TMI Tax Updates e-Newsletter
May 05,2026

Liability to GST under the 70:30 mechanism - Supply of solar power generating systems and related services - Deemed valuation - Composite Supply - issuance of separate invoices for goods and services.

Composite supply of solar power generating systems - Deemed valuation under the 70:30 mechanism - Separate invoices and applicable GST rate - HELD THAT: - The Court held that a conjoint reading of Entry 234 of Notification No. 1/2017 and Entry 38 of Notification No. 11/2017, along with the explanations inserted therein, creates a legal fiction for taxation of supply of solar power generating systems, including erection, procurement and commissioning contracts, by deeming 70% of the gross consideration as value of goods taxable at 5% and the remaining 30% as value of services taxable at 18%. The assessing authority's view that issuance of separate invoices for goods and services excluded the petitioner from this mechanism was rejected, as the notifications themselves contemplate supply of specified goods along with other goods and taxable services. The Court further found that the respondents had not disputed that the supplies were made pursuant to contracts with customers, and that mere separate invoicing could not displace the overall contractual supply. The assessment was also found unsustainable because, even on the respondent's own premise of separate supplies, no exercise had been undertaken to determine the value of goods and services separately, yet tax had been levied at 18% on the entire turnover.

The petitioner was liable to GST only in accordance with the 70:30 mechanism under the relevant notifications, and the differential levy at 18% on the entire supply was set aside.

Final Conclusion: The writ petition was allowed. The assessment order was set aside to the extent it levied differential tax on the supply of goods and services relating to solar power generating systems and solar power based devices, with consequential orders directed to be passed.

Jurisdiction of the show-cause notice and consequent order issued under the GST law against an amalgamating company after it had ceased to exist upon merger - Void ab initio - Principles of natural justice - Jurisdictional defect - Going concern - Proceedings against non-existent entity - Scope of liability in amalgamation or merger - HELD THAT: - The contentions urged on behalf of the Petitioner, particularly in view of the order dated 30th August 2018 passed by the NCLT is to the effect that the Petitioner is an entity formed pursuant to the merger of VMSL and Vodafone India Limited with Idea Cellular Limited. It is not in dispute that the said fact was duly intimated to the GST authorities at the time of amendment of the GST registration of Idea Cellular Limited. The same was also brought to their notice in the detailed replies filed in response to the show-cause notice dated 1st August 2024.

A Coordinate Bench of this Court in Reliance Industries Limited v. P. L. Roongta [2025 (2) TMI 612 - BOMBAY HIGH COURT], has also categorically held that despite the Assessing Officer having been informed that the amalgamating company had ceased to exist pursuant to the scheme of amalgamation, any proceedings initiated against such a non-existent entity are void ab initio.

The Court found that the fact of merger had been intimated to the GST authorities and that, upon sanction of the scheme, the amalgamating entity had ceased to exist in law. It held that proceedings could not thereafter be initiated or continued against that non-existent entity. On interpretation of Section 87, the Court held that the provision applies only to the intervening period between the effective date of amalgamation and the date of the order, so as to treat the companies as distinct for transactions inter se during that period. It does not confer authority on the Department to issue a show-cause notice or continue proceedings against a non-existent entity after merger. Since the notice itself was issued without jurisdiction, the entire proceedings stood vitiated and void ab initio. [Paras 11, 12, 13, 14, 15]

The impugned order was held unsustainable as the foundational show-cause notice issued to the non-existent amalgamating entity was without jurisdiction, and the petition was allowed in terms of prayer clause (a).

Final Conclusion: The Court held that the GST proceedings initiated against the amalgamating company after its merger were void ab initio, as they were taken against a non-existent entity. It further held that Section 87 of the CGST Act did not authorize such proceedings, and accordingly allowed the petition by setting aside the impugned order.

Cancellation of GST registration - Without assigning reasons in the order - Recording of reasons - Delay in approaching the writ court justified refusal of relief -HELD THAT: - It is evidently clear that the impugned Order is not in conformity with the procedure prescribed in FORM GST REG-19. A speaking order is one which expressly states the reasons for the decision. In other words, a speaking order speaks for itself by assigning the reasons behind the conclusion. If an order is passed without giving a reason by the concerned authority, then the order is a non-speaking one. Nonspeaking order is one which does not provide a clear reason for its decision. The fact that the petitioner-assessee did not submit any Reply to the Show Cause Notice dated 16.01.2023 or did not appear before the Proper Officer, when she was called upon to do so, does not absolve the Proper Officer from the obligation of passing a speaking order as any order which brings adverse consequence to a person cannot be a mere paper formality.

It is implicit in the principles of natural justice and fair play that an adjudicating authority should record reasons as it is part of fair procedure, more particularly, when the decision is likely to affect the right of the person concerned. Recording of reason is also prima facie suggestive of conscious application of mind on the part of the authority. The obligation to record reasons is a possible check against arbitrary action on the part of the adjudicating authority invested with the statutory power to take a decision which is likely to affect the right of the person concerned. When the statute itself contains a prescription to record reasons in the decision, absence of reasons in the decision falls short of the prescription and would be in violation of the prescription and thus, illegal. A look at FORM GST REG-19 also goes to substantiate that the Proper Officer is obligated to record his reason[s] for taking the action of cancellation of GST Registration.

The Court held that, though non-furnishing of returns for a continuous period could furnish a ground for cancellation, an order under Rule 22(3) read with FORM GST REG-19 must disclose the reasons on the basis of which the proper officer forms the opinion that registration is liable to be cancelled. The impugned order merely referred to the show cause notice and stated the effective date of cancellation, without recording any reason. Since cancellation of registration entails adverse civil consequences, the obligation to pass a speaking order is implicit in fair procedure and is also borne out by the statutory form itself. The assessee's failure to reply to the show cause notice or to appear did not relieve the proper officer of the duty to record reasons. The absence of reasons showed non-application of mind and rendered the order unsustainable. The Court further held that the defect in the order outweighed the delayed approach in invoking writ jurisdiction. [Paras 25, 26, 27, 28, 29]

The cancellation order was set aside and the matter was restored to the stage of the show cause notice, with liberty to the petitioner either to reply to the notice or to furnish pending returns and pay dues, interest, late fee and penalty, whereafter the proper officer was directed to proceed afresh in accordance with Section 29 and Rule 22 and pass the appropriate order.

Final Conclusion: The writ petition was allowed to the extent that the order cancelling GST registration was quashed for want of reasons and non-application of mind. The proceedings were restored to the show cause stage, and the petitioner was granted time to pursue the statutory options available under Rule 22.

Maintainability of Writ jurisdiction - Challenged to the show cause notice and the adjudication order - Denial of cross-examination​​​​​​​ - Alternative statutory remedy. - HELD THAT:- The Court held that the petitioners had a statutory remedy of appeal before the appellate authority against the adjudication order and, in that view, declined to interfere under writ jurisdiction. In doing so, it accepted the objection on maintainability and left it open to the petitioners to urge all factual and legal grounds before the appellate forum. [Paras 8, 9]

The writ petition was dismissed, with liberty to the petitioners to raise all grounds before the appellate authority.

Final Conclusion: The Court declined to entertain the writ petition against the show cause notice and the adjudication order on the ground that an effective statutory appeal was available. The petitioners were left free to urge all legal and factual grounds before the appellate authority.

Condonation of delay in filing GST appeal -Sufficient cause beyond control - Entertaining appeal on merits - Delay in filing the statutory appeal against the GST demand order -HELD THAT: - The Court held that though the Appellate Authority remains bound by the limitation prescribed under Section 107 of the RGST/CGST Act, 2017, the explanation furnished by the petitioner disclosed circumstances beyond its control for not filing the appeal within the stipulated period. The Court further held that refusal to permit adjudication of the appeal on merits in such circumstances would cause grave injury and prejudice. Following the consistent view already taken by the Court in the decisions in M/s M R Traders v. UOI [2026 (2) TMI 99 - RAJASTHAN HIGH COURT], M/s Molana Construction Company v. Central Goods and Service Tax Department & Ors [2024 (8) TMI 384 - RAJASTHAN HIGH COURT], Man Singh Tanwar v. Commissioner, Central goods and Services Tax Department & Ors. [2024 (9) TMI 1232 - RAJASTHAN HIGH COURT], RPC PSIPL JV Vs. State of Rajasthan & Ors [2025 (7) TMI 1998 - RAJASTHAN HIGH COURT] and RPC PSIPL JV Vs. State of Rajasthan & Ors [2024 (9) TMI 1232 - RAJASTHAN HIGH COURT], the delay was condoned and the appellate remedy was directed to be made available on merits. [Paras 7, 8, 9, 10]

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

Final Conclusion: The writ petition was allowed to the limited extent of condoning the delay in filing the appeal against the GST demand order for the tax period 2017-18. The challenge to the validity of the notifications was not pressed, and that issue was left open.

