TaxTMI Updates e-Newsletter
May 07,2026

Delay and Laches - Writ Petition filed more than 2½ years after passing of the impugned order - High Court refused to entertain the writ petition against the assessment order for assessment - HELD THAT:- The Special Leave Petition was dismissed, the Court stating that no good ground for interference with the impugned order of the High Court was made out.

Refund claim - export of services - Non-speaking order - Failure to record findings - Principles of natural justice. - HELD THAT: - The Court held that the impugned order was vitiated because it rejected the refund claim without recording any specific finding on the entitlement asserted by the petitioner. The order merely reproduced clauses of the agreement and did not adjudicate the petitioner's case on the basis of a reasoned consideration of the material and submissions placed before the authority. Such an order was held to be bald and non-speaking, and hence contrary to the requirement of a reasoned determination before rejecting the refund claim. On that ground, the matter was remanded for de novo consideration with an opportunity of hearing, while keeping all contentions open. [Paras 12]

The impugned order was quashed and the refund proceedings were remanded to the adjudicating/original authority for fresh consideration and a reasoned order after hearing the petitioner.

Final Conclusion: The Court set aside the impugned appellate order on the ground that it was a non-speaking order lacking specific findings on the refund claim. The proceedings were remanded for fresh adjudication in accordance with law after granting the petitioner an opportunity of hearing, with all contentions kept open.

Non-compliance with the mandatory requirement of pre-deposit in terms of Section 107(6) - reasonable opportunity to cure the purely procedural defect - Natural justice - Right to appeal - electronic cash ledger and the defect -HELD THAT: - From the material on record, it appears that there may have been a procedural glitch on the petitioner's part in effecting the pre-deposit. However, this is far from saying that the petitioner has made no pre-deposit at all.

The Court found that the appeal had not been rejected on merits, but solely on the ground of non-compliance with section 107(6). From the impugned order itself, it was evident that the petitioner had deposited the amount in the cash ledger and had shown a clear intention to comply with the pre-deposit requirement. In those circumstances, the matter was treated as involving, at best, a procedural defect rather than total absence of pre-deposit. The Appellate Authority was therefore required, in keeping with natural justice and fair play, to point out the defect and grant reasonable time to rectify it instead of dismissing the appeal outright. The Court held that procedure had been given precedence over substance and that the petitioner could not be deprived of the valuable right of appeal without such opportunity. [Paras 15, 16, 17, 18, 19]

The impugned appellate order was quashed and the matter was remanded to the Appellate Authority to consider the appeal on merits after the defect is cured and the pre-deposit is secured.

Final Conclusion: The writ petition was allowed by setting aside the order dismissing the appeal for alleged non-compliance with pre-deposit. The matter was remanded for decision on merits after granting the petitioner an opportunity to cure the procedural defect, with all merits contentions kept open.

Maintainability of writ against show cause notice -Cancellation of GST registration - HELD THAT: - The Court noted that the impugned proceeding was only a show cause notice and that the petitioner had already filed detailed replies. The respondent stated that no final order had yet been passed. Following the principle that a writ petition does not ordinarily lie against a mere show cause notice, and relying on the earlier Division Bench in M/s. Trillion Lead Factory Private Limited [2026 (2) TMI 649 - TELANGANA HIGH COURT] view affirmed by the Supreme Court [2026 (3) TMI 835 - SUPREME COURT], the Court held that the proper course was to permit the statutory authority to complete the proceedings and take a decision in accordance with law within a fixed time. [Paras 7, 8, 9, 10]

The writ petition was disposed of without examining the merits of the notice, and the respondent was directed to conclude the show cause proceedings and take a decision within fifteen days, if not already taken.

Final Conclusion: The Court declined to interfere at the stage of show cause notice and left the petitioner to the statutory process. The respondent was directed to bring the cancellation proceedings to a conclusion within fifteen days, if no final decision had already been taken.

Rejection of the claim for refund of tax paid against on zero rated supply for different periods - refund of unutilised tax credit -No opportunity of hearing - Judicial consistency in identical matters.

Refund of unutilised input tax credit of compensation cess - HELD THAT: - The Court recorded that both sides did not dispute that the controversy in the present batch was identical to the one already decided in the petitioner's own case [2025 (12) TMI 1826 - TELANGANA HIGH COURT] Proceeding on that basis, and following the earlier Division Bench decision in the same assessee's matter, the Court held that the present batch also had to receive the same treatment, namely reconsideration by the original authority in accordance with law after affording an opportunity of hearing. The decision thus turned on acceptance of the identity of issues and application of the earlier binding disposal in the petitioner's own case. [Paras 5, 6]

The impugned refund rejection orders were not sustained and the matters were directed to be reconsidered by the original authority within four months after giving the petitioner an opportunity of hearing.

Final Conclusion: Following the earlier decision in the petitioner's own case on an identical controversy, the writ petitions were allowed and the refund matters were remanded to the original authority for fresh decision in accordance with law after hearing the petitioner, within four months.

Maintainability of writ petition - Alternative statutory remedy - Challenged to show cause notice - denial of Cross-examination - Violation of Principles of natural justice - HELD THAT: - In case of Tanushree Logistics Private Limited. Vs. State of Rajasthan [2022 (12) TMI 1033 - RAJASTHAN HIGH COURT], wherein the Division Bench has already considered the provision of appeal under Section 107 of CGST Act and observed that alternative remedy of appeal is available to the petitioner before the appellate authority.

The Court held that where the petitioner had an effective statutory remedy of appeal under Section 107(1) of the CGST Act, interference under writ jurisdiction was not warranted. The Court, while noticing the challenge founded on denial of cross-examination, declined to examine the merits and left it open to the petitioner to urge all legal and factual grounds before the appellate authority. The challenge to the show cause notice was also not entertained. [Paras 8, 9]

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

Final Conclusion: The Court declined to exercise writ jurisdiction against the impugned show cause notice and adjudication order since a statutory appeal was available. The petitioner was left free to raise all legal and factual grounds before the appellate authority.

Refund claim - change in regime from KVAT to GST resulted in certain excess amount being paid by the petitioner to the Government authorities - Works contract - deemed service - GST neutralization / reimbursement of differential tax - HELD THAT:- The writ petition was disposed of in terms of earlier coordinate Bench orders [2023 (6) TMI 93 - KARNATAKA HIGH COURT], with liberty to the petitioner to submit a detailed representation to respondent No. 4, who was directed to consider it and refund the amount due, if any, within eight weeks.

Condonation of delay in filing statutory appeal- Dismissal of appeal on limitation alone - HELD THAT: - The Court noted the petitioner's case that the appeal had been filed immediately after he came to know of the original order, resulting in delay beyond the statutory period of 120 days. Since the appellate authority had dismissed the appeal only on limitation and similar delay had been condoned by this Court in comparable circumstances, and the respondents did not dispute that position, the Court condoned the delay and directed reconsideration of the appeal on merits. [Paras 5, 6]

The delay was condoned, the appellate order was quashed, and the appeal was remanded to the appellate authority for disposal on merits.

Final Conclusion: The writ petition was allowed. The order dismissing the appeal on the ground of delay was quashed, the delay was condoned, and the matter was remanded to the appellate authority for decision on merits.

Same subject matter - Overlapping proceedings - short payment of tax based on a comparison between GSTR-1 and GSTR-3B - excess availment of input tax credit - Distinct contraventions - Alternative statutory remedy. - HELD THAT: - Applying the principle stated in Armour Security (India) Ltd. [2025 (8) TMI 991 - SUPREME COURT], the Court held that the bar against parallel proceedings is attracted only where the proceedings seek to assess or recover an identical liability, deficiency or obligation arising from the same contravention. On the materials before it, the earlier proceeding concerned short payment of tax on comparison of GSTR-1 with GSTR-3B, whereas the later show cause notice, after considering the petitioner's reply to the scrutiny notice, was confined to excess ITC claimed on invoices not reflected in GSTR-2A on comparison of GSTR-3B/GSTR-9 with GSTR-2A. Since the second proceeding related to a distinct infraction and not to the charge forming the first proceeding, there was no overlap in subject matter. [Paras 6]

The challenge based on overlap of subject matter failed; the proceedings were held to concern distinct contraventions.

Final Conclusion: The Court held that the two adjudication proceedings, though relating to the same tax period, did not involve the same subject matter, as one concerned short payment of tax and the other excess availment of ITC. Since the petitioner sought to pursue the statutory appeal, the writ petition was disposed of with liberty to approach the appellate authority, leaving all grounds open.

Service through common portal - No Opportunity of hearing - non-service of notices - Violation of natural justice - HELD THAT: - The Court recorded that service of notices and assessment orders by uploading them on the common portal is a recognised and sufficient mode of service under the GST enactment, and referred to its earlier order in [2026 (5) TMI 243 - ANDHRA PRADESH HIGH COURT] taking that view. Nevertheless, having regard to the large number of complaints that registered persons were unaware of such uploaded notices and orders, including on account of lack of familiarity with online compliance or omission by authorised representatives, the Court considered it appropriate to extend one further opportunity. On that basis, the impugned assessment orders were set aside and the matters were remitted for fresh assessment after due hearing, subject to deposit of 20% of the disputed tax, with limitation directed to stand excluded for the intervening period and all issues left open before the Assessing Authority. [Paras 6, 7, 8, 9, 10]

Fresh opportunity was granted and the assessments were remanded for reconsideration on condition of deposit of 20% of the disputed tax.

Final Conclusion: The writ petitions were allowed by setting aside the impugned assessment orders and remanding the matters for fresh consideration after affording due opportunity of hearing. The relief was made conditional upon deposit of 20% of the disputed tax, and all contentions were left open before the Assessing Authority.

Composite show-cause notice - Effect of single show-cause notice and a single assessment order covering more than one financial year under the GST regime -HELD THAT: - The Court followed the earlier Division Bench view of this Court in S.J. Constructions, Suma Infra, M/s. SKS Traders, Bhaarat Scrap Traders [2025 (9) TMI 1215 - ANDHRA PRADESH HIGH COURT] that a single show-cause notice or composite assessment order cannot be issued for more than one tax period, namely, for more than one month where proceedings are initiated before the due date for filing the annual return, or for more than one year where such due date has been reached. Since the impugned notice covered the period from April, 2018 to March, 2023 and the petitioner pressed the challenge on the ground that the proceedings were composite in nature, the Court confined its decision to that determinative defect and left the other grounds open. [Paras 4, 5, 6, 7]

The show-cause notice and assessment order were set aside, with liberty to the respondents to initiate fresh proceedings separately for each assessment year, and the intervening period was directed to be excluded for limitation purposes.

Final Conclusion: The writ petition was disposed of by setting aside the composite show-cause notice and assessment order on the ground that proceedings could not validly cover multiple financial years in a single notice or order. Liberty was reserved to the department to proceed afresh separately for each assessment year, with exclusion of the intervening period for limitation.

Composite show cause notice for multiple tax periods - Show cause notice under Section 74 - Statutory Limitation -Binding nature of jurisdictional High Court precedent -Year-wise limitation under tax recovery provisions - HELD THAT: - The judgments of the High Court of Bombay will prevail. In the case of M/s. Milroc Good Earth Developers Vs. Union of India & Ors.[2025 (10) TMI 867 - BOMBAY HIGH COURT] and Rite Water Solutions (India) Ltd.[2025 (11) TMI 1939 - BOMBAY HIGH COURT], following amongst others were the reasons why the Court held that show cause notice consolidating various financial years/tax periods is not permissible.

Since this Court has, subsequent to decision of the Delhi High Court in the case of M/s. Technosys Integrated Solutions Pvt. Ltd. vs. Union of India and others [2026 (3) TMI 1136 - DELHI HIGH COURT], taken a different view, the authorities below will be bound by the subsequent judgments. The Hon’ble Supreme Court [2025 (11) TMI 1184 - SC ORDER], has neither stayed nor overruled the view taken in above two cases.

The Court held that the statutory scheme proceeds tax period-wise and financial year-wise, with assessment, return obligations, and limitation for determination and recovery operating separately for each year. A single notice clubbing different financial years would aggregate distinct tax periods carrying different due dates and limitation consequences, which the statute does not contemplate. The Court further held that dismissal in limine of the challenge to the contrary view of another High Court did not attract merger on merits, and, in any event, authorities functioning within the territorial jurisdiction of this Court were bound by the law declared by this Court so long as that view had neither been stayed nor overruled. [Paras 8, 9, 10, 12, 15]

The composite show cause notice and the consequential order were quashed, with liberty to the respondents to issue a fresh notice strictly in accordance with Section 74, subject to any other legal impediment.

Final Conclusion: The petition was partly allowed. The Court set aside the composite show cause notice and the consequential order on the ground that separate financial years could not be clubbed in a single proceeding under Section 74, while reserving liberty to issue a fresh notice in accordance with law.

