TMI Tax Updates e-Newsletter
May 13,2026

Validity of the ex parte assessment order passed without granting sufficient time to the petitioner to reply to the show cause notice - Violation of principles of Natural Justice - Reasonable opportunity of hearing - Insufficient time to respond to show cause notice - HELD THAT: - The Court found that the impugned order was admittedly an ex parte assessment order and that sufficient time had not been granted to the petitioner to submit a reply to the show cause notice. On the material placed, the Court accepted that only one notice had been received by the petitioner and that it granted merely one day's time to respond. In these circumstances, the Court held that the matter required reconsideration from the stage of show cause notice so that the petitioner could file a reply and participate in the proceedings. [Paras 7, 8]

The ex parte assessment order was quashed and the matter was remitted to the competent authority for fresh consideration from the stage of issuing show cause notice after affording the petitioner an opportunity to submit a reply.

Final Conclusion: The writ petition was allowed on the ground that the ex parte assessment had been made without affording sufficient opportunity to respond to the show cause notice. The assessment order was quashed and the proceedings were remitted for fresh consideration from the show cause stage.

Validity of the impugned assessment order - Non-consideration of reply and supporting documents for claiming entitlement to the benefit of Input Tax Credit - Requirement of speaking and reasoned order -HELD THAT:- The Court proceeded on the admitted position that, while passing the impugned order, the authority had not considered the petitioner's reply and the documents filed with it. Since the petitioner sought reconsideration of its objections with supporting material and the respondents stated that a fresh response with relevant documents would be decided by the competent authority, the Court held that the matter required fresh consideration on that procedural footing. The authority was therefore required to examine the objections and documents and pass a speaking and reasoned order in accordance with law. [Paras 4, 8]

The impugned order was set aside and the competent authority was directed to reconsider the petitioner's objections and supporting documents and pass a speaking and reasoned order within the time stipulated by the Court.

Final Conclusion: The petition was disposed of by setting aside the impugned order on the admitted ground that the petitioner's reply and supporting documents had not been considered, and by directing fresh consideration of the show cause notice through a speaking and reasoned order.

Refund of tax collected - GST collected on the sale of rejected wheat and paddy seeds - Retention of tax not payable - Refund application in prescribed form. -HELD THAT: - The Court noted that the Corporation itself did not dispute that the amount deducted towards GST was refundable, and the department also did not dispute the foundational fact that GST was not payable on the transactions in question. In that situation, the department could not be permitted to continue retaining the amount merely on the ground that refund had not yet been processed. At the same time, the Court accepted the requirement that the refund application had to be filed in Form RFD-01 under Rule 89, and therefore directed the Corporation to submit the application in the proper form, upon which the department was required to refund the amount forthwith, to be passed on by the Corporation to the petitioner. [Paras 10, 13, 14, 15]

The writ petition was disposed of with directions for filing of the refund application in the prescribed form and for immediate refund by the department thereafter, followed by payment to the petitioner by the Corporation.

Final Conclusion: The Court held that, since GST was not payable on the transactions in question and that position was not disputed, the amount could not be retained any longer. It therefore directed the Corporation to file the refund claim in the prescribed form and required the department and the Corporation to ensure prompt refund to the petitioner.

Validity of the adjudication order under the GST proceedings - Non-consideration of reply and supporting documents - Natural Justice - Audi Alteram Partem - Requirement of a speaking and reasoned order. - HELD THAT: - The Court proceeded on the admitted position that, while passing the impugned order, the competent authority had not considered the petitioner's reply and the supporting documents already filed in response to the show cause notice. Since the petitioner confined the grievance to fresh consideration of its objections and material, and the respondents stated that a fresh response with relevant documents would be decided, the Court treated the defect as one of failure to consider the assessee's response. On that basis, the impugned order was set aside and the matter was directed to be reconsidered on the petitioner's objections and documents by passing a speaking and reasoned order in accordance with law. [Paras 4, 8]

The impugned order was set aside and the competent authority was directed to reconsider the petitioner's objections and documents, if filed within the time granted, and to pass a speaking and reasoned order in accordance with law.

