TMI Tax Updates e-Newsletter
May 06,2026

Provisional attachment - Lapse of attachment by operation of law - Non-attachability of cash credit accounts - Statutory lapse of attachment -HELD THAT: - The Court held that once the period prescribed under Section 83(2) had expired, the provisional attachment could no longer continue. As the State did not dispute that the one-year period had lapsed, the impugned attachment was treated as having automatically ceased to operate, and the continued freezing of the bank accounts could not be sustained. [Paras 4]

The impugned attachment was declared to have lapsed, and the freezing of the bank accounts was held to have come to an end.

The Court recorded that it is settled law that cash credit accounts are not liable to provisional attachment. On that independent footing as well, the freezing of the petitioner's cash credit facilities was unsustainable. [Paras 4]

The petitioner was held entitled to operate the cash credit accounts as well.

Final Conclusion: The petition was disposed of by declaring that the impugned provisional attachment had lapsed by operation of law and that the freezing of all the bank accounts, including the cash credit accounts, could not continue. All other contentions were expressly kept open.

Maintainability of Writ Petition - Validity of a issuance of a consolidated show cause notice and consequential order covering multiple financial years under Section 74 of the CGST Act - Multiple financial years - HELD THAT: - The issue is squarely covered by both these judgments viz. in the matter of Ambika Traders [2025 (8) TMI 315 - DELHI HIGH COURT] and in the matter of Vallabh Textiles [2024 (10) TMI 1719 - DELHI HIGH COURT].

The Court held that the controversy was already covered by the consistent view taken in earlier decisions of this Court, which recognised that neither the language of Section 74 nor the nature of the proceedings bars consolidation of multiple financial years in one notice or order. It further noted that this Court had already declined to treat such consolidation as impermissible, and therefore found no reason to depart from that settled view merely because other High Courts were said to have taken a different view. Proceeding on that basis, the challenge to the impugned consolidated notice and order was rejected. [Paras 10, 11, 12, 13]

The writ petitions were dismissed, the Court affirming that consolidation of proceedings for multiple financial years under Section 74 is permissible.

Final Conclusion: Following its own consistent view, the Court declined to entertain the challenge to the consolidated show cause notice and order issued for multiple financial years under Section 74. The writ petitions were accordingly dismissed.

Non-speaking order - Failure to consider submissions - Principles of natural justice - Rejection of the refund claim without recording specific findings and without considering the petitioner's submissions and documents. -HELD THAT: - The Court held that before rejecting the refund claim, the authority was required to pass a reasoned and speaking order. Since the impugned order recorded no specific finding for rejecting the claim and proceeded without considering the petitioner's submissions, it suffered from non-application of mind and violated the requirement of proper adjudication. In that view, the Court did not adjudicate the merits of the petitioner's claim regarding intermediary services or export of services, but remitted the matter for de novo consideration with a fresh show-cause notice, personal hearing and a reasoned order. [Paras 9, 10]

The impugned order was quashed and the refund claim was remanded to the adjudicating authority for fresh consideration after notice and hearing, with all contentions kept open.

Final Conclusion: The Court set aside the refund rejection order on the ground that it was a non-speaking order passed without proper consideration of the petitioner's submissions. The matter was remanded for fresh adjudication after issuance of notice and grant of personal hearing, with all merits expressly left open.

Rejection of revocation - Validity of the cancellation of the petitioner's GST registration -Principles of natural justice - No Opportunity of hearing - Non- Reasoned and Non- speaking order - HELD THAT: - The Court held that the impugned orders cancelling the GST registration and rejecting revocation did not set out reasons for such action, although the requirement of recording reasons in such matters is well settled. The petitioner had also complained that its submissions were not considered and that an effective opportunity of hearing was not granted. On that basis, the Court treated the defect as one going to the legality of the decision-making process and held that the matter required fresh consideration by the original adjudicating authority after issuance of a fresh show-cause notice, grant of personal hearing, and passing of a reasoned order. The consequential notice founded on the cancellation was also quashed. [Paras 7]

The cancellation order, the order rejecting revocation, and the consequential notice were quashed, and the matter was remanded for fresh adjudication with liberty to issue a fresh show-cause notice and to pass a reasoned order after hearing the petitioner.

Final Conclusion: The writ petition was disposed of by setting aside the cancellation of registration, the rejection of revocation, and the consequential notice, and by remanding the matter for fresh adjudication after issuance of a fresh show-cause notice, grant of hearing, and passing of a reasoned order. If no fresh notice is issued within the time stipulated by the Court, the petitioner's GST registration would stand restored.

Non-speaking order - Rectification order - failure to consider the petitioner's submissions - HELD THAT:- Following the order passed in the petitioner's earlier matter [2026 (4) TMI 1814 - BOMBAY HIGH COURT] on similar facts, and as both sides agreed, the impugned order was quashed and the proceedings were remanded to the adjudicating authority for de novo consideration and a fresh reasoned order after hearing the parties.

Input tax credit time limit - Extended period for availment of input tax credit - HELD THAT: - The Court held that Section 16(5) overrides sub-section (4) and specifically grants entitlement to avail input tax credit in respect of invoices or debit notes pertaining to the financial years including 2019-20, if the return under section 39 was filed up to 30.11.2021. Since the petitioner's claim related to the period 2019-2020 and the relevant returns were filed in the last week of October 2020, the basis adopted by the authority that the right stood extinguished on 25.10.2020 was contrary to the statutory extension. On that construction, rejection of the claim on the sole ground of delayed filing was unsustainable.

The rejection orders were set aside and the matter was remitted to the first respondent for an appropriate decision in the light of the Court's interpretation of Section 16(5).

Final Conclusion: The writ petition was allowed. The Court held that the petitioner's input tax credit claim for the period 2019-2020 was within the extended statutory time and, therefore, the rejection on limitation was unsustainable; the matter was remitted for fresh decision accordingly.

Breach of Principles of natural justice- No Opportunity of personal hearing before passing an adverse order under Section 75(4) -HELD THAT: - The Court held that Section 75(4) casts a statutory obligation on the revenue to grant an opportunity of hearing where an adverse decision is contemplated. The show cause notice itself recorded the date, time and venue of personal hearing as not applicable, which showed that no such opportunity was afforded. The absence of a written reply to the show cause notice did not dispense with this requirement, since the assessee could still have appeared, produced records, filed written submissions and attempted to satisfy the authority against the proposed demand. [Paras 5, 7, 8, 9]

The impugned adjudication order was set aside, with liberty to the revenue to proceed afresh only after complying with law, including Section 75(4) of the 2017 Act.

Final Conclusion: The petition was allowed on the limited ground that no personal hearing was granted before passing the adverse adjudication order. The order was set aside and the revenue was left free to continue proceedings afresh in accordance with law.

Validity of the assessment orders - Sufficient service - Uploading the notices and assessment orders on the portal without any alert to the registered person under Section 169(1)(d) of the GST Act - Breach of Principles of natural justice.

Service by electronic portal - HELD THAT: - The Court accepted that uploading notices and orders on the portal constitutes sufficient service under Section 169(1)(d) of the GST Act. However, following its earlier view, it held that where proceedings are uploaded directly on the portal without any alert to the registered person, such mode of service could result in prejudice to persons lacking adequate technical assistance. To balance the interest of revenue and the registered person, the assessment orders were set aside and the matters were remanded for fresh assessment after due notice, subject to payment of 20% of the disputed tax. The period from the assessment order till receipt of the Court's order was directed to be excluded for limitation, and payments or recoveries already made were to be adjusted against the said requirement. [Paras 7, 8, 9, 10, 11]

The assessment orders were set aside and the matters remanded for fresh orders after due notice, subject to deposit of 20% of the disputed tax within six weeks.

Final Conclusion: The writ petitions were allowed by setting aside the assessment orders for the three assessment periods and remanding the matters to the proper officer for fresh assessment after due notice. The relief was made conditional upon payment of 20% of the disputed tax, with corresponding protection on limitation and adjustment of amounts already recovered.

Validity of the Ex parte adjudication order passed under Section 73(9) -HELD THAT: - The Court found that the authorities had concluded the proceedings taking note of the petitioner's communication and that, in view of the stand taken before the Court, the factual basis on which the adjudication rested required clarification from the petitioner's end. Since the petitioner sought to explain the circumstances of that communication and place further material for consideration, the matter was directed to be reconsidered from the stage of reply to the show-cause notice, with all contentions kept open. [Paras 8, 9]

The impugned adjudication order was set aside and the matter was remitted for fresh adjudication from the stage of reply to the show-cause notice, subject to payment of costs.

Final Conclusion: The petition was disposed of by setting aside the adjudication order and remitting the matter for fresh consideration from the stage of reply to the show-cause notice. The petitioner was permitted to place an explanation and supporting material, with all contentions left open.

