TMI Tax Updates e-Newsletter
May 02,2026

Principles of Natural Justice - Jurisdictional objection in assessment proceedings - Prior determination of jurisdiction before merits -HELD THAT: - The Court did not adjudicate the merits of the petitioner's contention that the same officer could not conduct audit-related proceedings and thereafter pass the adjudicatory order. Taking note that such an identical question is frequently raised, the Court held that the objection as to jurisdiction should first receive adjudication by the appropriate authority. It was therefore left open to the petitioner to raise the jurisdictional objection before respondent No.2, and the authority was permitted, if necessary, to obtain administrative orders from the assigning authority. The Court directed that a finding on jurisdiction be recorded first and that the proceedings on merits be taken up only thereafter. [Paras 7, 8, 9, 10]

The impugned order was set aside and the matter was remitted for reconsideration, with a direction that no steps on merits be taken until a finding on jurisdiction is recorded.

Final Conclusion: The Court set aside the impugned order and remitted the matter for fresh consideration confined first to the petitioner's jurisdictional objection. All contentions on that aspect were kept open, and the merits were directed not to be examined until such objection is decided.

Writ against revision notice - Premature challenge - Release of goods pending revision - Challenged to initiation of revisional proceedings under Section 108 -HELD THAT: - The Court noted that the impugned action was only a notice initiating revision and that the revisional authority had not yet passed any final order. In that situation, all objections urged by the petitioner, including the objection as to absence of jurisdiction and the contention that revision was not maintainable against the appellate order, were left open to be urged before the revisional authority itself. The determinative reason was that interference at this stage would be premature when the statutory proceedings were still pending. [Paras 6]

The writ petition was disposed of without examining the merits of the challenge to revision, reserving liberty to the petitioner to raise all contentions before the revisional authority.

Having regard to the appellate order reducing the liability and the fact that the validity of that order was still under consideration in revision, the Court considered it appropriate to protect the petitioner by directing release of the goods on payment of a further sum, in addition to the amount already deposited in appeal. The petitioner was also required to file an affidavit undertaking to abide by the final order in revision and to participate in the revisional proceedings. [Paras 7, 8]

The goods were directed to be released on the petitioner making the directed deposit, following due procedure, and furnishing an undertaking to abide by the final revisional order.

Final Conclusion: The Court declined to interfere with the revisional notice at the threshold, holding that the petitioner must raise all objections before the revisional authority. At the same time, it directed conditional release of the goods pending completion of the revisional proceedings.

Validity of the ex parte GST assessment order - Pre-deposit - Opportunity of Hearing - Bank Attachment - HELD THAT:- The ex parte assessment order was not examined on merits and the matter was remitted to the respondent for fresh adjudication on the petitioner's compliance with the conditions regarding filing of reply and deposit of 10% of the disputed tax in case of any shortfall in the amount already stated to have been paid.

Belated statutory appeal - Reconciliation of input tax credit mismatch - excess or short availment of Input Tax Credit - long after the expiry of the limitation period prescribed under Section 107 of the respective GST Enactments - HELD THAT:- The Court noted that, apart from the admitted payment of 10% of the disputed tax at the time of filing the appeal, there was no determination by the authorities on whether the petitioner had in fact availed excess or lesser credit under the respective heads and whether the amounts claimed to have been paid had been properly given credit. Since the DRC-01A intimation itself reflected restricted availment of IGST credit along with excess availment under SGST and CGST, the position required factual verification and possible squaring up, provided the petitioner had not subsequently availed the IGST credit and could establish that the supplier had paid the tax and that the inputs were received as reflected in GSTR-2A. In that view, the Court held that the matter required fresh consideration by the appellate authority on merits, and directed such consideration without reference to limitation, subject to the petitioner making an additional deposit. [Paras 13, 14, 15, 16, 17]

The matter was remitted to the appellate authority for fresh disposal on merits without reference to limitation, subject to the petitioner depositing an additional sum as directed; failing such compliance, the authorities were left free to proceed in accordance with law.

Final Conclusion: The writ petition was disposed of by restoring the petitioner's opportunity to pursue the statutory appeal on merits, notwithstanding delay, because the dispute required factual reconciliation of credit and payments. That indulgence was made conditional upon an additional deposit, with liberty to the authorities to proceed if the condition was not satisfied.

Validity of reassessment notice - Specified authority for sanction - Jurisdiction of Assessing Officer - Notice issued by the Jurisdictional Assessing Officer(s) (JAO) v/s prescribed faceless mechanism or competent Faceless Assessment Officer(s) (FAO) - Effect of subsequent amending legislation on pending reassessment litigation - Insertion of new section 147A - scope of legislative changes introduced to the reassessment framework under Sections 147 to 151 of the IT Act, by the Finance Act, 2021 enacted on 28.03.2021

HELD THAT: - The Court noted that the appeals arose from conflicting High Court views on whether, after the scheme framed under section 151A, notices and orders under sections 148 and 148A(d) could be issued by the Jurisdictional Assessing Officer or only through the faceless mechanism. During the pendency of the appeals, Parliament introduced section 147A with retrospective effect and made connected amendments, thereby altering the statutory foundation on which the High Courts had primarily quashed the reassessment notices. In that situation, the Court considered it unnecessary to adjudicate upon the merits of the rival submissions or the correctness of the competing High Court views, and held that the assessees should be relegated to the jurisdictional High Courts to raise all available challenges, including to the amending provision itself. [Paras 22, 23, 24, 26, 27]

The impugned judgments were set aside on the limited ground that the basis of those judgments stood altered by the amending legislation, and the matters were remitted to the respective High Courts for fresh consideration, with liberty to the assessees to amend their writ petitions and challenge the amended provisions; all questions on merits were expressly left open.

Final Conclusion: The appeals were disposed of by setting aside the High Court judgments on a limited ground arising from the subsequent statutory amendment and remitting the matters to the respective High Courts for fresh consideration. The assessees were given liberty to challenge the amended provisions, all merits were left open, and further assessment or reassessment proceedings were directed to remain stayed during the pendency of the writ petitions, subject to orders of the High Courts.

Addition u/s 68 r.w.s.115BBE - Additional evidence before appellate authority - Compliance with Rule 46A(3) - Distinction between appellate enquiry powers and Rule 46A procedure

HELD THAT: - The Tribunal held that, although the appellate authority recorded admission of the assessee's additional evidence by invoking powers under section 250(4), that did not dispense with compliance with Rule 46A(3). Once documents produced for the first time in appeal were taken into account, the Assessing Officer had to be confronted with them and given an opportunity to verify them and furnish comments.

Relying on CIT vs Manish Buildwell [2011 (11) TMI 35 - DELHI HIGH COURT] Tribunal held that the appellate enquiry power under section 250(4) is distinct from the procedure governing admission of additional evidence under Rule 46A, and the two cannot be conflated so as to bypass the mandatory opportunity to the Assessing Officer. [Paras 12, 13, 14]

The matter was remanded to the appellate authority to obtain a remand report from the Assessing Officer on the additional evidence and thereafter decide the issue in accordance with law.

Final Conclusion: The Tribunal held that the appellate order suffered from non-compliance with the mandatory procedure governing additional evidence. The deletion of the section 68 addition was therefore set aside on this limited ground, and the matter was remanded to the appellate authority for fresh consideration after obtaining the Assessing Officer's remand report.

Disallowance u/s 14A r/w rule 8D - Ceiling of disallowance to exempt income - Rule 8D computation

HELD THAT: - The Tribunal found that the assessee had itself disallowed the amount of exempt dividend earned during the year, and that the further disallowance computed by applying Rule 8D far exceeded such exempt income. Relying on the principle stated in Joint Investments (P.) Ltd. [2015 (3) TMI 155 - DELHI HIGH COURT] it held that section 14A permits disallowance only of expenditure incurred in relation to exempt income, and the disallowance cannot be so interpreted as to swallow or exceed the exempt income itself. Since the exempt income was lower than the disallowance sustained by the authorities below, the action of the AO was held to be illegal. [Paras 7]

The disallowance u/s 14A r/w Rule 8D was deleted and the assessee's grounds on that issue were allowed.

Final Conclusion: The Tribunal allowed the appeal and held that the disallowance made under section 14A read with Rule 8D was unsustainable since it exceeded the exempt income earned by the assessee for the year.

Reassessment based on third-party statements - Denial of cross-examination - Principles of natural justice denied - Reassessment jurisdiction - HELD THAT: - The Tribunal found that the assessee had specifically sought cross-examination of the persons whose statements were relied upon for drawing an adverse inference, but no such opportunity was afforded. Since the addition had been made purely on the basis of those third-party statements, denial of cross-examination amounted to a breach of principles of natural justice.

Applying the settled rule that an order founded on such statements without permitting cross-examination is rendered unsustainable, the Tribunal held that the reopening and consequent assessment were beyond jurisdiction and bad in law. [Paras 7, 8]

The reassessment was quashed on this legal ground, and the same finding was applied mutatis mutandis to the other two assessment years.

Final Conclusion: The Tribunal allowed all three appeals and quashed the reassessment orders, holding that additions founded solely on third-party statements could not stand when the assessee had been denied the requested opportunity of cross-examination.

On-money as part of sale consideration - addition u/s 69A - Scope of unexplained money - Taxability under capital gains - Cash received over and above the registered sale consideration on transfer of jointly owned immovable properties - HELD THAT: - The Tribunal held that section 69A, being a deeming provision, applies only where the assessee is found to be owner of money not recorded in the books and offers no satisfactory explanation regarding its nature and source.

In the present matters, the receipt in question was accepted by the Assessing Officer himself as on-money arising from sale of the properties and received from the buyer.

Once the source of the receipt was thus identified as part of the transaction of sale, it could not be treated as unexplained money merely because it was received in cash and was not reflected in the registered sale deed.

The amount retained the character of additional sale consideration and, having been excluded from the computation of long-term capital gains, had to be brought to tax only under the head capital gains by recomputing the sale consideration in the hands of each co-owner according to his share. [Paras 15, 16, 21, 26, 32]

Final Conclusion: The Tribunal held that the impugned on-money receipts formed part of the consideration for sale of the jointly owned properties and, the source having been accepted as payment from the buyers, could not be taxed as unexplained money u/s 69A. AO was directed to recompute the capital gains accordingly, and all four appeals were partly allowed.

Denial of Foreign Tax Creditu/s 90/91 -Belated filing of Form 67 - Directory procedural requirement

HELD THAT: - The Tribunal held that the determinative controversy stood covered in Anubhav Singhal [2025 (8) TMI 55 - ITAT DELHI] and Duraiswamy Kumaraswamy [2023 (11) TMI 1000 - MADRAS HIGH COURT] both taking the view that filing of Form 67 for claiming Foreign Tax Credit is directory and not mandatory.

It further held that in Wipro Ltd.[2022 (7) TMI 560 - SUPREME COURT] relied on by the first appellate authority, dealt with section 10B(8) in the context of exemption and factual verification of deduction claims, and was therefore on a different footing from a claim for FTC u/s 90/91 read with Rule 128. On that reasoning, the denial of FTC merely because Form 67 was filed belatedly could not be sustained. [Paras 6]

The Assessing Officer was directed to accept Form 67 filed by the assessee and allow the Foreign Tax Credit after due verification and in accordance with law.

