TMI Tax Updates e-Newsletter
May 11,2026

Entitlement to immediate zimma/release of the seized articles -Proper forum for release application - Alternate remedy -electronic devices and documents​​​​​​​ -HELD THAT: - The Court, after considering the rival submissions, held that release of seized goods was governed by Section 67(6) of the CGST Act. Since the petitioner had not applied before the Investigating Officer for zimma of the seized goods, the proper course was to require the petitioner to move such an application before that authority, to be considered in accordance with law. The Court therefore did not examine the claim for release on merits in the petition itself. [Paras 7]

The petitioner was directed to apply before the Investigating Officer for zimma of the seized goods, and the application was to be considered in accordance with law.

Final Conclusion: The petition was disposed of by directing the petitioner to seek provisional release of the seized goods before the Investigating Officer under the statutory procedure, without any adjudication on the merits of the release claim by the Court.

Statutory appellate remedy - Entitlement to pursuemanual filing of appeal and related representation for condonation of delay - Technical impediment in electronic filing - HELD THAT: - The Court held that the order impugned was appealable under Section 107 and that the petitioner had a statutory right of appeal. It further observed that such right could not be defeated on a technical issue or portal-related problem. Referring to Rule 108, the Court noted that appeals are ordinarily to be filed electronically in FORM GST APL-01, but if the appellant is unable to file electronically, he may submit a representation to the Commissioner for permission to file the appeal manually along with an application for condonation of delay. [Paras 4, 5]

The writ petition was disposed of by relegating the petitioner to the appellate remedy, with liberty to seek permission from the Commissioner to file the appeal manually along with an application for condonation of delay.

Final Conclusion: The Court declined to entertain the challenge in writ jurisdiction in view of the available statutory appeal. It protected the petitioner's right to pursue that remedy by permitting recourse to manual filing through the Commissioner if electronic filing was not possible.

Rejection of input tax credit - delay in filing GSTR-3B returns - garnishee order -Retrospective relaxation of input tax credit time-limit - Failure to consider subsequent statutory developments -HELD THAT: - The CBIC vide Circular No. 237/31/2024/GST dated 15.10.2024 has also issued a clarification concerning the implementation of the provisions of sub-sections (5) and (6) in Section 16 of the CGST Act, 2017.

The impact of the above subsequent developments will have to be considered. A Coordinate Bench of this Court in the case of Vinod Udaipuri v. Union of India and Others [2025 (9) TMI 1388 - JHARKHAND HIGH COURT] has taken cognizance of the subsequent developments and based upon the same, set aside the Order-In-Original impugned in the said writ petition and remitted the matter to the appropriate authority to pass a fresh order after considering the implication and impact of the subsequent developments.

Though the petitioner would ordinarily be relegated to the statutory remedy, the Court found that, after the impugned order, section 16 was amended by insertion of sub-section (5), extending the period for availing input tax credit for specified financial years, and a CBIC circular was also issued on its implementation. Since the implication and impact of these subsequent developments had not been examined while passing the impugned order, and this Court had adopted the same course in earlier matters, the proper course was to set aside the order and require the authority to decide afresh in accordance with law. The Court further held that the consequential garnishee order, having been issued in pursuance of the original order, could not survive. The question of refund was not decided and was left to abide by the fresh order on remand, with all contentions kept open. [Paras 7, 8, 9, 12, 13]

The impugned order-in-original and the consequential garnishee order were quashed, and the matter was remanded to the Assessing Authority for fresh decision after considering the subsequent amendment and circular; the refund claim and all other contentions were left open.

Final Conclusion: The Court set aside the order denying input tax credit for Financial Year 2018-19, as well as the consequential garnishee proceedings, and remanded the matter for fresh adjudication in light of the subsequent amendment to section 16 and the CBIC clarification. The claim for refund was not adjudicated and was left to depend upon the fresh order.

Taxability of regulatory fees under service tax and GST- functions discharged by a statutory electricity regulatory commission in determining tariff, licensing and allied regulatory matters - Quasi-judicial functions - Business and consideration under the CGST Act - Schedule III exclusion for services by courts and tribunals - HELD THAT: - The Court held that the legal position already stood settled that a statutory regulatory commission exercises adjudicatory and regulatory functions under the governing statute, and such functions are not in the nature of trade, commerce or business. The fees collected in discharge of those functions do not answer the requirement of consideration for a taxable supply, and the exclusion in Schedule III relating to services by courts and tribunals applies. The Court further held that no artificial bifurcation between regulatory and adjudicatory functions is permissible. Since the petitioner stood on the same footing as the electricity regulatory commissions dealt with in the earlier High Court decision in Central Electricity Regulatory Commission v. Additional Director, Directorate General of GST Intelligence (DGGI) & Anr., Central Tax, Bengaluru & Ors.[2025 (1) TMI 887 - DELHI HIGH COURT], the assumption of jurisdiction to levy service tax/GST through the impugned notices and orders was ex facie unsustainable. [Paras 10, 11, 12, 13]

The impugned show-cause notices, adjudication orders, final adjudication order and appellate order were set aside.

Final Conclusion: The writ petitions were allowed. The Court held that the petitioner commission's statutory regulatory and quasi-judicial functions were not liable to service tax or GST, and consequently all impugned notices and orders were set aside.

Challenged the impugned order and the summary order in Form GST DRC-07, whereby the proposal contained in Show Cause Notice for the tax confirmed - Double Taxation - Failure to consider material reply on tax already discharged - Remand for fresh adjudication. - HELD THAT: - The Court recorded that the petitioner's specific case was that the original invoice raised from Tamil Nadu was subsequently reversed by a credit note and that, for the same supply, tax had been discharged under the IGST Act through the Bangalore unit. On that basis, the Court found, at least prima facie, that tax appeared to have been paid on the same transaction. Since that aspect required proper consideration on merits, the impugned order confirming the proposal was not allowed to stand and the matter was remitted for fresh adjudication after permitting the petitioner to file a proper reply. The Court expressly left all issues open for decision by the authority. [Paras 6, 7, 8, 9, 10]

The impugned demand order was quashed and the matter was remitted to the respondent for a fresh order on merits after receipt of the petitioner's reply, with all issues kept open.

Final Conclusion: The writ petition was disposed of by quashing the impugned order and remitting the matter for fresh adjudication, as the petitioner's plea that tax had already been discharged on the same transaction required consideration. The respondent was directed to pass a fresh order in accordance with law after notice and upon receipt of the petitioner's reply.

Ex parte adjudication - No Opportunity to reply to show cause notice - Principles of Natural Justice - Failure of proper adjudication for want of reply - Multiple tax-related grounds, including alleged non-payment of tax, interest, late fee, reversal of input tax credit, reverse charge liability, and mismatch of credit. - HELD THAT: - The Court found that the adjudication involved multiple grounds and that proper determination of those grounds depended upon the petitioner's response on merits and the relevant documents. Since the order had been passed without the benefit of any reply, allowing it to stand would cause serious prejudice and would defeat proper adjudication. On that basis, the Court set aside the order and restored the matter to the stage of filing reply to the show cause notice, leaving all contentions open. Consequential recovery action based on that order, including bank attachment instructions, was also directed to be withdrawn. [Paras 4, 5, 7]

The impugned order was set aside for want of an effective opportunity to reply, and the matter was remitted to the adjudicating authority from the stage of reply to the show cause notice.

Final Conclusion: The petition was disposed of by setting aside the ex parte adjudication order and remitting the matter for fresh consideration after permitting the petitioner to file a reply to the show cause notice. The consequential recovery instructions issued to the bank were also directed to be rescinded.

Validity of impugned show cause notice in relation to Sections 52 and 17(2) of the CGST / KGST Act - Liability to collect tax at source even though it did not collect consideration for the supplies made through the online platform - Input tax credit reversal on exempt supplies - Mandatory jurisdictional ingredients of fraud, wilful misstatement or suppression of facts with intent to evade tax -Entitlement to invoke Section 74(1) of the CGST / KGST Act for the purpose of issuing the impugned SCN - Maintainability of writ against show cause notice without jurisdiction.

Whether the impugned SCN issued by the respondents alleging that the petitioner had contravened / violated Section 52 of the CGST / KGST Act, since they failed to collect TCS (Tax Collection at Source) @ 1% of the net value of the taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator deserves to be quashed? - HELD THAT: - The impugned SCN also fails to consider and appreciate that there is no provision in the CGST / KGST Act to treat the petitioner as an assessee in default, under which, the person responsible for collecting tax become s liable to pay tax which is a liability of the supplier of goods or services; in this context, it is relevant to state that in other tax / physical statutes for eg., Section 201 of the Income Tax Act, 1961 which provides for a legal fiction under which a person responsible for deducting tax “an assessee in default” and is liable to pay tax not deducted; however, in the CGST / KGST Act, there is no provision to issue a notice to the person who has not collected the tax to pay such tax which is the primary liability of the supplier of the goods or services and the impugned SCN deserves to be quashed on this ground also.

There is no provision in the CGST / KGST Act, much less, Section 52 which permits the respondents to consider a payment collected by a separate entity to be a payment collected “on behalf of” petitioner and Section 52 would be applicable only to cases where the e-commerce operator is also collecting consideration with respect of supplies undertaken through its online portal. In this regard, a perusal of the CBIC Circular dated 17.07.2023, will indicate that it is specifically stated that Section 52 is applicable only in cases where e-commerce operators such as the petitioner collects the payment. As stated supra, the petitioner herein does not collect consideration or payment and the various persons registered in the petitioner’s platform had engaged their own service providers and were settling payments directly among themselves, thereby establishing that the petitioner would neither be covered nor come within the scope and ambit of Section 52 of the CGST / KGST Act and the impugned SCN issued by the respondents illegally invoking Section 52 deserves to be quashed on this ground also.

A perusal of the impugned SCN will indicate that the respondents have proceeded on an erroneous assumption that the services provided by HLPL of logistics and payment collection services are in fact, services of the petitioner – HTPL and therefore, petitioner is covered under Section 52 of the CGST / KGST Act. However, such an assumption is wholly erroneous and contrary to the material on record, in as much as HLPL is a different, separate, distinct, juristic and legal entity which is carrying on business on its own account and is also separately registered with the GST authorities, while the petitioner – HTPL is also a different, separate, distinct, juristic and legal entity which is carrying on business on its own account and is also separately registered with the GST authorities as required under Section 25 of the CGST / KGST Act; it follows therefrom that in terms of the principles contained in the company laws in India and Section 25 of the CGST / KGST Act, HLPL is a distinct entity which is separate and independent from the petitioner – HTPL, especially when the said HLPL is one of the empanelled service providers on the online portal of the petitioner and it is completely optional for the users to enter into a Bipartite agreement with HLPL or anyone else and the petitioner being neither responsible nor collects the consideration on behalf of the users, the provisions of Section 52 are not applicable to the petitioner and viewed from this angle also, the impugned SCN deserves to be quashed.

The aforesaid discussion is sufficient to come to the conclusion that the impugned SCN issued by the respondents alleging that the petitioner had contravened / violated Section 52 of the CGST / KGST Act, since they failed to collect TCS (Tax Collection at Source) @ 1% of the net value of the taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator is clearly illegal, arbitrary and without jurisdiction or authority of law and contrary to the provisions of the CGST / KGST Act and the same deserves to be quashed.

The allegation of contravention of Section 52 was quashed as illegal, arbitrary and without jurisdiction.

Whether the impugned SCN issued by the respondents alleging that the petitioner had violated / contravened Section 17(2) of the CGST / KGST Act, since they failed to restrict availment of Input Tax Credit (ITC) to so much of the input tax as is attributable to the said taxable supplies deserves to be quashed? -HELD THAT: - It is alleged that there has been irregular availment of ITC by the petitioner with respect to free supplies resulting in the petitioner being liable to answer the demand made in the impugned SCN issued by the respondents.

The Court held that Section 17(2) operates only where goods or services are used partly for taxable supplies and partly for exempt supplies. The notice proceeded on the assumption that the petitioner's promotional activities on its platform amounted to free or exempt supplies to others. That assumption was rejected. The Court found that the promotional activity primarily benefited the petitioner's own business and was not shown to be an exempt supply attracting nil rate or specific exemption. Further, an activity without consideration would not qualify as a supply except in cases covered by Schedule I, and the transactions in question were not shown to fall thereunder. Since the notice neither established any exempt supply nor showed the statutory ingredients necessary for Section 17(2), invocation of that provision was held impermissible. [Paras 11]

A plain reading of Section 17(2) of the CGST / KGST Act will indicate that the said provision would be applicable only to a registered person using goods or services or both partly for effecting taxable supplies including zero rated supplies and partly for effecting exempt supplies; undisputedly, petitioner is not effecting zero rated supplies and in the case on hand, in the absence of any material placed by the respondents or any allegation made in the impugned SCN that the petitioner is partly effecting taxable supplies and partly effecting exempt supplies as required under Section 17(2), it cannot be said in the facts and circumstances of the instant case that the petitioner has violated Section 17(2) as alleged by the respondents and the said provision not being applicable to the petitioner or its transactions, the impugned SCN deserves to be quashed on this ground also.

The impugned SCN issued by the respondents alleging that the petitioner had violated / contravened Section 17(2) of the CGST / KGST Act, since they failed to restrict availment of Input Tax Credit (ITC) to so much of the input tax as is attributable to the said taxable supplies is clearly illegal, arbitrary and without jurisdiction or authority of law and contrary to the provisions of the CGST / KGST Act and the same deserves to be quashed.

Whether the respondents were entitled to invoke Section 74(1) of the CGST / KGST Act for the purpose of issuing the impugned SCN to the petitioner ? - HELD THAT: - The Court held that Section 74 can be invoked only where the foundational jurisdictional facts contemplated by that provision are present. The impugned notice contained only vague and general allegations and did not satisfy the requirement of alleging fraud, wilful misstatement or suppression with intent to evade tax. The Court further held that non-collection of TCS or non-reflection of what the department described as non-taxable supply in returns could not, by themselves, furnish the basis for invoking Section 74. Since the notice was found to be without jurisdiction and contrary to the statutory scheme, the existence of an alternative remedy did not bar the writ petition. [Paras 12, 13]

The invocation of Section 74 was held unsustainable, and the writ petition against the show cause notice was maintainable.

Final Conclusion: The High Court allowed the writ petition and quashed the show cause notice in so far as it proceeded against the petitioner under Sections 52, 17(2) and 74 of the CGST/KGST Act. It held that the notice was founded on a jurisdictional misapplication of those provisions and could therefore be interfered with in writ jurisdiction notwithstanding the alternative remedy.

Benefit of GST circulars - Rectification of invoice errors - entitlement to seek the benefit of Circular No.183/15/2022-GST and Circular No.193/05/2023-GST for the transaction - HELD THAT: - The Court noted that the petitioner's transaction undisputedly related to financial year 2019-20. Relying on the Coordinate Bench decision in M/s Wipro Limited India Vs. The Assistant Commissioner of Central Taxes and Others [2023 (1) TMI 499 - KARNATAKA HIGH COURT], the Court held that where identical invoice-related errors exist, the benefit of Circular No.183/15/2022-GST cannot be denied merely because that circular expressly referred to earlier years, and such benefit could be extended to financial year 2019-20 as well. The Court further observed that Circular No.193/05/2023-GST now expressly covers the period relevant to the petitioner. On that basis, the impugned adjudication order was quashed and the matter was directed to be reconsidered afresh in accordance with law and the said circulars. [Paras 6, 7, 8]

The impugned order was quashed and the authority was directed to reconsider the matter afresh for assessment year 2019-20 in the light of Circular No.183/15/2022-GST and Circular No.193/05/2023-GST.