Rejection of the rectification application - No Opportunity of hearing in rectification proceedings- Alternative statutory remedy - Condonation of delay - Violation of Principles of natural justice. - HELD THAT: - The Court held that under the third proviso to Section 161 of the Goods and Services Tax Act, 2017, notice or opportunity of hearing is attracted only when an order adverse to the assessee is proposed to be passed. Since the Proper Officer, while deciding the rectification application, did not interfere with the order-in-original and did not enhance the liability, the plea of absence of notice was not sustainable. In that view, the Court declined to entertain the challenge in writ jurisdiction and granted liberty to the petitioner to approach the appellate authority on all grounds of law and fact, with a direction that the appellate authority may consider delay in light of the pendency of the rectification application and the subsequent pursuit of the writ remedy. [Paras 2, 3]

The writ petition was disposed of by relegating the petitioner to the statutory appeal, with liberty to raise all available grounds and with observation that delay may be considered in the stated circumstances.

Final Conclusion: The Court found no breach of hearing requirements in the rectification proceedings, as the liability was not enhanced and the original order remained untouched. The petitioner was relegated to the statutory appellate remedy, with liberty to seek consideration of delay on the basis of the time spent in rectification and writ proceedings.

Jurisdiction objection to the intimation issued under Section 74(5) - Intimation issued by an officer lacking pecuniary jurisdiction - Intimation in lieu of notice. - HELD THAT: - The Court noted that the earlier objection was directed against an intimation issued by the Superintendent on the ground of limited pecuniary competence. Once a fresh intimation under Section 74(5) was issued by the Joint Commissioner, the jurisdictional objection ceased to exist. Since the petitioner had already filed objections to that intimation, the Court left it open to the proper officer to proceed in accordance with law and did not examine the merits of the petitioner's objections. [Paras 4, 6]

The writ petition was disposed of holding that the jurisdictional ground was no longer available and leaving further action to the proper officer in accordance with law.

Final Conclusion: The Court disposed of the writ petition after holding that the petitioner's objection to the earlier intimation on the ground of lack of pecuniary jurisdiction had become infructuous upon issuance of a fresh intimation by the Joint Commissioner. It left the matter to be dealt with by the proper officer in accordance with law on the petitioner's objections.

Validity of unsigned assessment order- effect of the absence of the signature, on an assessment order - non-inclusion of DIN number in GST proceedings - Service of unsigned order. - HELD THAT: - A Division Bench of this Court in the case ofM/s. Cluster Enterprises Vs. The Deputy Assistant Commissioner (ST)-2, Kadapa [2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT] on the basis of the circular, dated 23.12.2019, bearing No.128/47/2019-GST, issued by the C.B.I.C., had held that non-mention of a DIN number would mitigate against the validity of such proceedings. Another Division Bench of this Court in the case of Sai Manikanta Electrical Contractors Vs. The Deputy Commissioner, Special Circle, Visakhapatnam [2024 (6) TMI 1158 - ANDHRA PRADESH HIGH COURT] had also held that non-mention of a DIN number would require the order to be set aside.

The Hon’ble High Court of Madras, in T.V.L. Deepa Traders vs. The Deputy Commissioner [2025 (3) TMI 1388 - MADRAS HIGH COURT] had held the same view. Consequently, there is no service of the impugned order even as of today, on account of the absence of signature on the impugned proceeding. In those circumstances, the delay in approaching this Court would not be a relevant factor.

The Court held that the requirement of signature on an assessment order is mandatory and that such a defect is not cured by the statutory provisions referred to in the earlier decisions of the Court. It further held that non-mention of a DIN number also affects the validity of the proceeding. Since Rule 26(3) of the CGST Rules, 2017 stipulates that a notice or order without signature would not amount to service, the impugned order could not be treated as having been served at all; consequently, the delay in filing the writ petition was held to be immaterial. [Paras 8, 9, 10]

The assessment order was set aside, with liberty to the authority to undertake a fresh assessment after issuing notice and passing a duly signed order containing a DIN, and the intervening period was directed to be excluded for limitation.

Final Conclusion: The writ petition was disposed of by setting aside the impugned assessment order for want of the assessing officer's signature and absence of DIN. Liberty was granted to make a fresh assessment in accordance with law, and the period specified by the Court was directed to be excluded for limitation.

Depreciation claim on leased assets where the assessee is the owner but the lessee uses the asset - ownership and use for purposes of business under Section 32 - application of Supreme Court decision in I.C.D.S. Ltd. [2013 (1) TMI 344 - SUPREME COURT] to leasing business - interest under Section 220(2) chargeable only up to the original assessment order passed under Section 143(3)

HELD THAT:- Additional Solicitor General appearing for the petitioner fairly states that the very same judgment, that is presently impugned, was subjected to challenge before this Court in Commissioner of Income Tax – LTU vs. Tata Motors Ltd. [2024 (8) TMI 1026 - BOMBAY HIGH COURT] and the same was dismissed on the ground of delay.

Following the aforestated order, the condone delay application and, in consequence, the special leave petitions are dismissed.

Validity of reassessment - period of limitation - notice and initiation of re-assessment proceeding as beyond six years - scope of limitation both under the old Act as well as under newly amended provision relating to Section 147

HC [2023 (3) TMI 1625 - CALCUTTA HIGH COURT] held admittedly, the issuance of notice and initiation of re-assessment proceeding are beyond six years and, prima facie, it is barred by limitation both under the old Act as well as under newly amended provision relating to Section 147 - Matter deserves adjudication by calling for affidavits from the respondents and petitioner has been able to make out a prima facie case for an interim order by raising the issue of jurisdiction of the assessing officer concerned in initiating the impugned re-assessment proceeding.

HELD THAT:- Having heard the learned Senior counsel appearing for the petitioners and having gone through the materials on record, we find no good ground to interfere with the impugned order passed by the High Court.

Special Leave Petition is, accordingly, dismissed.

Order passed by AO u/s 197 - petitioner’s application for ‘NIL’ withholding tax, was rejected - cross charges considered as FTS or not? - Withhold tax at the rate of 15% (including surcharge and cess) on the payment - AO concluded that the charges paid to the petitioner by its AEs are taxable as FTS and FIS

HC [2025 (6) TMI 79 - DELHI HIGH COURT] held AO's order rejecting the Section 197 application is set aside, the petitioner is entitled to a NIL withholding tax certificate in respect of the crosscost charges from AIPL and AIGSPL, and the Revenue is not precluded from examining taxability in regular assessment proceedings.

HELD THAT:- Having heard the learned counsel appearing for the petitioner(s) and having gone through the materials available on record, we do not find any good ground to interfere with the impugned order passed by the High Court.

Special Leave Petition is, accordingly, dismissed.

Reopening of assessment -Reasons to believe - Survey u/s 133A - Permanent Establishment - Dependent Agent Permanent Establishment - Fixed Place Permanent Establishment - tangible material to form belief - chargeability of business income attributable to PE - reliance on precedent

HC [2025 (5) TMI 2058 - DELHI HIGH COURT] held there was no tangible material for forming a belief that the Petitioners had a dependent PE or a Fixed Place PE in India during the previous years relevant to the said assessment years in respect of which the impugned notices u/s 148 of the Act are issued.

HELD THAT:- Special Leave Petitions were dismissed as no ground for interference with the impugned order of the High Court was found.

Recovery of disputed demand by way of adjustments from refund made in the intimation Issued u/s 143(1) - Prayer for immediate release of an amount recovered in excess of 20% of the disputed demand along with appropriate interest under Section 244A

Delay and laches - Prior intimation and opportunity of objection before refund adjustment - Recovery of disputed demand during pendency of appeal - HELD THAT: - The Court held that the impugned adjustment made on October 25, 2022 had been questioned only after more than three years, without any explanation in the writ petition. Since the relief sought was in substance for refund of money, the period ordinarily applicable to a civil claim furnished the reasonable standard for testing delay. In the absence of any explanation, the Court declined to exercise writ jurisdiction in respect of that adjustment, while observing that the adjustment would remain subject to the result of the pending appeal against the assessment. [Paras 12]

The challenge to the adjustment from the refund for assessment year 2021-22 was rejected on the ground of delay.

Adjustment of refund under Section 245 - Natural justice - Prior intimation - HELD THAT: - The Court held that the intimation contemplated by Section 245 must precede any adjustment and is meant to afford the assessee an effective opportunity to object to the proposed set-off. Since exercise of the power to adjust refund entails civil consequences, the Revenue is bound to act fairly by issuing prior intimation, examining the objection, and then deciding whether adjustment should be made. In the present case, although the intimation granted 21 days to respond, the refund was adjusted on the very next day, thereby foreclosing the assessee's statutory opportunity. The Court further held that the assessee's failure to respond through the portal or to dispute the outstanding demand in the manner suggested by the User Manual, or under the intimation issued under Section 143(1), did not dilute its independent right to object to the specific intimation under Section 245. [Paras 22, 25, 26, 38, 39]

The adjustment made pursuant to the intimation concerning assessment year 2022-23 was held to be in breach of Section 245 and the principles of natural justice.

Pending appeal and recovery of disputed demand - No automatic stay on filing appeal - Guidelines for recovery of disputed demand - HELD THAT: - The Court held that Section 220(6) does not create an automatic stay merely because an appeal has been filed; in the absence of an application for stay or an order protecting the assessee, the Revenue is not barred from recovery. The Court expressly disagreed with the contrary observation in Rajendra Kumar to that limited extent. At the same time, it held that when the Revenue seeks to recover by adjusting a refund under Section 245 during pendency of appeal, the Assessing Officer must act judiciously and keep in view the administrative instructions governing stay of disputed demand, including the norm that recovery beyond 20% requires special justification. As the appeal against the assessment for assessment year 2018-19 remained pending, no stay application had been decided, the statutory procedure under Section 245 had been violated, and no special reason was shown for retaining more than 20% of the disputed demand, the Court directed refund of the amount adjusted in excess of 20% under the later adjustment. The earlier adjustment was excluded because it had not been interfered with on account of delay, and no interest was granted having regard to the belated approach to the Court. [Paras 31, 33, 34, 35, 47]

The Revenue was directed to refund, within the time fixed by the Court, the amount adjusted pursuant to the later intimation insofar as it exceeded 20% of the disputed demand for assessment year 2018-19, without interest and subject to the result of the pending appeal.

Final Conclusion: The writ petition succeeded only in part. The Court declined to interfere with the earlier adjustment on the ground of delay, but held the later adjustment of refund to be contrary to Section 245 and directed refund of the amount adjusted in excess of 20% of the disputed demand, without interest and subject to the outcome of the pending appeal.

Revision u/s 263 - Lack of enquiry and inadequate enquiry - Possible view doctrine - Show-cause notice and Explanation 2 to section 263 - utilization of accumulated income u/s 11(2) thereby rendering the assessment order erroneous and prejudicial to the interest of revenue

Lack of enquiry or inadequate enquiry - Possible view doctrine - HELD THAT: - The Court held that the assessment order was not erroneous and prejudicial to the interests of the Revenue merely because the Commissioner considered that further particulars or supporting verification ought to have been called for. The record showed that the assessee had furnished the details of accumulation, Form No. 10, board resolutions and the particulars of utilisation, and the Assessing Officer had acted on that material. Once enquiry had in fact been made and a possible view had been taken, the Commissioner could not reopen the matter under section 263 only because another view was possible or because he desired a fuller enquiry. In such a situation, the Commissioner had to himself undertake the necessary verification and demonstrate that the view adopted by the Assessing Officer was erroneous or unsustainable in law; absent such exercise, revision amounted to a fishing or de novo enquiry and was without jurisdiction. [Paras 9, 10, 12, 16, 17]

The order under section 263 was unsustainable, and the Tribunal was right in quashing it.

Show-cause notice and Explanation 2 to section 263 - Opportunity of hearing - HELD THAT: - The Court accepted the assessee's contention that invocation of Explanation 2 required prior notice in the show-cause proceedings. Since the assessee had not been confronted with the proposed application of Explanation 2, the order founded on that provision was held to be inappropriate and unsustainable in law. [Paras 13, 14]

The invocation of Explanation 2 to section 263 was bad in law for want of notice to the assessee.

Accumulated income u/s 11 - Taxability of non-utilization - HELD THAT: - The Court agreed with the Tribunal that the accumulated amount pertaining to AY 2016-2017 was available up to the end of the statutory period and, therefore, any question of taxability on account of non-utilisation would arise only in the immediately succeeding year after expiry of that period, namely AY 2022-2023. The Commissioner had not proceeded on a finding of actual non-utilisation within the statutory framework but only on the footing of alleged non-examination by the Assessing Officer, and that basis did not justify revision for AY 2017-2018. [Paras 8, 11, 12]

The alleged tax consequence concerning the accumulated amount did not arise for consideration in AY 2017-2018.

Final Conclusion: The High Court held that no substantial question of law arose from the Tribunal's order. Since the Assessing Officer had made enquiry and adopted a possible view, and Explanation 2 to section 263 had also been invoked without due notice, the Revenue's appeal was dismissed.

Natural justice in rectification proceedings - Refund adjustment without prior intimation - Stay of recovery in high-pitched assessment

Validity of order passed u/s 154 withdrawing the claimed exemption and converting the refund into demand where no prior notice and hearing had been given, and the refund adjustment had also been made without prior intimation

HELD THAT: - The Court recorded that the earlier intimation had accepted the nil income and granted refund, whereas the subsequent rectification order withdrew the exemption and converted the refund into demand. Since such rectification reduced the refund and enhanced the tax liability, the proviso to Section 154(3) required prior notice and opportunity of hearing. On the admitted position that no such notice had been issued, the action was held to be in breach of the principles of natural justice. The Court further found that the adjustment of refund had been made without prior intimation under Section 245, which furnished an additional ground for interference. [Paras 16, 18, 19]

Interference was warranted because the rectification and consequential refund adjustment suffered from procedural illegality.

