICICI Bank & Anr. [2017 (9) TMI 58 - SUPREME COURT] the Tribunal found that the Section 9 application did not satisfy the statutory requirement of an undisputed debt. [Paras 19, 20, 21, 22, 23]

The claim was held to be outside the scope of Section 9, as it related to a disputed refund of advance and not to an undisputed operational debt.

Limitation under Article 137 - Acknowledgment of liability - HELD THAT: - The Tribunal held that, even assuming the amount was otherwise payable, the claim had fallen due when the operational creditor first sought refund by its communication demanding repayment. On the appellant's own case, the demand for refund had been made on 13.05.2015, whereas the demand notice under Section 8 was issued only on 20.06.2018, beyond the three-year period prescribed under Article 137 of the Limitation Act. The Tribunal therefore treated limitation as running from the initial demand for refund and found the insolvency notice and the consequent Section 9 proceedings to be time-barred. [Paras 14, 22]

The demand notice having been issued beyond three years from the first demand for refund, the application was held barred by limitation.

Final Conclusion: The Appellate Tribunal upheld the dismissal of the Section 9 application. It held that the amount claimed was a disputed refund of advance, affected by a forfeiture assertion and subsequent settlement, and in any event the claim was barred by limitation.

Second charge over the moveable and immovable assets of the Corporate Debtor - Secured financial creditor - consent decree and the deed of charge creating a second charge over the corporate debtor's assets - Proof of security interest - Non-registration of the second charge with the Registrar of Companies - barred recognition of the security interest in liquidation - mortgage and hypothecation over its movable and immovable assets including land.

Second charge - Consent decree - Secured financial creditor - HELD THAT: - The Tribunal held that the Bombay High Court had passed a consent decree with clear knowledge that Abhyudaya, whose rights stood assigned to the appellant, was the first charge holder, while Respondent No. 2 was to have only a second charge. The arrangement itself preserved the priority of the first charge, and the second charge could operate only after discharge of the first charge. In that background, the liquidator was bound to act in terms of the consent decree read with the consequential Deed of Charge. Since the second charge was expressly subordinate to the appellant's first charge, the appellant could not show any legal injury or prejudice merely because Respondent No. 2 was classified as a secured financial creditor. The contention that absence of prior consent of the first charge holder rendered the second charge a nullity was therefore not accepted. [Paras 10, 11, 14]

The classification of Respondent No. 2 as a secured financial creditor on the basis of the consent decree and the Deed of Charge was upheld.

Proof of security interest - Non-registration of charge - Regulation 21 - HELD THAT: - The Tribunal held that Regulation 21 of the Liquidation Process Regulations is enabling in character, since the expression used is may, and therefore the modes mentioned there are authoritative but not exhaustive. It rejected the appellant's submission that only the modes specified in Regulation 21 could establish security interest. The decision in Bizloan [2025 (7) TMI 289 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI - LB] was held not to exclude other acceptable proof. Here, the Deed of Charge had been duly registered before the Sub-Registrar, Pune Gramin, and that instrument remained legally operative. Relying on the principles noticed in S. Rajendran [2024 (3) TMI 459 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI BENCH] and Home Kraft Avenues [2025 (2) TMI 636 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] the Tribunal held that non-registration under Section 77 of the Companies Act, 2013 was not by itself sufficient to deny secured status where the mortgage or charge otherwise stood validly created and evidenced. [Paras 22]

The objection founded on absence of RoC registration was rejected, and the liquidator's recognition of Respondent No. 2 as a secured financial creditor was sustained.

Final Conclusion: The Tribunal found no merit in the challenge to the liquidator's treatment of Respondent No. 2 as a secured financial creditor. The appeal was dismissed and the impugned order was affirmed.

Effect of satisfaction of charge - no dues certificates and NOCs issued by the bank showed extinguishment of liability, the NeSL record disclosed no actionable default - Proof of financial debt and default - Acknowledgement of debt - Admission of the Section 7 application ​​​​​​.

Effect of satisfaction of charge - No objection certificate - Existence of debt - HELD THAT: - The Tribunal held that the letters relied on by the appellant were addressed to the Registrar of Companies only for recording satisfaction of specified charges and could not be read as a declaration that no outstanding dues remained against the corporate debtor. The material on record, including the index of charges, showed that all charges in favour of the bank had not been satisfied. The Tribunal therefore rejected the contention that issuance of such NOCs or satisfaction letters extinguished the underlying debt or disproved default. [Paras 11, 12]

The NOCs and satisfaction-of-charge letters did not negate the existence of debt or default.

Proof of financial debt and default - Acknowledgement of debt - Section 7 admission - HELD THAT: - The Tribunal found that the NeSL certificate relied on by the appellant pertained to a different account and did not displace the authenticated NeSL records produced by the bank for the two loan accounts on which the Section 7 application was founded. It further held that withdrawal of notices under Section 13(2) of the SARFAESI Act did not affect the bank's right to initiate insolvency proceedings on proof of debt and default. The financial statements of the corporate debtor recording borrowings and non-payment, together with the acknowledgment letter and restructuring request noticed in the impugned order, constituted prima facie acknowledgement of debt. Disputes regarding the exact quantum or the appellant's claim that amounts were wrongly retained were held not to defeat admission, such matters being left open for collation of claims by the Resolution Professional. [Paras 17, 19, 20, 21, 22]

Debt and default were sufficiently established, the Section 7 admission was upheld, and issues regarding the precise amount due were left to be considered by the Resolution Professional while collating claims.

Final Conclusion: The appeal was dismissed and the admission of the Section 7 application was affirmed. The Tribunal held that the appellant's objections did not dislodge the existence of financial debt and default, while leaving the exact quantification of the claim to the Resolution Professional during collation.