Final Conclusion: The Tribunal allowed the assessee's appeal and held that belated filing of Form 67 could not, by itself, defeat the claim for Foreign Tax Credit. The Assessing Officer was directed to accept the form and grant the credit after due verification in accordance with law.

Accumulation of income u/s 11(2) - Belated filing of Form No. 10 - Condonation of delay - Procedural compliance and substantive entitlement -

HELD THAT: - The Tribunal held that the controversy stood covered by the binding decision of the Delhi High Court in THE ASSOCIATED CHAMBERS OF COMMERCE AND INDUSTRY OF INDIA [2024 (8) TMI 370 - DELHI HIGH COURT] which had considered the post-01-04-2016 position and treated timely availability of the prescribed particulars to the AO before completion of assessment as decisive, while delay in the digital filing of Form No. 10 was regarded as a procedural lapse.

In the present case, Form No. 10 had been filed before completion of assessment, and the assessee had also moved a condonation petition before the competent authority, on which no order had been passed. Hence, the lower authorities were not justified in rejecting the claim on the premise that no condonation petition had been filed or that the delay by itself was fatal. The Tribunal also noticed the later High Court view that where the claim of accumulation was already part of the return and the substantive conditions stood fulfilled, a liberal approach to condonation was warranted. [Paras 3, 4, 5, 6]

The assessee was held entitled to the claimed accumulation of income, and the addition made on that ground was deleted.

Final Conclusion: The appeal was allowed. The Tribunal held that belated filing of Form No. 10 before completion of assessment, coupled with the pending condonation request, could not defeat the assessee's substantive claim for accumulation under section 11(2), and the addition was deleted.

Deductibility of interest expenditure - Contractual liability under capital bond agreement - Corresponding interest liability - Interest paid by the assessee under clause 5 of the capital bond agreement as deductible against the interest income earned on the capital bond account - HELD THAT: - On a fresh consideration of the capital bond agreement dated 04.07.1997, the Tribunal found that article 5 specifically provided that the interest accruing on the capital bond was to be paid by the assessee to Prestige. The earlier view that there was no stipulation or enforceable obligation was therefore incorrect. Since the capital bond funds were provided by Prestige and, upon accrual of interest on those funds, a corresponding liability arose on the assessee to pay that interest to Prestige, the payment constituted an allowable expenditure. The Tribunal held that once the related interest income had been assessed in the assessee's hands, the matching liability arising under the agreement was deductible. [Paras 17, 18, 19, 20]

The disallowance of interest paid to Prestige was directed to be deleted and the claim was allowed.

Final Conclusion: The Tribunal held that the capital bond agreement created a binding obligation on the assessee to pay the accrued interest to Prestige and, accordingly, such interest was deductible. All seven appeals were allowed to that extent.

Deduction u/s 80P(2)(a)(i) - interest received from non-eligible entities - Assessee is a co-operative society though registered under the Karnataka Souharda Sahakari Act - disallowance made for non-deduction of tax

HELD THAT: - The Tribunal held that a society registered under the Karnataka Souharda Sahakari Act, 1997 is to be treated as a co-operative society for purposes of the claim, and therefore the Assessing Officer was not justified in denying the deduction merely because the assessee was not registered under the Karnataka State Co-operative Societies Act, 1959. It further found that the assessee was engaged in providing credit facilities to its members and there was no evidence of dealings with non-members. The appellate finding that interest was earned from non-members was therefore held to be without basis. Applying the principle that income attributable to the business of providing credit facilities to members qualifies for deduction, the Tribunal also held that any increase in business income resulting from disallowance for non-deduction of tax would likewise remain attributable to that eligible business and would correspondingly qualify for deduction.

Deduction under section 80P(2)(a)(i) was directed to be allowed for all the three assessment years, including on the enhanced business income resulting from the disallowance for non-deduction of tax.

Disallowance made for non-deduction of tax would increase the income of the Assessee which is attributable to the business of providing credit facilities to its members. Therefore, any disallowance made by the Ld. Assessing Officer for non-deduction of tax would further increase the income and simultaneously also increase the deduction. In view of the above facts, the Appeal filed by the Assessee is allowed.

We allow the deduction of business income attributable to the business of credit facilities u/s. 80P(2)(a)(i) of the Act. [Paras 8, 9, 10]

Interest income earned by the Assessee is not claimed by the Assessee u/s. 80P(2)(d) but whole of the income is stated to be business income attributable to the business of the Assessee. Therefore, in subsequent years, the issue raised by the Ld. revenue authorities of denying deduction u/s. 80P(2)(d) of the Act does not survive. [Para 11]

Final Conclusion: The Tribunal allowed all three appeals and held that the assessee was entitled to deduction of its business income under section 80P(2)(a)(i) for the assessment years 2017-18, 2018-19 and 2020-21. It further held that the objection regarding section 80P(2)(d) did not survive, as no such claim had been made.

Dismissal of appeal for non-prosecution - Tax deduction at source on year-end provisions - Tax deduction at source on salary at time of payment

Dismissal of appeal for non-prosecution - Appellate powers - HELD THAT: - The Tribunal found that the appellate order had not adjudicated the controversy on merits and had been passed only because there was no response to the notices issued. It held that the appellate authority had no power to dismiss the appeal for non-prosecution and was required to decide the appeal on merits. [Paras 13]

The appellate order was held to be unsustainable to the extent it dismissed the appeal for non-prosecution.

Tax deduction at source on year-end provisions - Credit to suspense or payable account - Assessee in default - HELD THAT: - The Tribunal noted that, on the assessee's own material, the recipients of income, their PAN, the nature of the expenses and the amounts provided as on 31.3.2018 were all identifiable. It therefore rejected the contention that the liability had not crystallised merely because the provision was reversed in the succeeding period. It further held that credit to an expenditure payable account did not take the case outside the TDS provisions, since the statutory scheme required deduction even where the amount was credited to an account other than the account of the payee. The maintenance of books on accrual basis and the recording of the expenditure in the financial statements also militated against the plea that no expenditure had been incurred. On that reasoning, the assessee was correctly treated as an assessee in default in respect of non-deduction of tax on the year-end provisions. However, the Tribunal held that the assessee would be entitled to the benefit of the first proviso to section 201, if the recipients had already offered the income and the prescribed material was furnished, and restored that limited verification to the Assessing Officer. [Paras 14, 15, 18]

The finding of default for non-deduction of tax on the year-end provisions was upheld, subject to verification by the Assessing Officer of the assessee's claim for relief under the first proviso to section 201.

Tax deduction at source on salary at time of payment - Variable pay - Assessee in default - whether tax on salary under section 192 was deductible at the time of actual payment? - HELD THAT: - The Tribunal found that the salary amounts in question had not been paid to the two employees during FY 2017-18 and were paid only in the subsequent year on performance basis. Since deduction under the salary provisions was required at the time of payment, and the assessee had deducted tax and issued the necessary Form 16 in the year of actual payment, the statutory requirement had been correctly followed. [Paras 16, 17]

The action of treating the assessee as in default in respect of the salary component and the consequential interest was set aside, and corresponding relief was granted.

Final Conclusion: The appeal was partly allowed. Tribunal upheld the TDS default on the year-end provisions subject to limited verification of relief under the first proviso to section 201, deleted the default and interest relating to the salary payments, and held that the first appellate authority could not dismiss the appeal for non-prosecution.

Unexplained investment in jewellery - CBDT Instruction No. 1916 - Jewellery received on customary occasions - Customary possession of jewellery -

HELD THAT: - The Tribunal found that the record contained a detailed break-up of the jewellery found, the family-wise allocation, affidavits regarding gifts received on marriage and other occasions, supporting bills, and bank withdrawals evidencing purchases. It further held that Board Instruction No. 1916 supported the assessee's explanation regarding reasonable holding of jewellery by family members, and that the case was covered by the precedent relied upon by the Tribunal in Vibhu Aggarwal [2018 (5) TMI 586 - ITAT DELHI] which recognised that jewellery held in the family having regard to status, customs and occasions could not be treated as unexplained merely on a rigid or arbitrary basis. On that reasoning, the addition made by the Assessing Officer was held to be illegal. [Paras 7, 8]

The addition on account of unexplained jewellery was deleted.

Final Conclusion: The Tribunal allowed the appeal and deleted the addition made on account of unexplained jewellery. It held that the assessee's explanation stood supported by the evidentiary material on record and by the principle recognised in CBDT Instruction No. 1916 as applied in the judicial precedent followed.

Transfer pricing adjustment - interest on loan to associated enterprise - interest on the loan advanced to the German subsidiary - Admissibility of additional evidence produced - HELD THAT: - The Tribunal took on record the additional evidence comprising the independent auditor's report, the letter filed before the RBI and the RBI order, and noted that the record also contained the Hamburg District Court order commencing liquidation proceedings. Since these materials bore directly on the sustainability of the adjustment for interest on the loan to the subsidiary which was stated to be incurring persistent losses and under liquidation, the appellate order upholding the adjustment at 6% was held to be not just, fair, reasonable and legal without such examination. The matter therefore required fresh adjudication by the Assessing Officer in accordance with law after granting opportunity of hearing. [Paras 7]

The issue was remitted to the Assessing Officer for fresh adjudication after admitting the additional evidence; no final decision on the merits of the transfer pricing adjustment was rendered.

Final Conclusion: The Tribunal admitted the additional evidence and set aside the sustenance of the transfer pricing adjustment on interest relating to the loan advanced to the German subsidiary. The matter was remanded to the Assessing Officer for fresh adjudication, and the appeal was allowed for statistical purposes.

Depreciation on goodwill arising on amalgamation - Disallowance under section 14A in absence of exempt income - Brought forward written down value

Depreciation on goodwill arising on amalgamation - Purchased goodwill - Explanation 3 to section 43(1) - claim denied on the basis of 5th Proviso to Section 32 of the Act as amalgamating company was not claiming depreciation on goodwill before amalgamation - HELD THAT: - The Tribunal found that the goodwill arose from an amalgamation approved by the High Court and stood recorded in the books pursuant to that scheme. It accepted the appellate finding that the excess paid over net assets acquired constituted purchased goodwill and not a mere book entry. The authorities cited by the Assessing Officer were either no longer good law for that proposition or were distinguishable on facts, particularly where the amalgamation involved a wholly owned subsidiary. On that basis, the Tribunal upheld the view that neither Explanation 3 to section 43(1) nor the fifth proviso to section 32(1) operated to deny depreciation on the goodwill so arising. [Paras 2]

The allowance of depreciation on goodwill was sustained and the Revenue's appeal on this issue was dismissed.

Disallowance u/s 14A in absence of exempt income - Rule 8D - HELD THAT: - The Tribunal recorded that the assessee had not earned any exempt income in the relevant year. Proceeding on the settled legal position that section 14A disallowance cannot survive in the absence of exempt income, it held that the disallowance confirmed in appeal was unsustainable. [Paras 3]

The disallowance under section 14A read with rule 8D was directed to be deleted.

Brought forward written down value - Additional legal ground - Depreciation on the opening written down value of goodwill brought forward from the earlier year could denied - HELD THAT: - The Tribunal admitted the additional ground as a pure legal issue since the relevant facts were already on record and no further enquiry was required. On merits, it noted that depreciation on goodwill had been allowed by the Department in the preceding assessment year and there were no pending proceedings affecting that position. It therefore held that, unless the earlier year's written down value was changed or disturbed, depreciation on the brought forward written down value could not be disallowed in the year under appeal.