Final Conclusion: The writ petition was disposed of after recording that the constitutional challenge was not pressed. The Court held that the petitioner was entitled to consideration under the relevant circulars for financial year 2019-20, quashed the adjudication order, and directed fresh reconsideration in accordance with law.

Anti-profiteering - construction services - failed to pass on the benefit of Input Tax Credit (ITC) by way of commensurate reduction in price in respect of the purchase of a residential unit in the said project upon the introduction of GST, in contravention of Section 171 - Passing on of benefit through price adjustment - GST component in profiteered amount - Interest on profiteered amount - Penalty for profiteering.

Anti-profiteering - Commensurate reduction in prices - Input tax credit on goods and services - Passing on of benefit through price adjustment - HELD THAT: - The Tribunal held that with the advent of GST, the Respondent became entitled to input tax credit on both goods and input services, unlike the pre-GST regime, and therefore an additional benefit accrued which had to be passed on under Section 171. It accepted the reworked computation based on comparison of ITC to construction cost in the pre-GST and post-GST periods as appropriate, and rejected the contention that credit relatable to input services should be excluded, holding that the GST benefit is not confined to material inputs alone. The Tribunal further held that denial by certain buyers through email could not override books of account, ledgers and credit notes showing adjustment of benefit against amounts payable, and that passing on through price adjustment is a valid mode of compliance. It also accepted that, for post-GST sales, contemporaneous records showed that the anticipated ITC benefit had been factored into the pricing itself. On that basis, the revised DGAP determination of total additional ITC benefit and the balance shortfall remaining to be passed on was found reasonable and evidence-based; excess benefit given to some buyers could not be set off against shortfall to others because each recipient is independently entitled to the commensurate benefit. [Paras 21, 22, 23, 24, 25]

The revised computation was upheld and the balance profiteered amount of Rs.71,37,747/- exclusive of GST was held liable to be passed on to the eligible recipients.

GST component in profiteered amount - Restitution of excess realisation - HELD THAT: - The Tribunal held that the balance profiteered amount determined by the DGAP was exclusive of GST, whereas the consideration collected from homebuyers was inclusive of GST. Therefore, the excess realisation on account of non-passing of ITC benefit necessarily included the corresponding GST collected from the buyers. The Respondent's plea that GST had already been deposited with the Government was rejected, the Tribunal holding that the issue was one of restitution of the entire excess amount realised from the recipients, including the tax component. [Paras 27, 28]

The profiteered amount was held returnable along with applicable GST at 12%.

Interest on profiteered amount - Compensatory restitution - HELD THAT: - The Tribunal held that Section 171 read with Rule 133(3)(b) casts a mandatory obligation to return the amount not passed on along with interest at 18% per annum from the date of collection of the higher amount until its actual return. It characterised such interest as compensatory, intended to restore to recipients the time value of money wrongly retained. [Paras 29, 30, 32]

The Respondent was held liable to pay interest at 18% per annum from the respective dates of collection till refund.

Penalty for profiteering - HELD THAT: - The Tribunal held that since Section 171(3A) came into force with effect from 01.01.2020 and the contravention period extended up to 30.09.2024, the case attracted the penalty provision for the period subsequent to its commencement. [Paras 33]

Penalty under Section 171(3A) was held attracted, subject to the statutory proviso.

Final Conclusion: The Tribunal upheld the revised anti-profiteering determination, holding that the Respondent had not fully passed on the additional ITC benefit and was required to return the balance amount to the eligible homebuyers along with GST and interest. It further held that penalty under Section 171(3A) was attracted for the applicable period.

Anti-profiteering investigation - Scope of DGAP's report -reduction in rates of the GST or availability of the Input Tax Credit - Failure to consider material evidence - Rebuttable presumption of profiteering - HELD THAT: - The Tribunal held that, in an anti-profiteering inquiry under section 171, the obligation to pass on tax reduction does not exclude consideration of evidence showing that prices may also move on account of market forces and increase in input costs. Referring to the Delhi High Court view in Reckitt Benckiser India Pvt. Ltd., [2024 (1) TMI 1248 - DELHI HIGH COURT] the Tribunal accepted that any presumption arising in such matters is rebuttable and must be tested against clear evidence. Since the DGAP itself acknowledged the documents relied on by the respondent but declined to incorporate them in the report, and no plausible reason was offered for not reconsidering the matter in light of those documents, the report was found unacceptable. On that procedural defect, the matter was directed to be investigated afresh from the beginning, without restricting the scope of investigation, with liberty to both sides to place further material. [Paras 7, 8, 9]

The DGAP report was not accepted, and the matter was remanded for fresh investigation from the beginning with liberty to both sides to produce further documents.

Final Conclusion: The Tribunal held that the impugned anti-profiteering report could not stand because material relating to market forces and increase in raw material costs had not been properly considered. The matter was therefore remanded to the DGAP for a fresh investigation from the beginning under Rule 133(4), with liberty to both sides to place further material.

Classification of supply of food items - sale of bakery products fully manufactured at the factory and sold through outlets without cooking, preparation or processing - preparation and sale of semi-finished items - Restaurant service - Dual tax treatment of goods and services from same premises - Pre-manufactured goods - levy of GST differently on goods and restaurant services from the same premises with separate billing and records.

Supply of goods - Pre-manufactured food items - Classification based on absence of preparation - HELD THAT: - Para 4.2 of Circular No. 164/20/2021-GST dated 06/10/2021 on this issue would also apply to all types of bakery products or for that matter any other goods which are pre-manufactured at some other premises other than the restaurant premises and are supplied without involving any service attached to it. Hence, same has to be treated as a supply of goods and as per the HSN classification of particular goods the gst rate would apply.

The fact that such items are sold through bakery outlets does not convert the transaction into restaurant service. Their taxability is therefore to be determined as goods according to the applicable HSN classification.

Ready-made bakery products supplied without any cooking, preparation or processing are to be treated as supply of goods.

Restaurant service - Cooking and preparation at outlet - Takeaway as restaurant service - HELD THAT: - The Authority held that where items such as pizzas, pastas, salads and shakes are cooked, prepared, made or blended at the restaurant premises upon receipt of the customer's order, the supply answers the description of restaurant service. This character is not altered by the mode of consumption, and the supply remains restaurant service whether consumed at the premises or taken away.

Semi-finished food items prepared at the outlet on customer order are taxable as restaurant service irrespective of dine-in or takeaway.

Dual tax treatment of supplies - Separate invoicing and records - Mixed business from same premises - HELD THAT: - The Authority found no legal impediment under GST law to a registered person carrying on the business of restaurant service and trading in goods from the same place of business. Since the classification depends on the nature of the individual supply, both treatments may coexist. However, the taxpayer must maintain separate turnover records and a separate series of tax invoices for the two categories so as to ensure compliance, including obligations concerning reversal of input tax credit on inward supplies.

Different GST treatment for goods and restaurant service from the same premises is permissible, but only with clear segregation in invoicing and accounting records.

Final Conclusion: The Authority ruled that pre-manufactured bakery items sold without further preparation are supplies of goods, while items prepared or blended at the outlet on customer order are restaurant services. It further held that both categories may be supplied from the same premises, provided the taxpayer maintains separate invoice series and clear accounting segregation.

Unexplained cash credit - addition u/s 68 - Identity, creditworthiness and genuineness- onus to prove - Concurrent findings of fact - Substantial question of law under section 260A

Whether deletion of the addition u/s 68 in respect of unsecured loan did not give rise to any substantial question of law in appeal under section 260A? - HELD THAT: - The Court held that the assessee had discharged the onus under section 68 by producing confirmation of the lender, bank account statement, return of income, audited financial statements, MCA data, TDS documents, and material showing that the lender was an NBFC registered with the RBI. The balance sheet of the lender was also relied upon to show availability of sufficient funds by way of share capital and reserves.

CIT(A) and the ITAT had concurrently accepted the identity of the lender, the genuineness of the banking transactions, and the creditworthiness of the lender, and the Court found no perversity in those findings. The Court also noted that loans pertaining to earlier assessment years had already been considered in those years and the balances were carried forward. On that basis, the proposed grounds raised by the Revenue were treated as factual disputes rather than questions of law fit for consideration under section 260A. [Paras 7, 8, 9, 11]

No substantial question of law arose, and the concurrent deletion of the section 68 addition was not interfered with.

Final Conclusion: The appeal was dismissed at the admission stage. The Court held that the section 68 issue stood concluded by concurrent factual findings in favour of the assessee and did not involve any substantial question of law.

Revision u/s 263 - quantum of deduction u/s 80-IA - Transfer pricing and computation of eligible profits - Plausible view and non-inquiry - Abated search assessment

Revision u/s 263 - Doctrine of merger - Issue-specific appellate merger - Whether the PCIT possessed the requisite jurisdiction u/s 263 to revisit the quantum of a Section 80-IA deduction when the said deduction had already been the subject matter of an adjudication by the CIT(Appeals)? - HELD THAT: - The Court held that the bar of merger under Explanation 1(c) to Section 263 is confined to matters actually considered and decided in appeal. The appellate proceedings had dealt with the valuation of power receipts and re-computation of deduction on that basis, but had not examined the separate question of apportionment of common Head Office expenses. Since income valuation and expense allocation were treated as distinct components of the profit computation, the unexamined issue retained an independent identity and remained open to revision. The Court further held that, in the search assessment context, the AO had a duty to examine both sides of profitability, and failure to verify the expense side left a jurisdictional vacuum which the Principal Commissioner could correct. [Paras 26, 28, 29, 32, 33]

The plea of merger failed, and the Principal Commissioner's jurisdiction under Section 263 was upheld on the issue of expense apportionment.

Transfer pricing and computation of eligible profits - Specified Domestic Transactions - AO's non-delegable duty - Whether the jurisdiction under Section 263 could be validly exercised to revisit cost-quantification after the same had undergone the specialized rigor of Transfer Pricing proceedings u/s 92CA? - HELD THAT: - The Court held that the Transfer Pricing Officer's function u/s 92CA was confined to valuation of the transaction and determination of Arm's Length Price, and did not extend to the holistic computation of net profits of the eligible undertaking for purposes of deduction. TPO's silence on cost allocation could not be treated as a binding finding, because an omission is not equivalent to an adjudication. The duty to ensure that the eligible unit bears its fair share of corporate overheads remained with the AO, and failure to discharge that duty resulted in an erroneous and prejudicial assessment. The existence of a specialized transfer pricing mechanism or administrative circular did not take away the Principal Commissioner's power to revise such an assessment defect. [Paras 36, 37, 38, 39, 40]

The Court rejected the contention of jurisdictional exclusivity under Chapter X and held that revision under Section 263 was maintainable.

Plausible view and non-inquiry - Direct nexus theory - Erroneous and prejudicial assessment - Whether Assessing Officer's acceptance of the non-allocation of Head Office expenses was not a protected plausible view because it was unsupported by inquiry? - HELD THAT: - The Court accepted that the direct nexus principle may be a valid legal approach, but held that its application required factual verification. A plausible view presupposes visible application of mind to the relevant accounting issue; it cannot arise from silence. The assessment record showed that the AO adopted the Transfer Pricing Officer's valuation on the receipt side but made no inquiry into the absence of allocation of Finance Costs, Personnel Expenses and other common overheads to the power units despite apparent red flags from the accounts. The Court therefore treated the case as one of lack of inquiry, not one of two possible views, and held that such non-inquiry rendered the assessment erroneous and prejudicial to the interests of the Revenue. [Paras 44, 45, 46, 47, 48]

The protection of the plausible view doctrine was denied, and the assessment was held liable to revision for non-inquiry.

Abated search assessment - Plenary assessment jurisdiction - Incriminating material - Whether for the abated search year, the absence of specific incriminating material did not restrict scrutiny of the deduction claim or revision of the resulting assessment? - HELD THAT: - The Court held that the limitation confining Section 153A additions to incriminating material applies to completed or unabated assessments, whereas for a pending or abated year the Assessing Officer regains full power to determine total income. Since Assessment Year 2018-19 was held to be an abated year at the time of search, the Assessing Officer had plenary jurisdiction comparable to a regular scrutiny assessment and was required to verify the correctness of the deduction claim, including the underlying expense allocation. The failure to exercise that power could therefore be revised under Section 263, and the absence of seized material specifically on Head Office expenses did not create any immunity. [Paras 50, 51, 52, 53]

The Court held that the search assessment status did not protect the assessee, and that revision under Section 263 was valid for the abated year.

Final Conclusion: The appeals were dismissed and the order sustaining revision under Section 263 was affirmed. The Court held that non-examination of allocation of common Head Office expenses amounted to lack of inquiry, and directed a fresh assessment confined to that issue for AY 2018-19 after giving the assessee an opportunity to substantiate its direct nexus claim.

Rectification u/s 154 - Finality of determination under the Direct Tax Vivad se Vishwas Act, 2020 - applicability of Income-tax Act rectification provisions to orders under a special scheme - AO jurisdiction to invoke Section 154 to rectify the determination made by the Principal Commissioner of Income Tax under Section 5(2) of the Direct Tax Vivad se Vishwas Act, 2020

HELD THAT: - The Court held that the impugned order itself showed that the Assessing Officer had attempted to rectify an order passed by the Principal Commissioner of Income Tax. It further held that the scheme of the Act of 2020 does not confer any power of rectification, and Section 5(3) makes the amount determined and the order passed under the scheme final and conclusive. Since the Act of 2020 does not make the provisions of the Act of 1961 applicable for such rectification, invocation of Section 154 was contrary to the statutory scheme. The Court also noted that this view was in line with Satish Kumar Dhingra [2024 (8) TMI 1245 - DELHI HIGH COURT] [Paras 10, 11, 12]

The rectification order passed by the AO was held to be without authority and was quashed.

Final Conclusion: The writ petition was allowed. Court quashed the impugned order on the ground that the Assessing Officer could not exercise rectification powers under the Income-tax Act, 1961 in relation to a final determination made under the Direct Tax Vivad se Vishwas Act, 2020.

Penalty under section 272A(1)(d) - non-compliance of notice u/s 142(1) - assessee has submitted that it was due to overload of the work of audit and ITR filing and pending assessment proceedings that the early notices remained non-complied during the course of assessment proceedings

HELD THAT: - The Tribunal found that though there was non-compliance at the initial stage of assessment proceedings, the assessee subsequently furnished detailed replies with supporting material. The assessment order itself recorded that the reply had been verified from the material on record, found tenable and placed on record, and the assessment was then completed u/s 143(3).

On these facts, the earlier defaults stood merged in the later compliance, and completion of the regular assessment after considering the material amounted to deemed condonation of the earlier absence or default. In that situation, levy of penalty under section 272A(1)(d) was held to be not justified. [Paras 8, 9, 10, 11]

The penalty under section 272A(1)(d) was directed to be deleted in the lead appeal, and the same view was applied to the connected appeals on identical facts.