Effect of Change in consortium after approval of resolution plan - Compliance with request for resolution plan and CIRP Regulations - Limits of commercial wisdom of Committee of Creditors - Limited Judicial Review. - HELD THAT: - The Appellate Tribunal held that clause 1.7.7(f) of the RFRP, which permits a change in consortium with prior approval of the financial creditors, operates only at the stage before approval of the resolution plan. Once the plan submitted by the original consortium stood approved, the eligibility, financial strength, obligations of members, and feasibility and viability of the plan had already been assessed on the basis of that consortium as reflected in the evaluation matrix and the consortium agreement. Induction of a new member with a substantial shareholding after such approval altered the implementing consortium itself and resulted in a reconstituted applicant which was not part of the final list of prospective resolution applicants. Such re-approval was therefore contrary to the RFRP and the statutory scheme, including the prohibition against considering a plan from a person not appearing in the final list. The Tribunal further held that the provisions relating to incorporation of an SPC and permitted change in its shareholding could not be read as permitting post-approval change in the consortium itself. The plea founded on the commercial wisdom of the CoC was rejected since judicial deference does not extend to approving a plan that fails statutory and process compliance. [Paras 27, 38, 40, 41, 42]

The remand of the re-approved plan for reconsideration was upheld, and the appeal was dismissed.

Final Conclusion: The Appellate Tribunal held that the consortium could not be reconstituted after the original resolution plan had already been approved by the Committee of Creditors, and that the subsequent re-approval in favour of the changed consortium was contrary to the RFRP and the CIRP framework. The order remanding the matter for reconsideration was therefore sustained, with liberty to the appellant to participate in the process if so permitted.

Entitlement to intervene in proceedings initiated by a financial creditor under Section 7 - unregistered agreement for sale - Impleadment of parties - Necessary and proper party - Section 7 insolvency proceedings - Dominus litis - Corporate Insolvency Resolution Process. - HELD THAT: - The Appellate Tribunal held that, though the principles underlying Order I Rule 10 CPC are not directly applicable to proceedings under the Code, they may guide the determination whether a person is a necessary or proper party. In a Section 7 proceeding, the controversy is confined to the financial creditor's claim against the corporate debtor on the occurrence of default, and the financial creditor cannot be compelled to implead an outsider who neither owes the financial debt nor answers the description of the corporate debtor. The appellant's asserted interest rested only on an unregistered agreement for sale and, in the absence of a conveyance creating rights in the immovable property, such status did not make him a purchaser in law or render his presence necessary for effective adjudication of the Section 7 application. Any claim of the appellant, if at all, was only against the corporate debtor and not against the financial creditor. [Paras 11, 12, 13, 14, 15]

The appellant was held to be neither a necessary nor a proper party to the Section 7 proceedings, and rejection of the intervention application was upheld.

Final Conclusion: The Appellate Tribunal upheld the refusal to implead the appellant in the Section 7 insolvency proceedings, holding that a proposed purchaser under an unregistered agreement for sale had no legal status requiring intervention. The appeal was consequently dismissed.

Personal Insolvency Resolution Process - Liquidation - sufficient justification - admission of the application filed under Section 95 - HELD THAT:- The appeals challenging admission of personal insolvency proceedings under Section 95 of the Code were dismissed as infructuous, since liquidation of the corporate debtor had already been ordered and affirmed in the connected earlier appeal, rendering consideration of the Section 95 admissions unnecessary.

Maintainability of appeal - Applicability of Section 37A - outward remittances - seizure of equivalent assets - false declarations under the automatic route and in contravention of Section 4 - expression "person aggrieved" in Section 37A(5) - failure to report step-down subsidiaries and the absence of bona fide business - denial of a fair opportunity for defence -violation of principles of natural justice.

Maintainability of appeal by aggrieved person - inclusive definition of person - continuing contravention under FEMA - HELD THAT: - The Tribunal held that the challenge to invocation of Section 37A failed because the alleged contraventions were not confined to a period prior to insertion of that provision; the seizure was largely referable to transactions after the amendment, and even earlier acts could be taken into account where the contravention continued till and beyond the amendment. On maintainability, the appeal was found to have been filed by the Union of India through the Assistant Director, who was a notified authorised officer, and not by the Assistant Director in his personal capacity. Section 37A(5) uses the expression person aggrieved, and the inclusive definition of person under the Act could not be given a narrow construction so as to exclude the Union of India from challenging an adverse order of the Competent Authority. [Paras 7, 9, 10, 11, 15]

The preliminary objections to applicability of Section 37A and to the maintainability of the appeal were rejected.

False declaration in ODI filings - automatic route and approval route - protective seizure - HELD THAT: - The Tribunal found that the case had to be examined as a composite contravention covering remittances both before and after 01.01.2016. In respect of the ODI filings made before 01.01.2016, the forms specifically required disclosure whether the applicant party, its promoters or directors were under investigation, yet the respondent marked the column as 'NO' despite pendency of investigation. The Tribunal held that, even if the respondent wished to contend that the declaration was not attracted in a particular manner, it could not furnish a false answer. The Competent Authority was therefore wrong in treating the issue as concluded in favour of the respondent by reference to the later change in ODI forms and by effectively treating the form requirement as inconsistent with the regulations. The Tribunal further held that seizure under Section 37A operated as a protective measure pending adjudication, and the Competent Authority ignored that character while setting aside the seizure. [Paras 25, 26, 27, 28]

The finding that no actionable false declaration existed was held erroneous, and the basis for refusing confirmation of seizure on that count was rejected.