Overlapping GST proceedings - Rectification of errors apparent on the face of record - Alternative statutory remedy - Duplication and abuse of process of law - Breach of Principles of Natural Justice - Petitioner failed to participate in the second proceedings to bring out the alleged overlap in the proceedings with the earlier proceedings vide the order-in-original - wrongful availment of Input Tax Credit without actual supply - non-issuance of mandatory show cause notice under Rule 142(1A) of the Central Goods and Services Tax Rules, 2017.

Rectification of errors apparent on the face of record - Alternative statutory remedy - HELD THAT: - On the one hand, the petitioner has failed to participate in the second proceedings to bring out the alleged overlap in the proceedings with the earlier proceedings vide the order-in-original dated 18.03.2025. While applying the twofold test, the first part may be satisfied, but the second may not be attracted, as the demand does not appear to be identical to the first imposition of liability. The petitioner has contended, relying upon the observations made by the Apex Court at paragraph 97(b) of the decision in Armour Security (India) Ltd.[2025 (8) TMI 991 - SUPREME COURT], that if the aforesaid authorities are not complying with the said guidelines, it would be open for the taxable person to file a writ petition under Article 226 of the Constitution of India.

The Court noted that the petitioner had not participated in the second proceedings and had therefore failed to place before the proper officer the alleged overlap with the earlier proceedings. It further observed that, on the facts before it, while one part of the overlap test may be arguable, the identity of demand did not appear clear enough for a merits determination in writ proceedings. Since Section 161 of the Act provided a remedy for rectification of errors apparent on the face of record and the six-month period had not expired, the Court held that the petitioner should first pursue that statutory course, without the Court expressing any view on the merits. [Paras 10]

The petitioner was permitted to file a rectification application within two weeks, to be decided by the proper officer in accordance with law after hearing, and was left free to pursue such appellate remedy as may be available against the original order and the rectification order.

Final Conclusion: The writ petition was disposed of without adjudicating the merits of the overlap objection. The Court directed the petitioner to avail rectification under Section 161 within the time indicated and left open the statutory appellate remedy thereafter.

Validity of the assessment order - absence of a Document Identification Number or RFN number - Delay and Laches in writ petition - Portal service of assessment order.

Document Identification Number - HELD THAT: - The Court followed its earlier view that absence of a DIN in an assessment order is itself a patent defect sufficient to invalidate the order. As the impugned assessment suffered from this inherent irregularity, it could not be sustained and was required to be set aside, with the matter going back to the Assessing Officer for fresh consideration after giving due opportunity to the petitioner. [Paras 3, 10, 12]

The impugned assessment order was set aside for want of a DIN and the matter was remanded for fresh assessment after notice and hearing.

Delay in writ petition - Portal service of assessment order - Conditional entertainment of writ remedy - HELD THAT: - The Court noted the contention that the order had been uploaded on the portal and the opposing contention that such mode had not effectively brought the order to the petitioner's notice. Without finally resting the matter on the validity of portal service, the Court observed that, ordinarily, ignorance of law or inability to access the portal would not justify delay. At the same time, having regard to practical difficulties under the GST online regime and the existence of a patent irregularity in the assessment order, the Court held that delayed writ petitions of this nature could be considered subject to payment of 20% of the disputed tax. The exclusion of time during pendency of the writ was also directed, while leaving all issues open before the Assessing Officer. [Paras 9, 10, 11, 12, 13]

The writ petition was entertained despite delay, subject to deposit of 20% of the disputed tax, and the matter was remanded with all issues left open.

Final Conclusion: The Court held that the assessment order was unsustainable for want of a DIN and remitted the matter for fresh assessment after opportunity of hearing. Though the writ petition was filed with delay, the Court entertained it in view of the patent defect in the order, subject to deposit of 20% of the disputed tax, while keeping all merits open before the Assessing Officer.

Entitlement to a fresh opportunity before reassessment - Service of notice by uploading it on the GST portal - adequate service of notice under Section 169(1)(d) of the G.S.T. Act, 2017 - HELD THAT: - The Court accepted that uploading of notice on the portal constitutes proper service under the statute. However, it also noted that a large number of registered persons had approached the Court stating that such uploaded notices had gone unnoticed because of difficulties arising from the online system. To balance proper statutory service with fairness in assessment proceedings, the Court held that the petitioner should be given another opportunity to place objections to the proposed assessment, subject to deposit of 20% of the disputed tax. [Paras 3, 4, 5, 6]

The assessment order was set aside and the matter was remanded for fresh assessment after notice to the petitioner, subject to deposit of 20% of the disputed tax within the time granted.

Final Conclusion: The writ petition was allowed. Though portal uploading was treated as valid service, the petitioner was granted a fresh opportunity in the interest of justice, subject to deposit of 20% of the disputed tax.

Validity of the assessment order - Absence of a Document Identification Number or RFN number - service of the order through portal upload - Delayed writ petitions.

Document Identification Number - HELD THAT: - Following its earlier decisions in M/s. Cluster Enterprises [2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT] and Sai Manikanta Electrical Contractors [2024 (6) TMI 1158 - ANDHRA PRADESH HIGH COURT], the Court held that absence of a Document Identification Number is by itself sufficient to invalidate the assessment order. While noticing the objection on delay and the contention that service had been effected by uploading the order on the portal, the Court took note of the practical difficulties faced by registered persons under the online GST regime and held that, where the impugned order suffers from a patent irregularity, such delayed writ petitions may still be entertained on terms. Balancing the hardship to taxpayers and the State's interest in tax administration, the Court directed that the order be set aside and the matter remitted, subject to deposit of 20% of the disputed tax. [Paras 10, 11, 12, 13]

The impugned assessment order was set aside for want of a DIN and the matter was remanded to the Assessing Officer for fresh orders after due opportunity of hearing, subject to deposit of 20% of the disputed tax; the intervening period was directed to be excluded for limitation and all issues were left open.

Final Conclusion: The writ petition was disposed of by setting aside the assessment order on the ground that it lacked a DIN and remanding the matter for fresh consideration after hearing the petitioner. The relief was made conditional upon deposit of 20% of the disputed tax, with exclusion of the intervening period for limitation.

Levy of GST on Extra neutral alcohol (ENA) - Validity of show cause notice issued - proceedings initiated for non-payment of Goods and Services Tax on Extra Neutral Alcohol (ENA) supplied to Bottling units (Liquor manufacturing units) -manufacture of alcoholic liquor for human consumption - HELD THAT:- The petitioner submits that the question of levy of GST on ENA for use in manufacture of alcoholic liquor for human consumption has been kept out Of the ambit of GST successively in the meetings of GST Council the last of which was held on 07.10.2023 in its 52nd meeting (Annexure P.7). The petitioner has also taken the plea that the alcoholic liquor for human consumption is included in Entry 54 of List II (State List) of VII Schedule of the Constitution of India whereby the State Government alone can levy tax/duty on alcoholic liquor for human consumption.

The petitioner has been making payment of Value Added Tax under Telangana Value Added Tax Act, 2005. It is submitted that earlier, the petitioner has approached this Court in Writ Petition on the same issue. He submits that the present Writ Petition may be tagged along with the said cases and interim orders on similar lines may be granted in the present case.

Accordingly, let the instant Writ Petition be tagged along with W.P. - In the meantime, there shall be stay on the impugned show cause notice.

Cancellation of GST registration for non-filing of returns and non-payment of taxes - HELD THAT:- The writ petition challenging cancellation of GST registration was disposed of by directing the petitioner to apply for revocation, file draft returns, deposit all taxes due within the time stipulated, and requiring the registering authority to consider such application and restore registration if the plea is accepted.

Reassessment notice - period of Limitation - Applicability of TOLA to substituted reassessment regime - Surviving period for issuance of notice - Validity of notice under amended reassessment regime

HELD THAT: - The Tribunal held that, on the dates recorded in the case, the original notice issued under the old law left only a limited surviving period for taking action after compliance with the procedure contemplated pursuant to Union of India v. Ashish Agarwal[2022 (5) TMI 240 - SUPREME COURT].

After reckoning the reply filed by the assessee and the minimum extended period of seven days referred to by the Tribunal, the last date for issuance of notice under the amended regime expired on 14.06.2022. Since the order u/s 148A(d) and the notice u/s 148 were issued only on 31.07.2022, they were beyond time and could not be sustained. Having decided the matter on limitation, the Tribunal found it unnecessary to adjudicate the separate objection regarding approval by the specified authority. [Paras 4, 6, 7]

The reassessment notice and the consequential order were set aside as time-barred, and the appeal was allowed on that ground.

Final Conclusion: The Tribunal allowed the appeal by holding that the notice under section 148 and the order under section 148A(d) were issued beyond the permissible period of limitation for assessment year 2016-17. In view of that finding, the challenge regarding approval by the specified authority was left undecided.