Final Conclusion: The Tribunal held that where the assessee subsequently complied with the notices, the material was accepted by the Assessing Officer, and the assessment was completed under section 143(3), the earlier default stood deemed condoned and penalty under section 272A(1)(d) was not leviable. All the appeals were accordingly allowed.

Ex parte appellate order - Reasoned appellate adjudication - Natural justice denied - HELD THAT: - The Tribunal found that the Commissioner (Appeals) had passed the impugned order ex parte without deciding the issues on merits. The record showed that the assessee had sought adjournment and extension of time through the e-proceedings portal, but that request was not considered before disposal of the appeal.

The affidavit filed before the Tribunal explaining the circumstances for non-compliance was accepted as disclosing a bona fide and reasonable cause, and the explanation remained uncontroverted.

Tribunal further noted that, on the identical property issue involving the co-owner, the co-ordinate bench had already restored the matter for fresh adjudication. In these circumstances, and having regard to natural justice and parity of facts, the entire matter was required to be restored for de novo adjudication. [Paras 6]

The ex parte order of the Commissioner (Appeals) was set aside and the entire matter was restored to the Assessing Officer for fresh adjudication on merits after giving reasonable opportunity of hearing.

Final Conclusion: The Tribunal held that the ex parte appellate order, passed without adjudication on merits and without considering the assessee's request for time, was unsustainable. The matter for A.Y. 2020-21 was restored to the Assessing Officer for de novo adjudication in accordance with law after affording reasonable opportunity.

Concessional rate of tax u/s 115BAA - Delayed filing of Form 10-IC - Benefit of the concessional rate of tax u/s 115BAA denied merely because Form 10-IC was filed after the due date u/s 139(1)

HELD THAT: - The Tribunal noted that the assessee had filed Form 10-IC and had also disclosed in the return that it had opted for taxation u/s 115BAA. Even the intimation u/s 143(1) recorded that the assessee had opted for that provision. Though the form was filed after the due date for furnishing the return, it was admittedly available with the CPC when the return was processed.

In these circumstances, and when no other requirement for availing the concessional rate was shown to be unfulfilled, the CPC ought to have considered the form while processing the return. The appellate direction to recompute tax by granting the benefit u/s 115BAA was therefore upheld. [Paras 7]

The Revenue's challenge to grant of the concessional rate u/s 115BAA was rejected.

Final Conclusion: The Tribunal upheld the appellate order directing recomputation of tax by granting the assessee the benefit of the concessional rate under section 115BAA for the assessment year 2023-24. The Revenue's appeal was dismissed.

Bogus purchases - Profit element in unverifiable purchases - penalty u/s 271(1)(c) - Premature challenge to penalty initiation

Bogus purchases - Profit element in unverifiable purchases - Section 69C addition - Rejection of books - HELD THAT: - The Tribunal found that the assessee failed to establish the genuineness of purchases from the supplier, as there was no evidence of delivery of goods by that supplier. At the same time, the record showed that the assessee had effected sales of the same goods to its customer, supported by tax invoices and delivery challans, and those sales were not disputed by the Revenue. On that factual position, the Tribunal held that the case was one of accommodation bills with goods having been procured from elsewhere at a lower cost, and therefore only a reasonable disallowance representing the profit element in such purchases could be sustained. Since the assessee had already offered 12.5% of the disputed purchases in the return filed in response to notice under section 148, and that offer was higher than the gross profit rate directed in the assessee's own earlier case and was also consistent with the principle noted from PCIT vs Paramshakti Distributors Ltd. [2019 (7) TMI 838 - BOMBAY HIGH COURT] no further addition was warranted. [Paras 9]

The addition sustained by the lower authorities on account of the alleged bogus purchases was deleted, and no amount over and above the assessee's voluntary offer was held taxable.

Penalty initiation - Prematurity - HELD THAT: - The Tribunal held that the grievance against initiation of penalty proceedings did not give rise to a live controversy at the stage of appeal against the assessment, since only initiation had been challenged and no penalty order was under consideration. [Paras 11]

The ground assailing initiation of penalty proceedings was dismissed as premature.

Final Conclusion: The appeal was partly allowed. The addition relating to the alleged bogus purchases was deleted on the footing that only the profit element could at best be taxed and the assessee had already offered more than that, while the challenge to initiation of penalty proceedings was dismissed as premature.

Wrong invocation of provision - Applicability of section 68 v/s 69C -Unexplained expenditure - Curable defect u/s 292B

Addition sustained merely because the AO invoked section 68 instead of section 69C -HELD THAT: - The Tribunal held that the real nature of the addition has to be examined on substance and not rejected only for wrong mention of the provision. A mere technical defect in quoting the section does not invalidate the assessment when the assessee was aware of the case sought to be made out and no prejudice is shown. On that principle, the approach of the appellate authority in deleting the addition only because section 68 was invoked was held to be unsustainable. [Paras 6]

The Revenue succeeded on the legal ground that wrong citation of the charging provision, by itself, was not fatal.

Applicability of section 68 - Unexplained expenditure - Accounting treatment - Limited verification of subsequent payment - HELD THAT: - The Tribunal found that no fresh loan or credit was received during the year and that the disputed amount arose from a cheque issued towards interest liability in a running loan account. Since the entry did not represent a sum found credited in the books, the foundational condition for section 68 was absent. Even from the standpoint of section 69C, the Revenue had not brought material to show that unexplained expenditure had in fact been incurred during the year, while the assessee had produced ledger accounts, bank material and subsequent-year records in support of its explanation. The assessment order had also failed to examine the accounting treatment of the amount, namely whether it was debited as expenditure or carried as liability, which was basic to the applicability of either deeming provision. However, as the assessee's stand that the cheque was reversed and actually paid in the next financial year required factual confirmation, the matter was restored to the Assessing Officer only for that limited verification; if substantiated by documentary evidence, no addition would survive. [Paras 7]

On merits, the addition was found unsustainable subject to limited verification of realization of the cheque amount in the subsequent year.

Final Conclusion: The Tribunal held that the addition could not have been deleted merely because the wrong provision was invoked. At the same time, since the disputed amount was not shown to be a fresh credit or unexplained expenditure on the existing record, the matter was restored to the Assessing Officer only for limited verification of reversal and subsequent payment, and the Revenue's appeal was partly allowed for statistical purposes.

Profit derived from unaccounted sales - addition applying net profit rate of 8% information was shared by CGST & Central Excise Commissionerate, Surat regarding fraudulent ITC/unexplained credit in respect of bogus sales by a proprietorship concern of the assessee - assessee had submitted before the AO that his PAN no. was mis-utilised by someone else - CIT(A) deleted addition

HELD THAT:- The assessee had filed a complaint with GST Department and the AO had held that mere filing of such complaint does not absolve the assessee of the prima facie evidence of ITC fraud. AO did not take up the matter with the GST department to find out the outcome of the investigation carried out by them

In the absence of any corroborative evidence that the transactions in the name of M/s Anmol Trading was carried out by the assessee, the addition made by the AO was not justified. In fact, the AO was also not convinced about these transaction being carried out by the assessee and he had made the addition only on protective basis. There was no iota of evidence that the sale transactions carried out in the name of M/s Anmol Trading were appearing in the bank accounts of the assessee.

On the material noticed by the appellate authority, including cancellation of the GST registration and absence of any finding by the GST Department confirming the assessee's involvement, there was no corroborative evidence to sustain the addition. The Tribunal also noted that the addition had itself been made on a protective basis. In these circumstances, estimation of profit on the alleged turnover could not be sustained against the assessee. [Paras 7, 8]

Final Conclusion: The Tribunal upheld the order deleting the protective addition, holding that no material had been brought on record to connect the alleged bogus GST turnover with the assessee. The Revenue's appeal was accordingly dismissed.

Deduction u/s 80P(2)(d) - Interest from co-operative bank - whether the cooperative bank is also treated as co-operative societies for the purpose of allowing deduction u/s. 80P(2)(d)? - HELD THAT: - The Tribunal treated the controversy as covered in PCIT Vs. Ashwinkumar Arban Co- Operative Society Ltd.[2024 (11) TMI 971 - GUJARAT HIGH COURT]. Following that ruling, it held that a co-operative bank, being a co-operative society, does not cease to qualify for the purpose of section 80P(2)(d), and the exclusion enacted in section 80P(4) against co-operative banks does not disentitle another co-operative society from claiming deduction on interest earned from investments made with such co-operative bank. On that basis, the disallowance could not be sustained.

The ground on merits was allowed and the claim for deduction under section 80P(2)(d) was upheld.

Final Conclusion: Following the binding jurisdictional High Court view, the Tribunal held that interest earned by the assessee co-operative society from investment with a co-operative bank qualified for deduction under section 80P(2)(d). The appeal was accordingly allowed on merits.

Deduction u/s 80P- return was filed belatedly -Adjustment u/s 143(1)- scope of provisions of section 80AC(ii) -HELD THAT: - Tribunal held that the condition requiring filing of return within the time prescribed u/s 139(1), introduced through section 80AC(ii), came into effect only from 01.04.2021. Since the dispute related to assessment year 2019-20, that condition was not applicable. The adjustment made in the intimation u/s 143(1) by denying the deduction u/s 80P on the sole ground of delayed filing of return was therefore unsustainable. [Paras 5]

The adjustment denying deduction under section 80P was held invalid and the intimation under section 143(1) was annulled.

Final Conclusion: For assessment year 2019-20, the assessee's claim for deduction under section 80P could not be denied by applying the return-filing condition introduced later through section 80AC(ii). The appeal was accordingly allowed and the intimation was annulled.

Transfer pricing Adjustment- receipt of training and technical services from AE - benchmarking approach adopted by TPO - assessee is a step-down subsidiary of ultimate holding company to perform the various technical services and provide the after sales services - main services rendered by the TBC through the assessee to the IAF are training simulators for the C17 and BBJ aircraft sold by TBC and the technical services at the customer station

TPO had rejected the submissions and claim of the assessee that it only functions with limited risk factor and all the required risk to provide the training and rendering the technical services are taken over by the TBC/BAO

HELD THAT: - The Tribunal found from the record that the assessee did not own the technical know-how, simulator, or any asset required to independently render the training and technical services in question, and only maintained routine assets required for liaison, coordination and assistance. The actual capability and infrastructure for rendering such services vested with the associated enterprise, and the inter-company arrangement also showed that claims, liquidated damages and performance-related risks were borne by the associated enterprise. On that factual matrix, the Tribunal held that the assessee could not be treated as the main provider of the services and was only a limited risk service provider.

Since the assessee had benchmarked the transaction by TNMM on the same functional and risk profile, and the same approach had been accepted by the Revenue in AY 2020-21 with no change in facts for the year under appeal, the Tribunal applied the principle of consistency and directed acceptance of the assessee's benchmarking.

It also held that the confidentiality restriction regarding defence contracts could not, in the circumstances, justify rejection of the assessee's detailed benchmarking, particularly when the TPO had proceeded on an incorrect understanding that the assessee itself rendered the full services and had failed to properly follow the DRP directions. [Paras 35, 36, 37]

The transfer pricing adjustment on account of technical fees paid to the associated enterprise was deleted and the Assessing Officer/TPO was directed to accept the benchmarking undertaken by the assessee.

Final Conclusion: The Tribunal allowed the appeal and held that the assessee was a limited risk service provider in relation to the impugned international transaction. The transfer pricing adjustment made on account of technical fees paid to the associated enterprise was directed to be deleted by accepting the assessee's benchmarking.

Merger of intimation with scrutiny assessment - Whether an appeal against an intimation u/s 143(1)(a) will survive after the same adjustments are reconsidered and deleted in the scrutiny assessment u/s 143(3)?

HELD THAT: - Tribunal found that the adjustments made by CPC under section 143(1)(a) were subsequently considered by the AO during the scrutiny assessment, when the rectification application was examined and relief was granted on merits. On that factual position, the intimation u/s 143(1)(a) lost its independent existence and merged with the regular assessment u/s 143(3).

Applying the principle noticed in South India Club vs. ITO [2024 (5) TMI 1125 - ITAT DELHI] Tribunal held that once such merger took place, the appeal against the intimation became infructuous; consequently, the Revenue's appeal against the order passed in that infructuous appeal was also infructuous. [Paras 9]

The Revenue's appeal was dismissed as infructuous since the section 143(1)(a) intimation had merged with the scrutiny assessment.

Final Conclusion: Tribunal held that the section 143(1)(a) intimation had merged with the scrutiny assessment after the AO examined the rectification request and granted relief in the regular assessment proceedings. Appeal before the first appellate authority had therefore become infructuous, and the Revenue's appeal was dismissed on that basis.

TP Adjustment - Related party transaction filter - Comparables outside search matrix - FAR analysis - ESOP reimbursement parity under cost-plus model - Working capital adjustment - Outstanding receivables as international transaction - LIBOR-based benchmarking

Comparable selection - Related party transaction filter - Uncontrolled comparable - whether Liquidhub Analytics Private Limited satisfies the RPT filter of 25% applied by the TPO? - HELD THAT: - The Tribunal held that, after adopting a 25% RPT filter, the TPO was bound to apply it uniformly to all comparables. On the figures placed on record, the related party transactions of Liquidhub Analytics Private Limited exceeded that threshold. A company crossing the prescribed RPT limit cannot be treated as an uncontrolled comparable. The authorities relied on by the DRP only recognised 25% as a reasonable filter and did not decide the manner of computation so as to justify inclusion of a company whose RPT level was above that limit. [Paras 11]

Liquidhub Analytics Private Limited was directed to be excluded from the final set of comparables.

Comparables outside search matrix - FAR analysis - Cherry picking - whether comparables can be included or excluded solely on the basis of their presence or absence in the search matrix and what constitutes “cherry picking” in the context of transfer pricing analysis? - HELD THAT: - The Tribunal held that the search matrix is only a structured tool for identification of potential comparables and not a statutory condition controlling inclusion or exclusion. The governing test remains comparability of functions performed, assets employed and risks assumed under section 92C read with Rule 10B. While ad hoc introduction of fresh comparables without explaining their fit within the filters or the search process would amount to cherry picking, an outright rejection merely because such companies do not figure in the search matrix is equally unsustainable if their functional profile is not examined. Since the comparables proposed by the assessee were rejected only on the ground of absence from the search matrix, the matter required fresh examination on FAR parameters and filters. [Paras 18]

The AO/TPO was directed to re-examine the assessee's proposed comparables afresh on FAR analysis and applicable filters, without rejecting them merely for non-inclusion in the search matrix.

ESOP reimbursement parity under cost-plus model - Operating cost and operating revenue symmetry - HELD THAT: - The Tribunal noted that the ESOP settlement amount had been incurred by the AE and the assessee had only disbursed it to employees. Even assuming the Revenue's stand that such ESOP cost formed part of the assessee's operating cost, the cost-plus model required parity between the cost base and the revenue base. A one-sided adjustment by increasing only the income side, without corresponding treatment in the cost base or reimbursement side, distorted the transfer pricing computation and was not consistent with transfer pricing principles. [Paras 26]

The AO/TPO was directed to maintain parity between the cost base and the income base while computing the arm's length price in respect of the ESOP cost.