Case of the assessee is squarely coverd by the decisions of Jute Corporation of India Ltd.[1990 (9) TMI 6 - SUPREME COURT], ii) National Thermal Power Co. Ltd [1996 (12) TMI 7 - SUPREME COURT (LB)] and Britannia Industries Ltd.[2017 (7) TMI 502 - CALCUTTA HIGH COURT] [Paras 4]

The additional ground was admitted and allowed in favour of the assessee.

Final Conclusion: The Tribunal upheld the allowance of depreciation on goodwill arising from the approved amalgamation, deleted the disallowance made under section 14A in the absence of exempt income, and also allowed the additional legal ground concerning depreciation on the brought forward written down value. Consequently, the assessee's cross-objection was allowed and the Revenue's appeal was dismissed.

TP Adjustment - selection of MAM - Comparable Uncontrolled Price method - Commodity broker quotations - Transfer pricing benchmarking - DR contented price quotations can be used provided the same pertain to actual transaction and are available in public domain

HELD THAT: - The Tribunal found that the controversy stood covered by the decisions cited before it, where in identical circumstances quotations from Sunvin Group and MMSPL were accepted as valid external CUP data. It noted that those precedents held that such quotations can be used for benchmarking in the absence of any material casting doubt on their reliability and authenticity.

Respectfully following decisions of CARGILL FOOD INDIA LIMITED [2016 (2) TMI 1100 - DELHI HIGH COURT] and TVARUR AND FATS PVT. LTD. AND (VICE-VERSA) [2025 (10) TMI 1106 - ITAT DELHI] Tribunal held that the rejection of Sunvin Group and MMSPL quotations was not sustainable and accepted the assessee's benchmarking challenge on that basis. [Paras 9, 10, 11, 12]

Grounds challenging rejection of Sunvin Group and MMSPL quotations were allowed, and the transfer pricing adjustment was deleted; the remaining connected grounds were rendered infructuous.

Final Conclusion: The appeal was partly allowed. The Tribunal, following earlier decisions, held that quotations from Sunvin Group and MMSPL were valid for CUP benchmarking and consequently deleted the transfer pricing adjustment; the remaining pressed grounds did not survive or were dismissed.

Addition u/s 56(2)(x) - difference between the purchase consideration and the stamp duty value being one-third share -Allotment letter as agreement fixing consideration - Benefit of provisos where part consideration is paid through banking channels

Whether the stamp duty value as on the date of registration can be adopted for the purposes of section 56(2)(x) or whether the consideration agreed at the time of allotment is to be considered? - HELD THAT: - The Tribunal held that where the date of agreement fixing consideration and the date of registration are different, the provisos to section 56(2)(x) require adoption of the stamp duty value as on the date of agreement, provided whole or part of the consideration has been paid through prescribed banking modes on or before that date. Allotment letter fixed the total consideration and evidenced payment by cheque at the time of booking, and the remaining consideration was paid in terms of that allotment.

Tribunal therefore treated the allotment letter as a valid agreement for this purpose and held that the statutory conditions stood satisfied. Adoption of the stamp duty value as on the date of registration was erroneous and the difference between the agreed value and the registration-date stamp duty value was not taxable. [Paras 4, 5]

The addition made u/s 56(2)(x) was held to be unsustainable and was directed to be deleted.

Final Conclusion: Tribunal allowed the appeal and deleted the addition made u/s 56(2)(x), holding that the assessee was entitled to the benefit of the provisos on the basis of the earlier allotment letter and part payment made through banking channels.

Maintainability of Writ Petition - Validity of the show cause notices - Wholly without or in excess of jurisdiction and with presupposed conclusions - Territorial jurisdiction of the Court - efficacy or applicability of an international treaty - Alternative statutory remedy - claim for preferential tariff treatment under AIFTA without first completing treaty-based verification - Article 226 of the Constitution of India.

Territorial jurisdiction - Part of cause of action - HELD THAT: - The Court held that territorial jurisdiction would exist where any material part of the cause of action arose within Delhi, including cases where the goods were received at ICDs in Delhi, the petitioner was situated in Delhi, or the show cause notice had been issued from the Customs office at Delhi. On the facts placed before it, one petition did not satisfy any of these connecting factors and was therefore beyond this Court's territorial jurisdiction. Even so, since all petitions had been heard together and were being dismissed as premature on the maintainability issue, the Court proceeded to dispose of that petition also, while expressly clarifying that this should not be treated as acceptance of its maintainability on territorial grounds. [Paras 101, 102]

Territorial jurisdiction was held to exist in the petitions having a Delhi nexus; one petition was found to be outside such jurisdiction, though it was also disposed of with the batch without recognising its maintainability on that ground.

Writ against show cause notice - Alternative statutory remedy - Customs jurisdiction under trade agreement regime - HELD THAT: - Relying on the settled principle that a writ ordinarily does not lie against a mere show cause notice, the Court held that the petitions were premature and that the petitioners must submit to the statutory adjudication process. The Court accepted the respondents' position that the customs authorities retain jurisdiction under domestic law to examine and adjudicate origin-related issues notwithstanding the trade agreement, and that the treaty provisions did not denude them of that power. It agreed with the view that the verification mechanism under the AITIGA/AIFTA uses facilitative language and is not shown, at this stage, to oust the authority of customs to proceed under the Customs Act. The Court distinguished Kothari Metals on the ground that the issue there concerned efficacy of Article 24, whereas the present case did not raise such a question in that manner. It also treated Trafigura India Pvt. Ltd [2023 (12) TMI 196 - GUJARAT HIGH COURT] and Purple Products Private Limited [2025 (6) TMI 1030 - BOMBAY HIGH COURT] as supporting the position that Article 24 does not invalidate action taken by customs under municipal law and that attempts to stall adjudication at the show cause notice stage should not be entertained. Earlier decisions cited by the petitioners on mandatory verification were held inapplicable, particularly in view of the altered statutory background after insertion of Section 28DA. The petitioners were therefore left free to raise all pleas before the adjudicating authority, which was directed to pass reasoned and speaking orders. [Paras 106, 107, 108, 109, 110]

The writ petitions were dismissed as premature, with liberty to the petitioners to urge all grounds before the adjudicating authority.

Final Conclusion: The Court held that, except for one petition lacking any Delhi nexus, part of the cause of action had arisen within its territorial jurisdiction. However, all the writ petitions were dismissed as premature since they were directed against show cause notices, leaving the petitioners to raise all their contentions before the adjudicating authority, which was required to pass reasoned and speaking orders.

Repeal and saving - Recovery of excess drawback and recovery for non-realisation of export proceeds under Rules 16 and 16A - All Industry Rate drawback - Confiscation of goods already exported - Penalty under sections 114 and 114AA.

Repeal and saving - Recovery of erroneous drawback - HELD THAT: - The Tribunal held that once the 2017 Drawback Rules came into force, the 1995 Drawback Rules ceased to operate, subject only to the limited saving contained in rule 20(2). Since rule 20(2) saves only specified pending matters and does not preserve proceedings for recovery under rules 16 or 16A, a different intention appears within the meaning of section 159A of the Customs Act, excluding the general saving. The Commissioner also proceeded on a factually incorrect premise that the proceedings had been initiated before 01.10.2017, whereas the show cause notice was issued only thereafter. Consequently, recovery under rule 16 could not be sustained, and for the same reason recourse to rule 16A was also unavailable; the Tribunal additionally noticed that the export proceeds had in fact been realised and were supported by Bank Realization Certificates. [Paras 39, 40, 41, 42, 43]

The demand and recovery of drawback under rules 16 and 16A of the 1995 Drawback Rules were held bad in law and were set aside.

All Industry Rate drawback - HELD THAT: - The Tribunal found that the appellant had claimed drawback at the notified All Industry Rate, the consignments had been assessed by the proper officer, Let Export Orders had been issued, and drawback had been granted accordingly. In such a case, the drawback could not be questioned merely on the allegation that the export goods were procured against fake invoices said to have been supplied by another person. The Tribunal further held that the statement of that person recorded under section 108 of the Customs Act could not be relied upon since the procedure contemplated under section 138B had not been followed. [Paras 44, 45]

The denial of drawback on the basis of alleged fake procurement invoices was rejected.

Confiscation of goods already exported - Penalty under sections 114 and 114AA - HELD THAT: - The Tribunal held that section 113 applies to goods which are to be taken out of India and not to goods that have already been exported; confiscation was therefore impermissible. Once confiscation could not be sustained, penalty under section 114 also could not survive. Penalty under section 114AA was likewise held inapplicable because there was no finding that the appellant had knowingly or intentionally made, signed or used any false or incorrect declaration, statement or document. The penalty on the partner was also held unsustainable for the same reasons. [Paras 46, 47, 48]

The confiscation order and the penalties imposed on both appellants under sections 114 and 114AA were set aside.

Final Conclusion: The Tribunal set aside the impugned order in its entirety, holding that recovery of drawback under rules 16 and 16A of the repealed 1995 Drawback Rules was impermissible after the 2017 Rules came into force. It further held that denial of All Industry Rate drawback, confiscation, and penalties on the exporter and its partner were unsustainable, and accordingly allowed both appeals.

Entitlement to anti-dumping duty exemption on the basis of the declared country of origin as Uzbekistan - Denial of cross-examination -Country of origin determination - Admissibility of electronic evidence - Corroborative Evidence - Burden of Proof​​​​.

Country of origin determination - HELD THAT: - The Tribunal held that the primary documentary evidence, particularly the Country of Origin Certificate and the supporting transport and commercial documents produced by the appellant, established Uzbekistan as the origin of the imported ammonium nitrate. Revenue neither verified nor discredited that certificate through the issuing authority. The case set up by Revenue rested mainly on recorded statements and electronic material such as chats, but the electronic evidence had not been subjected to the statutory requirements of Section 138C, lacked authentication and did not establish the identity of the persons or its linkage with the imported goods. The statements also had no independent documentary corroboration, and denial of cross-examination of the relied upon witness further undermined compliance with natural justice. In the absence of credible proof displacing the documentary evidence and in the absence of proof regarding bulk density, the reassessment and consequential demand, confiscation and penalties were held unsustainable. [Paras 10, 11, 12, 13, 14]

The impugned order was set aside and the appeal was allowed with consequential relief as per law.

Final Conclusion: The Tribunal held that Revenue had failed to lawfully displace the appellant's documentary evidence showing Uzbekistan as the country of origin. As the demand was founded on uncorroborated statements and unauthenticated electronic material, the impugned order was set aside and the appeal allowed.

Classification of goods - imported molybdenum mirror and shield - classifiable under CTH 81029590 as plates, sheets, strips and foils, or under CTH 81029900 as other articles of molybdenum - Application of General Rules for Interpretation.

Tariff classification - HELD THAT: - The perusal of the entry clarifies that tariff item 8102 includes molybdenum and articles thereof including waste and scrap in the form of powders & other articles, as is apparent from tariff entry No. 81021000.

It is clear that the hollow bars of 81029510 and “others” of 81029590 have three dashes (---) which means that the products of both these entries have to be the Bars and Rods other than those obtained simply by sintering, profiles plates, sheets, strips and foil of 810295. Thus, the molybdenum product classifiable under 81029590 as declared by the importer-respondent has to be in the forms Bars and Rods other than those obtained simply by sintering profiles plates, sheets, strip and foil of 810295. The tariff item/CTH 81029900 as claimed by the department covers other kind of other molybdenum and article thereof.