Royalty - tax deduction at source on payments to non-residents - remittance for hiring ‘International Private Leased Circuits’, (IPLC) on which tax was not deducted at source u/s 195 - Retrospective operation of explanatory amendments

HELD THAT: - The Court followed the earlier Division Bench decision in the assessee's own case, which had in turn applied the ruling in Engineering Analysis Centre of Excellence Pvt. Ltd [2021 (3) TMI 138 - SUPREME COURT]

It held that Explanations 4, 5 and 6 inserted by the Finance Act, 2012 could not be given retrospective operation for treating such payments as royalty. Since the payment to the non-resident service provider for the facilities in question was not taxable in India in the absence of a permanent establishment, non-deduction of tax at source u/s 195 could not be faulted on the footing that the remittance constituted royalty. [Paras 7, 9, 12]

The fourth substantial question of law was answered in favour of the assessee.

Final Conclusion: The appeal was allowed by answering the issue concerning deduction of tax at source on the impugned remittance in favour of the assessee.

Condonation of delay in filing Form 10-IC - Interpretation of beneficial CBDT circulars - Limitation under section 119(2)(b)

HELD THAT: - The Court held that the Circular dated 18.11.2024, read with the earlier circulars issued for the same subject, was intended to govern pending applications and to extend the framework to subsequent years, not to reopen cases where the prescribed three-year period had already expired.

On a combined reading of the circulars, the position for AY 2020-21 was that the assessee had to seek condonation within three years from the end of that assessment year, i.e. by 31.03.2024. Though a beneficial circular must receive liberal construction, such interpretation cannot travel beyond its clear language. Since the petitioner's application was filed only on 20.01.2025, it fell outside the ambit of the circular scheme and could not be entertained. [Paras 17, 18, 20, 21, 22]

The rejection of the petitioner's application under section 119(2)(b) for AY 2020-21 was upheld as the application was barred by the limitation prescribed in the applicable CBDT circulars.

Final Conclusion: The writ petition was dismissed. The Court held that, in relation to AY 2020-21, the petitioner's condonation application for delayed filing of Form 10-IC was made beyond the permissible three-year period and therefore no interference with the impugned order was warranted.

Deferred revenue recognition - Accrual of income - real income - Matching principle - Accrued liability and contingent liability - Advance receipt of time share membership fee

HELD THAT: - The Court held that the membership fee was not a mere entrance fee, but was received against continuing contractual obligations to provide assured accommodation and allied facilities over the membership period. The agreement itself split the membership cost between accommodation and advance payment towards facilities, and cast an enforceable responsibility on the assessee to honour holiday entitlements or compensate for default.

Liability attached to the receipt was a present and accrued one extending over future years, and not a contingent liability. The annual maintenance charges and utility charges were held to be distinct from the membership fee and did not justify bringing the entire receipt to tax in the initial year.

Applying the principles governing real income, accrued liability and recognition of revenue over the period of performance, the Court held that the method of accounting regularly followed by the assessee had legal sanction and could not be rejected merely because the assessee followed the mercantile system. [Paras 17, 18, 20, 22, 23]

The substantial questions of law were answered against the Revenue, and the Tribunal was right in deleting the addition made by taxing the entire time-share membership fee in the year of receipt.

Final Conclusion: The Court upheld the Tribunal's view that the assessee was entitled to recognise the time-share membership fee over the period of the contractual obligation and not wholly in the year of receipt. The Revenue's appeal was dismissed and the substantial questions of law were answered in favour of assessee.

Condonation of delay in filing return - Genuine hardship - Judicial review of discretionary order - Section 119(2)(b) discretion

HELD THAT: - The Court held that the authority had passed a speaking order after considering all grounds stated in the condonation application. The reasons put forward, namely shortage of staff, retirements and transfers, negligence of the auditor or chartered accountant, and absence of profit motive, were found to be only omnibus and general statements unsupported by specific particulars or bona fide cogent material capable of establishing genuine hardship.

In that view, no error of law, perversity, or infirmity warranting interference in writ jurisdiction was made out. The decisions cited by the petitioner were distinguished on facts, since the factual basis noticed in those cases was not borne out by the record in the present matter. [Paras 7, 8, 9]

The rejection of condonation under Section 119(2)(b) was upheld and no interference in writ jurisdiction was called for.

Final Conclusion: The Court dismissed the writ petition and sustained the order refusing condonation of delay in filing the return for the assessment year 2021-22. It held that the petitioner had failed to place specific and cogent material showing genuine hardship within the meaning of Section 119(2)(b).

Reassessment limitation - Time-barred notice - Notice issued u/s148 for Assessment Year 2015-2016 after expiry of six years

HELD THAT: - The Court proceeded on the admitted position that for Assessment Year 2015-2016 the outer period of six years expired on 31.03.2022, whereas the impugned notice was issued on 11.04.2022. In view of this admitted factual position, the notice could not be sustained and was liable to be treated as time-barred. [Paras 5, 6]

The notice under Section 148 was held to be barred by limitation and was quashed, and the consequent assessment order was also set aside.

Final Conclusion: The writ petition was allowed on the ground that the notice issued under Section 148 for Assessment Year 2015-2016 was beyond the permissible limitation period. Consequently, both the notice and the consequential assessment order were quashed.

Reassessment on search-based information - Live link between seized material and assessee - Scope of "pertains to" and "relates to" in reopening - vague and disconnected material

Whether seized loose paper and the broker's statement disclosed any prima facie nexus with the petitioner or with escapement of income in his hands? -

HELD THAT: - The Court held that, though at the stage of reopening the sufficiency of evidence is not to be examined, there must still exist prima facie material establishing a live link between the seized material and the assessee. The expressions "pertains to" and "relates to" in Clause (iv) of Explanation 2 to Section 148 cannot be applied in vacuum. The revenue is required to analyse the seized material in the light of attendant circumstances and record a prima facie opinion showing relevancy and linkage to escapement of income.

In the present case, the loose paper was dated nearly two years prior to the petitioner's purchase, did not contain the petitioner's name, the broker's statement did not refer to the petitioner, no link with the named broker was established, and the alleged inference of on-money was drawn only by matching the survey number through external sale-deed data. Such vague and non-specific material did not satisfy the jurisdictional requirement for invoking Section 148. [Paras 28, 29]

Section 148 was held inapplicable on the facts, and the reopening founded on the impugned material was quashed.

Final Conclusion: The Court allowed the writ petition and held that the impugned reopening rested on vague and disconnected material which failed to establish even a prima facie nexus between the seized documents and the petitioner. The impugned notices were therefore quashed.

Delayed filing of Form 10B - Exemption to charitable trust - Procedural requirement - Curable defect - benefit of exemption from taxation on the income shown in the returned of income - Delay in filing the audit report in Form 10B, despite the audit having been completed within the permitted period

HELD THAT:- Tribunal held that the requirement of filing Form 10B within time is procedural in nature and that a delay in its submission constitutes a curable defect, particularly where the audit report had already been obtained within the permitted period and there was no indication of mala fides.

Relying on the equitable approach adopted in the judicial precedents noticed in the order, the Tribunal held that substantive exemption available to an eligible charitable assessee should not be denied on a mere technical lapse in e-filing of the audit report. [Paras 3]

The exemption legally available to the assessee was directed to be allowed.

Final Conclusion: Tribunal held that belated filing of Form 10B, when the audit itself had been completed within the permitted period, was only a procedural lapse and could not deny the assessee the exemption otherwise available. Assessee's appeal was accordingly allowed.

Reassessment on investigation wing information - Deemed escapement where return processed u/s 143(1) - Section 68 addition on share sale proceeds - Penny stock transactions of regular share trader

Reassessment on investigation wing information - Deemed escapement where return processed u/s 143(1) - Objections to reopening - HELD THAT: - The Tribunal held that the assessee had not filed a return in response to the notice u/s 148 and, therefore, could not claim the procedural protection founded on the requirement of first filing a return and then seeking reasons and raising objections. The reasons recorded referred to specific information received from the Investigation Wing regarding trades in identified penny stock scrips, and those transactions were not denied by the assessee in its objections.

Since the original return had only been processed u/s 143(1) and no regular scrutiny assessment had been framed, clause (b) of Explanation 2 to section 147 was rightly invoked and the case was deemed to be one of escaped income. The reference in the reasons to the transactions needing to be verified did not invalidate the reopening, as the reasons, read as a whole, disclosed the AO's mind and the live link between the information received and the belief of escapement. [Paras 10, 12, 13, 14, 15]

The challenge to the reopening failed and the reassessment proceedings were upheld.