Working capital adjustment - Rule 10B comparability adjustment - assessee submitted that appropriate adjustments should be made to account for the differences between the controlled transactions of the assessee and the uncontrolled transactions of the comparable companies - HELD THAT: - The Tribunal held that differences in receivables, payables and inventory materially affect net profit margins and therefore require adjustment under Rule 10B(1)(e) when benchmarking under TNMM. The authorities below had rejected the claim without carrying out proper analysis based on average balances and comparable data. Since the comparables had been selected by the TPO, he could not refuse working capital adjustment without examining whether such differences materially affected margins. Once the assessee pointed out those differences, the TPO was required to undertake a fair and scientific exercise and grant appropriate adjustment in accordance with law. [Paras 33]

The issue was restored to the AO/TPO for fresh determination and computation of working capital adjustment in accordance with law and the directions issued by the Tribunal.

Notional interest on trade receivables - Outstanding receivables as international transaction - LIBOR-based benchmarking - Working capital adjustment overlap - HELD THAT: - The Tribunal held that, in view of the Explanation to section 92B, deferred receivables arising during the course of business fall within the ambit of an international transaction, and non-charging of interest on excess credit period is therefore subject to benchmarking. Since the underlying invoices were denominated in foreign currency, the domestic SBI PLR could not be adopted; the appropriate benchmark was LIBOR plus a reasonable spread, fixed here at LIBOR plus 200 basis points. The Tribunal further held that working capital adjustment, being based on opening and closing balances, may not fully capture invoice-wise delay beyond the agreed credit period, and therefore a separate receivables adjustment is not wholly subsumed in working capital adjustment. [Paras 38]

The receivables adjustment was upheld in principle, but the TPO was directed to recompute interest only for the actual delay beyond the agreed credit period by applying LIBOR plus 200 basis points.

Final Conclusion: The appeal was partly allowed for statistical purposes. Liquidhub Analytics Private Limited was excluded from the comparables, the issues relating to inclusion of the assessee's proposed comparables and working capital adjustment were remitted for fresh examination, ESOP adjustment was directed to be made with parity between cost and revenue, and interest on delayed receivables was upheld in principle but directed to be recomputed at LIBOR plus 200 basis points.

Taxability on Cash vs. Accrual Basis - royalty and fees for technical services -Software receipts not constituting royalty - Association of Persons - Offshore supply not taxable in India - Ad hoc transfer pricing adjustment - Interest on arbitration award - Limitation ground rendered infructuous

Taxability on receipt basis under DTAA - Royalty and fees for technical services - Taxability on Cash vs. Accrual Basis - HELD THAT: - The Tribunal followed the coordinate Bench decision in the assessee's own case for A.Y. 2009-10 [2024 (6) TMI 1553 - ITAT MUMBAI] which had held that under Article 12 of the India-Germany DTAA the relevant expressions used are "paid" and "payments of any kind received", and therefore royalty and fees for technical services become taxable only upon payment. That view had also been noticed as having been accepted in the assessee's own case in earlier years by the Bombay High Court. In the absence of any distinguishing feature in the years under appeal, the same position was applied. [Paras 5]

The Assessing Officer was directed to tax royalty and fees for technical services on receipt basis and not on accrual basis.

Software royalty - End-user licence restrictions - whether consideration received from supply of software was taxable as royalty either under the Act or under the India-Germany DTAA? - HELD THAT: - Following the earlier order in the assessee's own case A.Y. 2009–10 [2024 (6) TMI 1553 - ITAT MUMBAI] the Tribunal accepted that the software supplied was standard software, licensed on a non-exclusive and non-transferable basis, with restrictions against reverse engineering, commercial exploitation and other incidents of copyright transfer. The earlier Bench had also applied Engineering Analysis Centre of Excellence Private Limited [2021 (3) TMI 138 - SUPREME COURT] holding that such payments do not amount to consideration for use of copyright. As the factual position was found identical, the receipts from software supply could not be characterised as royalty. [Paras 6]

The software receipts were held not taxable as royalty, and the Assessing Officer was directed to give effect accordingly.

Association of Persons - Consortium arrangement - HELD THAT: - The Tribunal adopted the earlier finding that the parties had come together only for the limited purpose of tender participation and performance of distinct and independent scopes of work. There was no joint management, no joint execution, no sharing of profits or losses, and each party raised separate invoices and received separate consideration for its own work. The clause of joint and several liability in favour of DMRC was treated only as a contractual safeguard for the employer, particularly since the members had inter se indemnity and the MOU expressly disclaimed creation of any partnership, joint venture or other business entity. On those features, the essential ingredients of an Association of Persons were held absent. [Paras 7]

It was held that no Association of Persons came into existence between the assessee and Siemens Ltd.

Offshore supply taxability in India - Protocol to Article 7 of India-Germany DTAA - taxability of Income from offshore supply of goods undertaken by the assessee - HELD THAT: - The Tribunal upheld the earlier view that, notwithstanding a single overarching contract, the parties' respective roles and consideration were separately identified and invoiced, and the assessee's role was confined to offshore components. The Tribunal also noted the prior finding that no AOP existed and that there was no PE in India. Relying on Ishikawajima Harima Heavy Industries Ltd [2007 (1) TMI 91 - SUPREME COURT] and the Protocol to Article 7 of the India-Germany DTAA, it accepted that profits from direct offshore supply by the foreign enterprise were not attributable to any Indian presence and were therefore not taxable in India. The reliance placed by the Revenue on Vodafone International Holdings BV [2012 (1) TMI 52 - SUPREME COURT] was rejected as being in a different context. [Paras 8]

The Assessing Officer was directed not to tax the income arising from offshore supply of goods.

Transfer pricing adjustment - Arm's length price determination - adhoc adjustment @10% by taking 10% mark-up on the value of international transaction - HELD THAT: - The Tribunal followed its earlier order [2024 (6) TMI 1553 - ITAT MUMBAI] holding that the difference between the assessee's figures and those reported by the Indian associated enterprises was explained by the assessee being taxable on receipt basis under the treaty, whereas the Indian entities reported transactions on accrual basis and also reported all categories of transactions. In that situation, without finding any defect in the assessee's transfer pricing study and without determining the arm's length price by applying the prescribed rules and methods, the TPO could not resort to an ad hoc mark-up. The Tribunal further noted that where the same transactions in the hands of the Indian associated enterprises had already been benchmarked and accepted, a different ad hoc approach in the assessee's case was unsustainable. [Paras 9]

The ad hoc transfer pricing adjustment was deleted.

Interest on arbitration award - Business income in absence of PE - Taxability of interest from the NTPC arbitration award in the current year in the assessee's hands - HELD THAT: - Following the earlier order in the assessee's own case, the Tribunal held that the interest awarded in arbitration did not represent an independent debt claim arising in the current year but formed part of the arbitration award itself. It also accepted the earlier finding that, in the absence of a PE in India, such receipt was not taxable. The prior Bench had referred to CIT vs. Govinda Choudhury & Sons [1992 (4) TMI 8 - SUPREME COURT] and Islamic Investment Co [2002 (3) TMI 3 - BOMBAY HIGH COURT] while dealing with the character of such interest. [Paras 10]

Interest on the NTPC arbitration award was held not chargeable to tax.

Final Conclusion: Following the coordinate Bench decisions in the assessee's own case on identical facts, the Tribunal held that royalty and fees for technical services were taxable on receipt basis, software receipts were not royalty, no AOP existed, offshore supply income was not taxable in India, the ad hoc transfer pricing adjustment was unsustainable, and interest on the NTPC arbitration award was not taxable.

Imposition of Penalty under Section 112(a) - Smuggled/mis-declared goods -Corroborative Evidence - Knowledge of concealment - Customs House Agent liability - Proceedings under Customs Broker Licensing Regulations - absence of evidence showing knowledge of the concealed goods -HELD THAT: - The Tribunal found that the impugned order itself recorded that the appellant, acting as a CHA, had merely helped the importer in filing the Bill of Entry, which was filed on self basis by the importer. The Revenue had not brought any corroborative evidence to establish that the appellant had prior knowledge of the concealment of the memory cards. The Tribunal further took note that the penalty on the person treated as the mastermind had already been set aside and that no proceedings had been initiated against the appellant under the Customs Broker Licensing Regulations. Following G. NARAYAN & CO. VS. COMMISSIONER OF CUSTOMS, MANGALORE [2021 (3) TMI 560 - CESTAT BANGALORE], and the decisions noticed by the appellant, the Tribunal held that, without proof of knowledge of concealment and in the absence of proceedings under the licensing regulations, penalty under Section 112(a) was not imposable on the CHA. [Paras 6, 7]

The penalty imposed on the appellant was set aside and the appeal was allowed.

Final Conclusion: The Tribunal held that penalty under Section 112(a) was not sustainable against the appellant CHA, since there was no corroborative evidence of knowledge of the concealed goods and no proceedings had been initiated under the Customs Broker Licensing Regulations. The appeal was accordingly allowed and the penalty was set aside.

Separate penalty on partner and partnership firm - Penalty for use of false or incorrect declaration documents - Proportionality of penalty

Separate penalty on partner and partnership firm - Partnership firm not distinct from partners for penalty - HELD THAT: - The Tribunal held that, in the absence of any statutory indication treating the partnership firm as a separate legal entity from its partners for the purpose of such penalty, imposition of penalty on the firm covers the contravention by the partners as well. Relying on the Gujarat High Court decisions in Commissioner of Central Excise Vs. Jai Prakash Motwani [2009 (1) TMI 501 - GUJARAT HIGH COURT] and C.C.E & C.-Surat-II vs. MOHAMMED FAROOKH MOHAMMED GHANI [2010 (7) TMI 378 - GUJARAT HIGH COURT], it was held that once the firm had been penalised, no separate penalty could be imposed on the appellant as partner for the same contravention. [Paras 6, 7]

The penalty imposed on the appellant under Section 112(a) was set aside.

Penalty for use of false or incorrect declaration documents - Admission as evidentiary basis - Proportionality of penalty - HELD THAT: - The Tribunal found that the penalty under Section 114AA stood on a different footing because no such penalty had been imposed on the firm and the appellant's own statement disclosed his participation in arranging import of the goods in the firm's name for consideration. Since that admission had not been retracted, it constituted sufficient basis for penalty under the provision. At the same time, considering that, as per his statement, his expected benefit in the transaction was limited, the penalty imposed by the Commissioner was held to be excessive and disproportionate. [Paras 6, 7]

The penalty under Section 114AA was upheld in principle but reduced to Rs. 2 lakh.

Final Conclusion: The appeal was partly allowed. The separate penalty on the appellant under Section 112(a) was set aside, while the penalty under Section 114AA was sustained on the basis of his unwithdrawn admission but reduced as disproportionate.

Validity of the recovery proceedings - Non-issuance of a show cause notice as mandated under Section 28 of the Customs Act, 1962 and inordinate delay in adjudication spanning nearly twenty-three (23) years - Adjudication within reasonable time - Jurisdiction confined to the demand notice - Audi Alteram Partem - Natural Justice - Jurisdictional Notice - Whether the initiation of recovery proceedings without issuing a show cause notice in the form and manner mandated by Section 28 of the Customs Act, 1962 is legally sustainable?

Non-issuance of a show cause notice - HELD THAT: - It is a fundamental principle of law that an authority exercising quasi-judicial powers is circumscribed by the four corners of the notice that initiates the proceeding. The demand notice is not merely a procedural preamble, it defines the scope of the proceeding and delimits the jurisdiction of the adjudicating authority. Any confirmation of demand beyond the amount specified in the demand notice is, ex facie, an exercise of jurisdiction in excess of what was conferred.

The recovery proceeding was founded on a demand notice for a lesser amount, but the adjudicating authority confirmed a higher demand without any amended or supplementary notice. Since the initiating notice defines the scope of the proceeding and delimits the adjudicating authority's jurisdiction, confirmation of an amount beyond what was proposed in that notice was beyond jurisdiction and vitiated the order. [Paras 7, 8]

The orders were liable to be set aside on this ground alone.

Mandatory show cause notice for recovery of erroneous refund - Natural justice - HELD THAT: - The Tribunal held that Section 28 mandatorily requires issuance of a notice calling upon the noticee to show cause before any demand for erroneous refund is fastened. A mere demand for payment cannot be equated with a show cause notice, because it neither sets out the precise case in the manner required for adjudication nor affords the statutory opportunity to answer the proposed recovery. In the absence of such notice, the adjudicatory jurisdiction was not validly invoked and the proceeding stood vitiated at its root.

The Hon'ble Supreme Court, in Metal Forgings v. Union of India [2002 (11) TMI 90 - SUPREME COURT], has laid down that the issuance of a show cause notice in the prescribed form and manner is a mandatory requirement of law. The notice must call upon the noticee to show cause if he has any objection to the proposed demand. No such invitation was extended to the Appellant in the present case. The demand notice dated 18.12.1995, as claimed to be issued u/s. 28 ibid, was a unilateral communication directing deposit of money. It was not a notice that called upon the Appellant to show cause why the demand should not be confirmed. The adjudication that followed was therefore without a valid show cause notice and is unsustainable in law.

The adjudication based only on the demand notice was unsustainable in law.

Adjudication within reasonable time - Prejudice from delayed adjudication - HELD THAT: - The right of a party to a fair hearing necessarily encompasses the right to have the proceeding concluded within a reasonable time, such that the party retains the ability to effectively exercise its right of defence. Adjudication after a delay of two decades irreparably erodes this right. No party can be reasonably expected to preserve business records, maintain institutional memory of routine import transactions, or produce witnesses after the passage of nearly a quarter century.

The Hon'ble Bombay High Court has, in an analogous context, recognised this principle unequivocally. In Parle International Ltd. v. Union of India[2020 (11) TMI 842 - BOMBAY HIGH COURT], it has been held by the Hon’ble High Court that adjudication after a delay of more than a decade defeats the very purpose of issuing a show cause notice, rendering the proceeding fundamentally unjust. The ratio of that decision applies with even greater force to the facts of the present case, where the delay stretches to more than two decades.

The Tribunal found the delay between the demand notice and adjudication to be egregious and inherently prejudicial. Such prolonged inaction deprived the appellant of an effective opportunity of defence, as relevant personnel had retired and old records were no longer available. The right to fair hearing includes conclusion of proceedings within a reasonable time so that the noticee can meaningfully defend itself. A proceeding kept dormant for decades and then revived was treated as fundamentally unjust and liable to fail on that ground independently. [Paras 13, 14, 15, 16, 17]

The delayed adjudication was held sufficient by itself to invalidate the order.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal. It held that the recovery proceeding was invalid because the demand confirmed exceeded the initiating notice, no proper show cause notice under Section 28 had been issued, and the adjudication after about twenty-three years caused fatal prejudice and could not be sustained.

Limitation for appeal - Condonation of delay - Statutory exclusion of further extension - Power of the Commissioner (Appeals) to condone delay where the appeal under section 128(1) of the Customs Act was filed beyond the original period of 60 days as well as the further condonable period of 30 days. - HELD THAT: - The Tribunal held that section 128(1) permits filing of an appeal within 60 days from service of the order, and the proviso allows presentation within a further period of 30 days only on sufficient cause being shown. Since the appeal was admittedly filed beyond even that extended period, the appellate authority lacked jurisdiction to condone the delay. Relying on Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT], the Tribunal noted that where the statute itself limits condonation to a specified further period, no power exists to entertain the appeal thereafter. [Paras 6, 7, 8]

The dismissal of the appeal as time-barred was upheld.