The Tribunal held that tariff item 81029590 covers bars, rods, profiles, plates, sheets, strips and foil of the specified description, whereas the imported goods had ceased to be flat-surfaced products. On the importer's own admission, molybdenum sheets were cut and curved for use as shields or distributors of light beam in automobile lamps. Once so shaped for a distinct functional use, they no longer retained the character of sheets and became articles of molybdenum. Applying the principle stated in Atul Glass Industries versus Collector of Central Excise [1986 (7) TMI 90 - SUPREME COURT], the Tribunal held that a product transformed into a distinct commercial and functional article cannot continue to be classified as the raw sheet from which it was made. The Tribunal further held that, since neither of the competing 'other' entries provided a more specific description and the goods were not composite goods, Rules 3(a) and 3(b) did not apply; therefore, classification under the later entry in numerical order under Rule 3(c) was proper, namely CTH 81029900. Earlier inconsistent assessments were held to be irrelevant to the correct classification. [Paras 12, 14, 15, 16]

The goods were held classifiable under CTH 81029900 as other articles of molybdenum, and the departmental appeals were allowed.

Final Conclusion: The Tribunal set aside the order of the Commissioner (Appeals) and restored the original adjudication. It held that the imported molybdenum mirrors and shields were correctly classifiable under CTH 81029900 and not under CTH 81029590.

Demand of duty and interest on 49.431 MT of diesel oil - Proof of duty-paid character - Evidentiary value of supplier certificate - Re-import of bunkers - HELD THAT:- The Tribunal held that the Commissioner (Appeals) erred in discarding the certificate dated 17.09.2010 issued by HPCL. Since HPCL was both the charterer responsible for fuelling the vessel and the bunker supplier that had effected the supply, its certificate that the diesel oil supplied under the BDN dated 13.03.2008 was duty paid constituted acceptable evidence. The mere circumstance that a foreign-going vessel was eligible to receive duty-free bunkers did not justify rejection of that certificate in the absence of cogent reasons. On that basis, the quantity covered by the BDN dated 13.03.2008 was liable to be treated as duty paid. [Paras 4]

The finding demanding duty and interest on 49.431 MT of diesel oil supplied under BDN dated 13.03.2008 was set aside, while the remaining findings of the Commissioner (Appeals) were upheld.

Final Conclusion: The appeal was partly allowed. The Tribunal modified the impugned order by accepting HPCL's certificate as proof that the diesel oil covered by BDN dated 13.03.2008 was duty paid, and held that no duty or interest was recoverable on that quantity; the rest of the order was maintained.

Transaction Value - Redetermination of assessable value of imported second-hand cranes - Valuation by independent chartered engineer - differential duty - mis-match between the actual value of imported goods as determined by the department in their re-determination of assessable value and the value of imported goods as per invoice declared by the appellants-importer in the declaration -Extended period of limitation - Reasonable Doubt - Burden of Corroboration - statutory provisions vis-à-vis the facts of the case - Confiscation for undervaluation - Penalty for false declaration - Finalisation of provisional assessment.

Customs valuation of second-hand goods - HELD THAT: - The Tribunal held that, for second-hand machinery, valuation under the Customs Valuation Rules must proceed in the statutory sequence and cannot be redetermined merely on internet offer prices, broad market estimates, or thumb-rule tonnage values unsupported by the Board's prescribed method. The imported goods had already been examined at the port on first-check basis and assessed on the strength of independent chartered engineer certification in accordance with the Board circular governing second-hand machinery. In the absence of reliable evidence of the actual higher transaction value, parallel invoices, or legally admissible corroboration of the statements relied upon, the subsequent re-determination under Rules 8 and 9 could not be sustained. The Tribunal further held that, for 32 consignments of the importer and one consignment of the co-noticee lying beyond five years from the show cause notice, no duty demand could legally survive under Section 28, and the Revenue could not seek to use voluntary deposits to support recovery for such time-barred imports. [Paras 9]

The confirmed differential duty demand was set aside, and the Revenue's challenge to appropriation of voluntary payments in relation to time-barred consignments was rejected.

Confiscation for undervaluation - Penalty for false declaration - HELD THAT: - The Tribunal held that the mismatch between the invoice value declared by the importers and the value later redetermined by the department in the case of used goods did not by itself establish misdeclaration so as to attract confiscation. Since the goods were declared in the bills of entry, physically examined, and assessed by the proper officer before clearance, the matter remained one of assessment and reassessment rather than confiscability. The reliance placed on a decision concerning undeclared or excess goods was found inapplicable. On a harmonious reading of the provisions relating to search, seizure, confiscation and penalty, the Tribunal found that the ingredients necessary to invoke Section 111(m) had not been proved in the facts of the case; consequently, redemption fine and penalties could not survive. [Paras 10]

The confiscation, redemption fine and all consequential penalties imposed on the appellants and co-appellants were set aside.

Finalisation of provisional assessment - Customs valuation of second-hand goods - HELD THAT: - The Tribunal treated the impugned action as finalisation of provisional assessment under Section 18, but held that the higher CIF value adopted for that purpose rested on the same unsustainable valuation basis already rejected in relation to the other consignments. As no specific and legally acceptable findings supported the higher valuation under Section 14 read with the 2007 Rules, the differential duty could not be maintained. [Paras 10]

The differential duty arising out of finalisation of the provisional assessment was set aside.

Final Conclusion: The Tribunal held that the redetermined valuation, consequential duty demand, confiscation, redemption fine and penalties were unsustainable, including the differential duty arising from provisional assessment. The importers' appeals were allowed and the Revenue's appeals were dismissed.

Validity of MEIS scrips at the time of import- Effect of subsequent cancellation or modification of duty credit scrips - Whether such reduction of customs duty from 3% to 2% under the MEIS scrips can be made applicable to imports that were made by the appellant prior to the modification. - HELD THAT:- The Tribunal held that the determinative consideration was the validity of the MEIS scrips when they were utilized for imports. Once the DGFT had issued the scrips and they were valid on the date of import, the benefit could not be denied merely because the scrips were later modified by reducing the rate of customs duty benefit. The Tribunal applied its earlier view that subsequent cancellation or modification of such scrips does not affect imports already made during their validity, and further held that no distinction could be made between utilization by the original scrip holder and by a transferee. In that view, the alleged misclassification before the DGFT was not relevant to the controversy in the appeal. [Paras 11, 12, 13, 15]

The demand of duty with interest and penalty based on subsequent modification of the MEIS scrips was unsustainable.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal, holding that imports made against MEIS scrips valid at the time of import could not be reopened merely because the scrips were subsequently modified by the DGFT.

Demand of duty - imported marble blocks - diversion of duty-free imported goods - Admissibility of statements in customs adjudication - Penalty for breach of post-import conditions - False declaration as condition for penalty - Clandestine Removal - Burden of Proof - Suppression of Facts - Wilful Misstatement.

Demand of duty on alleged diversion of duty-free imported goods - HELD THAT: - The Tribunal held that, on the show cause notice itself, a substantial quantity of the imported marble was found lying in the factory of the 100% EOU and, therefore, there was no basis to demand duty on goods not shown to have been diverted. As regards the balance quantity alleged to have been diverted, the finding rested on the premise that the exported slabs were Harmony Brown/Fantasy Brown marble said to be available only in India. The Tribunal found that such conclusion was drawn from internet material and from statements recorded under section 108, but internet material could not, by itself, establish exclusive origin so as to fasten duty liability, and the statements could become relevant only if admitted in accordance with section 138B. Since the impugned order neither recorded the conditions contemplated by section 138B(1)(a) nor followed the procedure under section 138B(1)(b), those statements could not be relied upon to sustain the allegation of diversion. [Paras 18, 19, 20, 21, 22]

The duty demand with consequential interest was set aside in full.

Penalty for breach of post-import conditions - HELD THAT: - The Tribunal held that the imports were made when the unit was a registered 100% EOU, had executed the required bond, and was entitled to claim the exemption notification. There was no evidence that duty had not been levied at the time of import by reason of collusion, wilful misstatement or suppression of facts. Even on the Revenue's case, the alleged default arose only after import, by non-fulfilment of the post-import condition. Such a case would not attract section 114A, which is founded on non-levy or short-levy by reason of collusion, wilful misstatement or suppression. [Paras 24]

The penalty imposed on United under section 114A was set aside.

False declaration as condition for penalty - HELD THAT: - The Tribunal found that, even according to the Revenue, the imports were made by availing an exemption otherwise available to the unit and there was no misdeclaration in the import documents. A subsequent alleged failure to satisfy the post-import conditions did not, by itself, amount to a false declaration or intentional use of incorrect material particulars in documents for the purposes of the Act. The statutory requirement for invoking section 114AA was therefore not met. [Paras 25, 26]

All personal penalties imposed under section 114AA were set aside.

Final Conclusion: The Tribunal set aside the impugned order in its entirety. The duty demand and interest against the EOU, as well as the penalties on the unit and the other appellants, were all held unsustainable, and all seven appeals were allowed.

Anti-dumping investigation - non-disclosure of certain related entities - Equity Pledge Agreement and the share transfer arrangement - Danyang ILT remained related to the Essilor Group and under its control - Non-Cooperative Party - Related Party - Operational Control - Related party determination - Facts available -Relevance of non-exporting producers.

Pledge and control - Related party determination - Adverse inference - HELD THAT: - The Tribunal held that a pledge creates only a security interest and does not by itself confer ownership or legal or operational control over the pledged entity. Since the shareholding in Danyang ILT had already stood transferred and the pledged equity continued to belong to the purchaser, the pledge arrangement could not establish that the Essilor Group retained control over Danyang ILT within the meaning of the applicable related-party test. The Tribunal further held that an adverse inference could not be drawn for non-production of Danyang ILT annual reports when such documents were not shown to be within the possession or control of the Essilor Group. [Paras 18, 19, 20, 23, 25]

Danyang ILT could not be treated as a related party of the Essilor Group, and non-disclosure of the pledge agreement or non-furnishing of Danyang ILT annual reports did not sustain the finding of non-cooperation.

Dumping margin determination - Non-market economy - Non-exporting producers - Relevant information - HELD THAT: - The Tribunal held that, for the period of investigation, only information relevant to determination of normal value and export price was required. Since China was treated as a non-market economy and market economy treatment had not been claimed, normal value was constructed on the basis of domestic industry cost data, so information from non-exporting related producers was not required for that purpose. The Essilor Group had disclosed the export information of the exporting producers and related intermediaries forming its supply chain, and complete material for computing its individual dumping margin was therefore available. On that basis, the non-participation of Danyang ILT as an unrelated producer, and of the three related entities as non-exporting producers, was held to be of no consequence for the dumping margin exercise. [Paras 43, 44, 45, 46, 47]

The designated authority was not justified in treating the Essilor Group as non-cooperative on the basis of non-disclosure or non-participation of entities whose information was irrelevant to the dumping margin determination.

Irrelevant disclosure - Adverse inference - Export price determination - HELD THAT: - The Tribunal accepted that the working capital loans extended before 2018 did not answer the questionnaire requirement concerning financial or contractual links or joint ventures for the product under investigation, and therefore their non-disclosure was not a relevant omission. It further held that once Danyang ILT was found not to be related to the Essilor Group, the price or volume of subject goods produced by Danyang ILT and exported by the Essilor Group could not be taken into account for determining the Essilor Group's dumping margin. [Paras 49, 50]

The additional factors relied upon by the designated authority did not support the adverse conclusion against the Essilor Group.