Addition u/s 68 on share sale proceeds - Regular share trading business - No claim of exempt long-term capital gains - HELD THAT: - The Tribunal found that the transactions under scrutiny had been disclosed in the financial statements and return as part of the assessee's share trading business and that no exempt long-term capital gains had in fact been claimed. Assessee had produced contract notes, demat statements, bank statements and script-wise details, and it was not in dispute that the assessee traded in a large number of scrips in the ordinary course of business. In those circumstances, the initial burden under section 68 stood discharged. The material that may have justified reopening on suspicion that exempt capital gains had been claimed could not, by itself, justify taxing the entire sale consideration once the assessee showed that the transactions were business trades routed through the stock exchange. As the Revenue brought no further material to dislodge that evidence, and mere reference to price manipulation in the scrips was insufficient on these facts, the addition was liable to be deleted. [Paras 17, 18]

The addition made u/s 68 in respect of the entire sale consideration of the shares was deleted.

Final Conclusion: The Tribunal upheld the validity of the reassessment but deleted the addition made u/s 68 on the sale proceeds of the shares, holding that the assessee's disclosed trading transactions could not be treated as unexplained cash credits on the material brought on record.

Bogus long-term capital gains - Wrong mention of provision - addition u/s 69 v/s 69A - Additional evidence on cash credits

Bogus long-term capital gains - Exemption u/s 10(38) denied -Accommodation entries - Addition u/s 69 -HELD THAT: - The Tribunal held that the determinative question was the genuineness of the assessee's claim of long-term capital gain, including the very purchase of the shares. It found multiple infirmities going to the root of the transaction: the alleged purchase was in physical form and for cash; the broker was found non-existent; the sale note and payment receipt showed material discrepancies, including different names on documents otherwise bearing the same particulars; the recorded purchase preceded the date on which the sellers themselves were issued the share certificates; no satisfactory evidence supported the purchase price or the claimed holding period; and the assessee furnished no cogent explanation for an off-market purchase of shares of a listed company. On these facts, the Tribunal concluded that the purchase documents were manipulated and fabricated, the purchase itself was not genuine, and the assessee had failed to discharge the burden of proving the genuineness of the share transactions. Once the purchase was not established, the alleged capital gain arising from sale of those shares could not be accepted as genuine. [Paras 18, 19]

The disallowance of the exemption claim and the addition based on the alleged share sale receipts were upheld, and grounds 1 to 4 were dismissed.

Wrong mention of provision - Substance over form - addition as made under section 69 instead of section 69A - HELD THAT: - The Tribunal rejected the assessee's technical objection to the provision invoked. It held that mere mention of a wrong section does not vitiate the assessment or invalidate the addition where the substance and intent of the order are clear, the power to tax exists, and the ingredients of the appropriate provision are otherwise satisfied, particularly when the assessee was fully aware of the nature of the inquiry. [Paras 20]

The objection founded on invocation of section 69 instead of section 69A was rejected.

Unexplained cash credits u/s 68 - assessee has filed additional documents/evidences to explain the cash credits - HELD THAT: - On the issue of the loan addition, the Tribunal noted that the assessee had placed additional documents such as the lenders' income-tax returns, balance sheets and bank statements. In view of this material, it considered it appropriate that the genuineness of the loans be re-examined by the appellate authority instead of being finally adjudicated at that stage. [Paras 21]

The issue relating to the loan addition was set aside to the file of the CIT(A) for fresh adjudication, and grounds 5 and 6 were allowed for statistical purposes.

Final Conclusion: The Tribunal upheld the rejection of the assessee's claim of exempt long-term capital gain on the alleged share transactions and rejected the objection to the section invoked for the addition. The addition relating to the loans was, however, restored to the CIT(A) for fresh adjudication on the basis of additional evidence, and the appeal was partly allowed.

Date of acquisition for capital gains - long-term capital asset - indexed cost of acquisition - cost of acquisition

Date of acquisition for capital gains - long-term capital gain v/s short term capital gain - indexed cost of acquisition - HELD THAT: - The Tribunal upheld the appellate finding that the assessee had paid the entire consideration to the earlier holder during FY 2013-14 and had also obtained possession and enjoyment of the property. On that basis, the transfer in the assessee's favour stood completed for capital gains purposes during FY 2013-14, and the later formal registration by the builder did not determine the holding period. Since the Revenue brought no material to dislodge these factual findings, the property was rightly treated as a long-term capital asset and the assessee was entitled to indexation by taking FY 2013-14 as the base year. [Paras 8, 9]

The deletion of the addition made by treating the gain as short-term capital gain was affirmed.

Cost of acquisition - indexed cost of acquisition - Registration charges paid at the time of acquisition - HELD THAT: - The Tribunal accepted the appellate finding that the registration charges had already been paid in September 2013 in connection with acquisition of the property and that the supporting documents furnished before the appellate authority were not adversely commented upon in remand. In the absence of any contrary material from the Revenue, there was no infirmity in treating those charges as part of the cost of acquisition and granting indexation from FY 2013-14. The Tribunal also noted that the appellate authority had separately directed disallowance of the maintenance-related payment, thereby negativing the plea of duplication. [Paras 12, 13]

The allowance of registration charges as part of the indexed cost of acquisition was sustained and the Revenue's grounds were dismissed.

Final Conclusion: The Revenue's appeal was dismissed. The Tribunal affirmed that the property was a long-term capital asset acquired during FY 2013-14 and that the registration charges paid in that year formed part of the cost of acquisition eligible for indexation.

Assessment u/s 153C for want to valid satisfaction note - Consolidated satisfaction note for multiple assessment years - Jurisdiction to assess under search provisions

HELD THAT: - The Tribunal found from the satisfaction note that it was recorded in a consolidated form for all the years under consideration and that the Assessing Officer had neither bifurcated the amounts nor identified year-wise additions relatable to the assessee for the respective assessment years.

Relying on decision in SRS Panchratan Diamonds Pvt. Ltd. [2025 (12) TMI 1420 - ITAT DELHI] which had followed Shaksham Commodities Ltd.[2024 (4) TMI 461 - DELHI HIGH COURT] and Sunil Kumar Sharma [2024 (2) TMI 116 - KARNATAKA HIGH COURT] and noticing that the decision in Shaksham Commodities Ltd. [2024 (4) TMI 461 - DELHI HIGH COURT] was subsequent to Indian National Congress [2024 (3) TMI 1126 - DELHI HIGH COURT].

As against the Judgment of the Hon’ble Jurisdictional High Court in the case of Shaksham Commodities Ltd. (supra) the Revenue filed SLP before the Hon'ble Supreme Court, which has been dismissed along with other matters [2025 (6) TMI 1333 - SC ORDER]

Thus, Tribunal held that jurisdiction under section 153C cannot be validly assumed on the strength of a consolidated satisfaction note unaccompanied by year-specific identification of incriminating material having a bearing on each assessment year. [Paras 5, 6, 7]

The consolidated satisfaction note was held invalid, and the assessments framed under section 153C for all the years under consideration were quashed.

Final Conclusion: The Tribunal allowed the assessee's appeals and quashed the assessments for Assessment Years 2017-18 to 2020-21, holding that assumption of jurisdiction under section 153C on the basis of a consolidated satisfaction note was invalid. The remaining grounds were left unadjudicated as academic.

Foreign tax credit - Belated filing of Form No. 67 - Procedural requirement versus substantive relief - Relief u/s 90 denied merely because Form No. 67 was filed after the prescribed time

HELD THAT: - The Tribunal held that filing of Form No. 67 for claiming foreign tax credit is a procedural requirement and not a substantive condition for grant of relief. Since the form had been filed before the rectification order and was available on record, the claim for foreign tax credit could not be refused solely on the ground of delay in filing the form. Assessee was therefore held entitled to the tax relief claimed, subject to verification of the Form No. 67 by the AO. [Paras 4, 5]

The impugned order was set aside and the AO was directed to grant the claimed tax relief after due verification of Form No. 67.

Final Conclusion: Tribunal allowed the appeal for statistical purposes, holding that delayed filing of Form No. 67 does not by itself defeat the claim for foreign tax credit. The matter was restored only for verification of the form and consequential grant of relief.

Addition u/s 69A - Cash deposits during demonetisation - Assessee failed to give source of the said cash deposit made during the demonization period - cash sales were recorded in the books and books were not rejected,

HELD THAT: - The Tribunal held that Section 69A applies only where the money is found to be unrecorded in the books and the assessee either offers no explanation or an unsatisfactory explanation. In the present case, the assessee had produced the cash book, sales and purchase registers, VAT returns, GST details, audited financial statements and comparative trading results to show that the cash deposits represented recorded sale proceeds, and the department had not rejected the books of account nor pointed out any specific defect therein.

Co-ordinate Bench of the Tribunal in the case of S. Balaji Mech- Tech Private Ltd [2024 (12) TMI 490 - ITAT DELHI] held that, recorded and accepted cash sales cannot be taxed again u/s 68 or 69A of the Act merely due to higher demonetization deposits. Once the cash is duly entered in the books and explained, it cannot be treated as unexplained money.