Stay of recovery in high-pitched assessment - Expeditious disposal of appeal - HELD THAT: - Applying the principle governing high-pitched assessments, the Court held that where the assessee had filed a nil return claiming refund, but the assessment was altered into a demand and the statutory appeal was already pending with written submissions on record, recovery ought to remain stayed till the appeal was decided. On that basis, the appellate authority was directed to dispose of the appeal expeditiously by a reasoned order after hearing the petitioner, and the revenue authorities were restrained from taking coercive steps until the appeal attained finality. The Court expressly refrained from examining the merits of the exemption claim. [Paras 17, 19, 20, 21]

Recovery was ordered to remain in abeyance, the appeal was directed to be decided within the time indicated, and the merits were left open.

Final Conclusion: The writ petition was disposed of by directing expeditious disposal of the pending appeal and by restraining the revenue from taking coercive steps until the appeal reached finality. The Court intervened on procedural grounds and expressly left the merits of the exemption claim undecided.

Writ maintainability despite statutory appellate remedy - Pendency of stay application before appellate tribunal -allowability of bypassing the statutory forum and invoking writ jurisdiction - payment of an outstanding demand for the assessment year 2022-23 has been directed, coupled with a stipulation for coercive recovery in default.

HELD THAT: - The Court held that once the petitioner had already invoked the statutory appellate remedy before the ITAT, Guwahati Bench, and the stay application was also pending there, the Tribunal was in seisin of the matter. In that situation, the writ jurisdiction could not be invoked by bypassing an efficacious statutory remedy. The plea that the Tribunal was not sitting regularly was not accepted as sufficient to justify interference, particularly when the Tribunal was stated to be functional. As no exceptional circumstance was made out, the Court refused to entertain the writ petition, while expecting the ITAT to decide the stay application expeditiously. [Paras 7, 8, 9]

The writ petition was dismissed as not maintainable in view of the pending appeal and stay application before the ITAT, with an observation that the stay application be taken up expeditiously.

Final Conclusion: The Court declined to interfere with the recovery proceedings in writ jurisdiction, holding that the petitioner must pursue its pending statutory remedies before the ITAT. The writ petition was dismissed, with an expectation that the stay application would be decided expeditiously.

Capital gains on unimplemented joint development arrangement - taxable transfer or deemed accrued capital gain -Transfer u/s 2(47) - Hypothetical income - Accrual of capital gains - transfer of a capital asset or accrual of taxable capital gains for the relevant year or not?

HELD THAT: - The Court held that, in light of Balbir Singh Maini [2017 (10) TMI 323 - SUPREME COURT] an unregistered development arrangement has no legal efficacy for the purposes of Section 53-A and therefore cannot constitute a transfer under Section 2(47)(v).

Section 2(47)(vi) is attracted only where the transaction, in substance, enables enjoyment of the property as a purported owner; on the facts found, there was no movement of consideration and no transfer of property, either symbolically or constructively, before 31.03.2007.

Since the statutory clearances and NOCs were obtained only after that date, the agreements had not been acted upon during the relevant financial year. The Court also applied the principle in CIT Vs. B.C.Srinivasa Setty [1981 (2) TMI 1 - SUPREME COURT] that the charging and computation provisions form an integrated code, and concluded that where no real profit or gain had arisen and the income was only hypothetical, Sections 45 and 48 could not be invoked. [Paras 11, 12, 13, 14]

The Tribunal was right in holding that no taxable transfer or deemed accrued capital gain arose during the relevant year, and the Revenue's appeal was liable to be dismissed.

Final Conclusion: The Court upheld the Tribunal's view that, since the agreements had not been legally or factually acted upon before the end of the relevant financial year, no transfer of the capital asset and no real accrual of capital gains had taken place. The Revenue's appeal was accordingly dismissed.

Refund claim during pendency of appeal - Adjustment of refund against disputed demand - Stay of demand

HELD THAT: - The Court held that the petitioner had itself treated the adjusted amount as payment or adjustment against the outstanding tax liability for Assessment Year 2012-13 in support of its stay application and had obtained stay on that basis. In such circumstances, when the assessment dispute was still sub judice before the appellate authority, it was not proper to raise a claim for refund of that adjusted amount in the writ proceedings. The Court therefore left it open to the petitioner to raise such claim after disposal of the pending appeal. [Paras 4]

The prayer for refund at this stage was declined, with liberty to raise the claim after the appeal is decided.

Final Conclusion: The writ petition was disposed of by declining the petitioner's request for refund of the amount adjusted from A.Y. 2008-09 at the present stage, since the appeal concerning AY 2012-13 was still pending and the adjustment had been relied upon for stay. A direction was issued for expeditious disposal of that appeal.

Validity of reassessment notice - period of limitation - limitation period specified under section 149(1) -Computation of surviving time under deemed notice regime

HELD THAT:- Applying Union of India v/s Rajeev Bansal [2024 (10) TMI 264 - Supreme Court (LB)] read with Union of India vs. Ashish Agarwal [2022 (5) TMI 240 - Supreme Court] the Tribunal held that for notices originally issued between 01/04/2021 and 30/06/2021 under the old regime, the Revenue could use only the surviving time available up to 30/06/2021 for issuing notice under the new regime, after excluding the period during which the deemed show-cause notice remained stayed till supply of material and the two weeks allowed to the assessee to respond.

In the present case, since the first notice had been issued on 30/06/2021, only one day survived; after the assessee responded on 22/06/2022, the notice under section 148 ought to have been issued by 23/06/2022, and even with the benefit of the fourth proviso to section 149, not later than 29/06/2022. As the fresh notice was issued only on 25/07/2022, it was beyond limitation. [Paras 13, 14, 15, 21]

Final Conclusion: The Tribunal allowed both appeals, holding that the notices issued under section 148 on 25/07/2022 for assessment years 2013-14 and 2014-15 were time-barred under section 149 as interpreted in the governing Supreme Court decisions. Consequently, the reassessment proceedings and the assessment orders were quashed, and the other grounds were left open.

Levy of interest for deferment of advance tax - interest u/s 234C in respect of the first and second instalments of advance tax -Newly set up business and commencement of previous year - First-time business income under the proviso to section 234C(1)

Whether Levy of interest u/s 234C for the first and second advance tax instalments was not sustainable where the assessee's business commenced only on 17.10.2019 and no business income had arisen prior thereto?

HELD THAT: - Tribunal held that section 234C applies where income liable to advance tax was capable of estimation on the relevant due dates. Reading that provision with the proviso to section 3, it found that in the case of a newly set up business, the previous year begins only from the date of setting up, and before that date no income under the head business profits can be said to have accrued or arisen.

Since the assessee's operations commenced only on 17.10.2019 and the Revenue did not controvert absence of business activity before that date, there was no occasion to estimate or pay advance tax for the instalments due on 15th June and 15th September.

Tribunal further held that the case squarely fell within clause (c) of the proviso to section 234C(1), as the business income arose for the first time only after commencement of operations, and therefore interest could not be levied for the earlier instalments. The distinction drawn by the CIT(A) from Kumari Kumar Advani vs ACIT [2016 (7) TMI 1600 - ITAT MUMBAI] was rejected as the governing principle is non-anticipability of income on the relevant due dates, which applied with greater force where the business itself had not yet come into existence. [Paras 21, 22, 23, 24, 25]

Interest u/s 234C was directed to be recomputed by excluding the first and second instalments and restricting any levy only to the period after commencement of business, in accordance with law.

Final Conclusion: Tribunal allowed the appeal and held that interest under section 234C could not be levied for the advance tax instalments falling due before commencement of the assessee's business. AO was directed to recompute the interest accordingly.

Reassessment limitation - Sanction of specified authority - Validity of notice u/s 148 - effect of non-compliance with the statutory requirements governing limitation and approval

HELD THAT: - The Tribunal held that, on the AO's own determination, the income alleged to have escaped assessment did not exceed the threshold of Rs. 50,00,000/-. In such a case, under the new reassessment regime, no notice under section 148 could be issued after expiry of three years from the end of the relevant assessment year.

Tribunal further held, applying the principle stated in Union of India v. Rajeev Bansal 2024 (10) TMI 264 - SUPREME COURT (LB)] that prior approval under section 151 is a jurisdictional precondition and must be obtained from the authority prescribed with reference to the applicable time limit under the new regime. Since the impugned notice was issued beyond the permissible period and in breach of sections 149 and 151, the notice and the consequential reassessment were void in law. [Paras 5, 6]

The notice u/s 148 and the reassessment made in pursuance thereof were quashed, and the legal grounds were allowed.

Final Conclusion: The Tribunal allowed the appeal by holding that the reassessment notice issued for A.Y. 2017-18 was barred and unsupported by valid compliance with the statutory approval requirement. Consequently, the reassessment was quashed and the issues on merits were treated as academic.

Assessment u/s. 153A - Abated search assessments - Fresh claim in return filed pursuant to search notice - Lease rentals from SEZ and industrial park - Notional annual letting value of unsold stock-in-trade

Fresh claimin the return filed u/s 153A - Abated assessment - Business income - SEZ lease rentals - HELD THAT: - The Tribunal held that, since the assessments had abated on the date of search, the entire assessment stood open before the AO and the return filed in response to notice under section 153A substituted the earlier return. In such a situation, the assessee was not precluded from making a fresh or altered claim, and the principle applicable to reassessment for escaped income could not govern an abated search assessment. On merits, the Tribunal accepted that the CBDT circular clarifying tax treatment of income from letting out premises in an industrial park or SEZ reflected the correct legal position and applied to the assessee's IT park lease rentals; it also noticed consistency in the Department's acceptance of the same treatment in the assessee's own case for other years. [Paras 10, 12, 13, 14, 15]

The Revenue's challenge to the assessee's change of stand and to assessment of the lease rentals as business income was rejected.

Disallowance u/s. 14A read with Rule 8D - Disallowance in relation to exempt income - Book profit adjustment - HELD THAT: - The Tribunal noted that the same issue had already been decided in the assessee's own case for earlier years and found that the appellate order conformed to the settled legal position. It therefore sustained the direction restricting the disallowance under the normal provisions to the exempt income earned and upheld the view that, for book profit purposes, the computation could not be made by mechanically applying section 14A read with Rule 8D, though direct expenditure for earning exempt income could be considered under the applicable explanation. [Paras 16, 17]

The appellate relief on the disallowance under the normal provisions and under section 115JB was upheld.

Deemed annual letting value of unsold flats/units - Unsold flats as stock-in-trade -Prospective operation of section 23(5) - HELD THAT: - Following the co-ordinate bench decision noticed as Dosti Realty Limited. [2025 (9) TMI 431 - ITAT MUMBAI]the Tribunal held that the estimated computation of notional annual letting value of unsold inventory could not be sustained for the relevant assessment years. It specifically observed that the AO had relied on section 23(5), but that provision entered the statute only from assessment year 2018-19 and could not be used to support the impugned additions for the earlier years. The partial sustenance of the addition by the first appellate authority, therefore, also could not survive. [Paras 20, 21, 23]

The entire addition on account of deemed annual letting value was directed to be deleted, and the cross-objections on this issue were allowed.

Additions in the search assessment merely repeated additions made in the original assessment - HELD THAT:- As additions made in the assessment order passed u/s. 143(3) r.w.s. 153A of the Act were mere repetitions of additions made in the original assessment order passed u/s. 143(3) of the Act. The assessee has got the desired relief by virtue of the order passed by the Tribunal in appeal arising out of the original assessment. Therefore, CIT(A) has given only consequential effect. Hence, in our view, the present appeal of the department has been rendered infructuous

Final Conclusion: The Tribunal dismissed all three departmental appeals. It upheld the assessee's right, in abated search assessments, to offer the IT park lease rentals as business income, sustained the relief on the disallowance issue, deleted the entire addition towards deemed annual letting value of unsold units, and allowed the cross-objections.

Validity of reopening of assessment - Reason to believe - Borrowed satisfaction - Reassessment on third-party information - reassessment initiated based on general information received from the Insight Portal categorized as “High Risk Transactions” and the reassessment has been initiated on the basis of information received from the Investigation Wing / Insight Portal arising out of search proceedings in the case of certain entry operators

HELD THAT: - The Tribunal held that the recorded reasons rested only on general information that the assessee was one of the beneficiaries of accommodation entries allegedly provided by the named entry operators. The reasons did not disclose any specific transaction, specific entry, direct documentary linkage, routing of funds, or bank trail connecting the alleged material with the assessee. The statutory requirement is that there must be at least prima facie material linking the information relied upon with the belief of escapement of income.

Mere reproduction of third-party search findings, without independent examination of their applicability to the assessee's own transactions, amounted to absence of a valid reason to believe.

Tribunal further found that even the basic particulars necessary to sustain the reopening, including the nature of the alleged entries and the entities and accounts through which they were said to have moved, were missing from the reasons and the record relied upon by the AO [Paras 10, 11]

The reassessment was held to be unsustainable in law, and the assessee's appeal was allowed.