Non-reporting of step-down subsidiaries - bona fide overseas direct investment - perverse findings - HELD THAT: - Referring to the regulatory requirement to report decisions relating to step-down subsidiaries and to include them in annual reporting, the Tribunal held that the Competent Authority's view that such reporting obligation effectively arose only after insertion in the ODI form was contrary to the governing regulations. The Tribunal also found that the Competent Authority accepted the respondent's case on utilisation of funds without documentary support demonstrating actual business activity, deployment of ODI funds in business, or revenue-generating operations. Mere assertions that business was being run, or references to commercial risk and later events such as Covid-19, were held insufficient. On the record, the Tribunal accepted the appellant's grievance that the overseas entities had no demonstrated operational revenue and that the findings of the Competent Authority were vitiated by non-application of mind and perversity. [Paras 32, 33, 34, 35, 36]

The exoneration recorded by the Competent Authority on reporting obligations and bona fides of ODI utilisation was set aside as unsustainable.

Natural justice - fair opportunity of defence - HELD THAT: - The Tribunal held that the objections founded on the form of summons and alleged inadequacy of time were hyper-technical. The respondent had in fact received the summons, submitted replies on multiple dates, furnished extensive material, and was granted further time even after those replies. No attempt was made to produce the allegedly withheld material before the appellate forum by seeking to place additional evidence on record. In these circumstances, the Competent Authority had no basis to hold that fair opportunity had been denied. [Paras 38, 39, 40]

The finding of breach of natural justice was rejected.

Final Conclusion: The Tribunal held the appeal by the Union of India through the Assistant Director to be maintainable, upheld invocation of Section 37A on the facts, found the Competent Authority's reasoning on false declaration, reporting obligations, bona fides of ODI utilisation and natural justice to be unsustainable, and set aside the impugned order. The seizure under Section 37A was restored and the appeal was allowed.

Maintainability of the petition under Section 528 of the BNSS - Inherent jurisdiction - Alternative revisional remedy - Composite challenge to distinct criminal orders - Abuse of process - Belated quashing after commencement of trial. - HELD THAT: - The Court held that the inherent power preserved by Section 528 BNSS is extraordinary, to be exercised sparingly to prevent abuse of process or secure the ends of justice, and not as a substitute for the ordinary statutory remedy. In the present case, the impugned orders arose at different stages of the criminal case and each reflected a distinct judicial exercise; therefore they could not be jointly assailed in a single rolled-up petition. The orders rejecting discharge and framing charge were revisable orders, and the petitioner had an efficacious statutory remedy which was not availed within the prescribed period. The Court found that the petition was filed belatedly after commencement of trial and after participation by the petitioner in the proceedings, including cross-examination of witnesses, and that invocation of inherent jurisdiction at that stage was an attempt to bypass limitation and the conventional forum. The prayer to convert the petition into a revision was also declined because the petition was beyond limitation and contained multiple prayers that could not appropriately be treated as a single revision challenge. [Paras 71, 72, 73, 77, 78]

The Court dismissed the petition as not maintainable and refused permission to convert it into a criminal revision.

Final Conclusion: The Court held that the inherent jurisdiction under Section 528 BNSS could not be invoked to mount a belated composite challenge against distinct revisable orders after the petitioner had failed to pursue the statutory remedy and the trial had already progressed. The petition was therefore dismissed, and the prayer for conversion into a criminal revision was also rejected.

Service of adjudication order - Statutory mode of service - absence of acknowledgement due or proof of delivery under the prescribed mode of service - Electronic mail service - Benefit of doubt in service- HELD THAT: - The Court held that service of decisions or orders under the Finance Act, 1994, read with Section 37C of the Central Excise Act, 1944, must conform to the statutory modes prescribed therein. Although speed post is a recognised mode, the department did not disclose any acknowledgement due, tracking report, or other proof of delivery. The alternative plea of service through electronic mail was rejected since e-mail is not a recognised mode of service under the statute. In the absence of statutory proof of service, the Court gave the benefit of doubt to the petitioner and directed fresh service of the order in original, with consequential liberty for the petitioner to pursue the statutory consequences thereafter. The Court further held that any attachment made for non-compliance of the unserved order would not survive. [Paras 7, 8, 9]

The plea of valid prior service was not accepted; fresh service of the order in original was directed, and any attachment made for alleged non-compliance of that order was to stand quashed with release of the bank account or accounts.

Final Conclusion: The writ petition was disposed of by holding that the department had failed to establish valid service of the order in original in the manner required by statute. Fresh service was directed, and any attachment founded on alleged non-compliance of the earlier unserved order was set aside.

Demand for non-reversal of CENVAT credit on exempted supplies - input services - Rule 6(3) reversal of credit - reverse charge on rent-a-cab - point of taxation on advances - Admissibility of CENVAT credit on rent-a-cab, caretaker/security related services, health insurance, debit notes and works contract services - denial of Cenvat credit taken on the basis of Debit Notes - repair and renovation services - declared service of tolerating an act - extended period of limitation - Suppression of facts.

Liability to reverse credit for exempted services where separate accounts - HELD THAT: - The Tribunal found it admitted that the appellant was providing taxable as well as exempted services and had not maintained separate accounts. In such circumstances, the consequence under Rule 6(3) of the Cenvat Credit Rules, 2004 followed. However, in view of the separate finding that the extended period was not invocable, the demand could survive only for the normal period.

The demand for non-reversal of credit was upheld for the normal period alone.

Reverse charge on rent-a-cab - point of taxation on advances - HELD THAT: - The Tribunal held that liability under reverse charge on rent-a-cab arose in terms of the applicable notification and therefore the tax demand was valid on merits. As regards advances, Rule 3 of the Point of Taxation Rules, 2011 made the date of receipt of advance the point of taxation to the extent of such payment; therefore, payment of service tax only at the stage of invoice attracted interest for the delay. Since the extended period was separately held not to be available, the reverse charge demand was confined to the normal period.