The sole basis adopted by the authorities was non-maintenance of stock register, but the Tribunal held that mere absence of stock register, without rejection of books or other material showing falsity of the accounts, was insufficient to treat the recorded cash as unexplained money u/s 69A. [Paras 8, 10, 11, 12]

The addition made under Section 69A and sustained in appeal was deleted, and the assessee's grounds were allowed.

Final Conclusion: The Tribunal held that the cash deposits were explained as recorded business receipts and could not be taxed again as unexplained money under Section 69A merely because no stock register was maintained. The addition confirmed by the first appellate authority was accordingly deleted and the appeal was allowed.

Depreciation on intangible asset - concession rights acquired under the DBFOT concession agreement for construction, operation and maintenance of the highway project, including the right to receive annuity.

HELD THAT: - On a reading of the concession agreement as a whole, the Tribunal found that the assessee had executed the highway project at its own cost and, in consideration thereof, acquired an exclusive right, licence and authority during the concession period to operate and maintain the project and receive annuity.

The claim was not for depreciation on the road as a physical asset belonging to the authority, but on the intangible asset embodied in the concessionaire right. Since section 32(1)(ii) expressly covers a licence, and the right so acquired was also a valuable business or commercial right enabling recoupment of the investment over the concession period, it qualified as an intangible asset.

Tribunal followed the line of decisions holding that such rights under BOT/DBFOT arrangements are depreciable intangible assets, held that the contrary decisions concerning depreciation on the road itself did not govern a claim based on concessionaire rights, and observed that amortisation under the CBDT Circular would at best create only a timing difference. [Paras 24, 25, 28, 29, 33]

Depreciation on the opening written down value of the intangible asset was directed to be allowed for all the assessment years in appeal; the alternative claim regarding amortisation became infructuous and the remaining grounds were left academic or open, as applicable.

Final Conclusion: The Tribunal held that the assessee's concessionaire right to operate and maintain the project highway and receive annuity under the DBFOT arrangement constituted a depreciable intangible asset, and directed allowance of depreciation for A.Ys. 2017-18, 2018-19, 2020-21 and 2022-23. The alternative issue relating to amortisation did not survive, and the remaining grounds were treated as academic or left open.

Provisional Attachment - Benami transaction - Cash as property - Beneficial ownership - Burden of Proof - Substance Over Form - Word “Property” -Extent of attachment - cash handed over for deposit in a third party account, followed by retransfer through banking channels.

Benami transaction - Cash as property - HELD THAT: - The Tribunal held that cash is property within the statutory definition, being a movable asset capable of conversion and use for acquisition of other property. Where the appellant handed over the cash to the proprietor of M/s Shyama Trading Company, who deposited it in his concern's account and thereby held it in his own name on behalf of the appellant, he lent his name and answered the description of a benamidar. The requirement under section 2(9)(A) was found satisfied because the property was held by one person while the consideration was provided by another, and the amount was thereafter transferred back for the appellant's benefit. The Tribunal further held that immediate return of the amount through banking channels did not take the transaction outside the Act, and distinguished the authorities cited by the appellant on the ground that they did not fit the present facts or did not correctly appreciate the statutory scheme. [Paras 5, 6]

The attachment could not be challenged on the ground that the transaction was merely sham or intended only to convert demonetised notes, as the transaction was held to be benami.

Extent of attachment - HELD THAT: - Having accepted that the value of the benami transaction was the transferred sum, the Tribunal took into account the appellant's admitted payments under the disclosure scheme and the amount deposited in the interest-free bond. On that basis, it held that the impugned order required modification and that attachment should continue only to the reduced extent worked out after such payments and deposit. It further observed that if the balance amount was not available in the appellant's account, the respondent would be at liberty to trace its trail and attach it. [Paras 7, 8]

The impugned order was modified by restricting the attachment to the reduced amount specified by the Tribunal, and the appeal was partly allowed to that extent.

Final Conclusion: The Tribunal held that the appellant's act of routing demonetised cash through the account of M/s Shyama Trading Company and receiving it back through banking channels constituted a benami transaction. However, the attachment was modified and restricted to the reduced extent determined after accounting for the amounts already paid and deposited under the disclosure scheme.

Condonation of delay - Seeking waiver of the pre-deposit for filing of the appeal before CESTAT - huge undervaluation and mis-declaration in imports of various electronic goods and accessories - import of several prohibited and restricted items including refurbished laptop, old and used CPUs, mobile phones, hard disc, wallets, etc. - HC rejected the request for waiver or reduction of pre-deposit, and the writ petitions were not entertained. - HELD THAT:- Delay was condoned, and the special leave petition was dismissed as no ground for interference with the impugned judgment or order was found.

Imported Distillate Marine Oil - Scope of the fuels mentioned in petroleum products/fuels (Class F) specifications can also be applied to fuels used in “stationary diesel engines of the same or similar type as those used for marine purposes” - Seizure of Distillate Oil - release on execution of end use certificate - Marine use restriction - Ejusdem generis - Entitlement to seek provisional release on a modified end-use declaration differing from the form insisted upon by the authorities.

Distillate Marine Fuel - Marine use restriction - Ejusdem generis - HELD THAT: - It is the case of the petitioner that as mentioned in the Scope, the specification of fuels mentioned in IS can also be applied to fuels used in “stationary diesel engines of the same or similar type as those used for marine purposes”. Thus, it is asserted before us, that the Distillate Marine Fuel imported by the petitioner can also be used for stationary diesel engines of same or similar type, as those used for marine purposes. The petitioner has imported Distillate Marine Oil (for industrial use only) (HSN27101961) with a bill of entry No.5270780 dated 24.10.2025. Thus, the declaration of imported goods is required to meet with the IS petroleum products (Class F) specifications of marine fuels. It is not in dispute that the said standard defines 7 grades of Distillate Marine Fuels namely, DMX, DMA, DFA, DMZ, DFZ, DMB, and DFB, which have various parameters, including sulfur content, flash point, viscosity, density, cloud point, cold filter, plug-in point, and power point. Thus, it is the case of the petitioner that it is not required to give the end-use declaration, as suggested by the respondents (at page No. 103) and the petitioner cannot be compelled to use the Distillate Marine Fuel solely for use / sale of marine purposes, but for industrial purpose also.

The Court held that IS 16731/ISO 8217 is a standard framed for marine fuels and its introductory text, safety clauses and flash point requirements consistently link the fuel to use on board ships and to maritime safety. Reading the scope clause contextually, the expression referring to stationary diesel engines of the same or similar type had to be construed by applying ejusdem generis, so as to remain confined to engines of the same class used for marine purposes and not to industrial use generally. The Merchant Shipping Notice and the accepted position that goods under CTH 2710 1961 must conform to the marine fuel standard further reinforced that, if the import was to be treated as conforming marine fuel, its use had to remain restricted to marine purposes. [Paras 22, 23, 25, 28, 29]

The contention that the imported Distillate Marine Oil could also be used for industrial purposes was rejected.

End-use declaration - Regulatory compliance - Judicial restraint in technical matters - HELD THAT: - The Court noted the petitioner's own willingness to furnish an end-use declaration, but held that the declaration prescribed by the Directorate General of Shipping and the governing maritime regulatory framework could not be rewritten at the petitioner's instance. The earlier order relied on by the petitioner did not examine the contents of the end-use declaration or the relevant shipping notice, and therefore did not support alteration of the conditions now insisted upon. Since the Court found no illegality or manifest arbitrariness in the stipulated conditions, it declined to alter, delete or add to them, observing that such technical and regulatory requirements fell within the domain of the competent statutory authorities. [Paras 25, 26, 27, 30, 31]

Provisional release was made conditional upon execution of the prescribed end-use declaration in the form required by the authorities, and the challenge to those conditions failed.

Final Conclusion: The writ petition was dismissed. The Court held that Distillate Marine Oil conforming to the applicable marine fuel standard is restricted to marine use, and the goods would be released only if the petitioner executed the end-use declaration in the prescribed form.

Ex parte penalty order - Non-service of notice and non-communication of the hearing opportunity - Validity of the notice at Annexure-'A' passed pursuant to the order at Annexure-'E'. - HELD THAT: - The Court noted that the petitioner was only a co-noticee, that the proceedings against him concerned imposition of penalty, and that no reply had been filed to the show cause notice. In that background, and having regard to the contention that notice and opportunity of hearing had not effectively reached the petitioner, the Court held that it was appropriate to reopen the proceedings and remit the matter for fresh consideration from the stage of reply to the show cause notice, particularly since sustaining the penalty order would cause financial prejudice to the petitioner. All contentions were therefore left open for reconsideration. [Paras 4, 5, 6, 8]

The impugned penalty order was set aside insofar as the petitioner was concerned, and the matter was remitted for fresh consideration after supplying the show cause notice and granting sufficient opportunity to respond.