Final Conclusion: The Tribunal allowed the appeal by holding that the reopening was founded on generalized third-party information without any specific material linking the alleged accommodation entries to the assessee. The reassessment could not therefore be sustained.

Benami property attachment - Attachment of immovable properties - burden of proof​​​​​​​ - Tracing of converted property -Nexus between benami amount and attached property - deposit of the de-monetized currency. - HELD THAT: - The Tribunal held that the statutory definition of property includes property in its converted form and the proceeds from property, but the Initiating Officer must show that the benami amount was siphoned and utilised for acquisition of some other movable or immovable asset, or otherwise establish that the amount stood merged in the beneficial owner's assets so as to lose separate identity. In the absence of any material showing that the two immovable properties were acquired from the alleged benami amount, wholly or in part, the attachment of those properties could not be maintained. The principle stated in Commissioner of Income Tax Vs. Abhishek Industries Ltd. [2006 (8) TMI 123 - PUNJAB AND HARYANA HIGH COURT]. was held inapplicable on the facts in the absence of proof that the amount had merged into business assets. [Paras 5]

The release of the immovable properties was upheld and the appeal against that release was dismissed.

Final Conclusion: The Tribunal found no material connecting the attached immovable properties with the alleged benami amount and declined to interfere with their release. The appeal was accordingly dismissed.

Imposition of penalty under section 112(a) and 114AA - abetment rendering goods liable to confiscation - Knowingly Use of false documents in customs proceedings - benefit of Customs Notification No.97/2004 - Fraudulent export obligation fulfilment - Proportionality of penalty - participation in arranging third-party shipping bills to project fulfilment of EPCG export obligations.

Penalty for abetment rendering goods liable to confiscation - HELD THAT: - The Tribunal found that the case involved fraudulent use of EPCG licences and that the licences and EODCs had subsequently been cancelled, confirming the fraud. The appellant's unretracted statement admitted his role in procuring unrelated third-party shipping bills for consideration and using them to depict non-existent exports of the main noticee. On that basis, his acts were held to have rendered the goods liable to confiscation under section 111, attracting penalty under section 112(a). For the same reason, his knowing use of false shipping bills and related documents in customs business squarely attracted section 114AA. [Paras 5]

The penalties under sections 112(a) and 114AA were rightly imposable and were upheld on merits.

Proportionality of penalty - HELD THAT: - The Tribunal held that, while imposing penalty, the adjudicating authority must consider all relevant and material circumstances, including extenuating factors, particularly where strict liability is not evident from the statutory provisions in question. Since the managing director of the main noticee, who allegedly initiated the fraudulent arrangement, had been visited by the Settlement Commission with penalty of only one lakh rupees, the appellant's proportional liability could not be placed above that level even assuming an equally important role. On that comparative assessment, reduction of the penalty to fifty thousand rupees each under sections 112(a) and 114AA was considered sufficient to meet the ends of justice. [Paras 6, 7, 8]

The impugned order was modified by reducing the penalty to Rs. 50,000 each under sections 112(a) and 114AA.

Final Conclusion: The Tribunal sustained the appellant's liability to penalty for his admitted role in procuring and using false third-party shipping bills to fraudulently show fulfilment of export obligation. However, applying proportionality, it reduced the penalties to Rs. 50,000 each under sections 112(a) and 114AA and disposed of the appeal accordingly.

Redetermination of assessable value - Misdeclaration of value - essential character - Chartered Engineer's report and contemporaneous imports -incomplete computer system - Classification of imported goods - Incomplete or unfinished computer systems.

Whether there is mis-declaration of the quantity and value by the Appellant. - HELD THAT: - The Tribunal found that the Chartered Engineer had indicated the value in a casual manner without supporting material. It further found that the Revenue had produced no evidence of similar or identical imports at the value adopted and it was not even the Department's case that the importer had paid anything over and above the invoice price. On that basis, the finding of misdeclaration of value and the consequent re-determination of assessable value were held to be unsustainable. [Paras 13]

No case for re-determination of value was made out.

Classification of imported goods - Incomplete or unfinished computer systems - Essential character - HELD THAT: - The Tribunal held that the authorities had recorded no reasons for classifying the goods as incomplete computer systems. It noted that the Chartered Engineer had used the expressions 'computer cabinet cases' and 'bare bone systems' interchangeably, and held that a cabinet case with only a motherboard and fan could not be regarded as an unfinished or incomplete computer system. Since, without a CPU, the goods did not attain the essential character of a computer, and no technical opinion had been obtained by the Revenue to support the contrary view, the amended description adopted in the impugned orders was rejected. [Paras 14]

The goods could not be classified as incomplete or unfinished computer systems, and the impugned orders were liable to be set aside.

Final Conclusion: The Tribunal allowed the appeals and set aside the impugned orders. It held that neither the enhancement of value nor the altered description of the goods as incomplete or unfinished computer systems was legally sustainable.

Assessment and re-assessment - Claim for refund of excess paid CVD - Request for amendment of the Bill of Entry - Amendment of documents under Section 149 - Self-assessment and appealability - Verification, examination and reassessment under Section 17 -Judicial discipline - HELD THAT: - It is seen that the appellant has shown due diligence and good faith in pursuing his grievance, though the department did not find the procedure adopted to be as per law.

The Tribunal followed its earlier decision in M/s. Valeo India Pvt. Ltd. Vs Commissioner of Customs [2024 (4) TMI 484 - CESTAT CHENNAI], which had applied the law declared by the jurisdictional High Court that Sections 149 and 154 provide statutory machinery for altering an assessment, apart from the appellate remedy. In view of that binding position, and having regard to the appellant's diligence and the peculiar facts, the letter seeking reassessment was directed to be treated as an application for amendment of the Bill of Entry under Section 149, to be examined on the basis of contemporaneous documentary evidence. Only upon such amendment and reassessment would the appellant become entitled to pursue consequential refund in accordance with law. [Paras 5, 6]

The impugned order was set aside, the earlier letter was ordered to be processed as a request for amendment of the Bill of Entry under Section 149, and the matter was directed to proceed to reassessment and, if admissible, consequential refund after observance of natural justice.

Final Conclusion: Following the binding view of the jurisdictional High Court as adopted in its earlier decision, the Tribunal held that the appellant's request had to be processed as one for amendment of the Bill of Entry under Section 149, with reassessment on the basis of contemporaneous records. The appeal was accordingly disposed of by setting aside the impugned order and directing fresh consideration leading, if warranted, to consequential refund.

Rejection of the application for bringing additional documents on record suffered from an error apparent on the face of the record -sufficient cause -Production of additional evidence before Tribunal - Recall of order for failure to apply correct legal test- Whether there is an error apparent on the face of the record in the order by which the application filed by the appellant for bringing on record additional evidence was rejected. -HELD THAT: - In Abdul Gaffar vs Commissioner of Customs- [1992 (9) TMI 184 - CEGAT, NEW DELHI], this Tribunal after examining the provisions of rule 23 of the 1982 (Procedure) Rules held that the requirement for examining an application filed for production of additional evidence is that such documents should enable the Tribunal to pass orders or for any sufficient cause. In this connection, the Tribunal placed reliance upon the judgment of the Calcutta High Court In the goods of Premchand, wherein it was held by the High Court that the admissibility of additional evidence determines whether the appellate court requires the evidence to enable it to pronounce judgment or for any other substantial cause. The words ‘or for any substantial cause’ was also examined by this Tribunal and in this context the decision of the Privy Council in Parsotim vs Lal Mohan [1931 (3) TMI 26 - BOMBAY HIGH COURT] was referred to and it was held that these words refer to the requirement of the Court.

The Tribunal held that under rule 23, additional evidence may be permitted where the documents are required to enable the Tribunal to pass orders or where sufficient cause exists, and reasons must be recorded on that basis. The earlier order rejected the application only on the ground that the documents had not been filed during adjudication and that no good reason had been shown for such non-filing, without adverting to the governing test under rule 23. Since the documents sought to be produced related to the gold bars forming the subject matter of penalty and could assist the Tribunal in deciding the appeal, the omission to apply the correct legal standard constituted a mistake apparent from the record. The Tribunal also held that the departmental authorities relied upon did not assist the department, as one dealt only with the limited scope of apparent error in a different context and the other did not concern the power to rectify such an error. As the final order had been passed after the erroneous rejection of the additional documents application, it also had to be recalled, with the effect of the documents left open for consideration when the appeal is heard afresh. [Paras 20, 21, 22, 23, 24]

The order rejecting the application for additional evidence was recalled, the application was allowed, and the final order was also recalled for fresh hearing of the appeal without expressing any view on the merits of the additional documents.

Final Conclusion: The Tribunal held that its earlier rejection of the appellant's request to file additional documents was vitiated by failure to apply the correct test under rule 23, amounting to a mistake apparent from the record. The rejection order and the consequential final order were recalled, the application for additional evidence was allowed, and the appeal was directed to be heard afresh.

Export transaction value - Rejection of declared value - reason to doubt - Bank Realization Certificate - higher contemporaneous value without recording cogent reasons and following the prescribed valuation procedure - HELD THAT: - The adjudicating authority has adopted the figure of Rungta Sons Pvt Ltd i.e., USD 128 FOB. From the table of contemporaneous prices mentioned in the order of the adjudicating authority, it is clear that there were three prices below and two prices above the declared price of appellant but the adjudicating authority has chosen the highest price. It cannot be said to be contemporaneous, especially in a situation where no doubt has been raised about declared value.

Hon’ble Supreme Court in the case of Century Metal Recycling (P) Ltd Vs UOI [2019 (5) TMI 1152 - SUPREME COURT], inter alia, held that ‘rejection of the transaction value declared by importer without giving cogent and good reasons in terms of Section 14(1) of the Customs Act, 1962 and Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, not permissible. Enquiry prior to such rejection and giving of valid reasons for doing so by proper officer, is necessary. Requirement of giving reasons, both at the preliminary as well as the second stage of enquiry i.e., when doubting the truth or accuracy of the value declared, mandatory in nature’.

Transaction value/invoice price corroborated by sale/purchase contract and BRC cannot be rejected without substantive evidence that the export price was not true or genuine.

The Tribunal held that the dispute was confined to substitution of the declared unit price by a higher price adopted from another exporter. The adjudicating authority had chosen the highest figure from the contemporaneous prices even though some comparable prices were below the appellant's declared price, and no doubt had been raised as to the truth or accuracy of the declared value. The statutory principle is that export value is the transaction value, and departure from it is permissible only upon recording reasons for doubting the declared value and following the prescribed procedure for its rejection. As no reason had been given to reject the declared value, and no doubt had been raised regarding the transaction value or the Bank Realization Certificate, the declared price reflected in the bank realization had to be accepted for finalization of assessment. [Paras 8, 9, 10, 13, 14]

The impugned appellate order was set aside, and the matter was remanded to finalize the assessment on the basis of the transaction value as reflected in the Bank Realization Statement.

Final Conclusion: The Tribunal held that, in the absence of any valid reason or prescribed procedure for rejecting the declared export value, the assessment could not be finalized on the basis of a higher contemporaneous price. The impugned order was therefore set aside and the matter remanded for finalization on the basis of the transaction value reflected in the Bank Realization Statement.

Meaning of member in oppression and mismanagement proceedings - absence of formal entry of parson's name in the register of members - Equitable construction of membership requirement - Beneficial ownership - Locus standi - Whether the expression “member” as appearing under Sections 397 and 398 is to be construed strictly in accordance with Section 41 of the Act, 1956, Or whether it must be understood in the broader sense contemplated under Section 2(27)​​​​​​​ - HELD THAT: - The principle that equitable considerations must inform the interpretation of Sections 397 and 398 has also received approval in judicial precedent concerning analogous situations. In World Wide Agencies Pvt. Ltd. [1989 (12) TMI 245 - SUPREME COURT], this Court held that the legal representatives of a deceased shareholder, whose names had not yet been entered in the register of members, could nonetheless maintain a petition under Sections 397 and 398. The Court reasoned that such an interpretation was necessary to advance the purpose of the statute and to avoid defeating substantive rights through technicalities.

The Madras High Court in S.V.T. Spinning Mills P. Ltd. and Ors. v. M. Palanisami and Ors. [2009 (7) TMI 776 - HIGH COURT OF MADRAS], reiterated that the jurisdiction under Sections 397 and 398 is equitable in nature and that the meaning of the expression “member” must be construed in a manner consistent with the object of protecting minority shareholders.

The Court held that the statutory scheme does not confine the expression member in Sections 397, 398 and 399 to the technical requirement of entry in the register under Section 41(2). Section 2(27) contains the wider definitional framework, while Section 41 prescribes recognised modes of acquisition of membership and was not intended to make entry in the register the sole and exclusive test in every case. Since the jurisdiction under Sections 397 and 398 is equitable and remedial, maintainability must be assessed in a manner that advances protection against oppression and mismanagement rather than by an unduly technical construction. Applying that principle, the Court accepted the cumulative factual findings that the respondent had been consistently recognised by the company as having a proprietary stake, including through contemporaneous correspondence, conciliation material, his induction as Managing Director, the rebranding of the hospital reflecting his trading concern, and acceptance and utilisation of his investment in the company's business. Those circumstances justified treating him as a member for the limited purpose of invoking the statutory remedy. [Paras 27, 28, 29, 30, 31]

The respondent was rightly treated as a member entitled to maintain the petitions under Sections 397 and 398, notwithstanding the absence of formal entry of his name in the register of members at the relevant time.