Final Conclusion: The petition was disposed of by setting aside the impugned order solely on the ground that the petitioner's reply and supporting documents had not been considered, and by remitting the matter to the competent authority for fresh decision through a speaking and reasoned order.

Validity of assessment order, issued under GST without a Document Identification Number - absence of a DIN as an inherent defect - Delay and Laches​​​​​​​ - service through the GST portal - Delayed challenge to portal-served orders.

Document Identification Number - HELD THAT: - Following its earlier decisions in M/s. Cluster Enterprises Vs The Deputy Assistant Commissioner (ST)-2,[2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT] and in Sai Manikanta Electrical Contractors Vs The Deputy Commissioner, Special Circle,[2024 (6) TMI 1158 - ANDHRA PRADESH HIGH COURT], the Court held that absence of a DIN number is by itself sufficient to invalidate the impugned assessment orders. Since the orders under challenge lacked such identification, they could not be sustained and were required to be set aside. [Paras 3, 10, 12]

The impugned assessment orders were set aside and the matter was remanded to the Assessing Officer for fresh orders after due opportunity of hearing.

Delayed challenge to portal-served orders - Conditional entertainment of writ petition - HELD THAT: - The Court noted the controversy on whether mere uploading of orders on the GST portal constitutes sufficient service, and also recorded the practical difficulties faced by registered persons in accessing such orders. Without treating ignorance or inability to access the portal as a general justification, the Court held that where the impugned orders suffer from a patent irregularity, the delayed writ petition could be entertained in order to balance hardship to taxpayers and the State's interest in tax administration. For that purpose, interference was made conditional on deposit of 20% of the disputed tax, with adjustment of payments already made or recovered. [Paras 9, 10, 11, 12, 13]

Relief against the defective assessment orders was granted subject to the petitioner depositing 20% of the disputed tax within the time stipulated, while all issues on merits were left open before the Assessing Officer.

Final Conclusion: The Court set aside the impugned GST assessment orders for want of DIN and remanded the matter for fresh assessment after hearing the petitioner. The delayed writ challenge was nevertheless entertained, in view of the patent defect in the orders, subject to deposit of 20% of the disputed tax.

Effect of Unsigned assessment order - Service Through Portal - Patently Irregular Assessment - Entertaining delayed writ petition against patently defective assessment -HELD THAT: - The Court followed its earlier Division Bench decisions in the case of A.V. Bhanoji Row Vs. The Assistant Commissioner (ST) [2023 (2) TMI 1224 - ANDHRA PRADESH HIGH COURT], M/s. SRK Enterprises Vs. Assistant Commissioner [2023 (12) TMI 156 - ANDHRA PRADESH HIGH COURT] and M/s. SRS Traders Vs The. Assistant Commissioner ST & ors [2024 (4) TMI 894 - ANDHRA PRADESH HIGH COURT],holding that signature on an assessment order is mandatory and that the defect is not cured by the statutory provisions relied upon in those decisions. Though the respondents objected on the ground of delay and relied on portal upload as service, the Court did not finally decide that controversy and instead proceeded on the footing that the impugned order suffered from a patent and inherent defect. Having regard to the practical difficulties faced by registered persons under the online GST regime, the Court held that delayed writ petitions against such patently irregular orders may be considered on condition of deposit of 20% of the disputed tax, and accordingly set aside the impugned assessment and remanded the matter for fresh orders after hearing the petitioner. [Paras 11, 12, 13, 14]

The impugned unsigned assessment order was set aside and the matter was remanded to the Assessing Officer for fresh adjudication after opportunity of hearing, subject to deposit of 20% of the disputed tax; recoveries made were directed to be adjusted and coercive recovery steps were set aside.

Final Conclusion: The writ petition was disposed of by setting aside the unsigned assessment order as inherently defective and remanding the matter for fresh consideration after hearing the petitioner. Relief was made conditional upon deposit of 20% of the disputed tax, with adjustment of amounts already paid or recovered and exclusion of the intervening period for limitation.