Final Conclusion: The writ petition was disposed of by setting aside the penalty order only as against the petitioner and remitting the matter to the competent authority for fresh proceedings from the stage of reply to the show cause notice, with all contentions kept open.

Dealing in foreign exchange - receipt of a cheque in Indian currency from an NRE account - Contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973 - Applicability of the Section 8(2) - scope of restriction on foreign exchange dealings - Unauthorised currency conversion.

Dealing in foreign exchange - NRE account transactions - unauthorised currency conversion -HELD THAT:- The Court held that the determinative requirement under Section 8(1) is dealing in foreign exchange, namely acquisition, borrowing, transfer, lending or exchange of foreign exchange otherwise than through an authorised dealer. On the admitted facts, the appellant received only a cheque payable in Indian currency, and not any amount payable in foreign currency or any instrument answering the statutory description of foreign exchange. The Explanation to Section 8(1) was held inapplicable because there was no allegation that foreign exchange had been deposited with the appellant or that an account in foreign exchange had been opened with him. Section 8(2) was also held inapplicable since that provision is attracted only where a transaction provides for conversion of Indian currency into foreign currency or vice versa at a rate other than that authorised by the Reserve Bank, and there was neither any such allegation nor any finding on unauthorised exchange rate conversion. [Paras 16, 17, 18, 19, 23]

The penalty could not be sustained, as the facts alleged did not disclose any violation of Section 8(1) or Section 8(2) of FERA.

Suppression of material order - prima facie order in criminal proceedings - HELD THAT:- The Court held that the earlier order passed in the criminal revision petition was confined to the limited question whether there was sufficient material to proceed with the criminal prosecution on a prima facie view. Since the criminal case had thereafter ended in acquittal, that order had ceased to have material relevance for deciding the present appeal on the legality of the penalty. Its non-filing, therefore, could not justify rejection of the appeal on the ground of concealment. [Paras 20, 21, 22]

The objection founded on alleged suppression was rejected.

Final Conclusion: The Court held that receipt of Indian currency through a cheque drawn on an NRE account, without any dealing in foreign exchange or any unauthorised currency conversion, did not attract Section 8(1) or Section 8(2) of FERA. The Tribunal's order was set aside, the appeal was allowed, and refund of the deposited penalty was directed.

Forgery of Chartered Accountant certificates - transfer of shares from a non-resident to a resident - Burden of Proof - Fair Valuation​​​​​​​ - Compliance with pricing and documentation requirements - Contravention of FEMA and RBI transfer guidelines - failure to bring any corroborative piece of evidence in respect of the assertion of Chartered Accountant.

Proof of forgery - Documentary compliance - Fair valuation certificate - HELD THAT: - The Tribunal held that the appellant had relied essentially on the statement of the Chartered Accountant denying issuance of the certificates, but had produced no corroborative material to establish forgery. The record showed that the required documents had been submitted through the authorised dealer bank in terms of the RBI circular, the banking channel transaction had been reported, and the adjudicating authority had also considered the invoice attributed to the Chartered Accountant as supporting the respondents' stand. The Tribunal further noted the absence of any police complaint by the Chartered Accountant alleging forgery, while the respondents had placed material disputing his denial, and also relied on a later certificate of another Chartered Accountant confirming the same fair value of the shares. In these circumstances, mere suspicion was held insufficient to displace the documentary record or to prove contravention. [Paras 5, 6]

The charge of forged documentation and resulting FEMA contravention was not proved, and the dismissal of the complaint against the respondents was sustained.

Final Conclusion: The appeal was dismissed and the order exonerating the respondents was upheld. The Tribunal found that the allegation of forgery rested on an uncorroborated denial and did not establish any breach of the applicable FEMA and RBI requirements.

Previous sanction for prosecution - Condition precedent for the Special Court to take cognizance against the public servant - Applicability of Section 197 CrPC to PMLA proceedings - Overriding effect - Non obstante clause.

Previous sanction for prosecution - HELD THAT: - The Court held that previous sanction under Section 197(1) CrPC is a condition precedent for taking cognizance where the accused is a public servant and the alleged act is connected with discharge of official duty. It was undisputed from the Enforcement Directorate's replies and the concession made on its behalf that, on the date when cognizance was taken, the applicants were public servants and no such sanction had been obtained. The Court further held that the applicability of Section 197 CrPC to proceedings under the PMLA stood concluded by Directorate of Enforcement v/s. Bibhu Prasad Acharya [2024 (11) TMI 296 - SUPREME COURT], which recognised that, by virtue of Section 65 of the PMLA, Section 197(1) CrPC applies and is not excluded by Section 71 of the PMLA. On that basis, the order taking cognizance and issuing process was unsustainable; however, liberty was reserved to seek fresh cognizance if sanction is obtained in future, subject to all legal and factual objections. [Paras 10, 11, 12, 13]

The cognizance order and the order issuing process were set aside for want of previous sanction under Section 197(1) CrPC, with liberty to the Enforcement Directorate to apply afresh upon obtaining sanction.

Final Conclusion: The Court allowed the challenge limited to absence of sanction and held that cognizance under the PMLA against the applicants, being public servants, could not stand without previous sanction under Section 197(1) CrPC. The impugned cognizance and process orders were set aside, while preserving liberty to seek fresh cognizance after obtaining sanction.

Entitlement to regular bail - Twin conditions under Section 45 for bail - Scheduled offence as foundation of money laundering - Right to speedy trial - Prima facie non-guilt - HELD THAT: - The Court held that, while bail under the PMLA is controlled by the statutory twin conditions, those conditions do not impose an absolute bar and have to be applied on a prima facie assessment of the material. On the material placed, the applicant was not alleged to be involved in the predicate offence itself, and the role attributed to him was confined to conversion of the proceeds of crime into cryptocurrency for commission after the principal offence had already been committed. The Court further noted that, beyond such conversion, there was no allegation of concealment, possession, acquisition, use, or projection of the tainted property as untainted money by the applicant. Proceeding on that basis, and bearing in mind that the money-laundering allegation was dependent on the scheduled offence, the Court formed a prima facie view that continued custody was not warranted. [Paras 7, 8, 9]

Regular bail was held to be grantable, the Court being prima facie satisfied that the statutory threshold stood met in light of the limited and derivative role attributed to the applicant.

Right to speedy trial - Prolonged pre-trial detention - HELD THAT: - This Court is inclined to enlarge the present applicant on regular bail. This Court has taken into consideration the law laid down by the Hon’ble Apex Court in the case of Sanjay Chandra v. Central Bureau of Investigation [2011 (11) TMI 537 - SUPREME COURT].

The Court considered that the applicant had remained in custody for a substantial period, that the enforcement agency had itself taken time to arrest him after registration of the ECIR, and that the trial had not yet commenced. It also recorded that the scheduled offence had not been transferred to the Special Court and that there were numerous witnesses in both the scheduled offence and the PMLA case, making early conclusion of trial unlikely. In that situation, the Court held that further detention would impair the applicant's right to a speedy trial under Article 21. [Paras 10, 11]

The applicant was ordered to be released on regular bail, prolonged custody in the face of unlikely early trial being held inconsistent with the requirement of speedy trial.

Final Conclusion: The application for regular bail was allowed. The Court held that, having regard to the applicant's limited alleged role, the dependence of the money-laundering allegation on the scheduled offence, and the likelihood of prolonged delay in trial, continued custody was not justified.

Maintainability of writ petition - Alternative efficacious statutory remedy - Statutory appeal under Section 26 - lack of jurisdiction in the provisional attachment proceedings - Non- Reasoned order - HELD THAT: - The Court held that though existence of an efficacious statutory appellate remedy is a relevant consideration and an interim order making the adjudicating authority's order subject to the writ petition does not by itself compel the writ court to decide the matter on merits, the discretion to decline writ jurisdiction must still be exercised on disclosed reasons. The impugned order merely stated that the appellant was being relegated to appeal having regard to 'the nature of the adjudication which has taken place', but did not explain what in that adjudication justified refusal to entertain the writ petition, especially when the writ had been founded on a plea of lack of jurisdiction. In the absence of any explicit reasoning showing why the writ court chose not to exercise its discretionary jurisdiction, the order was set aside and the writ petition was restored for fresh consideration, with all pleas including maintainability kept open. [Paras 14, 15, 16, 17, 18]

The appeal was allowed; the impugned order was set aside and the writ petition was restored for fresh decision, leaving all pleas open.

Final Conclusion: The Court did not decide the merits of the challenge to the attachment proceedings or the maintainability of the writ petition. It set aside the order of the learned Single Judge for want of adequate reasons for relegating the appellant to the statutory appellate remedy and restored the writ petition for fresh adjudication.

Continuing offence of money-laundering - Money laundering - Attachment of equivalent value property - Projecting as untainted property - Third-party attachment - Effect of settlement of bank dues on attachment - Attachment of proceeds of crime in the hands of non-accused persons.