Final Conclusion: The Court upheld the view that the respondent could be treated as a member for the purposes of proceedings under Sections 397 and 398 of the Companies Act, 1956, despite the absence of formal entry in the register of members. The appeals were dismissed and the amount deposited before the Court, with accrued interest, was directed to be released to the respondent.

Corporate insolvency resolution process (CIRP) - application under Section 7 - leasehold lands held through wholly owned or controlled subsidiary companies - assets and development rights connected with the subsidiary-held projects -Transfer of land without GNIDA approving such transfer - Resolution plan - recovery of recalculated principal dues without penal components - belated claim in relation to its alleged dues - Separate Legal Entity - Corporate veil in insolvency of group companies - class voting of homebuyers - Penal interest and time-extension charges.

Class voting of homebuyers - severability of resolution plan - HELD THAT: - The Court found that GNIDA's challenge before the appellate tribunal concerned only the projects standing on its leased lands and had no connection with Earth Copia, which was on freehold land. The appellate tribunal, therefore, erred in disturbing approval of Alpha's plan for that project as well. The Court further held that, once the homebuyers as a class had voted through their authorised representative in accordance with the statutory voting mechanism, individual dissenting buyers could not maintain a separate voice against the majority decision, particularly when their earlier challenge to the same plan had already been rejected and had attained finality. [Paras 29, 30, 31, 32]

Alpha's resolution plan, insofar as it related to Earth Copia, was held to survive and stood restored.

Lifting of corporate veil - subsidiary assets in CIRP - development rights over leasehold land - HELD THAT: - The Court held that, although a holding company and its subsidiaries are ordinarily distinct legal entities, the corporate veil may be lifted where associated companies are in reality part of one concern. Applying that principle, the Court found that the two companies holding lease rights in Earth TechOne and Earth Sapphire Court were wholly owned subsidiaries of EIL, while ETIPL had been created as the special purpose company required under GNIDA's own scheme and was overwhelmingly controlled by EIL. The three entities had no independent commercial role apart from holding GNIDA's leases, whereas EIL was the real driving force behind development of all three projects and had also been making payments towards GNIDA's dues. GNIDA was fully aware that EIL was undertaking construction and had itself approved arrangements in which EIL remained the dominant entity. In these circumstances, the subsidiary companies were only a front and this was a fit case to pierce the veil. The Court, therefore, held that the appellate tribunal erred in treating the projects as wholly outside the CIRP of EIL and in proceeding on the footing that only the subsidiaries' separate juristic character concluded the matter. [Paras 53, 54, 55, 56]

The finding that the leased project assets could not be dealt with in EIL's CIRP was reversed, and the resolution plans could proceed on the basis of EIL's integral role in those projects.

Entitlement to levy penal interest, penal charges or time-extension penalties - principal dues recalculated without such components. -HELD THAT: - The Court held that GNIDA had materially contributed to the impasse by failing to monitor the projects, by not taking timely coercive steps despite longstanding defaults and complaints from buyers, and by remaining inactive even after being informed of the CIRP and called upon to furnish its claims. Its conduct was found to be inconsistent, belated and marked by lack of diligence. In that background, GNIDA stood disentitled to recover penal interest, penal charges and time-extension penalties. At the same time, the Court did not deprive GNIDA of the principal amounts lawfully due under the lease arrangements. Those dues were directed to be recalculated after excluding the penal components and were made payable by the successful resolution applicants themselves, without passing the burden on to the homebuyers. The Court further held that GNIDA would not be entitled to any interest even on the recalculated principal for the twenty-four month payment period granted for clearance of those dues. [Paras 49, 50, 51, 67, 68]

GNIDA's claim to penal components was rejected; only the recalculated principal dues were held recoverable in instalments, and the restored resolution plans were directed to be implemented accordingly.

Final Conclusion: The Court restored the resolution plans of Alpha and Roma, including Alpha's plan for Earth Copia, and rejected GNIDA's challenge save to the extent of permitting recovery of recalculated principal dues without penal components. The delayed appeal and supporting or repetitive intervention matters were dismissed, and the successful resolution applicants were permitted to proceed with completion of the stalled projects subject to payment directions in favour of GNIDA.

Rejection of the Section 9 insolvency application - barred by limitation - Failure to consider material documents - date of default - Acknowledgment of liability - Part payment -HELD THAT: - The Court found that, although the demand notice mentioned a default date, it also recorded that part payments had been made as per the ledger account, that the last payment was made on 30.05.2015, and that there was a confirmation of account dated 01.04.2017. The section 9 petition likewise referred to the running ledger account and the confirmation letter as annexed documents. Since the NCLAT did not consider these documents while deciding limitation, its conclusion could not be sustained and the appeal required fresh consideration in accordance with law, with all contentions left open. [Paras 9, 10, 11]

The impugned order was set aside and the appeal was restored to the NCLAT for fresh consideration on limitation and the other contentions in accordance with law.

Final Conclusion: The Supreme Court held that the NCLAT had not considered the ledger account and account confirmation relied upon by the operational creditor while deciding limitation. On that procedural defect, the impugned order was set aside and the matter was remitted to the NCLAT for fresh consideration, with all contentions kept open.

Admission of Section 7 application - Non-application of mind - illegality on the part of the NCLT - Corporate Debtor to pay the debt of the principal borrower - Co-extensive liability - Corporate guarantee - Financial debt - Section 10A bar - Invocation of guarantee - Suppression of material facts - Default of guarantor - Contrary Judgement delivered by the Same Bench

Whether under the Guarantee Deed dated 30.06.2010 the Corporate Debtor was obliged to discharge the debts of principal borrower- M/s. Sinnar Thermal Power Limited? - HELD THAT: - On a plain reading of the sanction letter and the deed dated 30.06.2010, the obligation undertaken by the corporate debtor was confined to timely infusion of equity share capital and meeting cost overruns by further equity or funds, without recourse to the lenders or project assets. The guarantee did not contemplate repayment of the loan liability of the principal borrower. The deed dated 11.01.2012 expressly recorded release of the corporate debtor from the existing corporate guarantee pursuant to the scheme, while preserving only a limited responsibility if the substituted primary obligor failed to fulfil the transferred obligations. The recall notice and the Section 7 application nevertheless proceeded on the footing that the corporate debtor was liable to pay the outstanding loan amount of the principal borrower, which was contrary to the terms of the governing documents. The Tribunal therefore held that no basis existed to treat the corporate debtor as having committed default in respect of a financial debt of the principal borrower. [Paras 15, 19, 20, 21]

The Section 7 proceeding founded on the guarantee deeds was held to be misconceived and not maintainable against the corporate debtor.

Whether various undertakings as relied by Financial Creditor including Cost Overrun Undertaking dated 21.11.2016 obliged the Corporate Debtor to discharge financial obligation of Principal Borrower towards lenders? - HELD THAT: - The Tribunal examined the cost overrun undertaking and the other undertakings relied on by the bank and found that they were directed to equity infusion, meeting shortfalls, retaining management and shareholding, or indemnifying specified contingencies. Even where the corporate debtor was required to step in, its obligation was limited to making good shortfall in connection with cost overrun or allied matters, and not to repay the principal borrower's loan dues. The adjudicating authority erred in treating these documents collectively as creating an obligation in respect of the debt advanced to the principal borrower without adverting to their actual terms. [Paras 24, 25, 29]

The undertakings relied on by the bank were held insufficient to establish any liability of the corporate debtor to discharge the principal borrower's debt.

Whether Section 7 application filed by the Appellant was barred by Section 10A? -Invocation of guarantee - Date of default of guarantor - HELD THAT: - The Tribunal held that the adjudicating authority was wrong in treating the principal borrower's NPA date as the date of default of the corporate debtor. Since the Section 7 application itself relied on the recall notice dated 30.09.2020 invoking the guarantee and granting three days for payment, the guarantor's default could arise only thereafter. Applying the principle stated in Pooja Ramesh Singh vs. State Bank of India and Others [2023 (5) TMI 17 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI], the default of the principal borrower is not the default of the guarantor, and the guarantor's default commences only on non-payment after invocation. As the default, on the bank's own showing, arose on 04.10.2020, it fell within the period covered by Section 10A. [Paras 31, 32]

The Section 7 application was held to be clearly barred by Section 10A.

Non-application of mind - Suppression of material document - Inconsistent adjudication -HELD THAT: - The Tribunal found that the adjudicating authority did not properly examine the guarantee deed dated 30.06.2010, did not notice the subsequent deed dated 11.01.2012 despite a specific plea that it had been suppressed, and reached a conclusion on existence of financial debt without addressing the nature of the obligations actually undertaken. It further noted that the same Bench, on the same day, had rejected another Section 7 application against the other corporate guarantor arising from the same recall notice and debt on the ground that no financial debt existed. The inconsistent treatment of the same underlying transaction furnished an additional and independent indicator of non-application of mind. [Paras 34, 35]

The impugned order was held unsustainable on the additional ground of non-application of mind.

Final Conclusion: The appeal was allowed. The admission of the Section 7 application was set aside, and the petition against the corporate debtor was dismissed, the Tribunal holding that the documents relied on did not create a liability to repay the principal borrower's debt and, in any event, the application was barred by Section 10A.

Admission of the Section 9 application - Claim arising out of the supply component executed under the inter se agreement between the joint venture partners - Operational debt - Acknowledgment of debt - Corporate Insolvency Resolution Process - Withdrawal of CIRP​​​​​​​ - Violation of Section 10A​​​​​​​ - Pre-existing dispute.

Operational debt in joint venture arrangement - HELD THAT: - The Appellate Tribunal held that, though the parties had jointly bid for and obtained the contract, they had thereafter entered into a separate agreement and addendum clearly allocating their respective obligations. Under those documents, the respondent alone was to execute the supply component, and the corporate debtor was expressly made responsible to pay for the supplies after receipt of the corresponding amount from OPTCL. The Section 9 application was confined to unpaid amounts for supplies and was not founded on profit sharing under the joint venture. The corporate debtor's letter acknowledging receipt of payment from OPTCL towards supplies and admitting the balance payable for supply of materials established the debt and showed that the liability was referable to goods supplied, not to any claim as a co-venturer in profits. The decisions cited by the appellant on general profit-sharing or joint development arrangements were distinguished because, in the present case, the contractual allocation of supply obligations and payment responsibility was specific and independent. [Paras 16, 19, 21, 22]

The Tribunal affirmed that the unpaid amount for supplies made by the respondent was an operational debt, and the admission of the Section 9 application on that basis was justified.

Section 10A bar - Date of default - HELD THAT: - The Tribunal rejected the Section 10A objection for two reasons. First, no factual foundation for that plea had been laid in the reply before the Adjudicating Authority. Secondly, Section 10A bars initiation only where the default occurred during the protected period; it does not turn merely on the dates of invoices. Under the contractual arrangement, the respondent became entitled to payment when the corporate debtor received the corresponding payment from OPTCL, and the date of default pleaded in the application was 31.10.2021, which was beyond the Section 10A period. In these circumstances, and in the absence of material showing that the default itself fell within the prohibited period, the statutory bar was held inapplicable. [Paras 23, 25]

The plea founded on Section 10A was held to be without merit.

Pre-existing dispute - Acknowledgment of liability - HELD THAT: - The Tribunal held that the letter written by the respondent to OPTCL did not evidence any pre-existing dispute as to the supply dues. On the contrary, that communication proceeded on the footing that the corporate debtor had already received payment from OPTCL, had acknowledged its liability to the respondent, and had nevertheless failed to release the admitted amount. Since the Section 9 claim related only to the supply component and the corporate debtor had already acknowledged liability exceeding the threshold, the subsequent request made to OPTCL for intervention could not be treated as a genuine pre-existing dispute defeating the insolvency application. [Paras 27]

The contention that the debt was disputed before issuance of the demand notice was rejected.

Final Conclusion: The Appellate Tribunal upheld the admission of the Section 9 application, holding that the respondent's unpaid supply dues under the inter se contractual arrangement constituted operational debt, that Section 10A was not attracted, and that no pre-existing dispute was established. The appeal was dismissed, leaving it open to the parties to pursue settlement and withdrawal under Section 12A in accordance with law.

Validity of the demand notice issued in Form 3 - Operational debt - Acknowledgement of Debt - Limitation - Plausible Contention - Pre-existing dispute - Rejection of Section 9 application.

Section 8 demand notice - HELD THAT: - The Appellate Tribunal held that where the operational debt involves generation of invoices, the creditor cannot avoid furnishing the invoice material by choosing Form 3. Applying the ratio of Neeraj Jain Vs Cloudwalker Streaming Technologies Pvt. Ltd. [2020 (3) TMI 99 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI], it held that the form to be used depends on the nature of the transaction and not on the creditor's convenience. Since the appellant itself stated in the demand notice that the debt had become due under invoices, but did not provide invoice particulars and had also failed to attach even the email and prior legal notice mentioned in the form, the Adjudicating Authority was justified in holding that the Section 8 notice was defective. [Paras 13]

The finding that the Section 8 demand notice was defective was affirmed.