Maintainability of writ petition - Alternative efficacious remedy - Exhaustion of statutory remedies - Violation of principles of natural justice. -HELD THAT: - The Court held that the questions raised by the petitioner, namely alleged violation of principles of natural justice in the ex parte adjudication, whether notice had been issued before rejection of the appeal, and whether the statutory pre-deposit requirement had in fact been satisfied, were all matters capable of examination by the Goods and Services Tax Appellate Tribunal. Since the Tribunal was competent to adjudicate both factual and legal aspects, and an effective statutory remedy was available, the High Court declined to exercise its discretionary jurisdiction under Article 226.

The Hon’ble Supreme Court in Radha Krishan Industries Vrs. State of Himachal Pradesh [2021 (4) TMI 837 - SUPREME COURT] held, inter alia, that where an effective alternative remedy is available to the aggrieved person, the High Court ought to restrain itself from exercising power under Article 226 of the Constitution of India and when a right is created by statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution of India. It is made clear that this rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion.

The Court applied the principle that where the statute creates a right and also provides the remedy for enforcement, recourse must ordinarily be taken to that statutory forum before invoking writ jurisdiction. [Paras 6, 7]

The Court declined to entertain the writ petition and left it open to the petitioner to approach the appropriate statutory forum under the GST law.

Final Conclusion: Holding that the GST Appellate Tribunal could examine the petitioner's grievances on natural justice, notice, and pre-deposit, the Court refused to entertain the writ petition on the ground of availability of an effective alternative statutory remedy. The writ petition was accordingly dismissed with liberty to pursue the remedy available under the GST enactment.

Ex parte assessment - Late fee liability - Conditional remand - Challenged to the assessment order passed without reply to the show cause notice -HELD THAT: - The Court noted that the impugned order had been passed without any reply from the petitioner to the show cause notice. It further recorded that, in view of the earlier decision in Ms. Kandan Hardware Mart Vs. The Assistant Commissioner (ST)(FAC) [2026 (1) TMI 383 - MADRAS HIGH COURT] the petitioner had no case insofar as the liability to pay late fee was concerned. Since the petitioner consented to deposit 25% of the disputed tax and the entire late fee and to file a reply with supporting documents, the Court accepted that course and directed fresh consideration on merits on that condition, treating the impugned order as an addendum to the show cause notice. [Paras 9, 10, 11, 12, 13]

The matter was remitted to the respondent for a fresh order on merits subject to deposit of 25% of the disputed tax and the entire late fee within the time fixed, failing which recovery could proceed in accordance with law.

Final Conclusion: The writ petition was disposed of by remitting the matter for fresh adjudication on merits upon the petitioner's consent to deposit 25% of the disputed tax and the entire late fee and to file a reply to the show cause notice. The Court made it clear that the petitioner could not dispute the late fee liability in view of the earlier decision noticed by it.

Scope of Rule 86A - Blocking of input tax credit by creating a negative balance in the electronic credit ledger - breach of the principles of natural justice - without providing any reasons as also without satisfying the conditions as mandated under Rule 86-A - statutory preconditions for invocation of the power - Reason to Believe - HELD THAT: - In Rawman Metal & Alloys Vs. The Deputy Commissioner of State Tax, Thane-Writ Petition [2025 (10) TMI 489 - BOMBAY HIGH COURT] in which the Court considering the purport of Rule 86A has categorically held that Rule 86A would be confined to the blocking of the Electronic Credit Ledger only to the extent of the credit available in the electronic credit ledger and not the future credit. It is also felt that admissibility of input tax credit can be verified from issuance of a show cause notice and thereafter, the adjudication of the liability. Referring to the decision of the Gujarat High Court in Samay Alloys India Pvt. Ltd. Vs. State of Gujarat-Special [2022 (2) TMI 843 - GUJARAT HIGH COURT], it was submitted that the powers under Rule 86A cannot be invoked in the absence of any credit balance in the electronic credit ledger. In the present case, it is contended on behalf of the petitioner that at the relevant time, there was a negative balance and therefore, there was no question of blocking of the petitioner’s electronic credit ledger by the impugned order.

The Court held that Rule 86A permits blocking only to the extent of credit available in the electronic credit ledger and does not authorise negative blocking. Applying the legal position already laid down by this Court, it found that, in the present case, the impugned action could not be sustained as it travelled beyond the ambit of Rule 86A. The petitioner was therefore entitled to restoration by unblocking the negative balance to the extent blocked, while all other issues were expressly left open. [Paras 6, 7]

The impugned blocking was held unsustainable under Rule 86A, and unblocking of the negative balance to the extent of the blocked input tax credit was directed.