Final Conclusion: The Tribunal held that the Essilor Group had been wrongly treated as non-cooperative, as the pledge arrangement did not establish control over Danyang ILT and the information relied upon by the designated authority was not relevant to determination of the group's dumping margin. The recommendation for imposition of anti-dumping duty on that basis was set aside, and the cases of the Essilor Group were directed to be considered afresh without treating it as non-cooperative.

Extended period of limitation - Show Cause Notice issued after about four years from the date of initial clearance - Suppression of facts - seeking to classify the goods under CTH 8526 - imported GSM/GPRS Module classifying the same under CTH 8517 7990 - claiming exemption from Basic Customs Duty on account of Sl.No.34 of Notification No.25/205-CUS - HELD THAT:- The Tribunal confined the matter to limitation and did not examine classification on merits. It held that mere non-imposition of penalty under Section 114AA did not by itself amount to an admission by the Revenue that there was no suppression. However, the show cause notice had been issued about four years after clearance, and the record showed that the appellant had been importing the same item earlier and later under the same classification without objection. These circumstances established a bona fide belief on the part of the appellant and also showed that the Revenue itself had not consistently maintained that the goods were classifiable under the alternate heading. Relying on Dr. Reddy's Laboratories Ltd. v. Commissioner of Customs, Hyderabad [2004 (2) TMI 562 - CESTAT, BANGALORE], the Tribunal held that, in the absence of misdeclaration or suppression, recourse to the extended period was not available. [Paras 6, 7, 9]

The impugned order was set aside and the appeal was allowed on the ground of time bar alone.

Final Conclusion: The Tribunal allowed the appeal solely on limitation, holding that the extended period was not invocable on the facts found. The classification issue was expressly left undecided.

Maintainability of subsequent insolvency application - second Section 95 application filed by the financial creditor - Interim moratorium under insolvency process for personal guarantors - Non-est proceedings filed during subsisting moratorium - Continuing guarantee and co-extensive liability.

Interim moratorium - Non-est proceedings - HELD THAT: - The Appellate Tribunal held that the earlier application filed by the creditor on 26.03.2021 had already triggered the statutory interim moratorium. Consequently, the application later filed by IFCI on 02.06.2021, during the subsistence of that moratorium, was itself barred and therefore non-est in law. A proceeding which is non-est cannot generate a fresh interim moratorium under Section 96. On that footing, the creditor's second application filed on 24.07.2021 could not be treated as hit by the IFCI proceeding. The Tribunal also noted that the appellant had concealed the pendency of the parallel proceeding and had attempted to use the two proceedings inconsistently, but ultimately held that, independent of the reasoning on inherent powers, the second application was maintainable because the IFCI application could not create any legal bar. [Paras 55, 56, 57, 58, 59]

The plea that the second Section 95 application was barred by interim moratorium was rejected, and the admission of that application was upheld.

Continuing guarantee - Co-extensive liability of guarantor - Discharge of guarantor - The personal guarantor was not discharged on the ground that the borrowing entity had changed pursuant to the order of the real estate authority. - HELD THAT: - On examining the loan agreement and the deed of guarantee, the Appellate Tribunal found that Supertech Ltd., Sarv Realtors Pvt. Ltd. and ASP Sarin Realty Pvt. Ltd. were all borrowers under the same loan transaction, and Sarv Realtors Pvt. Ltd. was already a co-borrower. The guarantee expressly provided that the guarantor's liability would not be affected by any change in the constitution of the borrowers and would remain a continuing guarantee until full repayment. Since the principal debt remained unpaid, the guarantor's liability, being co-extensive with that of the principal borrowers, continued to subsist. [Paras 45, 46, 47]

The contention that the guarantee had become unenforceable due to change of borrower was rejected.

Final Conclusion: The Appellate Tribunal dismissed the appeal and upheld the admission of the creditor's second application under Section 95. It held that the intervening IFCI application was non-est, incapable of triggering an interim moratorium, and that the appellant's liability as personal guarantor had not been discharged.

Prospective resolution applicants - Delayed expression of interest and resolution plan beyond the timelines fixed in Form G - Condonation of Delay - Committee of Creditors​​​​​​​ - HELD THAT:- The Appellate Tribunal held that participation in the CIRP has to be strictly in accordance with the timelines stipulated in Form G. It accepted the principle that a resolution applicant can be considered only if it is part of the final list of prospective resolution applicants, and that, in the absence of any fresh process, a late entrant cannot be permitted to submit an Expression of Interest and resolution plan by judicial condonation. On that basis, the direction of the Adjudicating Authority to accept the delayed EOI of respondent No. 5 was held unsustainable. [Paras 6, 7, 8]

The impugned order condoning the delay and permitting consideration of respondent No. 5 was set aside, leaving it to the CoC to take further steps in accordance with law.

Final Conclusion: The Appellate Tribunal set aside the order permitting respondent No. 5 to participate on the basis of a delayed EOI, holding that consideration of a resolution applicant must conform to the timelines in Form G and the final list of prospective resolution applicants. The CoC was left free to proceed further in accordance with law.

Maintainability of Application filed Under Section 95, by the debenture trustee through its authorised officer - General authorisation through power of attorney - Modification of Order - Authority of debenture trustee to invoke personal guarantee - Deposit of insolvency process expenses.

General authorisation through power of attorney - HELD THAT: - The Tribunal found that the board resolution was already on record and that the power of attorney had been executed pursuant to that resolution. Applying the principle noticed and approved by the Supreme Court in Rajendra Narottamdas Sheth vs. Chandra Prakash Jain & Anr. [2021 (10) TMI 144 - Supreme Court], it held that a general authorisation enabling an officer to conduct legal proceedings is sufficient, and the mere use of the expression power of attorney does not invalidate the filing. Since the present case involved both a board resolution and a power of attorney, no defect in competence was made out. [Paras 5, 6]

The objection to the competence of the power of attorney holder to institute the Section 95 proceedings was rejected.

Authority of debenture trustee - Personal guarantee enforcement - Absence of objection by debenture holders - HELD THAT: - The Tribunal gave two reasons for rejecting the contention that there was no written authorisation from the debenture holders. First, the personal guarantors had not filed any reply or objection to the Section 95 petition, and the plea was raised only in written submissions. Secondly, clause 15.2 of the guarantee deed, as extracted in the impugned order, contemplated collection and enforcement through the trustee for the debenture holders. The guarantee had been invoked and demand notices issued, and there was no material showing any objection from the debenture holders to the trustee initiating the application. [Paras 7, 8]

The plea that the debenture trustee lacked authority to file the application furnished no ground to interfere with the admission order.

Deposit of insolvency process expenses - HELD THAT: - On this aspect, the respondent conceded that the direction requiring the personal guarantors to deposit the amount in the account of the Resolution Professional required deletion. The Tribunal accordingly modified the order and directed that the amount be deposited by the financial creditor instead. [Paras 9]

The impugned direction against the personal guarantors was deleted, and the deposit was directed to be made by the financial creditor.

Final Conclusion: The appeals were disposed of by upholding the admission of the Section 95 applications and rejecting the objections to the trustee's authority and the power of attorney holder's competence. The order was modified only to the extent that the directed deposit was to be made by the financial creditor and not by the personal guarantors.

Belated claim in CIRP - Condonation of delay in filing claim - Finality of resolution plan after CoC approval - Locus standi - Knowledge of CIRP through public announcement - Finality of resolution plan after CoC approval.

Belated claim in CIRP - Condonation of delay in filing claim - HELD THAT: - The Appellate Tribunal held that the society had consciously not filed any claim despite being aware of the insolvency process and despite being specifically called upon by both a member of the society and the Resolution Professional to do so. Its own letter recorded that its claims against the developer stood fully and finally settled and that the developer had complied with the settlement. In that background, the later claim was rightly treated as belated and untenable. Applying the principle noticed from M/s. RPS Infrastructure Ltd. vs. Mukul Kumar & Anr. [2023 (9) TMI 516 - SUPREME COURT] and Committee of Creditors of Essar Steel India Limited through Authorised Signatory v. Satish Kumar Gupta and Ors. [2019 (11) TMI 731 - SUPREME COURT], the Tribunal held that once the plan had already been approved by the CoC, .a delayed claim could not be entertained so as to reopen the CIRP process. The subsequent plea that the earlier settlement had been breached was rejected as an afterthought in view of the society's own earlier written stand. [Paras 13, 14, 17, 18]

The rejection of the application seeking condonation of delay and consideration of the claim was upheld.

Appellate interference with plan approval - Resolution plan finality - HELD THAT: - Since the appellant's claim was rightly not entertained and the challenge to that rejection failed, no independent infirmity survived in the approval of the resolution plan. The Tribunal therefore declined to exercise appellate jurisdiction against the impugned orders. [Paras 20]

The approval of the resolution plan was left undisturbed and the appeals were dismissed.

Final Conclusion: The Appellate Tribunal upheld the rejection of the appellant society's delayed claim, holding that the society had prior knowledge of the CIRP, had itself treated its claims as settled, and could not seek to reopen the process after approval of the plan by the CoC. Consequently, no interference was warranted with the approval of the resolution plan, and the appeals were dismissed.

Co-extensive liability - Admission of Section 95 application as against the personal guarantors - Non-submission of repayment plan - Bankruptcy of personal guarantor - Deemed rejection under insolvency framework.

Repayment plan - Personal guarantor - Bankruptcy application - One-time settlement - HELD THAT: - It is made mandatory under Section 105(1) of the Code, for the debtor to submit the Repayment Plan along with a proposal for restructuring the debts. However, in accordance with the finding recorded in the impugned order, it is seen that Appellants did not submit the Repayment Plans, as contemplated under Section 105 of the I & B Code, though they have been submitting certain OTS proposals earlier. OTS Proposals in itself may not satisfy the parameters contemplated under Section 105 of the I & B Code, and therefore, submission of the OTS proposal cannot be taken as a substitute to the submission of the Repayment Plan, as contemplated under Section 105 of the I & B Code.

When it is an admitted case that, the Appellant had not submitted any Repayment Plan despite sufficient opportunities, it will be a case of deemed rejection of the repayment plan, as per the provisions contained under Section 115 of the I & B Code and thus the order of Learned NCLT to give liberty to Financial Creditor to file application under Section 121 and filing of the application for bankruptcy by the Financial Creditor by invoking Section 121 of the Code cannot be said to be vitiated.

The Appellate Tribunal held that submission of a repayment plan under the insolvency scheme is mandatory, and an OTS proposal cannot be treated as its substitute. Since the appellants, though admittedly personal guarantors with co-extensive liability under the guarantee deed, did not submit any repayment plan at any stage of the proceedings, the statutory consequence under the Code followed. Relying on the scheme of Sections 105, 115, 121 and 123, and following Sudip Dutta @ Sudip Bijoy Dutta Versus Prashant Jain [2024 (11) TMI 297 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI - LB], the Tribunal held that absence of a repayment plan operates as a deemed rejection for the purpose of enabling a bankruptcy application. Objections regarding alleged incorrect computation of dues, non-consideration of settlement proposals, or earlier events relating to SARFAESI and the corporate debtor's insolvency could not defeat the bankruptcy process at this stage, as those matters had already culminated and the quantum could be examined in the bankruptcy proceedings. [Paras 26, 27, 28, 29, 30]

The bankruptcy applications filed by the financial creditor were held maintainable, and the orders initiating bankruptcy proceedings against the appellants were affirmed.