Service through GST portal - No Opportunity of hearing - lack of effective service and violation of natural justice - Validity of the assessment order passed under the GST regime -HELD THAT: - The Court noted its earlier view that uploading show-cause notices and orders on the portal constitutes sufficient proof of service under Section 169(1)(b) of the GST Act. Even so, having regard to the recurring situation of assessees who are not technically equipped suffering adverse orders without an effective opportunity, the Court held that a further opportunity could be granted while balancing the interests of the revenue. On that basis, the impugned assessment was set aside and the matter remitted for fresh orders after due opportunity, with liberty to the petitioner to raise all objections. [Paras 3, 4, 5, 6]

The impugned order was set aside and the matter remanded for fresh consideration after due opportunity, subject to payment of 20% of the disputed tax within six weeks.

Final Conclusion: The writ petition was allowed by setting aside the assessment for the financial year 2023-2024 and remanding the matter for fresh adjudication after giving due opportunity to the petitioner, subject to deposit of 20% of the disputed tax.

Alternative statutory remedy - Writ maintainability - denial of right of hearing to the petitioner - Violation of​​​​​​​ principles of natural justice - Challenged to the GST demand order in writ jurisdiction -HELD THAT:- The Court reiterated that though the power under Article 226 is wide, it is ordinarily not exercised where an efficacious statutory remedy is available, especially when the statute itself creates the right and also provides the remedial mechanism. The recognised exceptions to this rule include enforcement of fundamental rights, breach of natural justice, absence of jurisdiction and challenge to vires. On the material before it, the Court found that the petitioner had participated in the proceedings and filed a detailed reply to the show cause notice. There was no case that any request for personal hearing had been made and refused, nor was it pleaded that the authority lacked competence to pass the order under Section 74. The plea of violation of natural justice was therefore not accepted, and the petitioner was relegated to the appellate remedy under Section 107. [Paras 2, 3, 6, 7, 8]

The writ petition was dismissed, leaving the petitioner to pursue the statutory appeal.

Final Conclusion: The Court declined to entertain the writ petition against the GST demand order, holding that the petitioner had an efficacious appellate remedy and had failed to establish any exception to the rule of alternate remedy. The petition was accordingly dismissed.

Challenged to the Input Tax Credit - Speaking Order - Reasoned Order - Objections to the Show Cause Notice - HELD THAT:- The petitioner did not press the challenge to section 16(2)(c), and the petition was disposed of by directing the competent authority to consider objections and supporting documents, if filed within the stipulated time, against the show cause notices and to pass a speaking and reasoned order; failing such filing, the authority was left free to proceed in accordance with law.

Validity of the Second provisional attachment under Section 83 - Lapse of the earlier attachment after statutory period - Abuse of law -Fresh attachment on same facts - Provisional attachment not as recovery measure

Provisional attachment - Lapse of attachment after statutory period - Fresh attachment on same facts -HELD THAT: - The Court noted that the first provisional attachment order had expired on completion of the statutory period of one year. It further found that, despite the expiry of the earlier order and completion of assessment, the respondents had issued a second attachment on the same factual basis without any change in circumstances. Applying the principle stated in Kesari Nandan Mobile vs. Office of Assistant Commissioner of State Tax [2025 (8) TMI 992 - SUPREME COURT], the Court held that a fresh provisional attachment on substantially the same grounds would defeat the safeguard built into Section 83(2) and was therefore unsustainable. [Paras 9, 10, 11, 12]

The impugned second provisional attachment order was held unsustainable and was quashed.

Provisional attachment not as recovery measure - Post-assessment recovery mechanism - After assessment had culminated in an order in original, provisional attachment could not be continued or reissued as a mode of recovery. - HELD THAT: - The Court recorded that the assessment proceedings had already concluded and an order in original had been passed. Relying on the law declared in Kesari Nandan Mobile vs. Office of Assistant Commissioner of State Tax [2025 (8) TMI 992 - SUPREME COURT], it held that provisional attachment is only a pre-emptive protective measure and cannot be used to short-circuit the statutory recovery machinery once a final demand has arisen. [Paras 8, 11, 12]

The impugned attachment could not be justified as a post-assessment recovery device.

Final Conclusion: The petition was allowed and the second provisional attachment order was held to be unsustainable. The Court found that, after lapse of the earlier attachment and in the absence of any change in circumstances, a fresh attachment on the same facts could not be maintained, particularly after completion of assessment.

Validity of an adjudication order passed without granting the assessee an opportunity of personal hearing - Statutory requirement mandate under Section 75(4) - breach of natural justice and of the statutory procedure. -HELD THAT: - The Court recorded the State's fair admission that no opportunity of personal hearing had been granted before the adjudication order was passed. It held that such omission violated both the principles of natural justice and the statutory requirement of Section 75(4) of the Act, which mandates grant of personal hearing before adverse action is taken against an assessee. On that ground alone, the adjudication order and the appellate order affirming it could not be sustained. [Paras 4, 6]

The impugned adjudication and appellate orders were set aside, with liberty to the State to proceed afresh in accordance with law after complying with Section 75(4).

Final Conclusion: The petition was disposed of by setting aside the adjudication order and the appellate order since no personal hearing had been afforded to the petitioner. The respondent-State was left free to initiate fresh proceedings only in accordance with law.

Scope of the summons issued under the Goods and Services Tax law - Judicial interference with ongoing inquiry- Availment of fake input tax credit. - HELD THAT: - The Court found that the impugned summons had been issued under Section 70 of the Act of 2017 by the proper officer conducting an inquiry. Such officer is empowered to require attendance for giving evidence or producing documents and other material in the same manner as a civil court. Since the summons were part of an ongoing inquiry and had been issued by an officer clothed with statutory authority, interference at that stage would amount to scuttling the inquiry. [Paras 10, 11, 12]

The challenge to the summons was rejected and the writ petition was dismissed.

Final Conclusion: The Court declined to interfere with the summons issued in the GST inquiry, holding that they were issued by the proper officer in exercise of statutory power and that writ interference would obstruct the ongoing inquiry. The writ petition was accordingly dismissed with costs.

Availability of a efficacious Statutory Remedy - Revocation of cancellation of registration - violation of Section 16 of the Act of 2017 read with Rule 21 (e) of the CGST Rules, 2017 - Judicial restraint during ongoing investigation - Blocking of input tax credit communicated by e-mail when the matter formed part of an ongoing investigation - Principles of Natural Justice​​​​​​​.

Alternative statutory remedy - HELD THAT: - The Court noted that the cancellation order in Form GST REG-19 did contain reasons and had been passed on the ground contemplated by Rule 21(e), namely availment of input tax credit in violation of Section 16. It held that against such cancellation the petitioner had an efficacious statutory remedy under Rule 23 read with Section 30 for revocation of cancellation within the prescribed period. In the presence of that remedy, the Court declined to examine the challenge in its extraordinary writ jurisdiction. [Paras 4]

The writ challenge to cancellation of registration was declined, leaving the petitioner to pursue the statutory remedy.

Judicial restraint during ongoing investigation - Blocking of input tax credit - HELD THAT: - On the materials placed, the Court found that the blocking of ITC was linked to allegations regarding fake or non-existent firms and that investigation against recipients was in progress, with further proceedings also contemplated. In that factual setting, the Court held that entertaining the writ against the e-mail communication would amount to interference with the ongoing investigation. It therefore declined relief while observing that the petitioner may avail its remedy before the appropriate forum in accordance with law. [Paras 7]

The prayer against the e-mail communicating blocking of ITC was not entertained on account of the ongoing investigation.

Final Conclusion: The Court dismissed the writ petition. It held that the challenge to cancellation of registration must be pursued through the statutory revocation mechanism, and that no interference was warranted with the communication on blocked ITC while investigation was still continuing.

Denial of transitional credit - Non-application of mind - failure to consider material documentary evidence - speaking order. - HELD THAT: - The Court found that the appellate authority proceeded on the footing that no material had been produced to show deposit of the service tax into the Government treasury, despite the petitioner having placed on record the certificate issued by CIDCO and the receipt acknowledging payment of service tax. Since these documents directly bore on the basis on which the credit claim had been denied, their non-consideration disclosed clear non-application of mind. On that ground, the appellate order, and consequentially the original order, could not be sustained, and the matter required fresh consideration through a reasoned and speaking order after personal hearing. [Paras 11, 12]

The impugned appellate and original orders were quashed and the matter was remanded to the appellate authority for de novo consideration, with all contentions kept open.