Final Conclusion: The Tribunal upheld the order of the Commissioner (Appeals) and dismissed the appeal, holding that once the statutory period of 60 days and the further condonable period of 30 days had both expired, no power remained to condone the delay.

Tariff classification of imported automatic soap dispenser - classifiable under CTI 8424 89 90 Or under CTI 9616 10 20 - Mechanical appliances for dispersing liquids - Distinction between dispersing and spraying - Exclusion of toiletry sprays classification -HELD THAT: - The words “dispersing” and “spraying” have both been used in Chapter Heding 8424. It is, therefore, clear that there is a difference between “disperser of liquids” and “spraying of liquids”. In such a situation, the product imported by the appellant cannot fall under Chapter Heading 9616 since it does not spray liquids.

he Tribunal held that Chapter Heading 8424 covers mechanical appliances for dispersing liquids, and the imported product, by its own functioning, detects the hand through a sensor, mixes air with liquid soap, and dispenses the soap as foam through the outlet. The determinative distinction drawn by the Tribunal was between dispersing and spraying. Since Chapter Heading 9616 deals with sprays, including toiletry sprays, and the imported product does not spray liquid, it could not be brought under that heading. The Tribunal also noted that the HSN to Chapter Heading 9616 specifically excludes dispersing or spraying appliances covered under Chapter 8424. On that reasoning, the departmental classification under CTI 9616 10 20 was found erroneous. [Paras 8, 10, 11, 12, 13]

The product was held to be appropriately classifiable under CTI 8424 89 90, and the contrary appellate order was set aside.

Final Conclusion: The Tribunal allowed the appeal and held that the imported automatic soap dispenser is classifiable under CTI 8424 89 90 as a mechanical appliance for dispersing liquids, and not under CTI 9616 10 20 applicable to sprays.

Statutory limitation for appeal - Condonation of delay - Exclusion of Limitation Act - Power of the Commissioner (Appeals)under section 128(1) of the Customs Act to entertain an appeal filed beyond the original period of 60 days and the further condonable period of 30 days. -HELD THAT: - The Tribunal held that section 128(1) prescribes a mandatory period of 60 days for filing an appeal, with only a limited discretion to condone delay for a further period of 30 days on sufficient cause being shown. Once that extended period also expires, the Commissioner (Appeals), being a statutory authority, has no jurisdiction to condone any further delay. The appellant's grievance regarding violation of natural justice could have been examined only in a competent appeal filed within the statutory framework. Relying on Singh Enterprises versus Commissioner of C.EX., Jamshedpur [2007 (12) TMI 11 - SUPREME COURT], rendered on a pari materia provision, the Tribunal held that section 5 of the Limitation Act stands excluded and the statutory outer limit cannot be enlarged. [Paras 5, 6, 7]

The dismissal of the appeal as time-barred was upheld.

Final Conclusion: The Tribunal upheld the order of the Commissioner (Appeals) and dismissed the appeal, holding that delay beyond the further statutory period of 30 days under section 128(1) could not be condoned.

Provisional release of seized goods- import and trading of TFT LCD parts - Judicial exercise of discretion under Section 110A - Onerous bank guarantee conditions - differential duty - opinion of Chartered Engineer without any evidence to support the allegation - imposition of condition of Bank Guarantee - Re-export of seized goods - mis-declared consignment of refurbished LCD Panels imported.

Provisional release of seized goods - HELD THAT: - The Tribunal held that, while considering provisional release, the adjudicating authority must exercise its discretion judiciously and cannot impose conditions merely by undue reliance on executive instructions. Referring to Navshakti Industries Pvt. Ltd. Vs. Commissioner of Customs, ICD, TKD, New Delhi [2010 (5) TMI 592 - DELHI HIGH COURT], as affirmed by the Supreme Court [2011 (5) TMI 149 - SUPREME COURT], and Daya Enterprises Vs. Commissioner of Customs (Export) [2016 (4) TMI 231 - DELHI HIGH COURT], the Tribunal noted that bank guarantee requirements must remain proportionate. It further noticed from Shanus Impex Vs. Union of India [2023 (12) TMI 597 - DELHI HIGH COURT] and Additional Director General (Adjudication) Vs. Its My Name Pvt. Ltd.[2020 (6) TMI 72 - DELHI HIGH COURT] that the circular could not be treated as displacing statutory discretion. Since the bank guarantee demanded was found unjustifiably onerous, the requirement was reduced while retaining bond for the full value of the goods. [Paras 6]

The impugned order was modified by directing furnishing of bank guarantee of Rs. 20,00,000/- along with execution of bond for 100% of the value of the goods.

Re-export of seized goods - Penalty security at provisional stage - Onerous conditions for re-export - HELD THAT: - The Tribunal found that the conditions for re-export had been imposed routinely and without due application of mind. It noticed the reliance placed on Shankar Pandi Vs. Union of India [2001 (12) TMI 83 - MADRAS HIGH COURT], based on Siemens Ltd. Vs. Collector of Customs [1999 (8) TMI 84 - SUPREME COURT], and the subsequent affirmation in Union of India Vs. Shankar Pandi [2010 (3) TMI 1247 - SC ORDER]. Without finally deciding the question of levy of redemption fine on re-export, the Tribunal held that, since the goods were not being cleared for home consumption, the requirement of securing possible liabilities at the provisional stage had to be moderated. It therefore restricted the security to a lower bank guarantee, while maintaining execution of bond for the full value, subject to the final outcome of adjudication. [Paras 7]

The impugned order was modified by directing furnishing of bank guarantee of Rs. 15,00,000/- along with execution of bond for the full value of the goods, the bank guarantee to remain alive subject to adjudication.

Final Conclusion: The Tribunal partly allowed both appeals and held that the conditions imposed for provisional release and for re-export were unduly onerous. The bond for full value was retained, but the bank guarantee requirements were substantially reduced in each matter.

Advance licence export obligation - Non-production of the Export Obligation Discharge Certificate - claim of having fulfilled the export obligation and of pursuing redemption before the DGFT. - HELD THAT: - The Tribunal found that the dispute turned only on the appellant's failure to produce the Export Obligation Discharge Certificate. Since the appellant stated that the export obligation had been fulfilled and that the certificate was being pursued before the DGFT, the matter was directed to be reconsidered in the light of Circular No.16/2017-Cus. on the basis of the EODC as and when issued by the DGFT, instead of sustaining the demand solely for its non-production at that stage. [Paras 6]

The impugned order was set aside and the matter was remanded to the adjudicating authority to decide the case on the basis of the EODC certificate as and when issued by the DGFT.

Final Conclusion: The Tribunal held that the controversy was confined to non-production of the EODC and, in view of the appellant's statement that redemption was being pursued before the DGFT, remanded the matter for fresh decision on the basis of the certificate when issued.

Non-fulfilment of notification conditions governing duty-free import and procurement -Applicability of Benefit of reduced penalty under Section 114A of the Customs Act, 1962 and Section 11AC(c) of the Central Excise Act on Penalty imposed under Section 112(ii) of the Customs Act, 1962 and Rule 25(b) -Cross objections treated as appeal -

Whether the Adjudicating Authority was correct in extending the benefit of payment of 25% of imposed penalty in terms of provisions under Section 114A as well as under Section 11AC(c) of Central Excise Act or otherwise? - HELD THAT: - As per Section 114A, there is a provision that where any duty is determined in terms of sub-section 8 of Section 28 and interest payable thereon is determined under Section 28AA and if the same is paid within 30 days from date of the communication of the order, then the penalty liable to be paid by the person would be 25% of the duty or interest so determined, as the case may be. Therefore, what is crucial to determine whether Section 28 of Customs Act has been invoked for recovery of demand in the present appeal or not. Section 28 is a provision under which recovery of duty not paid or short paid or erroneously refunded is to be made. In the present appeal, apart the procurement from indigenous source, imports were allowed in terms of certain notifications without payment of applicable customs duty and central excise tax. However, on noticing that the notificational conditions have not been met the demand was raised on them for recovery of duty not paid under Customs Act as well as under Central Excise Act. In the impugned order, the interest has been levied under Section 28AB. Essentially, therefore, the provisions that the demand of short levy, non-levy is to made in terms of Section 28 and the interest will also be applicable under Section 28AA or for that matter under Section 28AB, as it existed during material time. Similar provisions, under Central Excise Act also exist where Section 11AC(c) provides for similar payment of 25% of the duty as penalty.

The Tribunal noted that the demand of customs duty had been raised by invoking Section 28, but the penalty actually imposed was under Section 112(ii). During the material period, Section 112(ii) only prescribed the range of penalty and did not provide any statutory option for payment of a reduced penalty at 25%. Since the adjudicating authority had imposed penalty under Section 112(ii), and not under Section 114A, the reduced-penalty benefit available under Section 114A could not be imported into the order. The maximum penalty having been imposed, the matter required fresh determination of penalty strictly in accordance with Section 112(ii) as it stood at the relevant time. [Paras 10, 11, 14]

The departmental appeal was accepted on this aspect, and the matter was remanded to the original authority to re-determine the customs penalty under Section 112(ii) without granting any option of reduced penalty.

Cross objections treated as appeal - Remand for reconsideration of penalty -HELD THAT: - The Tribunal held that, the respondent being aggrieved by part of the impugned order, its cross objections were liable to be treated as an appeal in terms of Section 129(4) of the Customs Act. As the departmental appeal had already led to remand for fresh determination of penalty, the respondent's objections to the imposition of penalty were also directed to be considered by the same authority, without any final adjudication on those merits by the Tribunal. [Paras 7, 15]

The cross memorandum was treated as an appeal and was remanded to the original authority for fresh consideration of the respondent's challenge to the penalty.

Final Conclusion: The Tribunal held that the benefit of payment of 25% reduced penalty was not available for penalty imposed under Section 112(ii) during the relevant period, and the customs penalty was remanded for fresh determination accordingly. The respondent's cross memorandum was treated as an appeal and was also remanded for reconsideration of the penalty challenge.

Fraud classification of borrower accounts- transaction audit report - Non-Supply of relied-upon material - breach of natural justice - Reliance on undisclosed material - Audi Alteram Partem - Principles of Natural Justice - Non- Speaking Order​​​​​​. - HELD THAT: - The Court found that the show cause notice itself rested on the transaction audit report of M/s Deloitte, though the National Company Law Tribunal had already held that the report did not support the allegation that the transactions were undervalued, preferential or fraudulent, and that view had been affirmed in appeal. The bank had earlier accepted that position and withdrawn the wilful defaulter proceedings on the same report. In the impugned order declaring the account as fraud, the bank further relied on the Joint Lenders Meeting and the fact that more than 60% lenders had reported the account as fraud, but neither the convening nor the proceedings of that meeting had been disclosed to the petitioners or relied on in the show cause notice. The petitioners were therefore denied an opportunity to meet that material. The Court also held that the bank could not justify the action by referring during the writ hearing to the FIR, since the FIR had not been relied on either in the show cause notice or in the impugned order. Applying the principles stated in State Bank of India & Ors Vs. Rajesh Agarwal & Ors. [2023 (3) TMI 1205 - SUPREME COURT] and State Bank of India Vs. Amit Iron Private Limited and Others [2026 (4) TMI 507 - SUPREME COURT] the Court held that the decision-making process was contrary to natural justice and that the impugned order itself did not record findings and reasons. [Paras 27, 28, 29]

The impugned show cause notice and the order declaring the account as fraud were quashed, with liberty to the bank to proceed afresh in accordance with law and in compliance with the applicable RBI directions and the law laid down by the Supreme Court.

Final Conclusion: The Court set aside the show cause notice and the order classifying the petitioners' account as fraud, holding that the bank had relied on material already discredited and on undisclosed Joint Lenders Meeting material without affording an effective opportunity of response. Liberty was reserved to the bank to initiate fresh action in accordance with law.

Validation of post-petition disposition - first transaction, entered into after presentation of the winding-up petition but before the winding-up order - Effect of second transaction - Scope of Section 536(2) of the Companies Act, 1956 - Best interests of creditors - knowledge of the pendency of the winding-up petition despite due diligence - undervalue transfer - Void and voidable transactions in winding up -

Bona fide transaction - Validation of post-petition disposition - Benefit to creditors -HELD THAT: - The Court held that in Section 536(2) the word void is to be read as voidable, and the provision confers an enabling power to protect bona fide transactions completed before the winding-up order. Validation depends on whether the transaction was for the benefit of the company, for keeping its affairs going, or in the interest of creditors, and not on a mechanical rule that every post-petition disposition is invalid. On the facts, the Official Liquidator did not establish fraud, taint, or undervaluation and in argument fairly accepted that the consideration was above market value. The applicant, on the other hand, showed absence of knowledge of the winding-up proceedings at the time of the first transaction, due diligence through title and encumbrance search, payment of consideration above market value, use of the sale consideration to discharge creditors' dues, and absence of claims from other creditors or workmen. The subsequent reference to possible statutory dues, not pleaded in the report or supported on affidavit, was held insufficient to invalidate the first transaction in view of these findings. The Court nevertheless recorded that the ex-directors were aware of the winding-up proceedings and lacked bona fides in dealing with the company's property, but treated that circumstance as relevant to action against them rather than as a ground to refuse validation of the first transaction. [Paras 25]

The first transaction was validated under Section 536(2), while leaving statutory authorities free to proceed against the ex-directors in accordance with law.

Scope of Section 536(2)- Private inter se transfer -HELD THAT: - The Court expressly held that the second transaction was a transaction between two private parties and therefore lay outside the scope of an application under Section 536(2) of the Companies Act. The Court accordingly did not undertake adjudication on its validation within these proceedings. [Paras 24]

Relief under Section 536(2) was confined to the first transaction, and no validation was granted in respect of the second transaction in these proceedings.

Final Conclusion: The Court allowed the interim application in part by validating only the first transaction under Section 536(2), and dismissed the Official Liquidator's report. It held that the second transaction, being between private parties, did not fall for validation in these proceedings, while leaving open action in law against the ex-directors in relation to any statutory dues.

Challenged the grant of waiver under Section 244 - threshold for filing of the petition in a company limited by guarantee - Prima facie Oppression and mismanagement - Exceptional circumstances - Prima facie satisfaction - Violation of articles of association - Exceptional circumstances. - HELD THAT: - The Appellate Tribunal held that the impugned order disclosed sufficient prima facie grounds for waiver. It accepted that, at the waiver stage, a detailed merits examination was unnecessary and that concise reasons were adequate if the adjudicating authority had considered the relevant factors. The order showed consideration of the affairs of the club, the alleged illegal termination and suspension of Respondent No. 1 during pendency of proceedings, the alleged violation of the Articles of Association in convening the EOGM, and the broader allegations of mismanagement contained in the company petition. The Tribunal further held that the challenge was not confined to a purely personal grievance, but raised matters affecting members' rights and club governance. As to the withdrawal of 49 members, the Tribunal observed that such withdrawal could prima facie be attributable to the WhatsApp communication issued by the new committee, and therefore did not negate the case for waiver at that stage. [Paras 17, 18, 19]

The impugned order granting waiver was found to be based on relevant prima facie considerations and to suffer from no legal infirmity.