Pre-existing dispute - Notice of dispute - Section 9 maintainability - HELD THAT: - The Appellate Tribunal found that the reply dated 05.07.2018 categorically denied the liability, disputed purchase of goods from the appellant, questioned the nature of the transaction, and rejected the amount claimed. This constituted a notice of dispute attracting Section 9(5)(ii)(d). Relying on Mobilox Innovations Pvt. Ltd. Vs Kirusa Software Pvt. Ltd. [2017 (9) TMI 1270 - SUPREME COURT], the Tribunal reiterated that if the defence discloses a plausible dispute requiring further adjudication and is not spurious, hypothetical or illusory, the insolvency application must be rejected. On that test, the present matter involved disputes requiring adjudication by a competent court and was not a case of undisputed operational debt. [Paras 17, 18, 19, 20]

The rejection of the Section 9 application on account of pre-existing dispute was upheld.

Final Conclusion: The appeal was dismissed and the order rejecting the Section 9 application was affirmed. The Appellate Tribunal held that the demand notice was defective and that the corporate debtor had raised a real pre-existing dispute, while leaving it open to the appellant to pursue other remedies in accordance with law.

Entitlement to permission to travel abroad on the basis of the purchase order relied upon - Efflux of Time - Interpretation of contractual duration - Continuation of Proceedings - Right to travel abroad to carry on his business.

Permission to travel abroad by bankrupt - HELD THAT: - The Appellate Tribunal held that, although an appellate forum may consider relief in light of subsequent events and is not barred merely because the period originally prayed for before the Adjudicating Authority has expired, the entitlement claimed still depended upon the correct construction of the purchase order. On a cumulative reading of the purchase order, the stipulation of "13 months plus six months" and the expression parallel run for six months showed that the second component was to operate simultaneously with the implementation work and not consecutively after the initial thirteen-month period. This interpretation was reinforced by the appellant's own pleading that the duration of the purchase order was thirteen months. Once that period had lapsed, the very foundation for seeking permission to travel abroad on the strength of that purchase order ceased to exist. [Paras 12, 13, 14, 15]

The challenge to rejection of the travel application did not merit interference; however, liberty was reserved to the appellant to file a fresh application before the Adjudicating Authority if any subsequent occasion for foreign travel arises, to be considered independently in accordance with law.

Final Conclusion: The appeal was disposed of on the footing that the purchase order relied on by the appellant no longer supported any claim for permission to travel abroad. The appellant was left free to move a fresh application before the Adjudicating Authority if any new circumstance requiring such travel arises.

Modification of resolution plan - Email forwarding the addendum - maximization of value of assets of the CD - Evaluation of the Resolution Plan by Evaluation Matrix - Commercial wisdom of Committee of Creditors - Material irregularity - feasibility and viability - transparent resolution process.

Modification of resolution plan - Challenge process - Final and binding financial proposal - HELD THAT: - Appellant has clear case was that with the Addendum Vedanta would have scored 35 marks on NPV and significantly higher marks on upfront and equity infusion. The above clearly indicate that the Addendum was submitted by the Appellant with intent to improve the Evaluation Matrix of the Appellant and to increase its scoring to come up as the highest scoring resolution plan. As noted above, the Process Note clearly prohibited any change or modification of the financial proposal of the Resolution Applicant which have become final in the Challenge Process. The modification which was sought to be introduced by the Addendum by the Appellant cannot be said a clarification rather it substantially sought to improve the scoring of the Appellant with respect to upfront payment and equity infusion.

The present is a case, where reasons for not accepting the Addendum are reflected in the discussion of the CoC 24th meeting. The reason has been that the Addendum was duly discussed and all members of the CoC have noticed and deliberated that Addendum cannot be accepted as per RFRP and Process Note. CoC having noticed the relevant clauses of the Process Note and views of the CoC having taken, the decision not to accept the Addendum, which was submitted after submission of resolution plan by the Appellant, the decision of the CoC not to accept the Addendum cannot be judicially reviewed in exercise of jurisdiction by the Adjudicating Authority or by this Tribunal. We have noticed judgment of Hon’ble Supreme Court in Elegna Co-op. Housing and Commercial Society Ltd.[2026 (1) TMI 902 - SUPREME COURT], where it is laid down that commercial wisdom of the CoC is paramount and is not ordinarily amenable to judicial review, the width of powers vested in the CoC carries with it a corresponding duty of responsibility. Any extraordinary or non-routine decision taken by the CoC must, therefore, be supported by cogent reasons duly recorded in writing.

Present is a case where the reasons for CoC not accepting the Addendum are fully reproduced in the minutes of the 24th CoC meeting, as noted above. Admittedly, the Appellant was not permitted to amend or modify its resolution plan by the CoC. Sending Addendum was unilateral and unsolicited action by the Appellant, which was to improve its resolution plan. Appellant’s case itself, as has been noticed by the Adjudicating Authority, as noted above, was that by Addendum the scoring of Appellant shall substantially increase. All the resolution plans were considered in the 23rd CoC meeting on 07.11.2025 and decision was taken to simultaneously vote on all the resolution plans, which decision was taken after giving opportunity to the representatives of all Resolution Applicants.

The decision taken by the CoC not to accept the Addendum cannot be said to be invalid or untenable decision. The CoC which constitutes of the financial institutions are well aware of their interest and fully competent to watch the interest of all stakeholders. The scheme of IBC is designed in such a manner that interest of all stakeholders in the CIRP is taken care of by the CoC in a time bound manner. Thus, the decision of the CoC in its 24th CoC meeting held on 14.11.2025, not to take the Addendum into consideration is neither invalid nor untenable decision.

The addendum was a prohibited modification of the appellant's resolution plan, and the CoC's decision not to take it into consideration was valid and tenable.

Evaluation matrix - Commercial wisdom of Committee of Creditors - Feasibility and viability - Material irregularity - HELD THAT: - The Tribunal held that the statutory and contractual framework required evaluation of resolution plans as per the evaluation matrix, which assigned weight not only to NPV but also to upfront cash recovery and other quantitative and qualitative parameters. The process note expressly stated that the CoC was under no obligation to approve the plan with the highest NPV or the highest score. The minutes of the 23rd CoC meeting showed that BDO's report was considered, queried, and revised at the CoC's instance, after which the CoC deliberated on the plans and voted; this negatived the allegation that the CoC had surrendered its jurisdiction. The appellant did not challenge the scoring as being contrary to the evaluation matrix. The resolution professional's email expressing a tentative view that the addendum appeared contrary to the process note, while seeking the CoC's views, was not a material irregularity. Judicial review could not extend to supplanting the CoC's commercial assessment merely because the appellant had offered a higher NPV. [Paras 83, 85, 86, 87, 88]

The CoC's approval of the competing plan was a commercial decision taken after due evaluation, the appellant's plan was considered, BDO only assisted the process, and no material irregularity was established against the resolution professional.

Approval of resolution plan - Limited judicial review - Compliance with statutory requirements - HELD THAT: - The Tribunal noted that the Adjudicating Authority had examined the approved plan on the parameters required for approval and found compliance with the relevant provisions of the Code and the CIRP Regulations. Once the plan had been approved by the requisite voting share and no breach of the statutory requirements or other permissible ground of interference was shown, there was no basis to disturb the order approving the plan. The appellant's challenge was essentially an invitation to re-evaluate commercial merits, which was impermissible. [Paras 89, 90, 91, 92]

The dismissal of the appellant's application and the approval of the successful resolution plan were upheld.

Final Conclusion: The Appellate Tribunal held that the appellant's post-submission addendum was an impermissible modification of its final resolution plan, that the CoC validly rejected it, and that the subsequent evaluation and approval of the successful resolution plan were in accordance with the Code, the CIRP Regulations, the RFRP and the process note. Finding no material irregularity or permissible ground to interfere with the CoC's commercial decision or the Adjudicating Authority's orders, both appeals were dismissed.

Seeking regular bail - syndicate of criminals involved in manufacture and sale of spurious medicines, which are used in treatment of cancer - failed to produce any drug license - proceeds of crime so generated through sale of spurious medicines by the co-accused persons were transferred through Hawala transactions - Admissibility of statements recorded under Section 50 PMLA - Foundational facts for proceeds of crime - monetary transactions to the predicate offence - Prolonged pre-trial incarceration - Presumption of Proceeds of Crime - Self-Incriminating Statement - Reasonable Grounds to Believe - statutory twin conditions for bail under PMLA - Right to Speedy Trial - Selective Arrest - Economic Offence.

Successive bail after dismissal of SLP in limine - Judicial propriety in subsequent bail consideration - HELD THAT: - The Court held that dismissal of a special leave petition in limine neither affirms the order under challenge nor attracts subsequent bail court must, however, examine the reasons for the earlier rejection and record the fresh grounds that justify a different view. On that basis, the Court considered itself competent to re-examine the bail claims of the applicants whose earlier bail applications had been rejected, particularly since the earlier orders had not examined the strength of the predicate offence from the standpoint of foundational facts. [Paras 5]

The earlier rejection of bail and dismissal of the SLPs in limine did not preclude the Court from taking a fresh view on legally sustainable new grounds.

Admissibility of statements under Section 50 PMLA - Self-incriminatory statements in custody - Section 25 of the Evidence Act - HELD THAT: - Relying on the law explained in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] and Prem Prakash [2024 (8) TMI 1412 - SUPREME COURT], the Court held that when an accused is in custody and the same investigating agency records a self-incriminatory statement under Section 50 PMLA, such statement is hit by the principle underlying Section 25 of the Evidence Act because the maker cannot be regarded as operating with a free mind. Examining the record, the Court found that the statements of all the applicants were recorded after their arrest by the ED and appeared substantially uniform. The Court therefore held that the self-implicating portions of those statements could not be relied upon, and declined to follow the earlier coordinate bench view insofar as it had proceeded on those statements. [Paras 5]

The statements under Section 50 PMLA, being self-incriminatory statements recorded in custody, were discarded against the applicants.

Foundational facts for proceeds of crime - Presumption under Sections 23 and 24 PMLA - Predicate offence linkage- absence of prima facie establishment of foundational facts connecting the alleged monetary transactions with the predicate offence and the alleged proceeds of crime. - HELD THAT: - The Court held that the presumption under Sections 23 and 24 PMLA arises only after the prosecution prima facie establishes the foundational facts that a scheduled offence was committed, that the property was derived or obtained as a result of that criminal activity, and that the person concerned was involved in a process or activity connected with such property. On scrutiny of the material, the Court found the ED's case deficient on these foundational requirements. The investigation had not sufficiently addressed the source chain of empty vials, the role of hospital personnel, the end users of the allegedly spurious drugs, or the question whether the contents were in fact spurious in a manner connecting the applicants' transactions to the predicate offence. The Court also found the WhatsApp chats to be, prima facie, ordinary business communications and not of such significance as to justify continued deprivation of liberty. [Paras 5, 6, 7, 10]

The Court found the material on foundational facts to be hazy and insufficient, making it difficult at the bail stage to clearly identify any proceeds of crime attributable to the applicants.

Selective arrest - Fairness in curtailment of liberty - HELD THAT: - The Court held that although arrest is within the investigating officer's prerogative, selective treatment assumes significance when liberty is curtailed. It noted that several persons alleged to have played roles similar to or graver than those ascribed to the applicants had not been arrested, and some had not even been named as accused. The explanation that such persons were not arrested because they furnished information was rejected, since acceptance of that rationale would imperil the protection against self-incrimination. In the context of an offence punishable up to seven years, the Court regarded such differential treatment as a factor militating against continued detention of the applicants. [Paras 8]

The Court treated the selective arrest pattern as a circumstance undermining the fairness of continued incarceration of the applicants.

Prolonged pre-trial incarceration - Right to speedy trial - Article 21 - HELD THAT: - The Court held that the constitutional guarantee of speedy trial under Article 21 can override continued pre-trial detention even in prosecutions under PMLA. It noted that the applicants had remained in custody for more than two years, the ED itself stated that further investigation would require at least six more months, and there was no likelihood of the trial commencing, much less concluding, in the foreseeable future. In such circumstances, pre-trial detention could not be permitted to assume the character of punishment. [Paras 9]

The long incarceration and absence of any realistic timeline for trial strongly favoured grant of bail.

Twin conditions for bail under PMLA - Reasonable grounds for believing not guilty - HELD THAT: - Having found that the self-incriminatory custodial statements under Section 50 PMLA were unusable against the makers, and that the ED had not clearly established the foundational facts necessary to connect the applicants' transactions with identifiable proceeds of crime, the Court held that there were reasonable grounds for believing that the applicants were not guilty of the offence alleged. As regards the second condition, the Court found no material showing antecedents or propensities indicating likelihood of commission of any offence while on bail. The fact that some applicants were already on bail in the predicate offence and the others were not even charge-sheeted there also weighed with the Court. [Paras 10]

The Court held that the applicants satisfied both limbs of Section 45 PMLA and were entitled to regular bail.

Final Conclusion: The Court held that the applicants' custodial statements under Section 50 PMLA could not be relied upon against them, that the ED had failed to clearly establish the foundational facts necessary to connect the alleged transactions with proceeds of crime, and that prolonged incarceration without any reasonable prospect of trial militated against continued detention. All five applicants were therefore granted regular bail, subject to conditions.