The reverse charge demand on rent-a-cab was upheld for the normal period, and the interest demand on advances was upheld.

CENVAT credit on input services - Credit on rent-a-cab, caretaker services for guest house used for official purposes, and group health insurance for employees - HELD THAT: - On rent-a-cab, the Tribunal followed the consistent line of decisions permitting credit where the service was used in relation to business. On the so-called security service, the invoices were found to be for supply of caretaker to guest houses used by employees and professionals visiting for official purposes, and not for personal consumption; hence the exclusion relating to personal use did not apply. On health insurance, the Tribunal held that group medical and insurance policies covering employees support business operations and fulfil employer obligations, and therefore fall within eligible input services.

The denial of credit on rent-a-cab, caretaker/guest house service and health insurance was set aside.

Debit notes as duty-paying documents - HELD THAT: - The Tribunal held that the consistent view is that debit notes containing the requisite information prescribed under Rule 9(1) of the Cenvat Credit Rules are to be treated on par with invoices. Since the Revenue had not shown absence of the mandatory particulars or non-payment of tax by the service provider, mere nomenclature of the document was insufficient to deny credit.

The credit availed on debit notes was allowed.

Repair and renovation services - Credit on works contract services used for repair, maintenance and interior renovation of the cargo terminal premises was admissible. - HELD THAT: - On examining the nature of the work, the Tribunal found that the expenditure related to repair and maintenance activities and not to new construction. Relying on the CBEC clarification and precedent, it held that services used for repair or renovation of the premises of the provider of output service fall within the inclusive part of the definition of input service and are not hit by the exclusion applicable to construction-related services.

The disallowance of credit on works contract services was set aside.

Declared service of tolerating an act - HELD THAT: - The Tribunal held that the amount received by the appellant was a reversal or refund of licence fees earlier paid, because the land had not been handed over in time. Such remission did not represent consideration for any independent service rendered by the appellant, nor an agreement to tolerate an act or situation. The legal principle applied was that a mere refund of an earlier charge or expense does not become taxable consideration unless it is shown to be paid for a taxable obligation undertaken by the recipient.

The service tax demand raised on remission of licence fees under section 66E was set aside.

Extended period of limitation - HELD THAT: - The Tribunal found no material on record to show that the appellant had deliberately withheld information with mala fide intent to evade tax. It noted that the substantial part of the case on merits itself failed and that the Revenue had not established conscious suppression or deliberate non-disclosure. Applying the settled principle that suppression, in this context, must be deliberate and not a mere omission, the Tribunal held that the extended period could not be sustained.

The demands could not be sustained beyond the normal period, and the foundation for penalty under section 78 was not made out.

Final Conclusion: The Tribunal partly allowed the appeal and modified the impugned order. The demands under Rule 6(3), reverse charge on rent-a-cab and interest on advances were sustained only to the extent indicated, while the disallowance of various CENVAT credits and the demand on remission of licence fees were set aside; the extended period was held to be unavailable.

Classification of goods - tripartite research agreement - Renting of immovable property - Demand on ‘Event Management Services’ - Scientific or technical consultancy - Extended period of limitation.

Renting of immovable property - Tripartite agreement - Licence fee - HELD THAT: - The Tribunal examined the definition of the taxable entry and the terms of the MoU and found that the arrangement was a long-term collaborative R&D programme among BIGTEC, IISc and the appellant. The infrastructure belonged to IISc, and the payments were linked to the sponsored research arrangement. The Tribunal noted that the licence fee and other collections varied with the research projects undertaken and were not in the nature of fixed consideration ordinarily associated with renting of immovable property. On that construction of the agreement, the tripartite arrangement could not be treated as renting of immovable property by the appellant. [Paras 6]

The demand under renting of immovable property service for the said period was set aside.

Event management service - Health services - Logistic support - HELD THAT: - The Tribunal held that the appellant was providing logistic support for programmes connected with management and eradication of tropical diseases, which were in the nature of health-related services. Applying the statutory definition, it found that such activity was not planning, promotion, organisation or presentation of an event of the kind contemplated under event management service. The nature and purpose of the activity therefore took it outside the taxable category invoked in the notice. [Paras 7]

The demand raised under event management service was set aside.

Scientific or technical consultancy - Research-oriented programmes - Extended period of limitation - HELD THAT: - On the agreements and annexures placed on record, the Tribunal found that various organisations made payments through tripartite arrangements with IISc and the appellant for conducting research on scientific and technical subjects. These receipts were held to be project fees for research-oriented programmes and were therefore correctly classifiable as scientific or technical consultancy. The Tribunal further held that the nature of these activities came to the department's knowledge only on scrutiny of documents during audit, and hence invocation of the extended period for the demand covering the relevant years was justified. [Paras 8]

The demand under scientific or technical consultancy service was upheld, along with liability to interest, and the matter was remanded only for quantification of interest.

Final Conclusion: The appeal was partly allowed. The demands under renting of immovable property service and event management service were set aside, while the demand under scientific or technical consultancy service was sustained with interest, and the matter was remanded only for computation of the interest payable.

Taxability of alumni fee - Consideration for taxable service - Extended period of limitation - Suppression of facts - Departmental knowledge.