Final Conclusion: The Court set aside the impugned appellate and original orders solely on the ground that the material documents relied on by the petitioner had not been duly considered. The matter was remanded for fresh decision by a reasoned and speaking order after granting personal hearing, with all rival contentions left open.

Alternate remedy - Exhaustion of Remedies -right to appeal -Extraordinary Jurisdiction - Writ jurisdiction in fiscal matters - pre-deposit as condition of appeal -HELD THAT:- The right to appeal is never an inherent right. The right to appeal is subject to a pre-deposit, and challenges to this requirement have already been rejected. Based upon the audited accounts alone, we cannot accept the petitioner’s contention that the petitioner is unable to pay the pre-deposit amount, and to that extent, the alternate remedy is not efficacious. The jurisdiction under Article 226 of the Constitution cannot be exercised to frustrate the statutory regime provided in the Statute.

The decision of the Hon’ble Supreme Court in the case of J.M. Baxi & Co., Gujarat Vs. Commissioner of Customs, New Kandla and Anr.[2000 (1) TMI 999 - SUPREME COURT] turns on the peculiar facts of the case where a demand had been raised merely sixteen years after the amount had become due from the importer on whose behalf the appellant had been acting as an agent. In this case, no such startling facts have come to our notice.

The Court held that, the Order-In-Original being appealable, the petitioner could not ordinarily bypass the statutory appellate mechanism and seek direct adjudication of multiple challenges in writ jurisdiction. Since the challenge was not confined only to delayed adjudication and also involved other grounds requiring factual examination, the appellate remedy was held to be the more appropriate and comprehensive forum. The Court further held that inability to comply with the statutory pre-deposit, based only on audited accounts, did not render the alternate remedy inefficacious, and that deviation from the rule of relegating parties to statutory remedies in fiscal matters must remain an exception. The larger issue regarding the effect of delayed adjudication was left open to be urged before the appellate authority. [Paras 18, 19, 20, 21, 23]

The petitioner was relegated to the statutory appeal, with all contentions kept open, and the appellate authority was directed to consider any appeal filed within the granted period on merits and without adverting to limitation.

Final Conclusion: The Court declined to entertain the writ petition and directed the petitioner to avail the statutory appellate remedy. All contentions, including those based on delayed adjudication, were left open, and protection against objection on limitation was granted if the appeal was filed within the time stipulated and in compliance with statutory requirements.

Caim for input tax credit for the relevant financial year - time limit under Section 16(4) Or saved by the retrospective insertion of Section 16(5) - Non-obstante retrospective extension u/s 16(5) - Denial of input tax credit solely on the ground of delay under Section 16(4) - HELD THAT: - The Court held that sub-section (5) of Section 16 begins with a non-obstante clause and therefore overrides the time restriction contained in sub-section (4) for the financial years specified therein. On that construction, if returns relating to the concerned period were filed before 30.11.2021, the assessee would be entitled to claim ITC notwithstanding the earlier restriction under Section 16(4). Since the impugned order had proceeded only on the basis of delay under Section 16(4), and the petitioner's returns had been filed on 30.09.2020, the claim required reconsideration in the light of Section 16(5). The Court also noted that, as the appeal had been rejected only on the ground of delay, it could examine the merits of the impugned order. [Paras 10, 11, 12, 13]

The Order-in-Original and the show cause notice were set aside, and the matter was remitted for fresh adjudication in the light of Section 16(5), with the petitioner's ITC claim to be considered in accordance with law.

Final Conclusion: The Court held that the petitioner's ITC claim could not be rejected merely by applying Section 16(4) when Section 16(5) extended the entitlement up to 30.11.2021 and the returns had been filed within that period. The impugned order and show cause notice were therefore set aside and the matter remitted for reconsideration, with all other contentions kept open.

Failure to consider reply u/s 148A(b) - Non-application of mindin reassessment initiation - The order under Section 148A(d) was set aside as having been passed without consideration of the petitioner's response by HC [2024 (11) TMI 1637 - DELHI HIGH COURT]

HELD THAT:- We are not inclined to interfere with the impugned order in exercise of our jurisdiction under Article 136 of the Constitution of India.

Special Leave Petition is, accordingly, dismissed

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

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

HELD THAT:- We are not inclined to interfere with the impugned judgment(s) and order(s) of the High Court; hence, the special leave petitions are dismissed.

Sequential computation of deductions - Deduction under Sections 80-IB and 80-HHC - whether relief u/s 80IB should be deducted from profits and gains of business before computing relief u/s 80HHC? - HELD THAT: - The Court held that the impugned tax demand was not founded on proper computation of income, since the method accepted by the authorities and the Tribunal did not conform to the guidelines laid down by the Supreme Court in M/s Shital Fibers Ltd [2025 (5) TMI 1599 - SUPREME COURT (LB)] computing deductions under Chapter VI-A, particularly under Sections 80-IA, 80-IB and 80-HHC. Accepting that the matter required fresh computation in the light of that binding dictum, the Court set aside the Tribunal's order and confined the remand to recomputation of the deductions under Sections 80-IB and 80-HHC in accordance with law. [Paras 10, 11]

The Tribunal's view on the manner of allowing deductions under Sections 80-IB and 80-HHC was set aside, and the matter was remanded to the Assessing Officer for fresh computation in accordance with the Supreme Court's dictum.

Final Conclusion: The appeal was allowed. The Tribunal's order was set aside and the matter was remanded to the Assessing Officer for fresh computation of taxable income and deductions under Sections 80-IB and 80-HHC in the light of the law declared by the Supreme Court.

Writ petition challenging the intimation u/s 143(1) - alternative statutory remedy - inordinate delay and laches filling writ

HELD THAT: - The Court held that exercise of writ jurisdiction under Article 226 is not routine and is ordinarily confined to exceptional cases involving breach of fundamental rights, violation of natural justice, or lack of jurisdiction. On the facts, the challenge to the intimation was brought after more than five years, despite the petitioner being aware of the proceedings and having pursued remedies in relation to the scrutiny assessment. The petitioner had also filed an appeal before the CIT (Appeals), and after its dismissal on delay, had an effective further remedy under Section 253 before the ITAT.

In these circumstances, the Court declined to examine the merits of the jurisdictional challenge to the intimation and held that the petitioner should pursue the statutory appellate remedy. The decision in Harbanslal Sahnia was treated as distinguishable on facts. [Paras 12, 13, 14, 15, 16]

The writ petition was dismissed as not maintainable, leaving it open to the petitioner to avail the appellate remedy before the ITAT.

Final Conclusion: The High Court declined to entertain the writ petition against the intimation under Section 143(1), holding that the challenge was belated and that the petitioner had an efficacious further statutory remedy before the ITAT. The merits of the controversy were left open.

Royalty - payment to the non-resident company towards International Private Leased Circuit (IPLC) for providing bandwidth services -Prospective operation of Explanations 4 to 6 to section 9(1)(vi) - Disallowance u/s 40(a)(i)

HELD THAT: - The Court followed its earlier decision in the assessee's own case rendered on the basis of the Supreme Court ruling in Engineering Analysis Centre of Excellence Pvt. Ltd [2021 (3) TMI 138 - SUPREME COURT] and held that Explanations 4 to 6 to section 9(1)(vi) are not merely clarificatory but expand the definition of royalty and operate prospectively from 01.04.2012.

On that footing, the Tribunal's reliance on Verizon Communications Singapore PTE Ltd [2013 (11) TMI 1058 - MADRAS HIGH COURT] was held to be untenable to the extent it proceeded on the retrospective application of those explanations. Since the remittance to the non-resident for the telecommunication facility was not taxable in India as royalty for the years in question, no obligation to deduct tax under section 195 arose; consequently, disallowance under section 40(a)(i) and action under section 201 could not be sustained. The Court also accepted that the law does not compel an impossible act. [Paras 17, 20, 21, 22]

The substantial questions of law were answered in favour of the assessee, and the disallowance and consequential TDS default and interest liability were held unsustainable.

Final Conclusion: The appeals were allowed - Court held that, for the assessment years in question, remittance for IPLC and related telecommunication services to the non-resident was not royalty, with the result that there was no obligation to deduct tax at source and no basis for disallowance under section 40(a)(i) or consequential action under section 201.

Reassessment based on conjectures and surmises - Lack of nexus with seized material- loose papers relied upon - Consequential penalty proceedingsu/s 271DA - petitioner is a co-owner, who purchased the land along with own mother

HELD THAT: - The Court treated the present case as standing on the same footing as that of the co-owner in relation to the same land transaction. It accepted that the alleged escapement was founded on similarly worded loose papers referring to non-agricultural status, whereas the land sold by the petitioner was agricultural land. On that basis, the assumed sale value was held to rest only on hypothesis, and the reopening lacked a sustainable foundation. [Paras 5, 8]

The notice under Section 148 and the reassessment order under Section 147 were quashed.