Final Conclusion: The petition was allowed on the limited ground that Rule 86A does not permit negative blocking of the electronic credit ledger. The blocked amount was directed to be restored by unblocking, with all other issues kept open for action in accordance with law.

Scope of Composite show cause notice issued under Sections 73 and 74 - covers more than one tax period, more than one financial year, and more than one noticee - Multiple noticees - Parallel adjudicatory proceedings on the same subject-matter barred under Section 6(2)(b) - Mandatory limitation for issuance of notice and adjudication order - Single notice and multiple adjudication orders - Absence of any accrued demand or lawful garnishee proceedings.

Composite show cause notice - HELD THAT: - To read “tax period not beyond the Financial Year”, into Sections 73(1) and 74(1) would be to introduce an artificial restriction in the scope of Sections 73(1) and 74(1), not on strength of legislative language, but based on imagined restriction. In contrast, the adjudication procedure contemplates decision on disputes pertaining to specified tax, penalty, refund and ITC amounts. The legislature has specifically authorised the Proper Officer to, in addition to issuing notices under Section 73(1)/74(1), issue further statements with respect to other periods beyond that specified in the notice itself. Once that specific provision has been made, there is no room to introduce the concept of adjudication proceedings being confined to a unit of assessment/FY. To do that would be to do violence to the plain language of Section 73 (3)/74(3) and 73(4)/74(4) of the Acts. Standard rule to be applied in matters of interpretation of statutes being that every word used by the legislature be given its full and natural meaning unless a conflict arises, we find no occasion to restrict the scope of Section 73(3)/ 74(3) and 73(4)/74(4), by introducing an alien concept of unit of assessment/FY to adjudication proceedings.

The challenge to the proceedings on the ground of multiple noticees has arisen (in this batch of petitions), in adjudication proceedings arising under Section 74 of the Acts and not under Section 73 of the Acts. As extracted, the provisions of Section 74(12) of the Acts are specific. Clearly, they allow for multiple noticees to be included in one notice. Upon that specific inclusion made by the legislature, the submission to the contrary carries no weight. Suffice to note, there is no challenge to the validity of Section 74 (12) of the Acts. Once the legislature clearly contemplates issuance of one notice with respect to disputed quantified demand, there survives no room to consider that submission, any further.

Wherever it may be disputed that multiple noticees have been wrongly roped in together, that issue by very nature, would remain a mixed question of fact and law. Evidence would have to be led before any firm conclusion may be drawn, i.e. whether the dispute is such as may involve more than one noticee. It may normally be examined during statutory proceedings.

Therefore, while court is not inclined to accept on principle that a composite notice may never be issued under Section 74 of the Acts, leave that question of validity of individual notices issued to individual noticees open to be examined in individual adjudication proceedings, subject to appropriate objections being raised. Thus, if any noticee objects that he is not liable for a disputed transaction giving rise to the adjudication proceeding or he has been wrongly included as a noticee, it may give rise to an objection in that case. That objection once raised would have to be dealt with and decided by the Adjudicating Authority on the own strength of the objection.

The challenge to composite notices covering different tax periods, different Financial Years, and multiple noticees under section 74 was rejected in principle.

Same subject-matter bar under section 6(2)(b). - HELD THAT: - Following G.K. Trading Company and Armour Security (India) Ltd. [2021 (1) TMI 130 - ALLAHABAD HIGH COURT] the Court held that section 6(2)(b) bars initiation of proceedings on the same subject-matter once formal adjudicatory proceedings have commenced by issuance of a show cause notice. Searches, summons or investigative steps are not by themselves proceedings for this purpose, but where two proceedings seek to assess or recover identical or overlapping liability arising from the same contravention, the statutory bar is attracted. On that basis, the petitions raising overlapping proceedings were entitled to relief except to the extent expressly excluded by the Court for Financial Year 2020-21 in the case before it. [Paras 92, 93, 100]

The objection founded on section 6(2)(b) was accepted, and proceedings found to overlap on the same subject-matter were held unsustainable.