Taxability of alumni fee - HELD THAT: - On a plain reading of the agreement, the appellant's obligations were confined to assistance in development and provision of distance education programmes, identification and monitoring of learning centres, student facilitation, help desk and allied support functions. The agreement did not relate to alumni services to ex-students. Therefore, in the absence of any service rendered by the appellant in relation to the alumni fee collected by the University, such fee could not be included in the gross taxable value. The Tribunal also noted that levy on alumni fee had already been considered in Sikkim Manipal University vs. Commissioner of Customs, Central Excise and Service Tax, Siliguri [2016 (12) TMI 1923 - CESTAT KOLKATA] where it was held that no service tax arises when no service is provided for such fee. [Paras 7, 8]

The demand confirmed on alumni fee was held unsustainable on merits.

Extended period of limitation - HELD THAT: - The Tribunal found that the material facts were within the knowledge of the department, the appellant's records had been subjected to periodical audit, and service tax returns had been filed regularly. In these circumstances, the allegation of suppression of facts could not be sustained, and the extended period could not be invoked. [Paras 8]

The demand was also held barred insofar as it had been confirmed by invoking the extended period.

Final Conclusion: The Tribunal held that alumni fee collected by the University was not consideration for any service rendered by the appellant and therefore could not be subjected to service tax in the appellant's hands. The impugned order was set aside, the appeal was allowed, and the demand failed both on merits and on limitation.

Service tax demand on air travel agent services - Authorised operations - Overriding effect of SEZ Act - Suppression of facts - exemption from service tax on services provided to a Developer or Unit for authorised operations in a Special Economic Zone. - HELD THAT:- The Tribunal held that the air travel agent service was provided for travel of employees of SEZ units and the demand had been raised only on the ground that the travel occurred outside the SEZ area. It found that the Revenue had produced no evidence to show that such air travel service did not pertain to the authorised operations of the SEZ units or that it was used for the personal purposes of employees. In the absence of such evidence, the service had to be treated as one used for authorised operations of the SEZ. The Tribunal also noted that services provided to SEZ units for authorised operations had already been held allowable in the decisions cited before it, and therefore the demand could not be sustained. [Paras 8, 9]

The impugned demand, interest and penalties were set aside and the appeal was allowed with consequential relief.

Final Conclusion: The Tribunal held that, in the absence of evidence showing that the air travel agent services were not for authorised operations of the SEZ units or were for personal use, the demand could not be sustained. The impugned order was therefore set aside and the appeal was allowed with consequential relief.

Service tax - Principal to principal dealership - incentives, turnover-based discounts and reimbursements received by a motor vehicle dealer from the manufacturer - Business Auxiliary Service - demands barred by limitation - Trade discounts and sales incentives - Extended period of limitation - Suppression of facts.

Principal to principal dealership - Business Auxiliary Service - Trade discounts and sales incentives - HELD THAT: - The Tribunal found from the dealership agreement that the relationship between the appellant and the manufacturer was on a principal to principal basis and that the appellant was not acting as an agent. The difference between purchase price and sale price was therefore only trading profit. The additional incentives based on turnover and reimbursement of discounts passed on to customers were held to be part of the trading arrangement and not consideration for any service rendered to the manufacturer. Following the decisions discussed in Prem Motors Pvt Ltd [2023 (2) TMI 990 - CESTAT NEW DELHI] and Bimal Auto Agency [2023 (6) TMI 1082 - CESTAT KOLKATA], the Tribunal held that such amounts were in the nature of trade discounts and could not be subjected to service tax under Business Auxiliary Service. [Paras 16, 17]

The service tax demands on incentives, discounts and reimbursement were unsustainable on merits.

Extended period of limitation - Suppression of facts - Departmental knowledge - HELD THAT: - The Tribunal recorded that the appellant was registered, was paying service tax on taxable services and was filing ST-3 returns, while the relevant turnover also stood reflected in its accounts and income-tax records. For the first notice, the department had already audited the unit and identified the alleged liability, yet issued the notice only after a long gap without showing any further investigation; this could not be converted into suppression by the assessee. For the second notice also, the department had already called for and received documents, knew that operations had closed, and still delayed proceedings; the later demand was raised on facts already within departmental knowledge. Relying on Bimal Auto Agency and the principle stated by the Supreme Court in NIZAM SUGAR FACTORY Versus COLLECTOR OF CENTRAL EXCISE, A.P [2006 (4) TMI 127 - SUPREME COURT] with reference to P & B Pharmaceuticals (P) Ltd. v. Collector of Central Excise [2003 (2) TMI 68 - SUPREME COURT] the Tribunal held that once the facts were known to the department, subsequent invocation of the extended period on the same basis was impermissible. [Paras 18, 19, 20, 21, 22]

Both proceedings were also barred by limitation and the confirmed demands were liable to be set aside on that ground as well.

Final Conclusion: The Tribunal allowed the appeals and set aside the impugned orders. It held that the dealer incentives and discount reimbursements were not taxable as Business Auxiliary Service and, in any event, both demands were barred by limitation.

Consideration as an element of taxable service - levy of service tax on Manipal Arogya Card Scheme - Benefit of exemption under Notification No. 25/2012-ST - Healthcare services exemption - chargeable to service tax - legal services - Reverse charge on legal services - demand barred by limitation - Extended period of limitation.

Consideration as an element of taxable service - Facilitation of group health insurance - HELD THAT: - The Tribunal held that under section 65B(44), an activity becomes a service only when it is carried out for consideration. On the facts found, the appellant merely collected the premium from beneficiaries and remitted it to the insurance company, and even met the deficit from its own funds. Since the insurance cover was provided by the insurer and no consideration was received by the appellant for any independent service, the activity could not be treated as a taxable service in the appellant's hands. [Paras 14]

The service tax demand on the Arogya Suraksha Scheme was unsustainable.