Final Conclusion: The Appellate Tribunal dismissed all three appeals and upheld the initiation of bankruptcy proceedings against the personal guarantors. It held that, in the absence of any repayment plan, the creditor's recourse to bankruptcy under the statutory scheme could not be faulted.

Validity of the show cause notice - Delay and laches in adjudication proceedings - Vicarious liability of directors and legal heirs - Export proceeds realisation and repatriation - Reasonable steps to realise foreign exchange - contravention in terms of Section 42 of FEMA - imposition of penalty.

Whether the Appellant took all reasonable steps to realise and repatriate to India foreign exchange equivalent to Rs. 1.8 Crores, which was due on account of the exports made. - HELD THAT: - The Tribunal accepted the appellant's material showing adjustment of certain receipts, returned goods and advance remittance, and therefore accepted that the unrealised export proceeds were Rs. 1.8 Crore. However, it found no material to show that this amount had been written off by RBI or finally settled through Dena Bank. On the question of compliance, the Tribunal held that repeated calls, letters, faxes and personal visits did indicate efforts, but those efforts did not amount to reasonable steps for realisation of export proceeds, particularly when there was nothing to show that assistance of the Indian Mission/Consulate, Chambers of Commerce or other trade bodies had been sought. [Paras 7, 8, 9]

The finding of contravention against the company was sustained, but on the basis that the outstanding export proceeds were Rs. 1.8 Crore.

Delay and laches in adjudication proceedings - HELD THAT: - The Tribunal held that the notice could be issued only after necessary enquiry with the authorised dealer bank and RBI. It also noted that the appellant company itself was continuing efforts for recovery, bank settlement and RBI write-off. In those circumstances, the period could not be reckoned merely from the date of the last export consignment. [Paras 10]

The plea of delay and laches against the show cause notice was rejected.

Vicarious liability of directors and legal heirs - HELD THAT: - The Tribunal found that the later Managing Director took over only in 2006, by which time the impugned exports had already taken place and the earlier efforts for recovery had also been made. It therefore held that neither he nor his legal heir could be made liable. As regards the two directors, the Tribunal found no evidence showing their involvement in the day-to-day affairs of the company or responsibility for the export transactions, and consequently no basis to fasten penalty on them under the provision dealing with liability of persons in charge of the company. [Paras 11, 12]

The penalties imposed on Shri Mukesh Bhansali as legal heir, and on Shri Girish Agrawal and Shri Shailesh Jain, were set aside.

Vicarious liability of managing director - Reduction of penalty - HELD THAT: - The Tribunal relied on the admitted position that Shri Ashok Kasliwal was the promoter and Managing Director from inception till around 2006, was regularly concerned with the running of the company and its business, and was fully aware of the efforts made to realise the outstanding export proceeds. Since the company's contravention stood established, his liability for penalty was upheld. At the same time, having regard to the facts and circumstances, the Tribunal reduced the penalty on both the company and Shri Ashok Kasliwal. [Paras 13, 14]

Liability of Shri Ashok Kasliwal was sustained, but the penalty on him and on the company was reduced.

Final Conclusion: The appeals were partly allowed. The company's contravention and the liability of its then Managing Director were upheld subject to reduction of penalty, while the penalties imposed on the legal heir of the later Managing Director and on the two other directors were set aside.

School building constructed on leased land - Proceeds of crime - Attachment of property constructed from tainted funds - Tainted funds from unlawful organisation. - HELD THAT: - The Tribunal held that the material on record established that IRF, which had been declared unlawful, donated the funds received by the educational trust, and that a substantial part of those funds was utilised for construction of the school building. The property claimed by the appellant was therefore created from funds not free from taint and bore the character of proceeds of crime. The fact that the educational trust itself had not been declared unlawful, or that the appellant was not shown as an accused in the scheduled offence, did not displace the attachment when the asset had been created from funds originating from IRF. The Tribunal also accepted the significance of the finding noticed in the impugned order regarding termination of the lease shortly after the provisional attachment order, and treated it as indicative of the appellant's complicity, rejecting his attempt to distance himself from IRF and Dr. Zakir Naik. [Paras 11, 12, 13]

The attachment of the school building was sustained and the appeal was dismissed.

Final Conclusion: The Tribunal upheld the confirmation of attachment of the school building, holding that it had been constructed out of tainted funds received from IRF and therefore constituted property involved in money laundering. The appellant's claim based on land ownership and termination of the lease was rejected, and the appeal failed.

Ex parte adjudication - Opportunity to file reply to show-cause notice - Validity of the order-in-original passed without the petitioner having filed a reply to the show-cause notice was decided. - HELD THAT:- The Court noted the petitioner's grievance that the adjudication had culminated in an ex parte order and that an opportunity ought to be granted to submit a reply. On perusing the earlier order [2024 (9) TMI 64 - KARNATAKA HIGH COURT] and connected petitions, the Court followed the same course and held that the impugned order-in-original should be set aside and the matter reconsidered from the stage of reply to the show-cause notice. The Court expressly directed the authorities to keep in view the observations extracted from the earlier order, while leaving all contentions on merits open. [Paras 7, 8]

The order-in-original was set aside and the matter was remitted to the stage of reply to the show-cause notice, with liberty to the petitioner to file a fresh reply and with all merits kept open.

Final Conclusion: Following the earlier order in identical matters, the Court set aside the impugned order-in-original and relegated the petitioner to the stage of reply to the show-cause notice. The adjudicating authority was directed to reconsider the matter in light of the observations extracted from the earlier order, and all contentions were left open.

Activity undertaken under the job work arrangement - manufacture Or Not - levy of service tax under Renting of Immovable Property Services or Business Auxiliary Service - Exclusion of manufacture from taxable service - Taxability of reimbursable expenses.

Whether it is a case of manufacturing activity and therefore, not leviable to service tax or otherwise. - HELD THAT:- The Tribunal found that there was no dispute that the activity undertaken by the appellant resulted in manufacture of excisable goods. On examination of the agreement, it was held that the appellant continued to undertake conversion, provide manpower, pay salaries, comply with statutory requirements and carry out the manufacturing process, though subject to the principal manufacturer's control over production standards and quality. Such control did not amount to takeover of the entire facility on rent. The manner in which conversion charges were structured, including reimbursement of certain expenses and provision for additional payment where actual conversion cost exceeded the agreed amount, did not alter the true nature of the transaction. The determinative test was the real nature of the arrangement, which was manufacture of goods for or on behalf of the client. Since an activity amounting to manufacture stands excluded from taxable service, it could not be brought either under Renting of Immovable Property Service or, even if viewed as production or processing for another, under BAS. [Paras 10, 11, 12, 13, 14]

No service tax was payable on the conversion activity, as it was manufacture on job work basis and not renting of immovable property.

Whether reimbursable expenses are to be included in the gross value leviable to service tax or otherwise. - HELD THAT: - From the perusal of the terms and conditions of the agreement that there is no understanding or intention between the appellant and the APL to take the said facility of the appellant on rent and pay rent. On the contrary, it is an agreement for conversion of raw material and to manufacture excisable goods for or on behalf of APL. The activity undertaken by the appellant is admittedly amounting to manufacture and leviable to Central Excise duty. However, they are not paying Central Excise duty by following the provisions and procedure provided to job worker for clearance of job work goods to the principal manufacturer without payment of Central Excise duty. We also find force in the submission that department has tried to levy service tax on reimbursable expenses, which has been paid by APL to appellant by bringing said expenses also under the category of rent. We find that in terms of the judgment in the case of Intercontinental Consultants & Technocrats Pvt Ltd. [2018 (3) TMI 357 - SUPREME COURT], the reimbursable expenses, per se, cannot be subjected to service tax.

Thus, the activity cannot be brought under the category of RIPS and service tax is not payable. At best, the activity being undertaken by the appellant could have been covered under BAS, however, as it is amounting to manufacture, it gets excluded from this also. Thus, no service tax is payable. Since the matter is decided on merit itself, penalties will also not sustain.

Final Conclusion: The Tribunal held that the agreement evidenced contract manufacturing on job work basis and not renting of the appellant's factory or facilities, and that the activity, being manufacture, was outside the service tax net. Reimbursable expenses were also held not taxable, and the impugned order was set aside with the appeal allowed.

CENVAT credit on input services - Billing of goods by the subcontractor in the course of executing the BOOT works contract - trading or an exempted service - wrongly availed common input service credit without maintaining separate accounts or reversing credit under Rule 6(2) and Rule 6(3)/6(3A) - Works contract - Deemed sale of goods - CENVAT credit reversal - HELD THAT: - The BOOT contracts are a form of Turnkey contracts and are contracts for labour, work or service and not for sale of goods, though goods are used in executing the contract for labour, work or service. When a contractor undertakes a project, the buyer pays for cost of the structure which includes cost of material used, labour and other services offered by the contractor. Property in goods is passed on to buyer and there is no contract for supply of goods as such. It does not contemplate the delivery of a chattel as chattel. The laying of pipeline, as in this case, is an example of works contract, where passing of property in the pipe is part of the works contract.

In Kone Elevator India Pvt. Ltd. Vs State of Tamil Nadu [2014 (5) TMI 265 - SUPREME COURT (LB)], the Hon’ble Supreme Court observed that the installation obligation in a contract for manufacture, supply and installation of lift is not merely incidental, but was a profound part of the entire contract. That various components were assembled together and installed at site as a permanent fixture to the building. The goods, skill and labour elements are intimately connected with one another and the contract is not divisible.

Tribunal held that the BOOT arrangement for design, construction, commissioning and related obligations was a single and indivisible works contract, and not a severable arrangement containing an independent contract of sale. The transfer of property in goods used in execution of such contract was only incidental to performance of the works contract and did not amount to trading in goods. The constitutional deeming fiction relating to sale in a works contract could be applied only for the limited purpose for which it was enacted and could not be extended to treat reimbursement of material cost or the value of deemed sale in the contract as an exempted service. Since the appellant's activity was not trading, Rule 6(3) and Rule 6(3A) of the CENVAT Credit Rules, 2004 were inapplicable. The Tribunal also noted that there was no allegation of wrongful availment of eligible input service credit, and the appellant's assertion regarding separate accounting and use of credit for the service portion remained unrebutted in the impugned order. [Paras 11, 12, 14, 15]

The demand for reversal of credit under Rule 6(3A), together with interest and penalties, was unsustainable and was set aside.

Final Conclusion: The Tribunal held that the material component embedded in the indivisible BOOT works contract could not be treated as trading or as an exempted service for Rule 6 purposes. On that basis, the demand for reversal of CENVAT credit, with interest and penalties, was set aside and the appeal was allowed.

Liability to service tax - services rendered in relation to residential quarters or colony - Suppression of Facts - Bona Fide Belief - Substantive Taxability - Extended period of limitation - demand based on balance sheet and Form 26AS material.