Whether the attachment needs to be set aside as loan was sanctioned on 28.04.2009 whereas 420 IPC was inserted in the schedule of the PMLA w.e.f. 01.06.2009? - HELD THAT:- The Tribunal held that for the offence of money-laundering, the material date is not the date of sanction of the loan or even the date of the predicate offence, but the date on which the proceeds of crime are dealt with or projected as untainted property. Since money-laundering is an independent and continuing offence connected with possession, concealment, use or projection of proceeds of crime, action under the Act could validly continue even if the underlying criminal activity had occurred before the relevant offence was notified as a scheduled offence. [Paras 6]

The challenge based on non-retrospective application of the Act was rejected.

Whether the properties acquired/purchased prior to the commission of fraud needs to be released, being not connected with the proceeds of crime? - HELD THAT: - Construing the definition of proceeds of crime, the Tribunal held that the expression includes not only property directly derived from criminal activity relating to a scheduled offence but also the value of such property. On that basis, where the tainted property is not traced as such, attachment can extend to property of equivalent value, including property acquired earlier, subject to the statutory framework. Applying that principle, the attachment was sustained as one towards equivalent value and within the quantified proceeds of crime found in the case. [Paras 7]

The plea for release of properties on the ground that they had been purchased before the fraud was rejected.

Whether the attachment needs to be set aside as the matter is amicably settled between IDBI Bank Ltd. and appellants in Lok Adalat before Debts Recovery Tribunal, Guwahati vide order dated 21.12.2024 for sum of Rs. 1,37,07,020/- in OA No. 110/2015 and DPRC No. 2630/2017? - HELD THAT: - The Tribunal held that so long as the predicate offence case had not concluded, lifting the attachment would defeat the purpose of the pending proceedings. Release of the properties at that stage could result in their disposal and frustrate the statutory scheme, especially if the predicate offence were ultimately to end in conviction and confiscatory consequences were to follow. [Paras 8]

The bank settlement was held insufficient to dislodge the attachment.

Whether the properties of Smt. Ruma Das needs to be released as she is discharged in PMLA case? - Stridhan claim - The Tribunal held that attachment is not confined to properties held by persons formally accused in the predicate offence or the money-laundering complaint. Where property is alleged to represent proceeds of crime, it may be attached even if held in the name of another person. The wife's discharge did not bar attachment, particularly when the principal accused was still facing trial, and her claim that the jewellery constituted stridhan was treated as a matter requiring proof in the trial and not something to be accepted at the attachment stage in the absence of supporting invoices or cash memos. For the children as well, non-impleadment as accused was held immaterial to the power of attachment if the property represented proceeds of crime. [Paras 9]

The request for release of properties held by the wife and children was rejected.

Release of properties of Aditya Das and Aditi Das - HELD THAT: -The appellants Shri Aditya Narayan Das and Ms. Adity Das have contended that they were not the accused in the predicate offence case and hence, their properties should be released from attachment. However, the law on this issue now stands settled by the landmark judgment of the Hon’ble Supreme Court in the case of Vijay Madanlal Choudhary and Ors. v. Union of India (UOI) and Ors. [2022 (7) TMI 1316 - SUPREME COURT (LB)]

Therefore, the property in the hands of any person in possession of proceeds of crime can be attached, even if, he is not accused of the offence of money-laundering.

Final Conclusion: The appeals were dismissed and the confirmation of attachment was upheld in entirety. The Tribunal held that none of the grounds urged by the appellants displaced the attachment under the PMLA, while clarifying that its observations would not affect the outcome of the pending criminal trials.

Condonation of delay - delay of 356 days in filing the statutory appeal - appeal filed beyond the limitation prescribed under Section 85 - Sufficient cause -Exercise of writ jurisdiction despite limitation bar -HELD THAT: - The Court held that although the Appellate Authority was bound by the statutory limitation prescribed for filing the appeal and had no power to condone the delay beyond the permissible period, that constraint did not preclude the High Court from exercising writ jurisdiction where the petitioner had shown that the delay occurred due to circumstances beyond control. The Court found that refusal to have the appeal examined on merits would cause grave injury and prejudice, and, following the consistent view earlier taken by the Court in similar matters, condoned the delay after granting the statutory relaxation and directed consideration of the appeal on merits. [Paras 6, 7, 8, 9]

The delay of 356 days was condoned, the appellate order rejecting the appeal as time-barred was set aside, and the Appellate Authority was directed to entertain and decide the appeal on merits.

Final Conclusion: The writ petition was allowed to the extent of condoning the delay in filing the statutory appeal. The order dismissing the appeal on limitation was set aside and the Appellate Authority was directed to decide the appeal on merits.

Challenged to the Ex parte adjudication and appellate orders - adjudication based on inputs from the income tax returns - Services exempt in terms of the Mega Exemption Notification No.25/2012, and specific attention to Entry-14(b) -HELD THAT:- The Court recorded that the impugned adjudication had been passed ex parte. It noted that in similar matters a coordinate Bench had already directed reconsideration from the stage of reply to the show cause notice, while requiring the authorities to keep in view the questions indicated in that earlier order. Following the same course, the Court set aside both impugned orders and remitted the matter for fresh consideration from the show cause notice stage, without adjudicating the merits. [Paras 4, 5, 6]

The impugned orders were set aside and the matter was remitted to the stage of reply to the show cause notice, with all merits left open.

Final Conclusion: The petition was disposed of by setting aside the impugned orders and remanding the matter for fresh proceedings from the stage of the show cause notice. The authorities were directed to bear in mind the observations contained in the earlier order relied on by the Court, and all contentions were kept open.

Levy of Service tax - Fees collected by a State officer in discharge of sovereign statutory functions - Service taxability of statutory fees - Jurisdiction to levy tax on State functions.

Sovereign functions - Tour Operator service - Statutory fees - HELD THAT: - The Court held that the respondent was an officer of the State Government entrusted with conservation of the forest and was performing official and sovereign functions on behalf of the State. The amounts collected from visitors were statutory fees and compulsory levies collected in official capacity and credited directly to the consolidated fund of the State. Such activities of issuing permits, regulating entry and facilitating access through governmental arrangements were not private commercial functions and could not be brought within the ambit of taxable service as Tour Operator under the Finance Act, 1994. [Paras 8, 9]

The respondent could not be subjected to service tax, interest or penalty on the footing that he was providing tour operator service.

Jurisdiction to levy tax on State functions - Tax on State revenue - HELD THAT: - The Court observed that the State Legislature has exclusive power in respect of matters in the State List and that the charges in question were levied by the State in exercise of its authority to protect and conserve forests within its territory. Since the levy of service tax was in substance sought to be imposed on income of the State Government arising from discharge of governmental functions, the assumption of jurisdiction by the department against the respondent officer was misconceived. The Court further held that even assuming the department had any legal case, it could not lie against the respondent officer acting only in his official capacity. [Paras 9, 10, 11]

The appeals were held to be misconceived, no substantial question of law arose, and the Tribunal's order was left undisturbed.

Final Conclusion: The High Court upheld the Tribunal's view that the respondent, acting as a State officer in discharge of sovereign functions, was not liable to service tax as a tour operator. Finding the departmental proceedings misconceived and raising no substantial question of law, the appeals were dismissed.

Service classification - Differential service tax - Installation activity as Works Contract Service instead of Erection, Commissioning or Installation Service - Entitlement to exemption on the value of materials supplied - Whether the appellant are required to pay differential service tax of 2% of the gross taxable value considering the services rendered as Works Contract Service. - HELD THAT:- The Tribunal found that the appellant, as consortium leader, had throughout discharged service tax under erection, commissioning or installation service and the invoices clearly segregated the value of materials and the value of services. VAT had been paid on the material portion and service tax at the applicable rate had been paid on the service portion after availing exemption for the value of materials supplied. Since the Department had not disputed the admissibility of the exemption on the ground of non-fulfilment of its conditions, the authorities below had wrongly appreciated the facts in reclassifying the activity as works contract service and in demanding differential tax at 4% under the composition scheme. [Paras 8]

The differential service tax demand was held unsustainable and the impugned order was set aside.

Final Conclusion: The Tribunal held that the appellant had correctly paid service tax on the service portion after excluding the value of materials on which VAT was paid, and that the demand raised by treating the activity as works contract service was misconceived. The appeal was accordingly allowed with consequential relief.

Demand of Service Tax - Benefit of Notification No. 17/2005 ST for Exemptionfrom service tax for construction of government residential buildings for own use - Applicability ofBoard Circular No. B1/6/2005-TRU on Site formation, clearance, excavation, earthmoving and demolition services .