Consequential penalty proceedings u/s 271DA - HELD THAT: - The only feature pointed out by the revenue was that the reassessment had resulted in nil income and that a separate notice for penalty had been issued. The Court held that, once the reopening itself was liable to be quashed, the subsequent proceedings for initiation of penalty and the show-cause notice founded on such reopening were also liable to be set aside. [Paras 6, 7, 8]

The notice issued under Section 271DA was also quashed as a consequence of the invalid reopening.

Final Conclusion: The writ petition was allowed. The Court quashed the notice for reopening, the reassessment order, and the penalty notice, holding that the case was covered by the earlier decision in the co-owner's matter and that the penalty proceedings could not survive independently.

Trial for offence u/s 276C(2) - admitted tax liability not immediately paid.

HELD THAT: - The Court noted that the petitioner had filed the return for the relevant assessment year declaring tax and interest liability but had not paid the amount within the stipulated or extended period, and that a subsequent demand had also remained unpaid. It further recorded that no appeal against the assessment order had been pursued for more than six years and that the later appeal with delay petition had neither been admitted nor the delay condoned.

On the procedural side, the Court found that the petitioner had remained absent on several occasions and had begun participating only after coercive steps were initiated, while the trial had already reached the final stage. In that background, the Court held that the very points raised in the quash petition had already been raised during trial, and their re-agitation in a belated petition for quashing could not be entertained. [Paras 7, 8, 9, 10]

The quash petition was dismissed, leaving the trial court to decide the criminal case on its own merits uninfluenced by the observations in the order.

Final Conclusion: The Court declined to interfere with the pending prosecution and held that, at the stage when the trial had reached final adjudication, the petitioner could not seek quashing by re-urging the same grounds already raised before the trial court. The criminal original petition was accordingly dismissed, with a clarification that the trial court would decide the case independently on its own merits.

Deduction for provision for bad and doubtful debts u/s 36(1)(viia) -Assessee's option in claiming deduction - Option to choose either of the clauses in Section 36(1)(vii(a)) - expression “at its option” used in the proviso to subsection (vii-a) of Section 36(1), refers the option of the assessee or the option of the Assessing Officer?

HELD THAT: - The Court held that the expression at its option preserves the assessee's exclusive right to choose the permissible manner of claiming deduction under Section 36(1)(vii-a). Where the statute permits the taxpayer to claim deduction in a particular way, the AO cannot override that election by adopting a different interpretation. Acceptance of the Department's view would render the statutory expression meaningless. On that interpretation, the questions concerning whether the assessee lost entitlement under the main provision by exercising the option under the proviso were answered in favour of the assessee. [Paras 10, 11, 12]

The substantial questions relating to the interpretation of Section 36(1)(vii-a) and the assessee's option were decided in favour of the assessee.

Final Conclusion: The appeal was allowed. The Assessing Officer was directed to re-compute the taxable income by applying Section 36(1)(vii-a) in accordance with the interpretation accepted by the Court, and the remaining questions relating to rectification were treated as academic and held in favour of the assessee.

Computation of tax on the deferred income claimed - entire membership fee received for a 99-year timeshare period - Deferred income recognition - Matching principle - “advance subscription towards customers facilities” - Accrued liability and proportionate revenue recognition

AO disallowed the claim of the assessee, who declared 45% of the total consideration received for the membership as income of current year and deferred the balance 55% of the advance subscription received from the customer as provision for the future expenditure to provide amenities and facilitates promised to the customers for the remaining period of time share agreement (i.e.,) 99 years - HELD THAT: - The Court held that the Tribunal was fundamentally wrong in treating the concept of deferred income as alien to the Income-tax Act.

As in CALCUTTA COMPANY LIMITED [1959 (5) TMI 3 - SUPREME COURT]wherein, the Hon’ble Supreme Court has held that the liability on the assessee having been imported, the liability would be an accrued liability and would not convert into a conditional one merely because the liability was to be discharged at a future date. There may be some difficulty in the estimation thereof but that would not convert the accrued liability into a conditional one; it was always open to the tax authorities concerned to arrive at a proper estimate of the liability having regard to all the circumstances of the case.

Relying on the settled principle that under the mercantile system an accrued liability to be discharged in future is deductible if it is certain and capable of estimation, the Court held that the assessee's continuing obligation to provide promised facilities and amenities to members over the subsistence of the agreement attracted the matching principle and justified proportionate recognition of the receipt.

The recurring expenditure referable to the future period of membership was held to be certain in nature and not contingent, and annual maintenance or utility charges collected separately could not be equated with the facilities and amenities assured under the membership arrangement. The Court therefore accepted the principle of deferring part of the membership receipt to match future expenditure and rejected the Tribunal's view that the entire receipt necessarily accrued as taxable income in the first year. [Paras 16, 17, 18, 19]

The substantial question was answered in favour of the assessee, holding that the entire membership fee for 99 years was not assessable in the first year itself.

Final Conclusion: The Court allowed the assessee's appeals and held that the Tribunal had erred in taxing the entire 99-year membership receipt in the first year. The substantial questions of law were answered in favour of the assessee on the basis that deferred recognition of the receipt, matched against the continuing obligation to provide facilities and amenities, was legally permissible.

Deferred revenue recognition - Matching principle - Accrued liability and contingent liability - Method of accounting - tenure of the contract - Upfront membership fee received under the time-share

Whether assessee was entitled to recognise only part of the time-share membership fee as income in the year of receipt and defer the balance over the contract period? - HELD THAT: - The Court held that the membership fee was not merely an entrance fee for acquisition of a present right, but was received under contracts that imposed continuing obligations on the assessee to provide assured accommodation and related facilities throughout the membership period.

Those obligations were held to be real and subsisting under the contract, and not contingent merely because actual user by a member might vary. On that footing, the Court applied the matching principle and accepted the assessee's method of accounting, observing that taxing the entire receipt in the initial year would distort the true profits of the business when the corresponding liability to perform extended over future years. The annual maintenance and utility charges were treated as distinct from the membership fee and not destructive of the deferred income method. [Paras 16, 17, 19, 21, 22]

The substantial questions of law were answered against the Revenue, and the deferment of part of the membership fee over the tenure of the contract was upheld.

Final Conclusion: The Court upheld the Tribunal's view that the assessee could defer part of the time-share membership fee over the period of contractual obligations, since the receipts were linked to continuing enforceable liabilities and the adopted method of accounting properly reflected real income. The Revenue's appeal was dismissed.

Adjudicating the income tax refund against the income tax dues prior to initiation of CIRP under IBC -Extinguishment of tax dues under approved resolution plan - Approved resolution plan binding on Government authorities - Extinguishment of statutory dues -

HELD THAT: - The Court found from the approved resolution plan that it bound all stakeholders, including Government authorities, and that outstanding dues not surviving under the plan stood discharged.

Applying the Supreme Court rulings noticed in SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT] and GHANASHYAM MISHRA AND SONS PRIVATE LIMITED [2021 (4) TMI 613 - SUPREME COURT] the Court held that once a resolution plan is approved under Section 31 of the IBC, claims not forming part of the plan, including statutory dues for the prior period, stand extinguished and cannot thereafter be enforced. On that basis, there was no legal basis for the respondent to adjust refunds for the relevant assessment years against pre-CIRP income-tax demands, and the Court therefore did not examine the separate merits regarding actual issuance of refund. [Paras 8, 11, 12]

The impugned adjustment of refund for Assessment Years 2018-19 to 2023-24 was quashed as unsustainable in law.

Final Conclusion: The petition was allowed to the extent of holding that, after approval of the resolution plan, the respondent could not adjust refunds against extinguished pre-CIRP income-tax liabilities. The impugned adjustment for Assessment Years 2018-19 to 2023-24 was accordingly set aside.

Deduction u/s 80HHC and 80IA - Interplay of deductions under Sections 80HHC and 80IA - Set-off of loss from wind mill business - Application of binding precedent

HELD THAT: - The Court did not affirm the Tribunal's view on the merits. It held that, in view of the authoritative pronouncement of the Supreme Court in Shital Fibers Limited Vs. Commissioner of Income Tax [2025 (5) TMI 1599 - SUPREME COURT (LB)] the entire matter relating to the application of deductions under Sections 80HHC and 80IA required reconsideration. It therefore directed the Assessing Authority to revisit not only the manner of granting those deductions but also the issue of setting off the loss incurred in the wind mill business against the forging business, while taking note of the latest position in law. [Paras 5]

The assessment on these issues was remanded to the original Assessing Authority for fresh consideration in accordance with the law laid down by the Supreme Court.