Construction of residential complex service - HELD THAT: - The Tribunal held that the adjudicating authority misdirected itself in distinguishing M/s Nitesh Estates Ltd.[2015 (11) TMI 219 - CESTAT BANGALORE] on the sole basis that the assessee there was a main contractor, whereas the appellant here was a sub-contractor. The determinative test was the nature of the service, namely whether it related to residential units or colony satisfying the relevant criteria and not being used for commerce or industry. On that basis, the demand in respect of Construction of Residential Complex Service was held unsustainable. The Tribunal, however, recorded the appellant's admission that service tax remained payable on one amount received during 2013-14. [Paras 11, 12, 15]

The demand on services relating to residential quarters or colony was set aside on merits, except to the extent of the amount admittedly taxable for 2013-14.

Extended period of limitation - Suppression of facts - Form 26AS based demand - HELD THAT: - The Tribunal found that the impugned order did not disclose how the appellant had suppressed material facts with intent to evade tax. Since the case was built on the Balance Sheet and Form 26AS statements, those materials by themselves could not constitute evidence of suppression. Mere non-payment of tax or non-filing of returns was held insufficient, particularly when the appellant was registered and had filed ST-3 returns, and the dispute was interpretational in nature. Following the principle noticed in M/s Quest Engineers & Consultants Pvt. Ltd. [2021 (10) TMI 96 - CESTAT ALLAHABAD] and M/s GD Goenka Pvt. Ltd. [2023 (8) TMI 995 - CESTAT NEW DELHI], the Tribunal held that Revenue had failed to make out a case for invoking the extended period. [Paras 13, 14, 15]

The show cause notice and consequential demand were held barred by limitation, and the appeal succeeded in full on that ground.

Final Conclusion: The appeal was allowed partly on merits and entirely on limitation. Except for the amount admittedly taxable for 2013-14, the service tax demand was held unsustainable, and the appellant was directed to pay tax only on the admitted receipt.

Entitlement to exemption equivalent to the Research and Development Cess paid in respect of import of technology services - Strict Compliance with Exemption Conditions - Recovery of Duty Demand - Interest Liability - Penalty - Extended period of limitation.

Exemption on import of technology services - Research and Development Cess linkage - HELD THAT: - The Tribunal accepted the assessee's stand that the royalty and R&D fee figures initially reflected in the ST-3 returns were provisional and were later finalised on actual payment. It recorded that the assessee had furnished a detailed chart and supporting documents showing the dates of payment of R&D Cess and the dates of payment for the services, and that these established compliance with the conditions of the exemption notification. On that basis, it held that the exemption claimed against the service tax liability on the import of technical know-how and R&D fee had been correctly availed. [Paras 7, 8]

The denial of exemption was not sustainable.

Extended period of limitation - Departmental knowledge - HELD THAT: - The Tribunal found that the Department was aware of the assessee's manner of working since the assessee had regularly filed statutory returns, had disclosed its agreements with the foreign service provider, and notices had already been issued for earlier periods. In these circumstances, it held that there was no evasion of service tax and, therefore, the larger period could not be invoked. The same finding also displaced the basis for charging interest on the alleged tax shortfall. [Paras 7, 8]

The demand founded on the extended period and the consequential interest liability could not be sustained.

Final Conclusion: The Tribunal set aside the impugned appellate orders and allowed both appeals, holding that the exemption claim was correctly availed and that the larger period of limitation and consequential interest were not sustainable.

Demand under Club or Association service - Mutuality in club services - receipt of downlinking charges for telecast of racing - Commercial use or exploitation of event - Renting of immovable property - Restaurant services - Sponsorship services - Extended limitation and suppression.

Mutuality in club services - Club or Association service - HELD THAT: - The Tribunal held that services rendered by the club to its own members could not be treated as taxable services for consideration, the principle of mutuality excluding such levy. Applying State of West Bengal vs. Calcutta Club Limited [2019 (10) TMI 160 - SUPREME COURT (LB)], the demand under this category was set aside. [Paras 4]

The demand under Club or Association service was set aside.

Commercial use or exploitation of event - Telecast rights - HELD THAT: - The Tribunal found that the appellant had shared telecast rights of races conducted by it with other race clubs and collected consideration described as downlinking charges. Such sharing of telecast rights amounted to permitting commercial use or exploitation of the event by other clubs, and the consideration for that activity attracted service tax under the relevant taxable entry. Following Royal Western India Turf Club Ltd. vs. Commercial Service Tax, Mumbai [2012 (11) TMI 526 - CESTAT, MUMBAI], the Tribunal further held that this taxable category came into the service tax net only with effect from 1.7.2010; hence the demand was sustainable only for the period from 01.07.2010 to 30.06.2012. [Paras 5]

The service tax demand under Commercial Use or Exploitation of Event was upheld for the period from 01.07.2010 to 30.06.2012.

Renting of immovable property - Bookmakers stall fee - HELD THAT: - The Tribunal noted that the space was provided to licensed bookmakers for carrying on their operations in accordance with the betting law and rules, and the payment received was not based on the area of the premises but on the race being conducted. On that basis, the consideration could not be regarded as consideration for renting of immovable property within the statutory definition. [Paras 6]

The amount received as bookmakers stall fee was held not taxable under Renting of Immovable Property service.

Restaurant services - Service aspect of supply - HELD THAT: - The Tribunal rejected the contention that the facility being meant only for members took it outside the taxable net. Relying on the jurisdictional High Court decision in Ballal Auto Agency Versus Union of India [2014 (11) TMI 1021 - KARNATAKA HIGH COURT], which disapproved the contrary view in Kerala Classified Hotels and Resorts Association vs. Union of India [2013 (7) TMI 431 - KERALA HIGH COURT], it held that Parliament was competent to levy service tax on the service aspect of restaurant transactions and that the appellant's activity was covered by the taxable category of restaurant service. [Paras 7]

The demand under Restaurant service was upheld.

Sponsorship services - Reverse charge - HELD THAT: - The Tribunal recorded that the appellant did not dispute that it had sponsored sports events. In the absence of dispute on the taxable activity itself, the Commissioner's conclusion fastening service tax liability was upheld. [Paras 8]

The demand under Sponsorship service was upheld.

Extended limitation and suppression - HELD THAT: - The Tribunal found that there had been correspondence between the department and the appellant over a long period regarding service tax liability. In that background, suppression could not be alleged against the appellant so as to justify invocation of the extended period. The sustainable demands were therefore confined to the normal period. [Paras 9]

The invocation of the extended period was rejected, and the surviving demands were restricted to the normal period.

Final Conclusion: The appeal was partly allowed. The demand under Club or Association service was set aside, the demands under Commercial Use or Exploitation of Event, Restaurant and Sponsorship services were upheld, and the sustainable demands were confined to the normal period; on the Tribunal's reasoning, bookmakers stall fee was not taxable as Renting of Immovable Property service.

Commitment charges collected by a bank for keeping sanctioned loan funds available - Taxable service Or are excludible as interest - cum-tax benefit - extended period of limitation - Judicial discipline - Reference to Larger Bench - Conflicting coordinate Bench decisions - Precedential value - Whether the commitment charges received by a bank are exigible to service tax.

Judicial discipline - Reference to Larger Bench - Conflicting coordinate Bench decisions - HELD THAT: - The Appellant herein is a Government Bank (Public Sector Undertaking) registered as a service provider under the category of ‘Banking and Other Financial Services’. According to the Appellant, upon lending of the loan, the interest is chargeable right from the day the loan is made available to the borrower. At times, the borrower does not avail the loan from the date on which the loan is made available. In such circumstances, in order not to lose earnings, the Bank charges interest on the borrower at the contracted interest rate, generally specified as a fixed percentage of the undisbursed loan amount, as agreed upon with the borrower. This is known as the commitment charges and are paid by the borrower as compensation for keeping a line of credit open in assurance that the bank will supply the loan at the specified future date and at the contracted interest rate, regardless of conditions in the financial and credit markets. It is the contention of the Appellant that commitment charges are nothing but interest on the unavailed portion of the loan sanctioned and does not attract service tax and that Rule 6(2)(iv) of the Service Tax (Determination of Value) Rules, 2006 as applicable for the relevant period, and which deals with cases in which the commission, costs, etc will be included or excluded for valuation of any service, specifically excluded “interest” on loans.

The order records a direct conflict between coordinate Bench decisions of the Tribunal on the identical question whether commitment charges received by a bank are liable to service tax.

DIFFERENCE OF OPINION - A divergence of opinion has arisen between the Members of the Bench on the merits of the issue. The learned Member (Technical) holds that “commitment charges” constitute consideration for services rendered, involving a clear quid pro quo, viz., payment in lieu of the bank’s contractual commitment to lend the sanctioned amount at a future date; such payment, being for assured performance of a service, cannot be characterised as “interest”. The learned Member (Judicial), noting two conflicting decisions of coordinate Benches of the Tribunal on the issue, opines that judicial discipline requires a reference to a Larger Bench and has, accordingly, refrained from expressing any view on merits. This has raised some important questions of law. In order to resolve the issue, the Registry is directed to place the matter before the Hon’ble President for a reference to a Larger Bench.

Relying on the principle that a Bench cannot take a view contrary to an earlier coordinate or larger Bench decision and that judicial certainty must be preserved, it was held that the proper course was to place the matter before the Hon'ble President for constitution of a Larger Bench. The points framed for determination, including the precedential effect of the earlier decision in the appellant's own case and the substantive taxability issue, were left open for authoritative resolution by the Larger Bench. [Paras 22, 23, 24, 25, 26]

Final Conclusion: As conflicting coordinate Bench decisions were found to exist on the taxability of commitment charges, the Bench held that judicial discipline required the matter to be referred to a Larger Bench. The issue on merits, including the precedential effect of the earlier decision in the appellant's own case, was left open for authoritative determination.

Refund limitation - Mistake of law - Refund of service tax paid under the category of construction of complex service - unjust enrichment requirements under section 11B - Statutory refund framework. -HELD THAT:- The Tribunal did not examine the merits of taxability or exemption as determinative of the appeal. It held that, even if the appellant pleaded payment under mistake of law, refund could be granted only in accordance with the statutory mechanism under section 11B. Relying on Mafatlal Industries Ltd. [1996 (12) TMI 50 - SUPREME COURT] and the jurisdictional High Court decision in Southern Surface Finishers [2018 (11) TMI 1208 - KERALA HIGH COURT], the Tribunal held that a claim arising from the assessee's later realisation that tax was not payable remains subject to the statutory period of limitation. It further found that the appellant had not produced evidence to establish that the incidence of service tax had not been passed on to customers. The rejection of refund on both limitation and unjust enrichment was therefore sustained. [Paras 15, 16, 17]

The refund claim was rightly rejected as time-barred and hit by unjust enrichment, and the impugned order was upheld.

Final Conclusion: The Tribunal upheld rejection of the refund claim. It held that refund of service tax allegedly paid under mistake of law was still governed by section 11B, and the appellant having failed on limitation as well as unjust enrichment, the appeal was dismissed.

Demand recovery of the cenvat credit availed on the services of export of cargo - Scope of taxable exempted services - Supply of tangible goods for use - Cenvat credit on input services - repair of cars and telephone services.

Exempted service - HELD THAT: - The Tribunal held that export cargo service was not an exempted service, and therefore computation of the 8% amount by treating such export service as exempted service was incorrect. It further held that credit could not be denied on the footing of 'supply of tangible goods for use' for the period prior to 16.05.2008, since that taxable service itself was introduced only from that date. [Paras 14]

The demand on both counts was set aside as legally untenable.