Healthcare services exemption - Clinical establishment - HELD THAT: - The Tribunal found that the appellant, while running a medical college and providing health facilities in accordance with the regulatory requirements, could not be denied the character of a clinical establishment. As the card holders availed health services from the appellant's establishment, the services fell within the scope of the exemption available for healthcare services under Notification No. 25/2012-ST. [Paras 17]

The levy on the Manipal Arogya Card/Manipal Health Card scheme was held to be exempt.

Reverse charge on legal services - Business entity - Charitable trust - The appellant, being a trust, was not liable to service tax under reverse charge on legal services received during the relevant period. - HELD THAT: - The Tribunal rejected the Commissioner's view that the appellant became a business entity merely because it undertook certain commercial activities. Relying on India Advantage Fund-III vs. Commissioner of Central Tax [2024 (2) TMI 1086 - KARNATAKA HIGH COURT], as affirmed in Commissioner of Central Tax, Bangalore vs. India Advantage Fund [2024 (10) TMI 290 - SC ORDER], it held that the appellant, being a trust, could not be subjected to service tax on legal services under reverse charge during the relevant period. [Paras 18]

The demand of service tax on legal services received by the appellant under reverse charge was set aside.

Extended period of limitation - Suppression of facts - HELD THAT: - The Tribunal noted that the schemes and activities were in the public domain, the receipts were duly recorded in the books of account, and the records were subjected to periodic departmental audit. In those circumstances, suppression or misdeclaration could not be sustained, and the demand could not be confirmed by invoking the extended period. [Paras 19]

The demands also failed on limitation.

Final Conclusion: The Tribunal held that no taxable service was rendered by the appellant under the Arogya Suraksha Scheme, that the Arogya Card scheme was exempt as healthcare service, and that no reverse charge liability arose on legal services received by the trust. The demands were also held barred by limitation, and the impugned order was set aside.

Works Contract Service - Construction of canals under a turnkey/EPC contract contracts awarded by the State Government for irrigation and water-related purposes - Classification under Essential Character - Exclusion for non-commercial, non-industrial purpose - Benefit of Notification No. 41/2009-ST dated 23.10.2009.

Whether their activity of constructing canal is covered and classifiable under the category of WCS or otherwise. - HELD THAT: - The Tribunal held that the contracts in question were undisputedly EPC contracts for construction of canals awarded by the Government of Andhra Pradesh and were connected with carrying water for irrigation or drinking water purposes. Applying the Larger Bench ruling in Lanco Infratech Ltd. Vs CC, CE & ST [2015 (5) TMI 37 - CESTAT BANGALORE (LB)], it held that such canal construction, being in relation to reservoir or dam projects and intended for non-commercial, non-industrial purpose, stood excluded from the scope of Works Contract Service itself. Once the very classification adopted in the demand failed, the service tax demand could not survive. [Paras 9]

The activity was held to be outside the ambit of Works Contract Service, and the demand on that basis was unsustainable.

Prospective operation of exemption notification - Classification overriding exemption inquiry - HELD THAT: - The Tribunal agreed with the Commissioner that the notification dated 23.10.2009 could not be applied retrospectively in the absence of any specific provision to that effect. It nevertheless held that the question of exemption lost significance because the demand had already failed on the anterior issue of classification. With the demand itself not surviving on merits, the penalty also could not be sustained. [Paras 10]

The notification was held prospective, but the demand and consequential penalty were set aside since the activity itself was not taxable under the adopted classification.

Final Conclusion: The Tribunal allowed the appeal, holding that canal construction executed under Government EPC contracts for irrigation and allied non-commercial purposes was outside the scope of Works Contract Service. The demand and equal penalty were therefore not sustainable.

Maintainability of the appeal - Monetary limit for departmental appeals - Limitation for service tax demand - composite notice for claiming Service Tax on the ground of suppression of facts -Extended period of limitation - Time-barred demand - Whether an appeal can be filed in the High Court by consolidating the demand for Service Tax for 4 assessment years to reach the monetary limit -HELD THAT: - The show cause notice dated 31/12/2020 has at para 19, clearly determined the Service Tax payable by the assessee for each of the 4(four) assessment years. Though the demand of Service Tax for each assessment year is determinable, we need not go into the issue whether a composite demand notice for Service Tax, comprising different assessment years can be made, if the monetary limit in respect of the demanded/payable Service Tax, which is not time-barred for each assessment year, is not attained for filing an appeal. If the demand for Service Tax in respect of one of the assessment years is beyond the limitation period, the time barred demand cannot be made a part of the consolidated show cause notice. Thus, even if we are to assume that a consolidated demand for Service Tax comprising many assessment years can be made, the time-barred claim cannot be a part of the consolidated claims.

The Court first examined the preliminary objection based on the notification prescribing the monetary limit for departmental appeals to the High Court. It found that, although the show cause notice covered four assessment years and the aggregate demand crossed the threshold, the demand for each year was separately determinable from the notice itself. The Court held that the claim for 2014-2015 was barred by limitation even after invocation of the extended period under Section 73(1) of the Finance Act, 1994, and that a time-barred demand could not be included for the purpose of sustaining a consolidated claim. Once the barred demand was excluded, the remaining valid demand fell below the prescribed monetary limit. The Court therefore dismissed the appeal as not maintainable, while expressly leaving open the larger question whether demands for different years can be clubbed to overcome the monetary threshold in an appropriate case. [Paras 45, 46, 47, 48]

The appeal was dismissed as not maintainable because, after excluding the time-barred demand for 2014-2015, the surviving demand did not reach the monetary limit required for filing an appeal before the High Court.

Final Conclusion: The appeal was dismissed solely on the ground of non-maintainability under the notification prescribing monetary limits for departmental appeals. After excluding the time-barred demand for 2014-2015, the surviving service tax demand fell below the threshold, and the larger question of clubbing demands across years was left open.