Final Conclusion: The Tax Case was disposed of by remanding the matter to the Assessing Authority for fresh assessment in the light of the Supreme Court decision in Shital Fibers Limited [2025 (5) TMI 1599 - SUPREME COURT (LB)]. The questions relating to deduction under Sections 80HHC and 80IA and the treatment of wind mill loss were left to be reconsidered accordingly.

Deduction u/s 54B u/s 54EB - deduction available to an assessee with the status of an HUF - Exemption claim under correct statutory provision

Is not the word “assessee” used in Section 54B of the Income Tax Act includes HUF?

Is not the Appellate Tribunal bound to consider the plea of the assessee that they claimed exemption only under 54EB and not 54B?”

HELD THAT: - The Court found that, upon receipt of the revisional notice, the assessee had specifically stated that the exemption had been claimed under a wrong provision and sought consideration under Section 54EB. That plea was thereafter ignored by the Commissioner, the Assessing Officer, the appellate authority and the Tribunal.

The Court held that, when the return and accompanying disclosures showed investment of long-term capital gains, the tax authorities were bound to examine whether the assessee was entitled to exemption under the correct provision of law and could not adopt a pedantic approach by refusing to consider rectification of a bona fide error. The omission to test the claim under the appropriate provision amounted to non-application of mind. [Paras 8, 9, 10, 11]

The orders of the authorities below were set aside and the Assessing Officer was directed to reconsider the return afresh, specifically on the claim for exemption in respect of the investment of long-term capital gains, after permitting the assessee to furnish relevant details.

Final Conclusion: The appeal was allowed on the ground that the authorities had failed to consider the assessee's request to treat the exemption claim under the correct provision of law. The matter was remitted to the Assessing Officer for fresh consideration of the claim relating to investment of long-term capital gains.

Penalty under section 271D - violation of provisions of section 269SS - Cash sale consideration in immovable property transactions - Satisfaction recorded in assessment proceedings

Penalty u/s 271D for alleged violation of section 269SS - HELD THAT: - The Tribunal followed its consistent view that section 269SS, as amended to include specified sum, was intended to cover receipt of money in the nature of advance in relation to immovable property transactions and not the final sale consideration received at the time of execution and registration of the sale deed. Since the impugned cash receipts were part of the sale consideration for completed transfers and were duly mentioned in the registered documents, they did not fall within the mischief of section 269SS. [Paras 5]

Penalty under section 271D could not be sustained on cash received as sale consideration at the time of registration of the sale deeds.

Recording of satisfaction - Assessment proceedings - Validity of penalty initiation - HELD THAT: - Relying on the binding view of the jurisdictional High Court and its earlier coordinate bench decisions, the Tribunal held that recording of satisfaction by the Assessing Officer in assessment proceedings or other proceedings under the Act is a mandatory condition for valid initiation of penalty u/s 271D. The Revenue could not show any such proceeding or recorded satisfaction in the assessee's case. The Kerala High Court decision cited by the Revenue was held to concern limitation and not the requirement of satisfaction, and therefore did not assist the Revenue. [Paras 6]

The penalty was liable to be quashed for want of recorded satisfaction by the Assessing Officer.

Final Conclusion: The Tribunal allowed the assessee's appeal and deleted the penalty under section 271D. It held both that cash received as sale consideration at the time of registration of the immovable properties was outside section 269SS and that, in any event, the penalty was invalid for absence of recorded satisfaction by the Assessing Officer.

Validity of Reassessment proceedings - period of limitation - Prospective operation of extended reopening period - period of six (6) years reckoned from the relevant Assessment Year - TOLA

HELD THAT: - The Tribunal held that the notice under section 148 was issued beyond six years from the end of the relevant assessment year.

Following the binding view of Cyberabad Citizens Health Services Private Limited [2025 (11) TMI 1967 - TELANGANA HIGH COURT] it held that for assessment years covered by the first proviso to section 149, the extended period under the amended regime does not revive cases in which the old six-year limitation had already expired. Since the notice itself was time-barred, the reassessment proceedings stood vitiated. [Paras 4]

The notice under section 148 and the consequential reassessment order were quashed, and the remaining grounds were treated as infructuous.

Final Conclusion: The appeal was allowed. The Tribunal held that the notice issued under section 148 for the assessment year 2015-2016 was time-barred and, consequently, the reassessment could not survive.

Demand barred by limitation - pre-deposit and dismissing the appeals for non-compliance - Extended period of limitation - Misdeclaration - Violation of the conditions of Notification No. 32/97 by diversion of duty-free imports and suppression of material facts.

Extended period of limitation - HELD THAT: - The Court held that the show cause notice issued after investigation was within time under the applicable extended limitation provision because the material collected disclosed wilful misstatement and suppression of facts. It found that, though the imports were made claiming the benefit of the job work notification, the exports were declared under a different code meant for transactions with no foreign exchange involved, and this was done consistently in respect of the consignments. The Court treated such conduct, coupled with the alleged manipulation of export documentation, as sufficient to reject the plea that the discrepancy was merely clerical and to sustain invocation of the extended period. [Paras 17, 18]

The plea of limitation was rejected and the extended period was held applicable.

Whether the order of the Tribunal is right in directing 50% of pre-deposit is unjustifiable in as much as for the earlier period the very same tribunal has allowed the petitioner appeal in respect of identical issue decided? - HELD THAT: - The Court found that the appellants could not claim parity with the earlier order passed in their favour because that matter related to different facts and a limited set of bills of entry, whereas the present case arose from a detailed investigation into past transactions. The Court accepted that the material relied on by the customs authorities, including the use of an incorrect export code and the findings recorded in the original order regarding suppression of job work particulars and failure to demonstrate compliance with the notification requirement, furnished adequate basis for requiring pre-deposit. On that footing, the direction to deposit 50% by the firm and specified sums by the partners was held reasonable, and the consequential dismissal of the appeals for non-compliance was also upheld. [Paras 16, 19, 20, 21]

The condition of pre-deposit was upheld as reasonable, the claim of parity was rejected, and the dismissal of the appeals for non-compliance was sustained.

Final Conclusion: The Court upheld the Tribunal's order directing pre-deposit and also upheld the dismissal of the appeals for failure to comply with that condition. The appellants' pleas based on limitation and parity with the earlier order were rejected, and the civil miscellaneous appeals were dismissed.

Entitlement to refund of anti-dumping duty paid on imports prior to rescission - Excess anti-dumping duty - HELD THAT: - The Tribunal after considering the judgment of the Madras High Court in the case of Vetcare Organics Pvt. Ltd. [2011 (4) TMI 521 - MADRAS HIGH COURT], on the Notification having retrospective effect has quashed and set aside such Notification by holding as Ultra vires Sections 9A, 9AA, 9B and 10 of the Customs Tariff Act, 1975, Articles 265 of the Constitution of India and Rules 13, 17, 18(4) and 21(3) of the Customs Tariff (Identification Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, in so far as the petitioner is concerned.

It is not in dispute that, by Notification dated 29.02.2012, the expression “except as respects things done or omitted to be done before such rescission” was incorporated while rescinding the earlier Notification dated 03.03.2008. The Directorate General of Anti- Dumping Duty considered the relevant aspects and accordingly recommended that there was no need for the continued imposition of anti-dumping duty on phenol originating in or exported from Chinese Taipei and the USA, and that the same be withdrawn. Based on this recommendation, the Ministry of Finance issued the Notification dated 29.02.2012 rescinding the Notification dated 03.03.2008, with a clear stipulation that it would not have retrospective effect and would apply only to future imports. In the case of the respondent, all claims pertaining to antidumping duty were paid prior to 29.02.2012, and such payments are required to be treated as “things done before rescission.”

The Court noticed that the final findings of the Designated Authority recorded absence of adverse impact on the domestic industry during the period of investigation and post-period, absence of price suppression or depression, and concluded that there was no justification for continued imposition of anti-dumping duty on Phenol from Chinese Taipei and the USA. In view of those final findings, the Court declined to entertain the Revenue's challenge to the Tribunal's order granting refund and held that no substantial question of law arose. [Paras 14, 15]

The Revenue's challenge to the refund allowed by the Tribunal failed and the appeal was dismissed.

Final Conclusion: The High Court declined to frame or answer any substantial question of law and dismissed the Revenue's appeal. The Tribunal's order allowing refund of anti-dumping duty was left undisturbed.