Mandatory limitation for issuance of notice and adjudication order - HELD THAT: - The Court held that sub-sections (10) of sections 73 and 74 prescribe a rigid outer limit for passing the adjudication order, and section 75(10) reinforces that consequence by deeming proceedings concluded if the order is not issued in time. Since sections 73(2) and 74(2) require the notice to be issued at least three months or six months before that outer limit, those minimum periods are equally mandatory and admit of no relaxation. Any contrary construction would either curtail the minimum opportunity required for compliance with natural justice under section 75(4) or impermissibly extend the time for adjudication.

The prescription contained in Section 73(2) and 74(2) of three months and six months (before the end of termination of limitation to make the order) to initiate the proceedings, must also be read and understood as a hard/fixed period of limitation. In the context of adjudication proceedings contemplated and in view of the statutory mandate of the law under Sections 75(4) of the Acts, opportunity of hearing is mandatory before such orders may be passed. Therefore, the minimal period of three months or six months provided under Section 73(2) and 74(2), cannot be violated. Thus, there is inherent logic to accept such fixed period of limitation to issue the notices. In face of similar language used under Section 73(2) and 74(2) and consequences provided under Section 73(10) and 74(10) of the Acts, no different interpretation may be attempted to the similar words used in the same statute, in the same context. Doubt if any stands removed by the clear legislative intent contained in Section 75(4) of the Acts. Failure to conclude the adjudication proceedings within time granted by the Acts, would necessarily lead to such proceedings being deemed concluded.

The limitation provisions were held mandatory, and notices issued without the minimum statutory lead time were held time-barred.

Single notice and multiple adjudication orders - Functus officio - Transfer of proceedings - HELD THAT: - There can be no doubt that an audit may be directed for much longer period than a ‘tax period’ or a ‘Financial Year’, with the only limitation that it must be for completed periods and not for fractions thereof. However, it cannot be forgotten that an audit provision remains distinct and different in scope from proceedings for assessment for a FY or ‘tax period’ or for adjudication of a dispute of demand of specified amount of tax, penalty or ITC. At most, audit is part of the general power and scope of inquiries and investigation, to ascertain correct facts. What follows from an audit report is not a necessary part of either the assessment or adjudication proceeding. To that extent, there is no occasion to read or contrast the language of Section 65 of the Acts read with Rule 101 of the Rules framed thereunder, with the language used under Chapter XII of the Acts and Sections 73 and 74 of the Acts.

Once an order is passed, the authority is rendered functus officio except to the extent of rectifications etc., where permitted. Also, unless a proceeding is transferred, in accordance with the governing law, to another authority, the proceedings initiated on the strength of a notice issued by one authority may be conducted and concluded by that authority and not by any other. The Acts do not contemplate an automatic transfer of proceedings. Here no objection has been raised by the revenue to the submissions thus advanced.

While issue of composite notice is served under Section 74 of the Acts, both for different tax periods and FYs and also multiple assesses, is decided against the petitioners; the other objection based on Section 6(2)(b) of the Acts; multiple orders arising from a single notice, and the issue of limitation provision being mandatory, are decided in favour of the petitioners such that any notice issued within six months from the end of the limitation to make the adjudication order is time barred. The issue of composite notice, for different FYs and multiple noticees, is decided against the petitioners.

The separate orders passed by another authority on the strength of the same notice were held invalid and liable to be quashed.

Absence of statutory power to withhold payments - Garnishee proceedings - HELD THAT: - The Court found no provision under the Acts authorising the revenue authorities to compel the recipient of services to withhold payments due to the petitioner merely during pending proceedings and without any lawful recovery mechanism having been invoked. Since the impugned direction was not traceable to any statutory power, it could not be sustained. [Paras 100]

The direction requiring the service recipient to withhold payment was set aside, and the authority was restrained from enforcing such withholding absent lawful garnishee proceedings.