Imposition of Penalty on director for company contravention - Reduction -Quantum of penalty - HELD THAT: - The Tribunal noted that the main company's appeal had become infructuous after liquidation and that no proper defence on behalf of the company was available before it. In that situation, the Tribunal held that it would be difficult to pin-point the specific contravention committed by the appellant in his capacity as director. Proceeding on that basis, and in order to meet the ends of justice, the Tribunal sustained the penalty only to a reduced extent. [Paras 3, 4]

The penalty imposed on the appellant was reduced, and adjustment of the pre-deposit was directed.

Final Conclusion: The Tribunal partly allowed the appeal by reducing the penalty imposed on the appellant as director, since the company's liquidation and absence of an effective defence made it difficult to identify the precise contravention attributable to him. The pre-deposit was directed to be adjusted.

Scope of input service under Rule 2(l) - Admissibility of CENVAT credit on consultancy services used for feasibility reports and project preparation relating to expansion, modernization and allied works of the existing factory - HELD THAT: - The Tribunal held that the services in question were connected with modernization, renovation and expansion of an existing factory and not with establishment of a new factory. It further accepted the legal position that, even after deletion of the words relating to setting up from the inclusive part of the definition, services used directly or indirectly in or in relation to manufacture continue to fall within the main part of the definition of input service, unless specifically excluded. Since the consultancy services were integrally related to the manufacturing activities and proposed expansion of the existing plant, denial of credit on the ground that the projects were to materialise in future or that they related to setting up was not sustainable. [Paras 6, 7, 8]

CENVAT credit was held admissible on the impugned consultancy services, and the Revenue's challenge to the appellate order was rejected.

Final Conclusion: The Tribunal upheld the order allowing credit and dismissed the Revenue's appeal. It held that the consultancy services were eligible input services connected with expansion and manufacturing activities of the existing factory.

Excise duty - Marketability - Production of FDG F-18 - Manufacture Or Not - Correct classification of FDG F-1 - classification of radiopharmaceuticals - Extended period of limitation - Valuation of Excisable Goods - Bona Fide Belief - Capture Consumption Valuation.

Marketability - Manufacture - HELD THAT: - The Tribunal held that the appellant's own admission of third-party supplies established that the product was capable of being sold and was in fact sold. Once evidence existed of sale to third parties, the plea that the product was non-marketable because of its limited shelf life could not be accepted. The fact that FDG F-18 reduced in strength over time did not detract from its marketability, and the activity resulting in its emergence was therefore held to amount to manufacture. [Paras 15]

The product was held to be marketable and the activity was held to amount to manufacture.

Classification of radiopharmaceuticals - Diagnostic reagents designed to be administered to the patient - FDG F-18 was classifiable under Chapter Heading 3006 3000 Or under Chapter Heading 2844 4000. - HELD THAT: - On the documents relied on by the appellant, the Tribunal found that FDG F-18 was a radioactive pharmaceutical used in medical imaging in PET scans. It held that such pharmaceutical products fell under Chapter 30, and that sub-heading 30063000, covering opacifying preparations for X-ray examinations and diagnostic reagents designed to be administered to the patient, was the appropriate classification. The classification adopted in the impugned order under Chapter Heading 2844 4000 was therefore incorrect, and the demand founded on that classification was unsustainable. [Paras 16]

The impugned goods were held classifiable under Chapter Heading 3006 3000, rendering the demand based on Chapter Heading 2844 4000 unsustainable.

Extended period of limitation - HELD THAT: - The Tribunal found that the appellant was acting under a bona fide belief that the goods were not subject to excise duty and that there was no suppression of facts. It also noted that the appellant was an amalgamated entity. On these findings, invocation of the extended period of limitation was held to be unsustainable. [Paras 17]

The demand could not be sustained on the basis of the extended period of limitation.

Valuation under section 4(1)(a) - Residuary valuation rule - HELD THAT: - The Tribunal held that where goods were sold to independent buyers at the same time and place, valuation for clearances to the appellant's own branches, hospitals and patients ought to have been based on the price available under section 4(1)(a). The adjudicating authority had instead adopted a higher value for captively consumed goods and applied residuary Rule 11 for such internal clearances. That approach was held to be unsustainable in the presence of comparable independent sales. [Paras 17]

The valuation adopted in the impugned order was held unsustainable.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeals. Although FDG F-18 was held to be marketable and its production was held to amount to manufacture, the demand failed because the adopted tariff classification, invocation of extended limitation, and valuation methodology were found unsustainable.

Deemed rectification - Interest on delayed refund - Orders without jurisdiction - Legal fiction - Jurisdiction - Failure to reject the assessee's rectification application- Entitlement to interest on the delayed refund under Section 13-A of the Karnataka Sales Tax Act, 1957 - HELD THAT:- The Court held that the rectification application, enclosing the Division Bench judgment, was received by the Assessing Authority on 22.01.2010. Under the second proviso to Section 25-A(1), if such application is not rejected within sixty days, the order isdeemed to have been amended rectifying the mistake. Since no rejection was passed within that period, the deemed rectification came into effect on expiry of sixty days. The Tribunal erred in proceeding on the basis that the relevant date was when the Division Bench judgment was otherwise made available to the Assessing Authority. Once the deemed rectification had taken effect, the rectification order subsequently passed on 08.04.2010 could not override it and was without jurisdiction. On that basis, the Court further held that the consequential revisional, fresh assessment, refund and appellate proceedings founded on that later order could not defeat the statutory consequence already brought about by operation of law. [Paras 8, 9]

The assessee's rectification application stood allowed by legal fiction on expiry of sixty days from 22.01.2010, and the later rectification order and consequential proceedings were held unsustainable for want of jurisdiction.