Final Conclusion: The appeal was dismissed. The Appellate Tribunal held that the adjudicating authority had recorded adequate prima facie reasons for granting waiver under Section 244, including the alleged continuing oppression and mismanagement, the challenge to the membership action, and the asserted violation of the Articles of Association.

Financial debt default warranting initiation of CIRP - ingredients for initiation of corporate insolvency resolution process under Section 7 - Contractual dispute - Insolvency proceedings as recovery mechanism. - HELD THAT: - It is well settled that condition precedent invocation of Section 7 of the Code is the existence of a ‘financial debt’ and a ‘default’ in its repayment. The scheme of the Code is to ensure that when a debt becomes due and is not paid, the Insolvency Resolution Process begins [Innovative Industries Ltd. v. ICICI Bank & Anr.[2017 (9) TMI 58 - SUPREME COURT]]. The Code operates as a collective insolvency resolution mechanism and not as a forum for the adjudication of individual contractual claims. This Court has underscored that where object behind the invocation of Code is to compel payment rather than to address genuine financial distress, such invocation would amount to an abuse of process[Pioneer Urban Land and Infrastructure Ltd. & Anr. v. Union of India & Ors. [2019 (8) TMI 532 - SUPREME COURT]]. The Code must not be used as a tool for coercion and debt recovery by individual creditors [Glas Trust Company LLC v. BYJU Raveendran & Ors. [2024 (10) TMI 1185 - SUPREME COURT (LB)] and Anjani Technoplast Ltd v. Shubh Gautam [2026 (4) TMI 1518 - SUPREME COURT]].

The Court held that, though existence of a financial debt and a default in repayment is the condition precedent for invoking Section 7, the present transaction could not be viewed as a simple lending arrangement between the bank and the corporate debtor. On a reading of the quadripartite agreement, the disbursement was directly made to the builder and was structurally linked to the builder's obligations concerning construction, transfer of the property, refund contingencies, non-transfer without consent and creation of security. The obligations of the parties were therefore intertwined with the builder's performance, and the dispute was found to be predominantly contractual, involving competing claims relating to transfer of property and allied obligations. In that situation, the case did not present a straightforward financial debt default justifying commencement of CIRP, and allowing recourse to the Code would impermissibly convert insolvency proceedings into a coercive recovery mechanism, especially when proceedings concerning recovery were already pending before the DRT. [Paras 9, 10, 11, 12, 13]

The appeal was dismissed and the refusal to invoke Section 7 was upheld.

Final Conclusion: The Supreme Court declined to interfere with the NCLAT's decision and held that, on the terms of the quadripartite transaction, the matter was essentially contractual and already the subject of recovery proceedings before the DRT, and therefore did not justify initiation of CIRP under Section 7.

Jurisdiction of the Adjudicating Authority to direct recovery of assets of the corporate debtor - Proof of tenancy, lease or licence rights in corporate debtor's premises - Appellate Tribunal upheld the Adjudicating Authority's order directing the appellant to vacate the corporate debtor's premises, and authorised the Resolution Professional to take possession with police assistance if possession was not handed over within the time granted. - HELD THAT:- The Court declined to interfere with the impugned judgment of the NCLAT [2026 (3) TMI 1646 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI], but granted the appellant three month's time to vacate the premises subject to filing an undertaking to hand over vacant and peaceful possession to the Resolution Professional.

Resolution Professional to produce the full valuation reports and minutes of the monitoring committee to a dissenting financial creditor -Appeal against dismissal of the application for production of full valuation reports and monitoring-committee minutes is dismissed -condonation of delay - HELD THAT:- Delay was condoned, and the appeal was dismissed as no error was found in the impugned order [2026 (2) TMI 565 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI], particularly since approval of the resolution plan was not under challenge and the appellant had been left free to pursue its grievance regarding lesser payment before the adjudicating authority in the pending application.

Retention allowance - salary and wages during CIRP - requirement of legal sanction/evidence for entitlement- Claim for retention allowance is upheld for lack of legal entitlement and evidentiary support - The payment slip and managing director's endorsement were insufficient to establish legal enforceability. However, salary for June 2017 was ordered to be paid subject to conditions. - HELD THAT:- The appeal against the impugned judgment and order of the NCLAT [2024 (12) TMI 847 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI] was dismissed, and pending applications, if any, were disposed of.

Entitlement to exclusion of the period spent in prosecuting the earlier Section 9 proceeding under the IBC while computing limitation for the subsequent civil suit - Exclusion of time under Section 14 of the Limitation Act - Other cause of like nature - Whether the provisions laid down under Section 14 of the Limitation Act, 1963 shall apply in the facts and circumstance of this case where the previous proceeding was filed under Section 9 of IBC and the sub-sequent proceeding is the instant civil suit. -HELD THAT: - The Court held that Section 14(1) of the Limitation Act must receive a liberal construction and is not confined to cases of strict want of jurisdiction. The expression other cause of like nature extends to any legal bar which prevents the forum from entertaining the proceeding on merits. Since a proceeding under Section 9 of the IBC cannot be entertained where there is a pre-existing dispute, dismissal of the earlier NCLT proceeding on that threshold ground operated as a jurisdictional bar within the meaning of Section 14(1). The Court further held that the expression "court" in Section 14 includes tribunals, and that the matter in issue in both proceedings was the same, namely, whether there was a default and consequent liability of the defendants to pay the plaintiff's dues.

On a meaningful and conjoint reading of Section 8 and 9 of IBC, it appears to this Court that the only pre-condition for a proceeding under Section 9 of IBC is occurrence of default. On a meaningful reading of the statements made in the instant plaint, it appears to this Court that the plaintiff seeks to sue the defendants claiming a money decree on occurrence of default. Thus, the core issue in the instant suit would be whether there has been any occurrence of default on the part of the defendants in paying off the dues of the plaintiff, as claimed in the plaint. The issue in the instant suit is therefore the same matter in issue in the previously instituted proceeding under Section 9 of IBC.

In the matter of: HPCL Bio-Fuels Limited. [2024 (11) TMI 352 - SUPREME COURT] the judgment was rendered under Section 14(2) of the Limitation Act scenario, where the subsequent proceeding was an application filed under Section 11 of the Arbitration Act. The reliefs claimed under Section 11 of the Arbitration Act were not same as that of the previous proceeding filed under Section 9 of IBC. Hence, the ratio laid down in the said judgment would not apply in the facts and circumstances of this case.

On the record, the plaintiff had acted in good faith and with due diligence in first approaching the NCLT and thereafter instituting the suit promptly after dismissal of that proceeding. [Paras 31, 33, 34, 36, 37]

The period during which the Section 9 IBC proceeding remained pending was liable to be excluded under Section 14(1), and the plaint was held to be within limitation and admitted subject to scrutiny.

Final Conclusion: The Court held that dismissal of the earlier Section 9 IBC proceeding on the ground of pre-existing dispute constituted a failure on account of a cause of like nature within Section 14(1) of the Limitation Act. Excluding the time spent before the NCLT, the suit was treated as within limitation and the plaint was admitted subject to scrutiny.

Locus standi - Third-party intervention in Section 7 proceedings - Challenged the admission order by way of recall - pre-conditions to exercise power of recall of order - Delay and laches in filing the Intervention Petition - Review versus recall - lack of jurisdiction - fraud - collusion - Gross Failure of Justice​​​​​​​ - non-compliance with the allottee threshold under the second and third provisos to Section 7.

Challenge to the admission order on the ground of non-compliance with the statutory threshold for allottees​​​​​​​ - HELD THAT:- The Tribunal held that the Adjudicating Authority may recall its order only on limited grounds such as patent lack of jurisdiction, fraud or collusion, fundamental procedural error, or comparable gross failure of justice; it has no power to undertake a substantive review under the guise of recall. On the facts, none of the recognised grounds for recall was established. The allegation of collusion remained unproved, there was no procedural defect affecting a necessary party, and the admission order could not be treated as one passed without jurisdiction. The Tribunal also noted that the application for recall had been moved after considerable delay and after the statutory appellate remedy against the admission order had not been pursued. It further held that the objection founded on the third proviso to Section 7 could not succeed in any event because the original applicants, having cancelled the allotment and sought refund with interest, were no longer to be treated as homebuyers; their claim stood as a financial debt exceeding the then applicable threshold under Section 4, and compliance with the proviso applicable to allottees was therefore unnecessary. [Paras 7, 8, 9, 10, 12]

The prayer to recall the admission order was rightly rejected.

Third-party intervention in Section 7 proceedings - Necessary parties - Locus standi - HELD THAT: - Affirming the Adjudicating Authority, the Tribunal held that at the pre-admission stage of an application under Section 7, the enquiry is confined to the existence of financial debt and default, and the necessary parties are the financial creditor and the corporate debtor. Since third-party intervention is not contemplated at that stage, the appellant could not claim any independent right to be impleaded or heard in those proceedings. The rejection of intervention therefore did not give rise to any complaint of absence of notice or hearing, because no such right existed in the first place. [Paras 11]

The refusal to permit intervention was upheld.

Final Conclusion: The Tribunal upheld the dismissal of the intervention petition and found no ground to recall the admission order. The appeal was dismissed, holding that third-party intervention was not maintainable in the Section 7 proceedings and that the objection based on the allottee-threshold requirement was inapplicable once the original applicants had cancelled the allotment and sought refund as financial creditors.

Limitation for filing an appeal under Section 61 - commenced from the date of pronouncement of the impugned order Or from the later date when the order was uploaded Or otherwise came to the appellant's knowledge - Date of pronouncement of order - Exclusion of time for certified copy - Statutory outer limit for condonation of delay.

Commencement of limitation - Whether limitation would run for purposes of filing the appeal under Section 61 of the IBC from the date of knowledge of the impugned order as claimed by the Appellant i.e. 30.10.2025 or from the date of pronouncement of the order i.e. 07.10.2025 -HELD THAT:- It is the case of the Appellant that that the right of appeal could have been exercised by them only when they became aware of the contents of the order passed by the court. Since the operative portion of the order was not known to the Appellant, they could not have filed an appeal. The knowledge of the contents of the order by the Appellant enjoyed primacy in the computation of limitation for filing an appeal.

Per contra, it is the case of the Respondent that it was the responsibility of the Appellant to apply for a certified copy upon pronouncement of the order which would have given them the benefit of exclusion of time taken in obtaining the order and prevent the limitation from running. However, it is the own case of the Appellant that they applied for the certified copy only on 31.10.2025 which was only after uploading of the order.

The Appellate Tribunal found, from the pleadings of both sides, that the order had been heard, disposed of and pronounced in open court on 07.10.2025. The liquidator had not squarely denied pronouncement and had in fact admitted that the Adjudicating Authority had indicated that the Section 42 appeal deserved to be allowed. In that factual setting, the principle stated in Sanjay Pandurang Kalate Vs Vistra ITCL (India) Limited & Ors. [2023 (12) TMI 1249 - SUPREME COURT (LB)] was held inapplicable, since that decision proceeded on the footing that no order had been pronounced in open court. Applying V. Nagarajan v. SKS Ispat & Power Ltd. [2021 (10) TMI 941 - SUPREME COURT (LB)] and A Rajendra Vs Gonugunta Madhusudhan Rao & Ors. [2025 (4) TMI 319 - SUPREME COURT (LB)] the Tribunal held that once pronouncement in open court is established, limitation starts from that date; it is not postponed to the date of upload, receipt of copy, or actual knowledge. The plea that the right of appeal arose only after knowledge of the contents of the order was also rejected, the Tribunal holding that a party aware of pronouncement must act diligently and apply for a certified copy, so that only the time requisite for obtaining it may be excluded in accordance with law. [Paras 22, 23, 26, 32, 33]

The date of pronouncement, namely 07.10.2025, was held to be the starting point of limitation for both appeals.

Condonation of delay - Outer limit of forty-five days - Jurisdiction to condone - - HELD THAT:- Having held that limitation ran from 07.10.2025, the Appellate Tribunal computed the initial period of thirty days up to 06.11.2025 and the further condonable period of fifteen days up to 21.11.2025. The liquidator's appeal filed on 29.11.2025, and SBI's appeal filed on 11.12.2025, were therefore beyond the statutory outer limit. Relying on Tata Steel Ltd. Vs. Raj Kumar Banerjee & Ors. [2025 (5) TMI 661 - SUPREME COURT], the Tribunal reiterated that the proviso to Section 61(2) strictly limits the power to condone delay, and that no equitable or discretionary extension can be granted beyond the additional fifteen days. SBI's plea that it was not a party before the Adjudicating Authority and learnt of the order later was also rejected, the Tribunal holding that such circumstance does not arrest limitation once the order stands pronounced, and that the record further showed prior awareness of the underlying proceedings. The absence of timely steps, including delay in seeking the certified copy, was treated as lack of diligence and not as a ground enlarging statutory limitation. [Paras 27, 28, 32, 34, 35]

The delay condonation applications were dismissed as both appeals were beyond the Tribunal's condonable jurisdiction, and the appeals and connected applications were rejected.

Final Conclusion: The Appellate Tribunal held that limitation for both appeals commenced on the date of pronouncement of the Adjudicating Authority's order and not on the date of upload or knowledge. Since both appeals were filed beyond the statutory outer limit of thirty days plus fifteen days, the delay could not be condoned and both appeals, along with the connected applications, were rejected.

Corporate Insolvency Resolution Process - Resolution Plan - Committee of Creditors approval - objections of the stakeholders - Promoter's revised settlement proposal - Project-wise treatment in insolvency - Homebuyers' interest.

Promoter's revised settlement proposal - HELD THAT: - The Tribunal found that CIRP for Estella had already revived, a resolution plan had been approved by the CoC with the requisite majority, and that plan was pending consideration before the Adjudicating Authority. The promoter's settlement proposals had earlier been considered and rejected repeatedly, and even after the Supreme Court's order the homebuyers of Estella overwhelmingly voted against considering the promoter's proposal. The Tribunal further held that the arrangement relied on by the promoter with BCD Mumbai Pvt. Ltd. was non-binding and expressly subject to due diligence and funding availability, and therefore did not inspire confidence regarding completion of the project. Having regard to the need to protect the homebuyers' interest and the absence of confidence in the promoter's ability to perform, the revised proposal for Estella was held unacceptable. [Paras 22]

The revised settlement proposal submitted by the promoter in relation to Project Estella was rejected.

Project-wise treatment in insolvency - Promoter's obligation to complete project - Approval by majority of financial creditors - HELD THAT: - The Tribunal noted that NCR Greens had earlier been kept out of CIRP on the promoter's own statement that the project was almost complete and that units would be handed over. The material on record, including the promoter's own revised proposal and the position noted by the Supreme Court, showed that the project was substantially complete, with a large number of units already occupied and only limited balance work remaining. In these circumstances, the Tribunal held that the promoter remained obliged to complete NCR Greens, remove deficiencies, hand over the remaining units within six months as proposed by the promoter, and place before the financial creditors a plan indicating timelines and the manner in which the interests of homebuyers and Punjab & Sind Bank would be addressed. The permission, however, was made conditional upon approval by the majority of financial creditors, including Punjab & Sind Bank, failing which appropriate directions for insolvency process in respect of NCR Greens would be required. [Paras 26, 27]

For Project NCR Greens, the promoter was given an opportunity to complete the project within six months, subject to majority approval of the financial creditors including Punjab & Sind Bank; in default of such approval, appropriate insolvency directions would follow.