Validity of Anticipatory bail orders - Perverse bail order - Non consideration of the material aspects of the matter and the settled parameters governing exercise of jurisdiction in bail matters - necessity of custodial interrogation. - HELD THAT: - The High Court found on a perusal of the impugned orders that various relevant aspects had not been taken into account and that the factors required to be considered in accordance with the settled legal position while granting bail had been omitted. On that basis, the orders were held to be contrary to settled law and perverse. Since the defect lay in the manner of exercise of jurisdiction by the court granting anticipatory bail, the bail applications were remanded for fresh consideration, while keeping the parties' contentions open and continuing interim protection till disposal. [Paras 4, 6, 9, 10]

The impugned anticipatory bail orders were quashed and the bail applications were remanded to the Additional Sessions Judge for fresh disposal, with the existing protection directed to continue till such disposal.

Final Conclusion: The High Court held that the anticipatory bail orders had been passed without considering the settled parameters governing grant of bail and were therefore perverse. Those orders were set aside and the bail applications were remanded for expeditious fresh consideration, with interim protection to continue till disposal.

Detention of imported goods roasted areca nuts - declared to be fit for human consumption - Borderline test results - Provisional release on bond -HELD THAT:- The Tribunal held that, even accepting the Department's explanation that the matter was borderline because insect damage was reported at 2.9% against the permissible limit of 3%, that circumstance by itself did not furnish a valid ground to continue detaining the goods. Since the existing test report favoured the appellant and certified the goods as fit for human consumption, further retention at the port would only cause deterioration and could itself make the goods unfit on account of administrative delay. The proper course was to permit clearance while allowing the Department to retain samples and secure itself by bond. [Paras 3, 4]

The goods were directed to be released forthwith, with liberty to the Department to retain samples and take a bond, and release was ordered within two weeks subject to furnishing of requisite documents.

Final Conclusion: The Tribunal found no valid justification for continued detention of the imported goods after a favourable test report and directed their release. The appeal was partly allowed with a direction that release be secured, if necessary, by bond and retention of samples.

Enhancement of the value of the imported old and used machines on the basis of the local Chartered Engineer certificate - Evidentiary value of expert certificate - assessable value -​​​​​​​ HELD THAT: - The Tribunal found that the goods had originally been examined by the shed officer and released on the basis of the load port Chartered Engineer certificate furnished by the importer. The later certificate of the local Chartered Engineer, on which finalisation of provisional assessment and differential duty demand were based, was dated prior to the opening and 100% examination of the goods. Since that certificate had been issued without opening and examining the imported goods, it was held to have no validity. On that reasoning, the enhancement of value founded on such certificate was legally unsustainable. [Paras 6]

The differential customs duty demand with interest, founded on the said certificate, was set aside.

Final Conclusion: The Tribunal allowed the appeal and set aside the impugned order, holding that value enhancement and the consequential demand of differential duty and interest could not be sustained on the basis of a Chartered Engineer certificate issued without examination of the goods.

Enhancement of assessable value and rejection of the declared invoice value of the goods under the description of “Electric Tricycle Spare Parts” on the basis of higher values in respect of "similar goods" - valuation framework under Section 14 - Classification of motor controller - classifiable under heading 8708 or under heading 8503 0090.

Transaction value - Customs valuation - HELD THAT: - The Tribunal held that the controversy was already covered by its earlier decision in the respondent's own case [2026 (1) TMI 1019 - CESTAT KOLKATA], [2024 (9) TMI 1428 - CESTAT KOLKATA] and applied the same ratio. The earlier order, reproduced in the judgment, had found that the declared transaction value could not be discarded without valid reasons and without following the statutory valuation procedure, particularly when there was no material to show that the declared price was not the price actually paid, that the parties were related, that price was not the sole consideration, or that any amount had been paid over and above the invoice value. On that basis, the order of the Commissioner (Appeals) accepting the declared value was upheld. [Paras 6]

The declared transaction value was accepted and the Revenue's challenge to the setting aside of value enhancement failed.

Classification of motor controller - HELD THAT: - Following the earlier decision reproduced in the order [2026 (1) TMI 1019 - CESTAT KOLKATA],[2024 (9) TMI 1428 - CESTAT KOLKATA] the Tribunal accepted that the controller performs functions connected with the operation of the motor and is principally used with the motor. The earlier reasoning also noted that there was no evidence that the goods were solely or principally parts of e-rickshaw or electric tricycle so as to attract Chapter 87, while Chapter 85 specifically covered parts suitable for use solely or principally with machines of heading 8501 or 8502. The judgment further noticed the exclusion of electrical machinery or equipment falling under Chapter 85 from Chapter 87 goods. Accordingly, the classification adopted by the Commissioner (Appeals) under CTH 85030090 was sustained. [Paras 6]

Classification under CTH 85030090 was upheld and the Revenue's proposed classification under CTH 87089900 was rejected.

Final Conclusion: The Tribunal found that both the valuation and classification issues stood covered by its earlier decisions in the respondent's own case and upheld the order of the Commissioner (Appeals). The Revenue's appeal was accordingly dismissed.

Demand proceedings for customs duty -short levy - Finality of Bill of Entry assessment - Maintainability of demand proceedings - imported goods cleared on the basis of self-assessment - Challenge to self-assessment - Unchallenged assessment -HELD THAT: - The Tribunal held that the Revenue sought to dispute the exemption benefit granted at the time of assessment, but did not address the foundational question whether such proceedings could be initiated without first challenging the assessments themselves. Since the assessments of the Bills of Entry had admittedly never been challenged, the subsequent proceedings against the respondent could not be sustained. [Paras 10, 11]

The order in favour of the respondent was upheld and the Revenue's appeals were dismissed.

Final Conclusion: The Tribunal upheld the impugned order and held that, in the absence of any challenge to the assessments of the Bills of Entry, the demand proceedings were unsustainable. The Revenue's appeals were accordingly dismissed.

Classification of goods - SafeStore Auto - imported in unassembled form with lockers - classifiable under Heading 8303 Or Heading 8479 - imported components without lockers are classifiable as a complete article under Rule 2(a) or, failing that, under their respective tariff headings - Essential character of composite goods - Classification of goods imported in unassembled form but without safe deposit lockers - Robot, Shelf Walls, Sockets and Frames, Shelf Troughs, Delivery Cube.

Classification of unassembled goods under Rule 2(a) - HELD THAT: - From a perusal of the HSN Explanatory Notes and the submissions made by the applicant, the subject goods SafeStore Auto (with lockers) are imported in unassembled form for the convenience of packing, handling or transport. Further, for assembling the finished product, no component over and above what has been imported, is needed and merely assembly operations shall be undertaken. Thus, it can be implied that the Kit is complete or finished article presented in unassembled condition of the subject product and classification of the product shall be according to Rule 2(a) as the finished article only.

The applicant submitted that the subject goods are to be classified under CTH 8479 as the subject product is essentially a machine that functions as a robotic vault by automating the process of storing and retrieving valuables in safe deposit boxes. The product is akin to a robot as it functions on the basis of programmed instructions and inputs, and it does not require any human assistance or intervention (other than the user's inputs who is using the robot for accessing their belongings). Various types of robots are covered under Chapter 84 and those robots which are not classifiable elsewhere are classifiable under Heading 8479. Further, Note 3 of Section XVI is concerned with classification of multi-function machines merit classification on principal function. The reason any person will use SafeStore Auto is for its automated retrieval mechanism. That is the key feature of the imported product. Thus, when the whole emphasis of the product is on its automatic nature it shows that the principal function of the product is its automated functioning. Thus, the product is rightly classifiable under Heading 8479.

It is evident that the subject goods are safe deposit locker system that is used for the secure storage of valuable items such as gold and precious metals, jewellery, bonds, contracts, and other important documents. As per the HSN explanatory notes of heading 8479 it is clear that heading covers only those goods which have individual functions and neither excluded by chapter notes or section notes from chapter 84 nor covered more specifically by a heading nor can be classified by reference to its use, functioning, description, type or to the industry in which it is employed. Now the main issue is that whether the subject goods can be classified in any heading or not.

Thus, the subject goods i.e. Safestore Auto is more specifically covered under CTH 8303 by virtue of their essential character and primary function of securing the valuables through locker.

Classification of goods imported in unassembled form but without safe deposit lockers - Robot, Shelf Walls, Sockets and Frames, Shelf Troughs, Delivery Cube. -HELD THAT: - From the catalogue, documents and submission made by the applicant, it is observed that safe deposit lockers alongwith the above mentioned parts are essential components to complete a unit. Therefore, it can be implied that without lockers, the imported goods do not have the essential character of a complete unit as it is the lockers that give the essential character to Safestore Auto which has been discussed.

It is clear that heading 7308 specifically cover frames, structures and parts of structure, made of iron or steel. In the present case, shelf walls and frames are used to prepare structure, so these can be considered as parts of structure; hence, the same is classifiable under CTH 7308.