Entitlement to interest on the delayed refund, and the period of delay -HELD THAT: - The Court found that there was no dispute as to the assessee's entitlement to refund in the light of the Division Bench decision, and that the controversy was confined to the period of delay. Since the application for rectification was received on 22.01.2010, the statutory sixty-day period expired on 22.03.2010 and the further ninety-day period for grant of refund under Section 13-A expired on 22.06.2010. The Tribunal's reckoning from 23.03.2010 was held contrary to the material on record. The Court held that the right to interest had accrued by operation of the second proviso to Section 25-A(1) read with Section 13-A, and such accrued right could not be defeated by subsequent proceedings which were without jurisdiction. [Paras 9]

The assessee was held entitled to interest under Section 13-A at 6% per annum for the delay of one year, six months and eighteen days, computed after expiry of ninety days from 22.03.2010.

Final Conclusion: The revision petition was allowed. The Court set aside the Tribunal's rectification order and held that the assessee had acquired a statutory right to interest on delayed refund, payable at 6% per annum for the period determined by reckoning deemed rectification from the date of receipt of the rectification application.

Joint development agreement between a landowner and a developer - Works contract - Barter or exchange - value of immovable property or land under the KVAT Act in view of Entry 54 of List II and Article 366(29A)(b) of the Constitution of India - Machinery provision for levy - circular prescribing valuation methodology and inclusion of land value in taxable turnover - Composition scheme - transfer of undivided share in land in return for construction.

Joint development agreement - Works contract - Composite contract - HELD THAT: - The Court held that the JDA had to be read in the light of the law declared in Larsen and Toubro Limited [2015 (8) TMI 749 - SUPREME COURT]. Though a development arrangement may form part of a composite transaction involving transfer of immovable property and execution of works, the taxable works contract arises only from the stage when the developer enters into agreements with flat purchasers for monetary consideration. The landowner-developer arrangement under the JDA, where the owner conveys an undivided share in land and the developer delivers a corresponding built-up share, does not by itself constitute a taxable works contract in respect of the landowner's share. [Paras 23, 24, 25, 27, 28]

Question of law No. 1 was answered in favour of the assessee; construction relating to the landowner's share under the JDA was held not taxable as a works contract.

Barter or exchange - Sale - Other valuable consideration - HELD THAT: - The Court accepted the Tribunal's view that under the JDA the landowner transfers an agreed share in land and, in return, the developer constructs and hands over the agreed built-up portion. Since no monetary consideration moves from the landowner to the developer for construction of the landowner's share, the transaction lacks the essential price element of a sale. The expression "other valuable consideration" in Section 2(29) was not construed to authorise treating such exchange of land rights for built-up area as sale, and the Revenue's attempt to equate construction cost with consideration for land solely on the basis of the circular was rejected. [Paras 29, 30, 32, 33, 34]

Question of law No. 2 was answered in favour of the assessee; the JDA arrangement was held to be barter or exchange, not sale.

Tax on immovable property - Legislative competence - Value of goods in works contract - The State cannot levy VAT on the transfer of immovable property or land under a JDA, and any permissible levy is confined to the goods component in a works contract executed for flat purchasers. - HELD THAT: - Relying on the larger Bench ruling in Larsen and Toubro Limited [2015 (8) TMI 749 - SUPREME COURT], the Court held that Entry 54 of List II permits tax only on the sale of goods element in a works contract and not on transfer of immovable property. Therefore, where the subject matter of the JDA is transfer of undivided share in land, levy on that component falls outside legislative competence. Tax, if at all, can be sustained only on the value addition to goods transferred after the developer enters into contracts with flat purchasers. [Paras 35, 36, 37]

Question of law No. 3 was answered in favour of the assessee; levy on land or immovable property under the JDA was held impermissible.

Machinery provision for levy - Valuation mechanism - Circular without statutory backing - HELD THAT: - The Court found that Circular No. 12/2009-10 sought to introduce methods for valuing the land-related component and to add such value to taxable turnover, but the circular itself did not disclose any statutory source of power. Since the statute did not provide the machinery for computation in the context in question, the deficiency could not be cured by executive instructions. Applying the principle that a levy must be supported not only by a charging provision but also by a workable statutory measure for computation, the Court held that the circular could not override or supplement the Act and Rules. [Paras 38, 39, 40, 41, 42]

Question of law No. 4 was answered in favour of the assessee; the valuation mechanism in the circular was held unenforceable for want of statutory backing.

Composition scheme - Taxable turnover - Exclusion of land value - HELD THAT: - The Court held that the Revenue's argument based on limited deductions under the composition scheme could not survive once it was found that the value of land or immovable property was not includible in taxable turnover at all. The composition option does not enlarge the taxing power so as to permit levy on non-taxable elements. Therefore, after exclusion of the land component in terms of the law declared on the earlier questions, no separate controversy regarding deductions under the composition scheme remained. [Paras 43]

Question of law No. 5 was answered accordingly against the Revenue.

Final Conclusion: The Court held that, in the context of a joint development arrangement, VAT under the KVAT Act can be levied only on the value of goods involved in construction undertaken for flat purchasers after such agreements come into existence, and not on the landowner's share or on transfer of immovable property. The Revenue's revision petitions and review petitions were dismissed, while the assessees' appeals were allowed.

Arbitration agreement - Unilateral appointment of arbitrator - Jurisdictional nullity - Limitation for objections to award - Estoppel in public tender contracts - HELD THAT:- The Special Leave Petition was dismissed, and pending applications, if any, were disposed of.