Final Conclusion: The Court held that adjudication under sections 73 and 74 is dispute-based and not confined to a single tax period or Financial Year, and that composite notices are not invalid merely for covering multiple periods or, under section 74, multiple noticees. At the same time, the Court upheld the bar against parallel proceedings on the same subject-matter, treated the statutory timelines for notice and adjudication as mandatory, held that one notice cannot produce separate adjudication orders by different authorities without lawful transfer, and set aside the direction for withholding payments in the absence of statutory authority.

Classification of services - Supply of Coursera User Licenses - classifiable as education service under Heading 9992 Or Not - Benefit of exemption under Sl. No. 72 of Notification No. 12/2017-Central Tax (Rate) - Licensing services for the right to use computer software and databases - Specific description principle - Strict construction of exemption notifications - Principal to principal basis - Non-exclusive right to access - Leasing or rental services - OSDA (Odisha Skill Development Authority) - classifiable under Heading 9992 (Education Service).

Classification of digital user licence - Education services - Online content services - HELD THAT: - The Authority held that the applicant merely supplied a user licence enabling access to digital content hosted on Coursera's proprietary platform and did not itself impart education, conduct training, provide faculty, control curriculum, or assume instructional responsibility. The transaction therefore lacked the essential character of education service. It further found that the predominant element of the supply was the grant of a non-exclusive right to access a proprietary digital platform, making the supply one of licensing rather than a general online content service. Applying the principle that the more specific description is to be preferred over a general description, the Authority classified the supply under Heading 9973, specifically SAC 997331. [Paras 5, 6]

The supply was held classifiable under Heading 9973, specifically SAC 997331, and not under Heading 9992 or Heading 9984.

Exemption for training programme services - Education services - HELD THAT: - The ruling on exemption did not involve any independent interpretative exercise apart from the classification already determined. Since the supply was held not to be an education service under Heading 9992, the exemption founded on that basis was answered as not applicable. [Paras 5, 6]

The exemption under Sl. No. 72 of Notification No. 12/2017-Central Tax (Rate) was held not applicable.

Final Conclusion: The Authority ruled that the applicant's supply of Coursera user licences to OSDA is not an education service. It was classified under Heading 9973, specifically SAC 997331, and the claimed exemption under Sl. No. 72 of Notification No. 12/2017-Central Tax (Rate) was held not applicable.

Taxability of the supply of Restaurant Service - supply of food and drink in a restaurant - Composite supply, with restaurant service constituting the principal supply - Definition of specified premises - Benefit of Notification No. 05/2025 Central Tax (Rate).

Whether levying GST@ 5% (SGST @ 2.5% and CGST @ 2.5%) on the invoice amount which includes the foods as well as the packaged drinking water bottle (the rate of which more than the MRP printed on the bottle) as ordered by the customers treating the entire transaction as providing Restaurant Service is legally correct? -HELD THAT: - The activity of sale of goods in question along with services thereof performed by the applicant in respect of supply of Restaurant Service is covered under ‘supply’ as per section 7 of the CGST Act, 2017 and liable to tax as per section 9 of the CGST Act, 2017.

It is evident that, the supply in question qualifies as a composite supply as it comprises of two or more supply. As far as nature of supply in the present case is concerned, reference is also invited to clause (b) of entry 6 of the Schedule II to the section 7 of the CGST Act, 2017

The Authority held that supply of food and drink in a restaurant is a composite supply and, by virtue of Schedule II, such composite supply is treated as a supply of service. Referring to the definition of restaurant service, it concluded that any drink supplied by the restaurant along with food or other article for human consumption falls within that service. Consequently, the value of packaged drinking water supplied in the restaurant forms part of the transaction value of restaurant service even if it is charged separately in the bill. [Paras 6]

GST is leviable on the total invoice value including packaged drinking water as part of restaurant service.

Specified premises - GST rate on restaurant service - Hotel accommodation criteria - HELD THAT: - The concept of declared Tariff has been done away with from 01.04.2025 onwards. The definition of specified premises has been changed. For the period prior to 01.04.2025, “specified premises” meant premises providing “hotel accommodation” services having declared tariff of any unit of accommodation above seven thousand five hundred rupees per unit per day or equivalent.