Final Conclusion: The Tribunal rejected the promoter's revised proposal for Project Estella and declined to disturb the ongoing CIRP position in that project. In respect of Project NCR Greens, it permitted the promoter an opportunity to complete the project within six months, subject to approval by the majority of financial creditors including Punjab & Sind Bank, while leaving the parties free to place the order before the Supreme Court.

Territorial Jurisdiction - Full export value of goods - Export contracts - Repatriation of foreign exchange due or accrued - Overseas commission paid by foreign buyer - Master Circular governing payment of agency commission when no commission payment - Hearsay evidence - contravention of the export declaration and repatriation obligations - Conclusive Settlement Order.

Finality of settlement proceedings - Independent FEMA adjudication - HELD THAT: - The Tribunal held that Section 127J of the Customs Act did not preclude action under FEMA merely because the same factual background had been examined in settlement proceedings under the Customs Act. FEMA was treated as a self-contained code, and the enforcement authority was competent to proceed on the basis of evidence independently collected in the FEMA investigation rather than on the settlement order itself. The Tribunal, however, left open the sufficiency and quality of such evidence for separate examination on merits. [Paras 7]

The objection founded on Section 127J of the Customs Act was rejected.

Full export value of goods - Repatriation of foreign exchange due or accrued - Overseas commission paid by foreign buyer - Export Regulations - Master Circular -HELD THAT: - The Tribunal found it to be an admitted position that the commission was paid by the foreign importer to the overseas agent and not by the appellants. On the record, there was no material to show that the agent had been engaged by the exporter for certification or that the exporter had any enforceable claim to receive that commission amount. The Tribunal held that, even if the allegation of non-disclosure were assumed, the commission remained payable to the foreign agent and therefore did not become foreign exchange due or accrued to the exporter. Since the invoice value of the exported goods had been realised in India, there was no loss of foreign exchange and no failure to repatriate export proceeds within the meaning of Sections 7 and 8 of FEMA. On that reasoning, the Tribunal further held that the RBI Master Circular dealing with remittance of commission by an exporter had no application where no commission was paid by the exporter, and that contravention of the Export Regulations could not be sustained. The Tribunal also accepted that, in the absence of involvement of a resident person in the impugned payment between two non-residents, FEMA liability could not be fastened on the appellants on that basis. [Paras 8, 9, 10, 12, 13]

The principal charge of non-declaration and non-repatriation of the commission amount failed, and the related findings under FEMA and the allied regulations were set aside.

Hearsay evidence - Personal knowledge - Selective reliance on statements - HELD THAT: - The Tribunal held that the statement of Mr. Mukesh Saglani could not carry evidentiary value on matters relating to export transactions that had taken place before he became a director. In the absence of any authentic source shown for his knowledge of those earlier transactions, the relevant part of his statement was treated as hearsay and contrary to the company record. The Tribunal further held that selective reliance on his statement, while no material statement had been elicited from the person alleged to have been in charge at the relevant time on the specific arrangement concerning commission, rendered the evidentiary basis of the impugned order unsustainable. [Paras 5, 11]

The statement of Mr. Mukesh Saglani was discarded for the purpose of proving the alleged contravention.

Final Conclusion: The Tribunal allowed the appeals and set aside the penalties. It held that the commission paid abroad by the foreign buyer to the foreign agent was not export proceeds due to the appellants under FEMA, while the principal statement relied upon by the enforcement authority was hearsay and insufficient to sustain the contravention.

Foreign inward remittance - Delayed reporting of Form FC-GPR - non-compliance with the reporting requirement - Imposition of penalty - Substantial Compliance - Burden of Proof - Acknowledgment of Filing. - HELD THAT: - The Tribunal found from the record, including the original letter dated 04.04.2008 and the accompanying acknowledgment, that the appellant had submitted Form FC-GPR to the authorised dealer on 05.04.2008. The subsequent letter dated 11.04.2008 showed further follow-up by the appellant in relation to the same filing. The authorised dealer's own letter to RBI admitted that the appellant claimed to have lodged the form with supporting evidence, that the bank could not trace when the documents were forwarded to RBI, and sought condonation of delay on its own part. In the absence of any legal requirement identified by the adjudicating authority for direct filing with RBI instead of routing the form through the authorised dealer, and in view of the bank's admitted lapse, the delay in transmission to RBI could not fairly be attributed to the appellant. On that basis, the Tribunal held that compliance with the reporting requirement stood established and the finding of contravention was unsustainable. [Paras 11, 12]

The alleged contravention of Section 6(3)(b) read with the applicable FEMA Regulations was held not proved, and the penalty for that contravention was set aside with a direction to refund the pre-deposit.

Final Conclusion: The Tribunal held that the appellant had complied with the FEMA reporting requirement by submitting Form FC-GPR to the authorised dealer within time, and that the subsequent delay was due to the authorised dealer's lapse. The appeal was accordingly allowed and refund of the pre-deposit was directed.

Ex parte adjudication - Seeking reconsideration from show cause notice stage - Demand under Section 73(2) of the Finance Act, 1994 and that the claim of exemption under Notification No. 25/2012-ST - No Opportunity of hearing - Principles of Natural Justice -HELD THAT: - It is specifically asserted that the demand raised by virtue of adjudication is not legally tenable as service rendered would come outside the purview of taxability by virtue of exemption claimed that could be traced back to the notification No.25/2012.

It is not in dispute that the Order in Appeal is a mere order of dismissal of appeal due to non-compliance of statutory requirement of pre-deposit. The order of adjudication itself requires reconsideration taking note of the order [2024 (9) TMI 64 - KARNATAKA HIGH COURT] and connected petitions, the relevant portions of which are extracted hereinabove.

Accordingly, the order-in-original dated 22.09.2022 at Annexure-A is set aside. The matter is remitted to the stage of reply to the show cause notice. The Authorities to take note of the observations made in the order passed in W.P. and connected petitions as extracted (supra), in specific, to the observations at para-10 of the order as may be applicable.

As the impugned order had been passed ex parte, the petitioner was held entitled to file a fresh reply, and all merits were left open for consideration by the authority. [Paras 9, 10, 11, 15]

The order-in-original was set aside and the matter was remitted to the stage of reply to the show cause notice for fresh consideration in accordance with the earlier directions referred to by the Court.

Final Conclusion: The writ petition was disposed of by setting aside the ex parte order-in-original and remitting the matter for fresh adjudication from the show cause notice stage, with liberty to the petitioner to submit a fresh reply. Consequential recovery and bank attachment were made subject to, and dependent upon, the result of the fresh adjudication.

Territorial jurisdiction - Adjudication by competent Commissionerate - HELD THAT: - The Court recorded the submission made on instructions for the respondents that the petitioner's assertion regarding jurisdiction required acceptance. On that basis, the Court held that the order of adjudication and the recovery notice issued by the Bengaluru North West Commissionerate could not stand, and left it open to the authorities of the Tirupathi Commissionerate to proceed pursuant to the earlier notice. The recall of the recovery notice was directed as a consequence of the setting aside of the adjudication order. [Paras 3, 4]

The impugned adjudication order and recovery notice were set aside on the basis that jurisdiction lay with the Tirupathi Commissionerate, with liberty reserved to that Commissionerate to proceed further.

Final Conclusion: The petition was disposed of by setting aside the adjudication order and recovery notice issued by the Bengaluru North West Commissionerate for lack of jurisdiction, while leaving all contentions open and permitting the Tirupathi Commissionerate to continue proceedings pursuant to the earlier notice.

Service tax on goods transport operator services - Show cause notice under amended Section 73 - Limitation for recovery from service recipient - Interest liability under Rule 7A - Retrospective validation - Extended period of limitation - Refund of tax paid on self-assessment - Wrong provision of law - Jurisdictional precedent. -

Whether the confirmation of service tax demand made on the Appellant on the value of the taxable services rendered to the Appellant by the goods transport operators during the period from 16-11-97 to 1-6-98 demanded under SCN dated 08.11.2004, is tenable. - HELD THAT: - The issue is no more res-integra and it is noticed that a Division Bench of the jurisdictional High Court in CCE, Puducherry v. CESTAT [2014 (1) TMI 459 - MADRAS HIGH COURT] while answering interalia, a question whether or not the show cause notice issued under Section 73 includes person falling under Section 71A in view of the Supreme Court laying down the law in the cases of Gujarat Ambuja Cements Ltd.[2005 (3) TMI 492 - SUPREME COURT] and L.H. Sugar Factories Ltd [2005 (7) TMI 106 - SC ORDER].

The Hon’ble High Court has exhaustively analysed the various provisions of the Finance Act 1994 as well as examined the statutory changes; right from the amendment to Section 65, extending the meaning of ‘taxable services’ to include 18 different services, including the service to a customer of a ‘Goods Transport Operator’ in relation to ‘carriage of goods’ by road in a ‘goods carriage’, thereby bringing the included services also within the umbrella of ‘Service Tax’ liability, through the Judgements of the Apex Court in Laghu Udyog Bharati case[1999 (7) TMI 1 - SUPREME COURT], the decision of the Tribunal in L.H. Sugar Factories case as affirmed by the Apex Court, the amendments brought about by the Finance Act, 2003, the decision of the Apex Court in Gujarat Ambuja case, upto and including the substitution of Section 73 by the Finance Act, 2004; in paragraphs 6 to 26 of the said Judgement.

The Tribunal held that the controversy stood concluded by the jurisdictional High Court, which had considered the effect of Sections 68, 71A and amended Section 73 read with Rule 7A and held that persons who received goods transport operator services during the specified period were liable to file returns and pay tax within six months from 14-5-2003, and that notices issued within one year from 13-11-2003 were valid. On that basis, the objection that a second show cause notice could not be issued because an earlier notice remained unadjudicated, and the objection that the later notice was time-barred, were rejected. The Tribunal further held that though the notice referred to the proviso to Section 73(1), the demand had in fact been confirmed only under Section 73(1), the notice itself was within the normal limitation period, and mere reference to a wrong provision caused no prejudice. The Tribunal also relied on the jurisdictional High Court ruling that, once the levy on users of goods transport operator services stood upheld, tax already paid pursuant to self-assessment was not refundable. [Paras 32, 33]

The service tax demand was upheld and the appellant was held not entitled to refund of the tax already paid.

Interest liability under Rule 7A - Filing of return within prescribed period - HELD THAT: - The Tribunal found that Rule 7A required the return for goods transport operator services for the specified period to be furnished within six months from 13-5-2003, that is, on or before 13-11-2003, and that the appellant had filed the return on 12-11-2003. Since the return was filed within time, the condition for attracting interest and penal consequences under Rule 7A was not met. The Tribunal therefore held that the appellate authority erred in sustaining interest, notwithstanding its own notice of the time permitted under the Rule. [Paras 35, 36]

The levy of interest was set aside while the tax demand was left undisturbed.

Final Conclusion: The appeal was partly allowed. The service tax demand under the show cause notice dated 08-11-2004 was upheld as valid and within limitation, but the interest component was set aside because the return had been filed within the period prescribed under Rule 7A.

Taxability of construction of residential complex prior to 01.07.2010 - Taxability of land owner's share under development agreement - Reclassification from Construction of Complex Service to Works Contract Service - Extended period of limitation - Suppression of facts - Wilful mis-statement - Penalty under Section 78.

Taxability of construction of residential complex prior to 01.07.2010 - HELD THAT: - The Tribunal held that the controversy was no longer res integra and that the consistent view of the Tribunals and higher courts was that, prior to 01.07.2010, there was no levy of service tax on construction of residential complex by a builder or developer in respect of its own projects.

Reliance is placed on M/s Aditya Construction Company India Pvt Ltd., Vs CCT, Hyderabad [2025 (1) TMI 1376 - CESTAT HYDERABAD], wherein, it was held that no tax liability prior to 01.07.2010 irrespective of classification and also in other cases like Larsen & Toubro Ltd., & Another Vs State of Karnataka [2013 (9) TMI 853 - SUPREME COURT], M/s Aruna Constructions Vs CCE and ST, Visakhapatnam [2026 (3) TMI 753 - CESTAT HYDERABAD] and CCE Vs Krishna Homes Vs CCE, Bhopal [2014 (3) TMI 694 - CESTAT AHMEDABAD]. Further, CBEC Circular No. 108/02/2009-ST dated 29.01.2009 clarified that construction undertaken by builder till execution of sale deed is in the nature of self service and not taxable.

Following that position, it held that no service tax was leviable on the appellant's residential projects completed before that date. [Paras 9, 10, 11]

No service tax was leviable on the residential complexes completed prior to 01.07.2010.

Taxability of land owner's share under development agreement - Reclassification from Construction of Complex Service to Works Contract Service - Demand on flats allotted to land owners and the Department's reclassification of the service from CCS to WCS. -HELD THAT: - The demands relates to flat allotted to land owner under development agreement, the Tribunal in Vasantha Green Projects Vs CCT [2018 (5) TMI 889 - CESTAT HYDERABAD] has held that flats given to land owners are not taxable as service.

The Tribunal held that flats given to land owners under the development agreement were not taxable as service and that such arrangements involved transfer of immovable property rather than rendition of taxable service. It further noted that the Department had reclassified the activity from CCS to WCS, but held that under Section 65(A), specific classification would prevail over general classification and that WCS became taxable only after its introduction. In that view, and particularly when taxability itself failed for the period in question, the reclassification was not legally sustainable. [Paras 12, 13, 14]

The demand on the land owner's share and the reclassification from CCS to WCS were held unsustainable.

Extended period of limitation - Penalty under Section 78 - HELD THAT: - The Tribunal found that the appellant was registered, had regularly filed ST-3 returns and had disclosed the classification adopted. Since the relevant facts were already within the Department's knowledge, there was no suppression or wilful misstatement and the extended period could not be invoked.

It is a settled law that extended period cannot be invoked when facts are known to the Department. It was held by Hon’ble Supreme Court in the case of Pushpam Pharmaceutical Company Vs CCE [1995 (3) TMI 100 - SUPREME COURT].

As the demand itself was unsustainable and suppression was not established, penalty under Section 78 was also held not imposable. [Paras 15]

The extended period was not invocable and penalty under Section 78 was not imposable.

Final Conclusion: The Tribunal held that no service tax was leviable on the appellant's residential construction projects completed prior to 01.07.2010, including flats allotted to land owners under the development agreement. The reclassification to works contract service, invocation of the extended period, and penalty were all held unsustainable, and the appeal was allowed.

Entitlement to threshold exemption - service turnover as reflected in the income-tax records and return statements - non-disclosure of the full receipts in the service-tax returns -Extended period of limitation - Penalty for failure to apply for registration within time - suppression of facts with intent to evade tax - discrepancy between the service-tax returns and the income-tax materials.

Threshold exemption - Quantification of taxable turnover - Interest on delayed payment - HELD THAT: - On examining the appellant's income-tax return and Form 26AS for the preceding year, the Tribunal found that receipts from provision of services were below the threshold limit prescribed under Notification No. 33/2012-ST, since the larger amount reflected therein was salary income and not consideration for taxable services. The appellant's own written submission also accepted short payment of tax to a limited extent after claiming threshold exemption. Accordingly, the original demand based on the entire difference between ST-3 and income-tax data was unsustainable, and the demand had to be restricted to the admitted short-paid amount. Once tax to that extent remained payable, interest under Section 75 also remained recoverable. [Paras 4]

The demand was reduced to the limited short-paid amount after extending threshold exemption, and interest on that amount was upheld.