It is observed that delivery cube comprises of access control system, sensor, weighing system, slide mechanism and guides. It can be implied that it is not only an access control system but a completely machine that allow users to interact and have weighing mechanism, safety system and sensors. Since, the delivery cube have both mechanical and electronic processing and there is no specific heading provided in the tariff. Therefore, the delivery cube merits classification under CTH 8479, more specifically under CTI 84798999 as other machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter 84 as the delivery cubes satisfy the conditions of heading 8479.

The Authority held that, without the lockers, the imported set does not possess the essential character of the complete SafeStore Auto system, because the lockers themselves impart that character. Consequently, Rule 2(a) was held inapplicable to treat the import as the finished article. The components therefore had to be classified independently: the robot under heading 84795000 as industrial robot; shelf troughs under heading 84799090 as parts of the robot; shelf walls and frames under heading 7308 as parts of structures of iron or steel; sockets under heading 7307 as pipe or tube fittings of iron or steel; and the delivery cube under heading 84798999, it being a machine with its own individual function and not more specifically covered elsewhere. [Paras 6, 7]

The import without lockers was not treated as the complete article, and each item was ruled classifiable under its separate tariff heading.

Final Conclusion: The Authority ruled that SafeStore Auto imported in unassembled form with lockers is classifiable under CTH 8303, the lockers imparting the essential character of the system. Where the goods are imported without lockers, they do not qualify as the complete article under Rule 2(a), and the imported components are classifiable separately under the tariff headings specified by the Authority.

Entitlement to anticipatory bail in a Customs investigation - Custodial interrogation - misdeclaration and smuggling of areca nuts. -HELD THAT: - The Court found that the adjudicatory proceedings under the Customs Act had already commenced, the show cause notice had been issued, and the applicant was participating in that process. It further noted that the applicant had remained on ad-interim protection for a considerable period without any case of breach being alleged, had no criminal antecedents, and that the matter substantially revolved around documentary evidence which the investigating agency could secure independently. On that basis, the Court held that the applicant's presence for investigation could be ensured by imposing conditions and that custodial interrogation was unnecessary. [Paras 11]

The application for anticipatory bail was allowed, subject to conditions securing the applicant's attendance and cooperation with the investigation.

Final Conclusion: The Court exercised its discretion in favour of the applicant and granted anticipatory bail, holding that the investigation could proceed by securing his presence through conditions and that custodial interrogation was not required.

Seeking leave to deposit the claimed amount was on record before pronouncement of the Section 7 order - Debt and Default - Corporate Insolvency Resolution Process - Post-reservation interlocutory application - Tender of entire claimed debt - Applicability of section 12A to unilateral deposit.

Admission of section 7 application - HELD THAT:- The Tribunal held that, although the general rule is that applications filed after reservation of judgment are ordinarily not to be entertained, that principle did not govern the present case because the Adjudicating Authority had itself taken cognisance of the subsequent application, issued notice on it and fixed it for consideration on a later date. Once the corporate debtor had placed on record a payment order for the entire amount claimed by the financial creditor and sought leave to deposit the same, that subsequent development became a relevant circumstance for deciding whether insolvency proceedings should still be triggered. The impugned admission order, having been passed without adverting to that pending application and the offer to deposit the entire claimed amount, was held unsustainable. The Tribunal also accepted the appellant's undertaking to replace the payment order drawn in favour of the Registrar with a fresh payment order in favour of the Bank, with the payment remaining subject to adjudication of the Bank's actual entitlement in the pending recovery proceedings. [Paras 18, 19, 21, 23, 24]

The admission order was set aside, and the appellant was directed to hand over a fresh payment order for the full claimed amount to Bank of India, subject to final determination of the Bank's entitlement in the pending DRT proceedings and refund of any excess.

Inapplicability of section 12A to unilateral deposit - HELD THAT: - The Tribunal rejected the objection founded on section 12A by holding that the case did not involve any settlement recorded between the parties. The corporate debtor had, on its own, moved an application seeking leave to deposit the entire amount claimed by the financial creditor, and the controversy arose because that application remained pending while the section 7 petition was admitted. Since the matter concerned a unilateral offer to deposit the claimed amount and not a compromise between the creditor and the corporate debtor, the principle invoked from Glas Trust Company LLC vs Byju Raveendran & Ors [2024 (10) TMI 1185 - SUPREME COURT (LB)] was held inapplicable. [Paras 25]

The objection based on section 12A was rejected as the case was not one of settlement but of a voluntary deposit offered by the corporate debtor.

Final Conclusion: The appeal was allowed and the admission of the section 7 application was set aside on the ground that the Adjudicating Authority had ignored a pending application, already entertained by it, offering deposit of the entire claimed amount. The appellant was directed to make payment to Bank of India, subject to final determination of the Bank's actual entitlement in the pending DRT proceedings, while Punjab & Sind Bank was left free to seek revival of its own section 7 application.

Entitlement of the petitioner to bail in a prosecution - Reason to believe -Twin conditions under section 45 - Proceeding against person not named in predicate offence - Arrest under section 19 at bail stage - involvement of the accused in attempting to interfere with auction proceedings relating to attached properties and in assisting activities connected with proceeds of crime.

Bail under PMLA - Twin conditions under section 45 - HELD THAT: - The Court held that the material collected during investigation, including electronic evidence and recorded statements, prima facie indicated the petitioner's involvement in interfering with the auction process of attached properties and in activities connected with the proceeds of crime. It further held that, at the bail stage, the contention that no predicate offence was registered against the petitioner could not defeat the prosecution, since a person may be proceeded against under the PMLA if he is directly or indirectly involved in any activity connected with proceeds of crime even if he is not named in the predicate offence. Having regard to the seriousness of the allegations and the statutory rigour of section 45, the Court was not satisfied that there were reasonable grounds for believing that the petitioner was not guilty or that he was not likely to commit any offence while on bail. [Paras 6, 7, 9, 10, 11]

Bail was refused as the prima facie material and the bar under section 45 of the PMLA operated against the petitioner.

Arrest under section 19 at bail stage - Challenge to arrest deferred to trial - HELD THAT: - The Court held that the objections regarding alleged non-compliance with section 19 and the absence of prior summons required detailed examination during trial and could not be conclusively determined while considering bail. Since the record reflected invocation of power on the basis of "reason to believe", the Court declined to interfere with that satisfaction at this stage. [Paras 8]

The arrest-related objections were left open for appropriate examination at trial and did not furnish a ground for grant of bail.

Final Conclusion: The Criminal Petition was dismissed. On the prima facie material and the statutory restrictions governing bail under the PMLA, the Court declined to enlarge the petitioner on bail.

Joint venture arrangements - Taxable service - Consideration for service - Renting of immovable property

Joint venture arrangements - Taxable service - Consideration for service - Renting of immovable property - The obligations performed by the appellant and SRSL under the project development agreement did not constitute a taxable service, including renting of immovable property service, for service tax purposes. - HELD THAT: - The Tribunal found that the project development agreement, entered into underThe the guidance of the State of Maharashtra for revival of a sick sugar unit, defined reciprocal obligations of both parties in a common commercial arrangement. The appellant and SRSL were held to be co-venturers, each discharging its own duties and liabilities to achieve the object of the arrangement, including installation and operation of the power generation facility and supply of inputs required for the sugar operations.

Following the reasoning noticed from the decisions in EMTA Coal Ltd.[2026 (4) TMI 1004 - CESTAT KOLKATA] and B.G. Exploration and Production India Ltd. [2022 (1) TMI 207 - CESTAT MUMBAI], the Tribunal held that performance of obligations by co-venturers in furtherance of the joint venture objective is not an activity carried out by one for another for consideration, and therefore cannot be treated as a service. On that basis, the service tax demands founded on the arrangement were held to be unsustainable. [Paras 6, 7, 8]

The activity under the project development agreement was held to be performance of mutual obligations in a joint venture and not a taxable service; consequently, the service tax demand and penalty were set aside.

Final Conclusion: The Tribunal held that the arrangement between the appellant and SRSL under the project development agreement was a joint venture under which each party discharged its own obligations and not a taxable service rendered for consideration. The service tax demands for the disputed periods, along with penalty, were therefore set aside and the appeals were allowed.

Taxability of works contract serviceunder the category of ‘Commercial or Industrial Construction Service’, ‘Works Contract Service’ - Composite works contracts involving supply of materials and labour - Stare Decisis - Service classification -HELD THAT:- The appellant had discharged service tax for undertaking the construction services prior to 01.06.2007 under the taxable category of ‘Commercial or Industrial Construction Service’ and thereafter w.e.f. 01.06.2007 paid service tax under ‘Works Contract Service’. Therefore, the demand confirmed for the period after 01.06.2007, in our opinion, cannot be sustained when the construction work carried out by the appellant are in the nature of ‘Works Contract Service’ which involves both supply of material as well as labour. This view has been expressed by the Hon’ble Supreme Court in the case of CCE vs. Larsen & Toubro Limited [2022 (8) TMI 168 - SUPREME COURT], which was followed by this Tribunal in the case of M. Srinagesh Hegde V. CCE [2024 (1) TMI 301 - CESTAT BANGALORE].