Cenvat credit on input services - HELD THAT:- The Tribunal found that the Revenue had produced no evidence to show that the services relating to repair of cars and telephone were used for the personal use of the appellant's employees. It also noted that landline telephone services had been treated as eligible for cenvat credit in decided cases, and on that basis the denial of credit could not be sustained. [Paras 14]

The disallowance of cenvat credit on repair of cars and telephone services was set aside.

Final Conclusion: The Tribunal held that the impugned demands were unsustainable, since export cargo handling could not be treated as exempted service, the dispute relating to supply of tangible goods concerned a period prior to introduction of that service, and no evidence established personal use in relation to repair of cars and telephone services. The impugned order was therefore set aside and the appeal was allowed with consequential relief.

Entitlement of CENVAT Credit at the time of availment of the credits which was disclosed in the respective returns filed during the relevant period - Refund of accumulated CENVAT credit - Eligibility of input credit at refund stage - definition of input service - Scope ofservices received prior to 01.04.2011, including outdoor catering, club or association, general insurance, cafeteria rent, rent-a-cab, bus/car hire charges, and support services to business or commerce.

Refund of accumulated CENVAT credit - HELD THAT: - The Tribunal found that the appellant had disclosed the availment of credit in the statutory returns and that no proceedings had been initiated to dispute or recover the credit as wrongly availed. On that basis, and in the light of the Board Circular clarifying that the standards for admissibility of credit and grant of refund cannot differ, the Tribunal held that the eligibility of the credit could not be reopened while deciding a refund claim under Rule 5. The ratio in Qualcomm India Pvt. Ltd.[2021 (11) TMI 72 - TELANGANA HIGH was followed to hold that, in the absence of any prior challenge to the credit itself, refund could not be rejected on the ground that the underlying services were not admissible input services. [Paras 6]

Rejection of the refund claims on the ground that the disputed services were not input services at the refund stage was held to be legally unsustainable.

Input services prior to 01.04.2011 - Activities relating to business - Nexus with output service - HELD THAT: - The Tribunal held that all the disputed services had been received before 01.04.2011, when the definition of input service was of wide amplitude and expressly covered services relating to business. It also found that the Revenue had not produced evidence to show that these services were unrelated to the appellant's output services. Relying on the decisions cited before it, the Tribunal accepted that these services had sufficient nexus with business operations and the provision of output services, and therefore fell within the pre-amendment scope of input service. [Paras 7, 8]

The disputed services were held to be admissible input services for the relevant pre-01.04.2011 period, and the appellant was held entitled to the refund claims.

Final Conclusion: The Tribunal held that refund under Rule 5 could not be denied by re-examining the admissibility of credit when the availment had not been disputed earlier, and further held that the disputed services, having been received prior to 01.04.2011, qualified as input services. The impugned orders rejecting the refund claims were therefore set aside and the appeals were allowed with consequential relief.

Extended period of limitation - time-barred - Bona fide conduct - CENVAT credit eligibility - delayed availment - Credit availed after one year from the invoices - non-filing of ST-3 returns - Suppression of facts.

Extended period of limitation - HELD THAT: - The Tribunal found that the appellant had commenced taxable activity, availed input service credit, and utilised that credit for payment of service tax by 31 March 2017. It further found that the appellant could not file the ST-3 return because the registration had been suo motu cancelled, and that the appellant had thereafter approached the Department for migration to GST, which was rejected for the same reason. These facts were treated as establishing bona fide conduct and negativing suppression. The Tribunal also noted that the Department remained silent despite being aware of the position and initiated proceedings much later. On that reasoning, the extended period was held to be not invocable and the show cause notice to be time-barred. [Paras 8, 9, 10]

The show cause notice was held barred by limitation and the demand founded on the extended period was set aside.

CENVAT credit eligibility - One-year time limit - HELD THAT: - The Tribunal held that the Department's objection on time-bar to the credit was factually incorrect. It recorded that the appellant had availed the services during December 2016 to June 2017 and had utilised the credit for payment of service tax by March 2017, which was within one year. On that basis, the credit could not be denied. [Paras 9]

The denial of CENVAT credit was held unsustainable.

Final Conclusion: The Tribunal held that the appellant had established bona fides, that the extended period of limitation was not available to the Department, and that the objection to CENVAT credit on the ground of delay was untenable. The demand was therefore set aside and the appeal was allowed with consequential relief.

Marketing support services provided to the foreign entity - Intermediary service -Scope of ‘Export of Service’ - Place of provision of services - Principal-to-principal basis.

Whether the services provided by the appellant to the foreign agency M/s. Cadence Design Systems (Ireland) Ltd., Ireland is in the nature of intermediary service and falls outside the scope of POPS Rules, 2012. - HELD THAT: - On a plain reading of the agreement, the appellant was only required to provide market information, customer feedback and promotional support to the overseas entity. It had no authority to represent the foreign company in legal transactions, to bind it, or to accept or reject customer orders, all orders being directly placed on and dealt with by the foreign company. The Tribunal applied its consistent view that where the Indian entity provides support services on its own account on a principal-to-principal basis, without arranging or facilitating the main supply between the overseas supplier and Indian customers, it does not answer the definition of intermediary. Consequently, Rule 9 of the POPS Rules was held inapplicable and the service remained governed by the general place of provision rule, supporting its treatment as export of service. [Paras 8, 9, 10]

The demand was held unsustainable as the appellant's pre-sales marketing support service was not an intermediary service; the impugned order was therefore set aside and the appeal allowed with consequential relief.

Final Conclusion: The Tribunal held that the appellant's pre-sales marketing support services to its foreign affiliate did not constitute intermediary services. The service was therefore to be treated under the normal place of provision rule as export of service, and the impugned demand with interest and penalty was set aside.

Additional consideration - Trade discount - Assessable value - Transaction value - trade discount extended to NMMT, resulting in a lower sale price as compared to the price charged to other customers for selling CNG through appellant’s other outlets.

Whether the trade discount extended by the appellant to NMMT can be treated as an “additional consideration” in terms of Rule 6 of the Valuation Rules, thereby warranting inclusion in the assessable value? - HELD THAT: - The Tribunal held that the departmental case proceeded on a factually incorrect assumption that depot premises and infrastructure had been provided free of cost by the buyer. The record showed that the land was taken on sub-lease for agreed monthly rent and that the appellant had itself incurred the expenditure for plant, machinery and dispensing infrastructure. In the absence of cogent material showing any facility or benefit flowing free of cost from the buyer, the foundation for invoking Rule 6 failed. The Tribunal reiterated that additional consideration requires a clear and demonstrable flow of consideration, direct or indirect, from the buyer to the assessee having nexus with the price, and that a lower negotiated price to a bulk buyer by itself does not establish such additional consideration. [Paras 6, 7, 8, 9, 13]

The demand of duty and interest based on loading the discount into assessable value was held unsustainable.

Binding precedent - Identical facts - Commercial discount - HELD THAT: - The Tribunal noted that similar discounts to other bulk consumers had already been accepted and further found that, in the appellant's own case [2024 (10) TMI 814 - CESTAT MUMBAI] on identical facts involving supply to NMMT, it had been held that payment of separate lease rent for land ruled out any inference that the discount represented additional consideration. Treating that earlier ruling as binding on the same factual matrix, the Tribunal held that the present issue was no longer open to dispute and the discount remained a legitimate commercial discount. [Paras 10, 11, 12, 13]

Following the earlier decision on identical facts, the appeal was allowed and the impugned order was set aside.

Final Conclusion: The Tribunal held that no additional consideration flowed from NMMT to the appellant, since the land was under a paid sub-lease and no free facility was proved. The trade discount was therefore a legitimate commercial discount, and the demand of duty with interest was set aside.

Extended period of limitation - Area-based exemption - Relevancy of statements - Penalty under rule 26 - Suppression of facts - transfer of ownership - Departmental knowledge - Burden of proof - Mandatory compliance - Admissibility of statements - violation of the mandatory provisions of section 9D of the Central Excise Act - HELD THAT: - The Tribunal held that the impugned order itself proceeded on the basis that the appellant had maintained records and filed them with the department. Once the relevant documents had been furnished, there was no legal obligation on the assessee to prove that the department had scrutinised them. The record also showed that in 2015 the department was aware that the appellant had taken over Om Sai, had examined the documents submitted in that regard, and had noted that nothing objectionable was found. In these circumstances, suppression or fraud with intent to evade duty could not be alleged merely on the basis of the show cause notice allegations, especially when the adjudicating authority had not dealt with the appellant's reply on this aspect. As the entire demand was beyond the normal period and rested only on the extended period, the demand was time-barred. [Paras 44, 45, 53, 54, 55]

Invocation of the extended period was held to be unsustainable, and the duty demand confirmed for the entire period was set aside.

Area-based exemption - Manufacture of new products - Shifting of factory premises - Transfer of ownership - HELD THAT: - The Tribunal interpreted the exemption notification and the departmental circulars as showing that the benefit attached to an eligible industrial unit for the prescribed period and that the notification did not prohibit manufacture of new products, expansion by new plant and machinery, shifting of the premises to another location within the specified area, or transfer of ownership of the unit. It found that Om Sai had been availing the exemption since 29.03.2010, had intimated the authorities regarding addition of new electrical products, had obtained permission for shifting to another eligible location, and had intimated the authorities of such shifting. Since the exemption was granted to the unit and the three events of addition of new products, shifting of premises, and transfer of ownership were all permissible in law, the contrary findings in the impugned order were unsustainable. [Paras 65, 66, 67, 68, 69]

Denial of the area-based exemption on the grounds adopted in the impugned order was held to be unsustainable.

Whether the statements recorded under section 14 of the Central Excise Act can be considered as relevant when the procedure contemplated under section 9D of the Central Excise Act has not been followed.​​​​​​​ -HELD THAT: - The Tribunal held that, except in the circumstances specified in clause (a) of section 9D(1), a statement recorded during inquiry becomes relevant for proving the truth of its contents only if the maker of the statement is first examined as a witness before the adjudicating authority, the authority then forms an opinion that the statement should be admitted in evidence in the interests of justice, and only thereafter the affected party gets the opportunity of cross-examination. It was not disputed that this procedure had not been followed by the adjudicating authority in respect of the persons whose statements were relied upon. Consequently, those statements could not be treated as relevant evidence for sustaining the duty demand. [Paras 74, 81, 82]

Reliance on the statements recorded under section 14 was held to be impermissible in the absence of compliance with section 9D.

Penalty under rule 25 - HELD THAT:- The Tribunal held that penalty under rule 25 could not be sustained in the facts of the case, as the appellant had not removed goods in contravention of the rules. [Paras 83]

The penalty imposed on the appellant under rule 25 was held to be unsustainable.

Penalty under rule 26 - Goods liable to confiscation - HELD THAT: - The Tribunal found that the impugned order contained no discussion or finding that the goods had been confiscated or were liable to confiscation, and referred to confiscability only while imposing penalty. Since liability of the goods to confiscation is an essential ingredient for penalty under rule 26(1), the statutory requirement was not satisfied. In the absence of such a finding, penalties on the individual appellants could not be sustained. [Paras 88, 90]

The penalties imposed on Jasraaj Singh Kalra and Sarabjit Singh Kalra under rule 26 were set aside.

Final Conclusion: The Tribunal set aside the adjudication order in its entirety. It held that the demand was barred by limitation, the denial of area-based exemption was unsustainable, the relied-upon statements were inadmissible for want of compliance with section 9D, and the penalties imposed on the company and the individual appellants could not survive.