Construction of government residential buildings - Own use exclusion - Exemption notification - HELD THAT:- The Tribunal found that the appellant produced a certificate from the service recipient establishing that the work related to construction of government residential buildings for own use. On that factual basis, it held that the service was covered by the exemption under Notification No. 25/2012-ST and the demand raised on this component could not be sustained. [Paras 8]

The demand on construction of government residential buildings was set aside.

Site formation and excavation services - Exemption in course of specified construction - CBEC clarification - HELD THAT: - The Tribunal considered the departmental clarification on the scope of site formation and related services and held that the activity undertaken by the appellant was exempt in terms of Notification No. 17/2005-ST. Since the activity itself was exempt, the tax demand on this component was unsustainable and, consequently, the penalties also could not survive. [Paras 10, 11]

The demand on the site formation related activity was set aside and the penalties were dropped.

Final Conclusion: The Tribunal held that both components of the confirmed service tax demand were exempt and therefore unsustainable. The impugned order was set aside to that extent, and the penalties imposed on the appellant were also deleted.

Cargo handling services rendered in relation to agricultural produce - Benefit of Exemption from service tax under Notification No. 10/2002-ST - Service tax liability on renting of immovable property - Corroborative evidence - Benefit of doubt - Imposition of penalty under Section 77 of the Finance Act, 1994.

Whether the cargo handling services in relation to agricultural produce rendered by the appellant are eligible for exemption under the Notification No. 10/2002 dated 01.08.2002, as has been claimed by the appellant​​​​​​​ - HELD THAT:- The Tribunal held that the adjudicating authority had wrongly proceeded on the basis of treating the appellant's services as GTA service and denying exemption for want of consignment notes. The record showed that the bills produced related to handling of agricultural produce, and the Department had not verified the genuineness of those transactions from the consignees' end or produced corroborative evidence to dislodge the claim. On examination of the invoices, the Tribunal found that the services related to agricultural produce such as onion, grapes and spices, which fell within the scope of the exemption granted to cargo handling service in relation to agricultural produce under Notification No. 10/2002 dated 01.08.2002. In the absence of contrary evidence from the Revenue, exclusion of such value from taxable turnover was held to be correct. [Paras 11]

The demand relatable to cargo handling services in connection with agricultural produce was set aside.

Service tax liability on renting of immovable property - HELD THAT: - The Tribunal recorded that, as per the appellant's own declaration, a part of the receipts pertained to renting of immovable property service and that the appellant had not contested the demand raised under that category. Since the appellant did not dispute its service tax liability on that service in the impugned order, there was no basis to interfere with that part of the demand. [Paras 10]

The demand confirmed under renting of immovable property service was sustained.

Imposition of penalty under Section 77 - HELD THAT: - The Tribunal noted that although the appellant had initially provided taxable services without obtaining registration, it subsequently obtained registration for renting of immovable property service and later included cargo handling service in its registration. Taking a lenient view in light of this subsequent compliance, the Tribunal considered the penalty under Section 77 not warranted. [Paras 12]

The penalty imposed under Section 77 was waived.

Final Conclusion: The appeal was allowed in part. The demand on cargo handling services relating to agricultural produce was set aside, the demand on renting of immovable property service was left undisturbed, and the penalty under Section 77 was waived, with consequential relief as per law.

Transaction Value - Valuation of the goods manufactured - Undervaluation based on evidence - Challenged the impugned order dropping the substantial part of the demand made as per the Show Cause Notice (SCN) and also for imposing lesser amount of penalty than the penalty imposed by original authority while adjudicating the issue in the earlier proceedings.

Excise valuation - Undervaluation based on evidence - HELD THAT: - When the appeal came up for hearing, Learned Authorized Representative (AR) for the Revenue reiterated the findings in the grounds of appeal and submits that against the first Order-in-Original, substantial demand was dropped and further submits that in the similar case of M/s. CERA Boards and Doors Vs. CCE, Calicut [2020 (8) TMI 451 - SUPREME COURT], Hon’ble Supreme Court directed that if any particular dealer or customer has paid consideration over and above what is reflected in the invoice, the additional payment made by him together with the invoice value shall be taken to be the transaction value, for all the transactions that the particular dealer/customer had with the assessee. In simple terms, if a dealer/customer has made 10 purchases during the period in question, for a particular value stated in the invoice, the transaction value determined on the basis of material relatable to a few out of those transactions, can be applied to all the transactions of that customer /dealer across the board for that period. However, the said direction was not followed by adjudication authority by determining the demand.

The Tribunal held that the adjudicating authority had correctly complied with the earlier remand directions while re-determining the valuation dispute. It further found that the Revenue had not produced any additional evidence beyond the material already considered by the adjudicating authority to substantiate a larger case of undervaluation. On that basis, the impugned order restricting the demand to the evidence available on record was found sustainable. [Paras 7]

The restricted demand and consequential penalties as determined in de novo adjudication were upheld, and the Revenue's appeal was dismissed.

Final Conclusion: The Tribunal upheld the impugned de novo order on the ground that it conformed to the earlier remand directions and was based on the evidence available on record. In the absence of any further material to establish broader undervaluation, the Revenue's appeal failed.

Abuse of process of law - cheating or fraud - commercial supplies - non-payment over a long period - Criminal proceedings for recovery of civil debt - Quashing of criminal complaint. - HELD THAT: - The Court held that, apart from the alleged email said to have been sent by one of the directors, there was no material showing any valid acknowledgment of liability. As the company had already been ordered to be wound up, that director had no authority thereafter to speak on behalf of the company or acknowledge its liability. In any case, such alleged later communication could not relate back to the earlier transactions so as to constitute cheating in relation to the supplies and the non-payment therefor. The Court further found that, after the cheque dishonour cases had ended in monetary settlement, the respondent was merely seeking to invoke criminal law as a means of recovering dues which could no longer be pursued through civil proceedings. On that basis, the Magistrate and the High Court were held to have failed to notice the true nature of the proceedings. [Paras 12, 13, 14]

The High Court's refusal to quash was held unsustainable, and the criminal case was quashed as against the appellants.

Final Conclusion: The appeal was allowed. The order refusing quashing was set aside and the criminal proceedings were quashed only in relation to the appellants before the Court.

Enforcement of foreign arbitral award - FEMA compliance - enforced in India without any legal impediment - Recognition of foreign award - Current account transaction - RBI approval - precondition to enforcement. - HELD THAT: - The Court took note of the RBI's affidavit stating that payment of compensatory damages awarded by the arbitral tribunal is in the nature of a current account transaction under Section 5 of FEMA read with the Foreign Exchange Management (Current Account Transaction) Rules, 2000, and that such payment, by itself, does not require approval or permission from RBI. It also noted the RBI's clarification that the award was for compensatory damages and not for transfer of shares. In view of that clear position, the Court held that no legal impediment survived to the enforcement of the foreign award. [Paras 9, 10]

The petition was disposed of by holding that nothing further remained to be adjudicated and that the execution proceedings should continue expeditiously.

Final Conclusion: The Court concluded that, in light of the RBI's stated position, there was no legal impediment to enforcement of the foreign arbitral award. The matter was disposed of and the execution proceedings were directed to proceed expeditiously.

Negotiable Instruments Act - Dishonour of cheque - Security cheque - Legally enforceable debt or liability - Presumption as to enforceable liability - statutory presumptions - acquittal in a prosecution under Section 138 - Preponderance of probability - Presumption of innocence​​​​​​​ - HELD THAT: - The Court found that the contract between the parties did not refer to the cheque at all, and the complainant's stands in the cheque case and in the separate cheating complaint were materially inconsistent on the manner in which the cheque came into its possession. In that background, and particularly in view of the non-examination of the person through whom the cheque was alleged to have passed, the complainant failed to establish the foundational facts necessary to invoke the presumptions in its favour. The cheque was also treated as a security instrument, and the material on record did not show that, on the date of its presentation, any liability corresponding to the cheque amount had crystallised. The allegation regarding inferior quality of ore was unsupported at that stage, since the cheque had been presented before the analyst's report, and disputes arising out of contractual performance had not yet matured into an ascertained liability. [Paras 16, 17]

The cheque could not be enforced under the Act as one issued against an existing debt or liability, and the complainant's case failed on merits.

Appeal against acquittal - Presumption of innocence - HELD THAT: - Applying the settled principles governing an appeal against acquittal, the Court held that interference is unwarranted unless the acquittal is palpably wrong, based on an erroneous view of law, or likely to result in grave injustice. Since the Sessions Court's view that there was no enforceable liability and that the complainant had failed to lay the factual foundation for statutory presumptions was a possible and legally sustainable view, the strengthened presumption of innocence in favour of the respondents could not be displaced. [Paras 13, 17, 18]

The acquittal was affirmed and the appeal was dismissed.

Final Conclusion: The Court upheld the order of acquittal, holding that the complainant had failed to establish that the cheque represented a legally enforceable liability on the date of presentation. Finding the appellate acquittal to be based on a possible and legally sound view, the appeal was dismissed.