Extended period of limitation - Suppression of taxable value - Penalty for suppression - HELD THAT: - The Tribunal held that the appellant was aware of the value of services rendered and of the requirement to seek registration on approaching the exemption limit. It rejected the explanation that delay in issuance of registration caused the non-disclosure, noting that the statutory scheme itself contemplated registration on application and the filing of periodical returns after the receipts were already within the appellant's knowledge. Since the gross value of services was not correctly declared in the ST-3 returns, the Tribunal treated it as suppression with intent to evade tax, thereby sustaining invocation of the extended period. Having upheld such suppression, the Tribunal held that penalty under Section 78 followed, though only to the extent of the reduced tax demand, relying on Rajasthan Spinning and Weaving Mills Ltd. [2009 (5) TMI 15 - SUPREME COURT]. [Paras 4]

The extended period was sustained, and the penalty for suppression was maintained but reduced in line with the reduced tax demand.

Penalty for failure to obtain registration - Reduction of penalty - HELD THAT: - The Tribunal found that the appellant had not applied for service tax registration within the prescribed time and that such failure contributed to the short payment of tax. The levy of penalty for that default was therefore not open to challenge on principle. However, taking into account that a penalty for suppression had already been sustained, the Tribunal reduced the separate penalty imposed for the registration-related default. [Paras 4]

The penalty for failure to obtain registration was upheld in principle but reduced in quantum.

Final Conclusion: The appeal was partly allowed. The Tribunal extended the benefit of threshold exemption, reduced the service tax demand and the corresponding penalty for suppression to the admitted extent, upheld interest, and reduced the separate penalty for failure to obtain registration.

Levy of service tax on royalty and other levies paid for services in relation to grant of mining rights - Services by Government in negative list - Royalty and mining rights - Reverse charge on grant of natural resources - Whether Service Tax is payable on royalty and other levies paid to the Government in April 2016 pertaining to the period March 2016, during which coal was removed from the mines?

- HELD THAT: - The Tribunal held that the determinative test was the point of time when the service was provided or agreed to be provided, since that constituted the taxable event under section 66B.

Relying on the Tribunal decision in Principal Commissioner, CGST and C EX versus SR Trader [2023 (5) TMI 766 - CESTAT NEW DELHI] which in turn noticed Madhya Pradesh State Mining Corporation Limited versus Principal Commissioner, CGST & C.EX, Bhopal [2023 (4) TMI 1075 - CESTAT NEW DELHI], it held that prior to 01.04.2016 services provided by Government remained within the negative list under section 66D, except to the extent specifically excluded. As the service relating to grant of mining rights and the corresponding liability pertained to the period before 01.04.2016, subsequent payment in April 2016 did not shift the taxable event or attract service tax. [Paras 2, 3]

The demand was held unsustainable and the appellant was found not liable to pay service tax on the royalty and other levies in question.

Final Conclusion: Following the earlier Tribunal view on the taxable event for services relating to grant of mining rights, the Tribunal held that no service tax could be levied where the relevant service pertained to the period prior to 01.04.2016, notwithstanding payment in April 2016. The impugned order was therefore set aside and the appeal was allowed.

Refund of service tax paid on services received for authorised operations in the SEZ - Overriding effect of SEZ Act - non-compliance with procedural conditions under Notification No. 17/2011-ST - Interest on delayed refund.

SEZ service tax exemption - HELD THAT: - The Tribunal held that Section 26 of the SEZ Act grants a substantive exemption in respect of taxable services provided to a unit for authorised operations in an SEZ, and by virtue of Section 51, that enactment overrides inconsistent requirements under the Finance Act framework. It followed the view taken in SRF Ltd. [2022 (4) TMI 989 - CESTAT NEW DELHI], Inox India P Ltd [2024 (3) TMI 922 - CESTAT AHMEDABAD] and Adani Power Mundra Ltd [2025 (1) TMI 224 - CESTAT AHMEDABAD] that exemption notifications and their procedural conditions cannot defeat the statutory exemption available under the SEZ Act where the services are admittedly received in the SEZ for authorised operations. Since the department did not dispute that the transport of goods through pipeline service was received in the SEZ, rejection of refund on the technical grounds of subsequent approval of specified services and non-filing of Form A-1 was unsustainable. [Paras 4]

The refund claim was held admissible, and denial of refund on procedural infractions under Notification No. 17/2011-ST was set aside.

Interest on delayed refund - Commencement of interest liability - HELD THAT: - Relying on Ranbaxy Laboratories Ltd. [2011 (10) TMI 16 - SUPREME COURT] and Jayanta Glass Ltd. [2004 (2) TMI 89 - CESTAT, NEW DELHI], the Tribunal held that the right to interest on delayed refund arises on expiry of three months from the date of the refund application. The subsequent appellate order allowing the refund does not postpone the commencement of interest, since the deeming fiction applicable to appellate orders does not alter the statutory starting point for payment of interest. [Paras 4]

The appellant was held entitled to interest on the delayed refund from the period commencing after three months from the date of the refund application.

Final Conclusion: The Tribunal allowed the appeal, holding that the statutory exemption available to services received for authorised operations in an SEZ could not be denied for non-compliance with procedural requirements of the refund notification. The refund was held payable for the disputed period along with interest for delayed payment in accordance with law.

Place of removal - FOR destination sales - CENVAT credit on outward GTA service - Depot as place of removal - Inconsistent stand on valuation and credit

Place of removal - FOR destination sales - HELD THAT: - The expression “place of removal” under Section 4 of the Central Excise Act, 1944 includes a factory, warehouse, depot, premises of consignment agent or any other place from were excisable goods are sold after clearance from the factory. The determination of place of removal is essentially a question of fact depending upon the terms of sale, transfer of title, risk, freight, insurance and the point where sale is completed.

The Tribunal held that determination of place of removal depends on the factual terms of sale, including transfer of title, assumption of transit risk, and inclusion of freight and insurance in the assessable value. On the facts found, the goods were supplied on FOR destination basis, freight and insurance were borne by the respondent, those elements were included in the assessable value, duty was discharged on that value, and the sale stood completed only at the buyer's premises. Having accepted duty on a transaction value inclusive of freight and insurance, the Department could not, for CENVAT credit purposes, contend that the place of removal was only the factory gate, since that would amount to adopting inconsistent positions on the same transaction. The decision in CCE Vs Ultra Tech Cement Ltd.[2018 (2) TMI 117 - SUPREME COURT] was held not to lay down that the factory gate must invariably be treated as the place of removal irrespective of contractual terms, and the Board Circular was also noted as requiring determination on the facts of each case. [Paras 9, 10, 11, 12, 16]

Credit of service tax paid on outward GTA service up to the buyer's premises was held admissible.

Depot as place of removal - Outward transportation to depot - HELD THAT: - The Tribunal separately noted that a depot is expressly included in the statutory concept of place of removal. Therefore, where goods are moved from the factory to a depot from which they are stored and sold, transportation up to that depot remains transportation up to the place of removal and is eligible on that footing. [Paras 14]

Credit was held available to the extent the outward transportation related to movement up to the depot as place of removal.

Final Conclusion: The Tribunal upheld the order allowing credit on outward GTA service. It held that, on the facts of FOR destination sales and depot clearances, the place of removal extended to the buyer's premises or depot, as the case may be, and the Revenue's appeal was dismissed.

Rectification of mistake - Omission in the earlier final order [2016 (3) TMI 1043 - CESTAT CHENNAI] in relation to computation of the duty- Duty demand on the five uncontested products - Consequential assessment of duty - Abatement under retail sale price based assessment - benefit under Notification No. 49/2008-CE (NT) and by applying Section 4A valuation. - HELD THAT: - The Tribunal held that, although there was no apparent mistake in the earlier final order on classification, the direction remitting the matter for quantification had to be clarified. Since the assessee had not contested the classification of the five products and the duty demand on those products had been upheld, the duty was required to be computed as per law. On a scrutiny of Notification No. 49/2008-CE (NT), the Tribunal found that goods falling under the relevant Chapter headings were entitled to 30% abatement on retail sale price, and that products classifiable under Chapter 38 were assessable under Section 4A after granting such abatement. The Tribunal therefore held that once the Revenue's classification was accepted, the consequential assessment necessarily had to follow with the benefit of abatement while working out the duty liability. [Paras 13]

The miscellaneous applications were disposed of by clarifying that the duty on Rhino Powder, Allwin XL-Liquid, Rishab, Rock and Agrowet, with interest, must be recomputed after allowing abatement under Notification No. 49/2008-CE (NT), and the exercise was directed to be completed within the stipulated time.

Final Conclusion: The Tribunal did not treat the earlier order as suffering from an apparent mistake on classification, but clarified the quantification direction. It held that the upheld duty demand on the five products must be recomputed in accordance with law after allowing the applicable abatement under Notification No. 49/2008-CE (NT).

Meaning of manufacture - Activity of repacking repacking of bulk epoxy resin, hardeners and colours into smaller containers - manufacture under section 2(f) - Change in Name - Character or Use -HELD THAT: - As per Section 2(f) of the Central Excise Act, 1944, definition of ‘manufacture’ includes activity incidental or ancillary to the completion of a manufactured product. However, in the present case, Appellant has purchased 'epoxy resin', 'hardener', and colour in bulk from suppliers which were marketable products and merely repacked into smaller containers and it does not amount to any incidental process of manufacture.

The Tribunal held that the goods purchased by the appellant were already marketable products and the activity undertaken was only repacking them into smaller quantities. Since the process brought about no transformation in the goods and did not result in any new product with a distinct name, character or use, it could not be treated as manufacture. It further held that the section note relied on in the impugned order was relevant for classification and could not by itself determine manufacture. The deeming provisions were also held inapplicable because the goods were not shown to be covered by the relevant schedule so as to make packing or repacking a deemed manufacture. [Paras 16, 17]

The activity was held not to be manufacture, and the demand confirmed in the impugned order was therefore unsustainable.

Final Conclusion: The Tribunal held that the appellant's activity of repacking bulk epoxy resin, hardener and colour into smaller containers did not amount to manufacture. On that finding, the impugned order confirming duty, interest and penalty was set aside and the appeal was allowed with consequential relief.

CENVAT credit - outward transportation - expression ‘place of removal’ - assessable value of the goods sold on FOR destination basis - Appellate authority travelling beyond show cause notice - Scope of valuation proceedings. - HELD THAT:- The expression ‘place of removal’ has been used in the same sense in Section 4 of the Act and in the CENVAT Credit Rules. The appellant’s submissions amount to arguing that for the same transaction, it has treated its own premises as the place of removal and did not pay central excise duty on the cost of transportation upto the buyer’s premises even when the goods are sold on FOR destination basis but treated the buyers’ premises as the place of removal and availed CENVAT credit on the cost of transportation upto the buyers’ premises. Such a stand cannot be accepted. However, learned counsel is correct in her assertion that denial of CENVAT credit was not part of the SCN or the order of the Deputy Commissioner and only valuation was.

Therefore, the Commissioner (Appeals) can decide only the question of valuation and for this purpose, he should consider all facts, including the fact that the appellant has, by its submissions before us, implicitly agreed that it has treated the buyer’s premises as the place of removal and availed CENVAT credit and then decide the matter. It may not be out of place to mention that in view of the conflicting decisions on the question of what will be the place of removal when goods are sold on FOR destination basis, the matter was referred to and was decided by a larger bench of this Tribunal in The Ramco Cements Limited- [2023 (12) TMI 1332 - CESTAT CHENNAI-LB] decided by larger bench.

The direction requiring reversal of CENVAT credit could not be sustained in the valuation appeal, and the matter was remanded to the Commissioner (Appeals) for fresh decision on valuation after hearing both sides.

Final Conclusion: The Tribunal held that the appellate authority could not enlarge the valuation proceedings by directing reversal of CENVAT credit when that question was not part of the show cause notice or the original adjudication. The impugned order was therefore not sustained to that extent, and the matter was remanded to the Commissioner (Appeals) for fresh decision on the valuation issue after considering all relevant facts.

Maintainability of revision against remand order - Scope of revisional jurisdiction - Review Jurisdiction - Error Apparent on the Face of the Record.

Maintainability of revision against remand order - HELD THAT: - The appellate authority had only remanded the matter to the assessing authority for examination of Form F with reference to bills, challans and invoices. The High Court held that no jurisdictional error was shown in the Tribunal treating a revision against such remand as not maintainable. It further held that, even assuming revisional jurisdiction could be invoked, no case for interference arose because the remand was confined to factual verification. [Paras 13, 14]

The dismissal of DN No. 14 of 2014 was upheld.

Scope of revisional jurisdiction - Concurrent factual findings - HELD THAT: - The High Court noted that the authorities below had already examined the factual material in relation to imposition of tax under the JVAT Act. In such circumstances, the scope of revisional jurisdiction being limited, the Tribunal was justified in refusing interference with those concurrent findings. The Court also accepted the Tribunal's conclusion that, even on merits, no ground warranting revisional interference had been made out. [Paras 15]

The dismissal of DN No. 13 of 2014 on merits was sustained.

Review on error apparent on the face of record - Fresh material in review - Challenge to unassailed conditions - HELD THAT: - The Court held that review under Section 81 lay only for a mistake apparent from the record. The letter of the Ministry of Coal, relied upon in review, had not formed part of the case at the stages of assessment, appeal or revision, and therefore could not furnish a basis for invoking review jurisdiction. The Tribunal's further reasoning was accepted that the lease deed itself bound the petitioner to comply with the earlier conditions, that no challenge had ever been mounted to those conditions before the Government, Court or Tribunal, and that after acting upon the allocation the petitioner could not belatedly contend, upon detection of breach, that the condition was beyond jurisdiction or ultra vires. [Paras 18, 19, 21, 22, 23]

The Tribunal correctly refused to exercise review jurisdiction.

Final Conclusion: The writ petition was dismissed. The High Court upheld the Tribunal's view that the revision against the remand order was not maintainable, found no ground for revisional interference with concurrent factual findings, and held that the review petitions disclosed no error apparent on the face of the record.

Entitlement To Honorific - Use of honorifics for constitutional and public functionaries - Official reference to Members of Parliament in formal complaints -HELD THAT: - The Court recorded the compliance affidavit and noted the explanation offered regarding the complaint forming the basis of the check FIR. It then held, as a matter of protocol, that an Hon'ble Member of Parliament is entitled to the prescribed honorific, as are other specified constitutional and public functionaries. The Court further held that private familiarity or personal grievance with the family of such a functionary cannot permit omission of the honorific in a communication referring to that person. On that determination, the Court treated that aspect of the matter as closed.

The Court held that the concerned former Union Minister, being an Hon'ble Member of Parliament, was entitled to the honorific, and the issue regarding omission of the honorific stood closed.

Final Conclusion: The Court accepted the compliance explanation to the extent recorded, declared that persons entitled under protocol must be addressed with the appropriate honorific, and closed that aspect of the matter, while directing further pleadings in the writ petition.