Demand-cum-show cause notice issued beyond the period prescribed under Section 73(1) - Limitation as jurisdictional fact - Writ Maintainability - availability of an alternative remedy- Whether an adjudicating order founded upon a demand notice which is ex facie barred by limitation can be sustained in law, and whether such defect strikes at the very jurisdiction of the authority so as to warrant interference under Article 226 of the Constitution of India. - HELD THAT: - The law on the point is no longer res integra. In Whirlpool Corporation Vs Registrar of Trade Marks, Mumbai and Ors.[1998 (10) TMI 510 - SUPREME COURT], the Apex Court authoritatively held that notwithstanding the availability of an alternative remedy, a writ petition would be maintainable in, inter alia, cases where the proceedings are wholly without jurisdiction.

The said principle is not merely procedural but is rooted in the constitutional duty of the High Court to prevent abuse of statutory power. Where the assumption of jurisdiction itself is in question, relegating a party to an appellate forum would amount to compelling it to participate in proceedings which are void ab initio.

The distinction between the normal period and the extended period is also not cosmetic. The extended period can be invoked only upon satisfaction of stringent jurisdictional facts, namely fraud, suppression, or wilful misstatement with intent to evade tax.

The Court held that the limitation prescribed under Section 73(1) is not merely procedural but conditions the very exercise of power to issue a show cause notice. The distinction between the normal and extended periods was treated as dependent on jurisdictional facts, and once the statutory period had expired, the authority stood divested of power to initiate proceedings. On the admitted dates, the notice issued on 11.04.2022 in respect of the financial year 2016-2017 was beyond even the extended period and was therefore ex facie time-barred. Since the proceedings were founded on a notice issued without jurisdiction, the resulting adjudication was non est, and the existence of an appellate remedy did not bar interference under Article 226 in a case falling within the exception recognised for proceedings wholly without jurisdiction. [Paras 19, 20, 21, 22, 23]

The demand-cum-show cause notice was held to be barred by limitation, the proceedings pursuant thereto without jurisdiction, and the impugned adjudicating order was quashed.

Final Conclusion: The Court held that the show cause notice issued for the financial year 2016-2017 was ex facie barred by limitation and that the proceedings founded on it were without jurisdiction. The writ petition was therefore entertained despite the alternative appellate remedy, and the adjudicating order was quashed.

Power of rectification under Section 35C(2) of the Central Excise Act, 1944 - Demand of service tax under Mining Service and Goods Transport Agency (GTA) Service - Application for Rectification of Mistake - seeking modification of the said final order to the extent of confirmation of demand under GTA service - Mistake apparent on the face of the record - re-appreciation of evidence - reverse charge mechanism - limitation - bona fide belief.

Rectification of mistake - Mistake apparent on the face of the record - HELD THAT:- The Tribunal held that its power under Section 35C(2) is confined to correction of an obvious and patent error and cannot be invoked for re-argument, re-appreciation of evidence, or substitution of one view for another. On the record, the final order had already examined the appellant's liability under Goods Transport Agency service and had proceeded on the absence of documentary material to show that the recipient had discharged the tax or that the case satisfied the conditions for shifting liability under the reverse charge mechanism. The appellant's plea that the limitation benefit granted for Mining Service should also extend to GTA service was found to rest on a different factual and legal basis, since the Mining Service finding turned on legal uncertainty concerning taxability of sub-contractors, whereas liability under GTA depended on factual proof regarding the nature of service, receipt of freight, and compliance with the statutory conditions. Reconsideration of those aspects would necessarily require fresh appraisal of facts and conclusions already recorded, which falls outside the limited scope of rectification. [Paras 12, 13, 14, 15, 16]

No rectifiable mistake having been shown, the application for rectification was rightly dismissed.

Final Conclusion: The Tribunal dismissed the rectification application, holding that the appellant sought reconsideration of the concluded findings on GTA service liability and limitation rather than correction of any patent error apparent from the record.

Validity of the show cause notice - Taxability of commercial training and coaching service - Taxability of the same service - Double taxation - failed to identify the precise statutory provisions and taxable service - Foundational defect in notice.

Vague show cause notice - Statutory basis of tax demand - Natural justice in tax proceedings -HELD THAT:- It is settled position in law that SCN is the basis for the recovery of any demand or imposition of penalties and an SCN that does not put the appellant to notice of the statutory provisions that are attracted to bring the appellant within the ambit of the proposed taxable service and indicate the basis for making a tenable demand of tax, vitiates the proceedings on this ground alone. The Honourable Apex Court in the decision in CCE, Bangalore v Brindavan Beverages (P) Ltd. [2007 (6) TMI 4 - SUPREME COURT],has held that the show cause notice is the foundation on which the department has to build up its case. If the allegations in the show cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that the Noticee was not given proper opportunity to meet the allegations indicated in the show cause notice. The decisions in CCE Nagpur v Ballarpur Industries Ltd. [2007 (8) TMI 10 - SUPREME COURT], Arcelor Mittal Nippon Steel India Ltd v. Assistant Commissioner [2021 (12) TMI 227 - GUJARAT HIGH COURT], are also in similar vein. Therefore, absent these elementary requirements in the notices, which effectively renders the SCN fundamentally and incurably defective, and absent any such legally tenable findings, we are of the considered view that the consequential proceedings and demand of service tax made on the appellant, which have been challenged in these appeals, are liable to be set aside on this ground alone.

The Tribunal held that the show cause notices were fundamentally defective because, while alleging that the appellant rendered commercial coaching and training services, they did not specify the relevant statutory definitions, did not clearly indicate the exact taxable service under Section 65(105), and, in the first notice, did not even invoke the charging provision. Since a show cause notice is the foundation of a tax demand, absence of the statutory basis necessary to classify the activity and fasten levy deprived the appellant of proper notice and vitiated the entire proceedings. The adjudicating and appellate authorities were found to have confirmed the demands despite this basic defect. [Paras 13]

The demands and penalties were liable to be set aside as the proceedings stood vitiated by incurably vague show cause notices.

Double taxation - Discharge of tax by principal service provider - Representational rights -HELD THAT: - The Tribunal found that the Department had produced no evidence to show that the appellant had been conferred representational rights so as to sustain the Department's premise regarding the arrangement. The appellant's case that student fees were deposited directly into MAAC's account and that MAAC discharged service tax on such receipts remained uncontroverted and was supported by the statement of the appellant's Director, MAAC's registration particulars, its reply to the audit team, challans, and ST-3 returns.

It is also seen that a larger bench of this Tribunal, inn Vijay Sharma & Co v. CCE, Chandigarh [2010 (4) TMI 570 - CESTAT, NEW DELHI-LB] has observed that providing service being the event of levy, same service cannot be taxed twice. In Tamilnadu Electricity Board v. CGST & CE, Salem [2023 (11) TMI 14 - CESTAT CHENNAI],a coordinate bench of this Tribunal has observed that various decisions of the judicial fora have laid down the principle that double taxation for the same service activity is not in accordance with law.

Applying the principle that the same taxable transaction cannot be subjected to service tax twice, the Tribunal held that the activity sought to be taxed at the appellant's end had already suffered tax at MAAC's end, and the decision relied on by the Department was distinguishable on facts. [Paras 14]

The impugned order was unsustainable also because it resulted in impermissible double taxation of the same service activity.

Final Conclusion: The Tribunal allowed the appeals and set aside the impugned order. It held that the demands were vitiated by fundamentally vague show cause notices and, in any event, the same service could not be taxed again when service tax had already been discharged at MAAC's end.

Chargeability to service tax - liquidity damages recovered under contractual delay - ‘declared service’ under clause (e) of section 66E of the Finance Act, 1994 - consideration towards an act of tolerance. - HELD THAT:- The demand has been made on the amount collected as liquidity damages by treating the same as chargeable to service tax as declared service in terms of section 66E(e). We find from the impugned order that the appellants were collecting certain amount, which they had declared as liquidity damages in their books of accounts from their supplier/service. These liquidity damages were charged only when the supplier or the service provider failed to deliver the goods or perform the service within the time limit specified in the contract. They used to deduct/reduce 0.5% / 1% of the total contract value per complete week of delay or part thereof subject to maximum of 5% / 10%. Therefore, in certain cases of purchase of goods or procurement of service, they had invoked this clause and had collected liquidity damages. The issue whether the ‘liquidity damages’ can be subjected to service tax, as a declared service or otherwise is no longer res integra in the case of Bharat Dynamics Ltd Vs CCT, Hyderabad-GST [2025 (6) TMI 1269 - CESTAT HYDERABAD], held that no service tax can be levied on liquidity damages. We find that the ratio of such judgments is squarely applicable in the present factual matrix.

The demand and connected penalty based on taxability of liquidity damages as declared service were held unsustainable, and the impugned order was set aside.

Final Conclusion: The Tribunal held that service tax was not leviable on liquidity damages recovered for contractual delay and, applying the settled view of coordinate Benches, set aside the impugned order and allowed the appeal.

Seeking waiver of the late fee imposed under Rule 7C of the Service Tax Rules and penalties imposed under Section 77(1)(c) and 78 of the Act -Late fee for non-filing of ST-3 return - Threshold exemption - Extended period of limitation - Mandatory penalty under Section 78.

Late fee for non-filing of ST-3 return - Threshold exemption - HELD THAT: - The Tribunal held that, once the impugned order itself accepted availability of the threshold exemption, the appellant was not required to file ST-3 returns during the period in which the turnover remained within the exemption limit. Relying on the Board circular, it found that persons not liable to pay service tax because of exemption are not required to file ST-3 returns. Since the appellant's receipts for the period from 1st April 2016 to 30th September 2016 were below the threshold limit, the late fee levied for non-filing of the return for that half-year was unjustified. However, the late fee relating to the subsequent return was maintained. [Paras 4]

The late fee for non-filing of the ST-3 return for the period 1st April 2016 to 30th September 2016 was set aside, while the balance late fee was upheld.

Mandatory penalty under Section 78 - Extended period of limitation - HELD THAT: - The Tribunal held that the penalty under Section 78 is mandatory where the service tax demand has been confirmed by invoking the extended period of limitation. On that basis, it rejected the appellant's prayer for reduction, modification or setting aside of the penalty, following Rajasthan Spinning and Weaving Mills Ltd. [2009 (5) TMI 15 - SUPREME COURT]. [Paras 4]

The penalty imposed under Section 78 was upheld.

Final Conclusion: The appeal was partly allowed. The Tribunal set aside the late fee for non-filing of the ST-3 return for the first half-year falling within the threshold exemption, but sustained the penalty under Section 78 and the remaining late fee.

Classification of painting and related end-to-end execution services - classifiable under Works Contract Service or under Management, Maintenance or Repair Service - Benefit of Notification No.24/2009-ST. - HELD THAT: - It is an admitted fact the appellant was undertaking painting services to various types of customers for the residential flats houses, commercial industrial sites, etc., and charged service tax to the customers at the applicable rates. From the definitions given above, the services rendered by the appellant under no circumstances can be considered to be maintenance and repair services; while it clearly falls under ‘Construction of Complex Service’ as defined under section 65(30a), therefore we do not find any reason to accept the contention of the Commissioner in the impugned order that the services fall under the category of ‘Management, Maintenance or Repair Services’. It is also pertinent to note that in appellant’s own case for the period from October 2011 to June 2012, the original authority had dropped the proceedings on the ground that the services rendered by the appellant are classifiable under ‘Works Contract Services’.

The services were held to be rightly classifiable under works contract service, and the demand confirmed under management, maintenance or repair service was set aside.

Final Conclusion: The Tribunal held that the appellant's painting activity was not taxable under management, maintenance or repair service and was correctly classifiable under works contract service. The impugned order was therefore set aside and the appeal was allowed with consequential relief in accordance with law.

Liability to pay service tax on construction of railways - Scope of the statutory exclusion for "railways" in the service tax framework governing commercial or industrial construction service - Private and public railways.

Service tax exemption for railways - Meaning of railways - HELD THAT: - The Tribunal held that the controversy stood concluded by earlier Tribunal in the case of Hari Construction & Associates Pvt. Ltd. Vs. Commissioner of CGST & Central Excise [2023 (9) TMI 454 - CESTAT KOLKATA], affirmed by the Supreme Court in the case of Konkan Railway Construction Limited Vs. CGST & Central Excise, Navi Mumbai [2023 (8) TMI 128 - SC ORDER]. It accepted the principle that, in the absence of any qualifying restriction in the Finance Act, 1994 or the exemption scheme, the expression railways cannot be artificially confined to government or public railways alone. No distinction could therefore be drawn between private railways and public railways for denying the benefit available to construction of railways, and construction of railways remained construction of railways for the purpose of non-taxability. [Paras 3, 4]

The appellant was held not liable to pay service tax on construction of railways, and the demand was held unsustainable.

Final Conclusion: The Tribunal held that no distinction could be made between private railways and public railways for the purpose of levy of service tax on construction of railways. Following the earlier decisions noticed by it, the impugned demand was set aside and the appeal was allowed with consequential relief.

Taxability of target-based incentives as trade discount - incentives or discounts received from the manufacturer on achievement of sales targets - Business Auxiliary Service - Commission received from insurance companies and financial institutions for facilitating insurance and vehicle loans to customers - Extended period of limitation - Penalty in absence of suppression.