Since the contracts involved both supply of materials and labour, they were composite works contracts. Applying the settled principle that such contracts are to be treated as works contract service and that the taxable entry for works contract came into force from 01.06.2007, the Tribunal held that the demand confirmed for the post-01.06.2007 period on the footing that tax should have continued to be paid under commercial or industrial construction service was unsustainable. [Paras 6, 7]

The impugned orders were set aside and the appeals were allowed with consequential relief.

Final Conclusion: The Tribunal held that the appellant's contracts were composite works contracts involving both material and labour, and therefore the post-01.06.2007 demand raised by insisting on classification under commercial or industrial construction service could not survive. The impugned orders were accordingly set aside and the appeals were allowed.

Imposition of penalty - Suppression of facts - CENVAT credit availed on excise duty paid on capital goods purchased - Validity of show cause notice in penalty proceedings - Applicability of Section 11AC(1)(a) and Section 11AC(1)(c) - Reduced penalty on payment of duty and interest.

Penalty for suppression of facts - Validity of show cause notice in penalty proceedings - HELD THAT: - The Court held that, on a reading of the show cause notice and the successive orders, the case was consistently treated as one of suppression of facts. The notice specifically referred to Rule 15(2) of the CENVAT Credit Rules read with Section 11AC, and that reference, in the context of the allegations, clearly indicated invocation of the penalty provision applicable to fraudulent or suppressive conduct. Since the appellant had availed credit on capital goods and cleared them without following the prescribed rule, the substance of the proceedings unmistakably conveyed that the charge was suppression of facts. The mere fact that the Tribunal made a reference to Section 11AC(1)(a) did not alter the true nature of the case, which had to be gathered from the content of the orders. The decision relied upon by the appellant was therefore held inapplicable. [Paras 21, 22, 31, 32]

The objection based on non-specification of the limb of Section 11AC was rejected, and the case was held to fall under Section 11AC(1)(c).

Applicability of Section 11AC(1)(a) and Section 11AC(1)(c) - Reduced penalty on payment of duty and interest - HELD THAT: - It is not a case of excise duty not been levied or paid or has been short-levied or short paid or erroneously refunded and it is clearly a case falling within the scope of suppression of facts. Therefore, only clause (c) of sub section (1) of Section 11AC of the Act will apply when it comes to levy of penalty. It is not a case where the appellant realised the non payment of duty and thereafter voluntarily came forward to pay the duty. It is a clear case where the audit team while scrutinising the accounts found out the evasion of duty by the appellant. Such a case will only fall within the scope of “suppression of facts”.

The Court explained that the statutory scheme separates cases falling under clause (a) from those falling under clause (c), and the consequential benefits under clauses (b) and (d) depend upon satisfaction of the conditions attached to the respective category. The proviso to Section 11AC(1)(a) applies only where both duty and interest are paid before issue of the show cause notice or within the prescribed period thereafter. In the present case, only the duty component was paid before the notice, while the interest was paid only after adjudication. More fundamentally, the Court found that the default was not a simple short-payment falling under clause (a), but a case detected on audit involving suppression of facts; therefore clause (c), and not clause (a), governed the levy of penalty. Since the appellant did not voluntarily disclose the default and payment was made only after the violation was pointed out, the statutory relief attached to clause (a) could not be invoked. [Paras 26, 27, 28, 29, 30]

The claim for waiver of penalty on the basis of prior payment of duty was rejected, and the penalty was held sustainable under Section 11AC(1)(c).

Final Conclusion: The Court upheld the penalty and dismissed the appeal, holding that the matter was one of suppression of facts attracting Section 11AC(1)(c). It further held that the appellant could not claim the benefit of the proviso to Section 11AC(1)(a), since the case did not fall under that clause and the interest had not been paid within the statutory time.

Maintainability of Writ petitionagainst long-pendingshow cause notice and the proposed adjudication - Delay and laches - Interference at show cause notice stage - Alternative statutory remedy - Lack of jurisdiction. - HELD THAT: - The Court held that the petitioners had not challenged the show cause notices when they were issued and had approached the High Court only after about eighteen years, which disclosed apparent delay and laches on their part. It further found that, after issuance of the notices, opportunities had been given and several dates of hearing were fixed, but the petitioners did not participate; hence the delay in adjudication could not be attributed solely to the department. Since factual issues remained to be examined on the basis of materials to be placed before the competent authority, the Court declined to examine the merits of the proposed demand in writ jurisdiction. The decisions cited by the petitioners were held distinguishable on facts, and all submissions on merits were left open for consideration by the competent authority. [Paras 30, 31, 32, 33, 34]

The writ petitions were dismissed, with liberty to the petitioners to appear before the competent authority within four weeks and raise all available submissions.

Final Conclusion: The High Court declined to quash the show cause notices at the writ stage, holding that the challenge suffered from delay and laches and that the petitioners had not shown a case for interference before adjudication. The petitioners were left free to appear before the competent authority and raise all submissions on merits.

Scope of show cause notice - Principles of Natural Justice - Audi Alteram Partem -Rejection of the refund claim - no provision for refund under Central Excise Act, 1944 - Refund of wrongly reversed Cenvat credit - Cenvat credit on outward freight -

Scope of show cause notice - HELD THAT: - Hon’ble Allahabad High Court in the case of Associated Switch Gears and Projects Ltd. Vs. State of U.P. [2024 (2) TMI 181 - ALLAHABAD HIGH COURT] held that the orders passed beyond the scope of show cause notice are bad in law.

The show cause notice proposed rejection only on the ground that there was no provision for refund under the Central Excise Act and the Rules. The lower authorities, however, rejected the claim on a different basis, namely that the appellant had settled the matter by payment under Section 11A(2B) and therefore could not seek refund. Since the adjudicating authority travelled beyond the foundation laid in the notice, the order was held unsustainable in law. [Paras 5]

The refund rejection was held bad in law for travelling beyond the scope of the show cause notice.

Entitlement to refund of the Cenvat credit and interest reversed pursuant to audit objection, since the credit on outward freight - HELD THAT: - The Tribunal noted that the Assistant Commissioner had already held in the appellant's favour that freight formed part of the assessable value and that Cenvat credit of service tax paid on outward transportation to the buyer's premises was admissible. It further held that, in view of the CBIC Circular dated 08.06.2018, the appellant was otherwise entitled to such credit, and the audit-driven reversal made just before issuance of the Circular was not warranted. As the credit could not be carried forward in the GST regime, refund of the wrongly reversed amount with interest was held due. [Paras 5]

The appeal succeeded on merits as well, and the matter was remanded to the jurisdictional Assistant Commissioner with a direction to sanction the refund claim.

Final Conclusion: The Tribunal held that the refund claim had been rejected on a ground outside the show cause notice and that, on merits, the appellant was entitled to the Cenvat credit reversed under audit objection. The impugned order was set aside and the matter was remanded with a direction to sanction the refund.

Reopening of concluded assessment on Form 'F' declarations - Scope of revisional jurisdiction under Section 6A of the CST Act- Fraud - Collusion - Misrepresentation - Suppression of Material Facts - False Particulars - HELD THAT:- The Court held that Ashok Leyland-II [2004 (1) TMI 365 - SUPREME COURT] substantially overruled the view taken in Ashok Leyland-I [1997 (2) TMI 451 - SUPREME COURT] and clarified that an order passed after due consideration of Form 'F' carries conclusivity, though it may still be reopened on limited grounds such as fraud, collusion, misrepresentation, suppression of material facts or furnishing false particulars. Since the Tribunal had no occasion to consider the dispute in the light of the later decision, and since the controversy as to whether such exceptional grounds existed turned on matters better examined by the Tribunal as the final fact-finding authority, the High Court declined to render a truncated ruling on the legal questions and instead directed a fresh decision by the Tribunal. The contentions on the competence of the revisional authority, the effect of the later statutory amendment, and the position regarding Form 'C' were expressly left open. [Paras 28, 29, 30, 31, 32]

The Tribunal's order was set aside to the extent challenged before the Court and the revision case was remanded for fresh consideration of the Form 'F' issues in accordance with Ashok Leyland-II and the effect of the later amendment, with all rival contentions kept open.

Final Conclusion: The High Court did not decide the merits of the controversy on the Form 'F' transactions. It set aside the Tribunal's order to the extent under challenge and remanded the matter to the Tribunal for fresh consideration in the light of Ashok Leyland-II, leaving all rival contentions open.