Target-based incentives - Principal-to-principal sale - Trade discount - Trading of goods - HELD THAT:- Following the decision of this Tribunal in the case of Bangalore Motors Pvt. Ltd. [2024 (7) TMI 1255 - CESTAT BANGALORE] and the principle of law laid down in the case of Prem Motors Pvt. Ltd.[2023 (2) TMI 990 - CESTAT NEW DELHI]. The Tribunal found that, under the dealership arrangement, the appellant purchased vehicles from the manufacturer on a principal-to-principal basis and sold them onward on its own account. The incentives received on achieving sales targets were held to be in the nature of trade discounts forming part of the sale transaction, and not consideration for any service rendered to the manufacturer. Since the activity related to sale of goods and involved no independent service element, the demand under Business Auxiliary Service on such incentives could not be sustained. [Paras 6]

The demand of service tax on incentives or discounts received from the manufacturer, with interest thereon, was set aside.

Commission received from insurance companies and financial institutions for facilitating insurance and vehicle loans to customers. - HELD THAT: - Following the decision of Tribunal in the case of City Honda [2017 (10) TMI 801 - CESTAT BANGALORE]. The Tribunal held that the appellant rendered assistance by introducing prospective vehicle buyers to insurance companies and financial institutions for obtaining insurance and loans. Such assistance promoted the services of those entities and squarely fell within the scope of Business Auxiliary Service. The commission received for that activity was therefore taxable. [Paras 8]

The demand of service tax on commission received from insurance companies and financial institutions was upheld for the normal period with interest.

Extended period of limitation - Absence of suppression - Penalty - HELD THAT: - The Tribunal noted that the demand was raised on the basis of data retrieved from the appellant's own records and that returns had been filed from time to time. In the absence of suppression of facts with intent to evade payment of tax, invocation of the extended period was held to be unwarranted. On the same reasoning, the equivalent penalty and other penalties were also held to be not imposable. [Paras 9, 10]

The demand survived only for the normal period in respect of taxable commission, and all penalties were set aside.

Final Conclusion: The appeal was partly allowed. Service tax on incentives or discounts received from the manufacturer was held unsustainable, while tax on commission received from insurance companies and financial institutions was upheld only for the normal period with interest, and all penalties were set aside.

Principle of mutuality. -Treatment of incorporated bodies under the service tax law - registered cooperative society providing lending and deposit-related services exclusively to its members - liable to service tax under the category of Banking and Other Financial Services Or Not body of persons - HELD THAT: - The Tribunal held that the appellant was admittedly a cooperative society registered under the Karnataka Cooperative Societies Act and that its activities of advances and loans were confined to its members. Applying the principle of mutuality, as recognised in the decision in the case of Karavali Credit Cooperative Society Ltd. [2025 (4) TMI 767 - CESTAT BANGALORE] governing incorporated clubs and registered cooperative societies, the Tribunal held that services rendered by such a society to its own members could not be treated as taxable services provided by one person to another. On that basis, the view taken in the impugned order treating the appellant as a commercial concern liable under Banking and other Financial Services was found unsustainable. [Paras 4, 5]

The demand of service tax and the penalties founded on taxability of member-based services were set aside.

Final Conclusion: Following the principle of mutuality as applied to a registered cooperative society dealing exclusively with its members, the Tribunal held that the appellant was not liable to service tax on such activities under Banking and other Financial Services. The impugned order was therefore set aside and the appeal was allowed with consequential relief.

Classification of goods - sugar syrup captively consumed in the manufacture of biscuits - classifiable under tariff item 17029090 as a marketable product Or Not - marketability and the available test reports - Benefit of Exemption under Notification No.67/95-CE - Manufacture within the meaning of Section 2(f) - definition of ‘excisable goods’ under Section 2(d).

Tariff classification - Fructose content - HELD THAT: - The Tribunal held that classification under the claimed entry required the syrup blend to contain 50% fructose by weight in dry stage. On the material noticed in the order, the fructose content stood certified at 31%, and there was no acceptable evidence from the Department to establish the statutory threshold for classification under the said heading. The Departmental case that the product answered the description of invert sugar or otherwise fell within the tariff entry was therefore not sustainable. [Paras 22, 24, 25]

The demand failed insofar as it was founded on classification of the impugned sugar syrup under sub-heading 1702 90 90.

Marketability - Captive consumption - HELD THAT: - The Tribunal found that the syrup was prepared to the appellant's own manufacturing requirement and could not be equated with sugar syrup generally available in the market with preservatives and longer shelf life. Following the earlier line of decision in the case of Rishi Bakers [2015 (4) TMI 893 - CESTAT NEW DELHI] followed in the case of M/s Lingaraj Biscuits Pvt Ltd.[2025 (11) TMI 937 - CESTAT KOLKATA], M/s Badami Foods [2019 (7) TMI 248 - CESTAT HYDERABAD], Venugopal Foods Pvt Ltd.[2019 (3) TMI 25 - CESTAT MUMBAI], it held that marketability had to be established in the condition in which the product emerged, and such marketability could not be presumed by reference to other commercially available products. In the absence of evidence proving that the appellant's intermediate sugar syrup, as such, was capable of being marketed, excisability was not made out. [Paras 21, 22, 23, 26]

The product was not proved to be marketable and, on that ground also, the duty demand could not be sustained.

Final Conclusion: The Tribunal held that the captively consumed sugar syrup was neither classifiable under tariff sub-heading 1702 90 90 nor proved to be marketable in the form in which it emerged. The impugned orders were therefore set aside and both appeals were allowed on merits.

Demand - Applicability of Section 11D to stock transfer- Excess duty in the guise of collection of excise duty from their sister concern - Whether excess amount of duty paid on the inputs cleared ‘as such’ by determining the value of stock transferred goods to sister concern at Nashik @ 110% of the cost of production be recoverable applying Section 11D(2) of CEA, 1944 being collected from the sister concern. - HELD THAT: - The Tribunal held that Section 11D applies only where an amount collected as representing duty of excise, in excess of the duty assessed or determined and paid, remains to be paid to the credit of the Central Government. It accepted the assessee's contention that the clearances were on stock transfer to a sister concern and not a sale to a buyer, and further found that the amount collected in excess had already been paid to the Government. Following CCE, Thane-II Vs. Angadpal Industries Ltd. [2013 (12) TMI 508 - CESTAT MUMBAI] and CCE, Belapur Vs. PRP Wire Ropes [2017 (2) TMI 1169 - CESTAT MUMBAI], the Tribunal concluded that, in the absence of a sale and when no amount remained unpaid to the Government, recovery under Section 11D(2) was not attracted. [Paras 9, 10, 11]

The demand confirmed under Section 11D(2) was held unsustainable and the impugned order was set aside.

Final Conclusion: The Tribunal held that Section 11D(2) was inapplicable to the impugned stock transfers, particularly when the excess amount collected had already been deposited with the Government. The impugned order was therefore set aside and the appeal was allowed with consequential relief.

Delay and laches- Non-availement of the statutory remedy before the Tribunal - service of notice at last known address - HELD THAT: - The Court found that, after the Tribunal had remanded the matter, repeated registered notices issued to the petitioner were returned with the endorsement that there was no such firm at the address. It held that if the business had shifted or closed, the petitioner was required to intimate the department and provide the address for future correspondence. Since the remand had been obtained in the petitioner's own appeal, the petitioner was expected to follow up the proceedings and could not rely on non-receipt of notices as a sufficient explanation. The challenge to the appellate order was brought after about two years without any satisfactory explanation, and even after learning of the order the petitioner had an effective remedy of approaching the Tribunal, which was not availed. On these grounds, the Court declined to exercise writ jurisdiction. [Paras 4, 5]

The writ petition was dismissed as not fit for interference in writ jurisdiction.

Final Conclusion: The High Court declined to entertain the writ petition and dismissed it, holding that the belated challenge to the appellate order was unsupported by any satisfactory explanation and that the petitioner had also failed to avail the available remedy before the Tribunal.

Arbitral tribunal's jurisdiction - Application under Order VII, Rule 11 of the Code of Civil Procedure, 1908, seeking rejection of the appellant’s claim petition - barred by limitation - Maintainability of the application - rejecting a plea of lack of jurisdiction on limitation - Interim award - challengeable under Section 34​​​​​​​ - Competence-Competence - Finality of Jurisdictional Ruling -HELD THAT: - The Court held that the statutory scheme is explicit: where the arbitral tribunal rejects a plea under Section 16(2) or Section 16(3), it must continue the proceedings and make the award, and the aggrieved party can assail that rejection only in proceedings against the final award. The decision in Indian Farmers Fertilizer Cooperative Limited v. Bhadra Products [2018 (1) TMI 1137 - SUPREME COURT] was explained as dealing with a decision on limitation rendered as a preliminary issue dehors Section 16, which finally determined that issue and therefore amounted to an interim award. That principle could not be extended to a rejection of a jurisdictional objection under Section 16, because doing so would defeat the scheme of Sections 16(5), 16(6) and 37, and render the specific appeal provided only against acceptance of a jurisdictional plea superfluous. [Paras 13, 14, 15, 16, 17]

The application under Section 34 against the arbitral tribunal's order rejecting the Section 16 plea was not maintainable, and the appeal entertained thereafter was equally incompetent; the respondent may question that order only after the final award, if occasion arises.

Final Conclusion: The Court held that the proceedings before the courts below were incompetent in law, as the arbitral tribunal's rejection of the jurisdictional plea under Section 16 could not be challenged at that stage under Section 34. The impugned judgment was set aside, leaving it open to the respondent to raise the challenge only after the final award.

Negotiable Instruments Act, 1881 - Dishonour of cheque for other liability - Legally enforceable liability of another person - Absence of privity - Limits of quashing at process stage - Expressions "any cheque" and "any debt or other liability".

Dishonour of cheque for other liability - Legally enforceable liability of another person - Absence of privity - HELD THAT: - In the case of ICDS Ltd. V/s. Beena Shabeer and Anr.[2002 (8) TMI 577 - SUPREME COURT], the import of the expressions “where any cheque” and “other liability” was expounded by the Supreme Court

In the case of Bijoy Kumar Moni V/s. Paresh Manna and Anr. 2024 (12) TMI 1231 - SUPREME COURT, the Supreme Court further clarified that, Section 138 of the NI Act does not envisage that only those cases where a cheque was issued towards the discharge of the personal liability of the drawer towards the payee gets dishonoured would come within the ambit of the provision.

The Court held that Section 138 uses the expressions "any cheque" and "any debt or other liability", and its ambit is not confined to a cheque drawn towards the drawer's own personal liability. If a cheque is drawn in discharge of a legally enforceable liability of another person, the drawer may still attract penal liability upon dishonour. On that construction, the petitioner's contention that no complaint could lie merely because it was not a party to the consent award, or because no direct privity existed between it and the complainant, was untenable. The Courts below were therefore justified in proceeding on the basis that the cheque could prima facie have been issued towards an other liability within the meaning of Section 138. [Paras 20, 21, 22, 23, 27]

The challenge founded on want of privity and absence of the petitioner's own liability was rejected.

Quashing of complaint - Prima facie case - Defences at trial - HELD THAT: - The Court held that, at the stage of testing the legality of issuance of process, it could examine only whether the complaint and accompanying material disclosed a prima facie offence. The petitioner's case that no amount was payable, that the cheque was issued by way of gift, and that it formed part of a without prejudice settlement, raised disputed factual matters and defence pleas which could not be adjudicated in proceedings under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023. The Court also observed that the documents relied on by the petitioner from other proceedings were not of such unimpeachable and sterling quality as would justify quashing on that basis. These matters were left to be pursued at trial for rebuttal of the statutory presumptions. [Paras 25, 26, 27, 28]

The plea for quashing the complaint against the petitioner company was declined, leaving all such defences open for trial.

Final Conclusion: The writ petition was dismissed. The Court upheld the order issuing process, holding that a cheque drawn towards a legally enforceable liability of another person may fall within Section 138, and that the petitioner's remaining objections were defences to be examined at trial.

Negotiable Instruments Act, 1881 - Dishonour of Cheque for want of funds - Legally enforceable debt - Part payment endorsement - Cheque Liability - Commission of offence punishable under Section 138.

Legally enforceable debt - Part payment endorsement - Cheque dishonour - HELD THAT:- The Court held that the governing principle, as explained in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel and Another [2022 (10) TMI 424 - SUPREME COURT] is that the dishonoured cheque must represent the legally enforceable debt on the date of presentation or maturity. Where part payments are made after the cheque is drawn and before its subsequent presentation, those payments must be endorsed on the cheque in terms of Section 56 of the NI Act, so that the instrument may be negotiated only for the balance. In the present case, after the earlier dishonour, the accused made part payments, but the cheque was again presented for the original amount without the required endorsement and the complaint itself proceeded on the full cheque amount. Therefore, the cheque as presented did not represent the legally enforceable debt for the amount claimed, and dishonour of such cheque would not attract the offence under Section 138 of the NI Act. [Paras 11, 12, 13]

The acquittal was upheld, since Section 138 of the NI Act was held inapplicable on the admitted facts.

Final Conclusion: The appeal was dismissed and the acquittal confirmed. The Court held that, in view of the admitted part payments and absence of endorsement on the cheque, the instrument did not represent the legally enforceable debt for the cheque amount and no offence under Section 138 of the NI Act was made out.