In the light of this Notification No. 05/2025 Central Tax (Rate) Dated 16.01.2025, the hotel premises of the applicant will qualify for “specified premises” for financial year 2025-26 if the value of supply of any room exceeds Rupees Seven thousand five hundred in financial year 2024-25. If the said value of supply of any room does not exceed Rupees Seven thousand five hundred in financial year 2024-25, the premises of the applicant will not be considered as “specified premises”. The applicant has submitted the declared Tariff of the Hotel along with their application wherein the tariff so declared is less that Rs. 7500/-. In lieu of the recent changes of the definition, “declared premises”, the applicant has been informed to submit the details of value of the unit accommodation during the previous Financial Year. The applicant vide letter dated 10.9.2025 submitted their clarification wherein it is evident that, the unit accommodation of the applicant’s hotel during the previous Financial Year was less that Rs. 7500/-.

The applicant premises would not fall under the category of Specified premises as the tariff is below Rs. 7500/ -. Hence, the applicant is liable to discharge GST @ 5% (CGST: Rs. 2.5% & SGST Rs. 2.5%) for the supply of Restaurant Service Provided that credit of input tax charged on goods and services used in supplying the service has not been taken. Since, the term “any drink supplied” finds the place in the inclusive definition of Restaurant Service as discussed and the value of the “Packaged Drinking water” form part of the transaction value of Restaurant Service as per above definition of “Restaurant Service”, the considered conclusion that,, GST on supply of “Packaged Drinking water” along with other food items at the applicant’s Restaurant shall be levied @ 5% (CGST: Rs. 2.5% & SGST Rs. 2.5%) provided that credit of Input Tax charged on goods and services used in supplying the service has not been taken.

The applicant was liable to charge GST at 5% on restaurant service, including the packaged drinking water supplied with food, so long as its premises remained outside the definition of specified premises and input tax credit was not availed.

Final Conclusion: The Authority ruled that packaged drinking water supplied along with food in the applicant's restaurant is part of restaurant service, and GST at 5% was correctly leviable on the total invoice value, subject to the condition of non-availment of input tax credit. This conclusion rested on the finding that the applicant's hotel was not a specified premises for the relevant financial year.

Validity of show cause notices issued u/s 144 and u/s 148 - barred by the limitation provisions prescribed under the said Act - availability of an efficacious statutory appellate remedy - whether the case disclosed exceptional circumstances warranting exercise of extraordinary writ jurisdiction?

HELD THAT:- We are of the view that no error, not to speak of any error of law could be said to have been committed by the High Court in passing the impugned order [2026 (5) TMI 694 - JHARKHAND HIGH COURT]

High Court in its impugned order has made itself very clear that it shall be open for the petitioner to challenge the assessment order dated 27.03.2026 by preferring a statutory appeal.

The impugned order passed by the High Court is of 07.04.2026. We grant further four weeks’ time to the petitioner to prefer the appeal in accordance with law.

Special Leave Petition stands disposed of. It shall be open for the petitioner to raise all contentions available to him in law including the contention that the notices issued were statutorily time barred.

Jurisdiction to issue notice u/s 148 - Exclusive authority of NFAC under CBDT notification - Faceless assessment - issuance of notice under Section 148 in a faceless manner - notice issued under Section 148 for AY 2016-2017 by an authority other than the NFAC

HELD THAT:- The Special Leave Petitions are disposed of in terms of the order dated 10.04.2026 passed by this Court in Tej Partap Singh [2026 (5) TMI 54 - SC ORDER (LB)] The reasons assigned in the said order shall also form part of this order.

As a result, the pending interlocutory application, if any, also stands disposed of.

Jurisdiction to issue notice u/s 148 - Exclusive authority of NFAC under CBDT notification - Faceless assessment - issuance of notice under Section 148 in a faceless manner

High Court [2025 (5) TMI 2279 - PUNJAB AND HARYANA HIGH COURT] noted that the challenge was founded on lack of jurisdiction of the issuing authority, since the CBDT circular/notification dated 29.03.2022 specifically vested exclusive power to issue notice under section 148 in the NFAC. Impugned notice u/s148, the assessment order under section 147, the demand notice and consequential actions were not sustained, with liberty to the Revenue to follow the procedure prescribed

HELD THAT:- Leave granted.

In view of the order passed in Civil Appeal [2026 (5) TMI 54 - SC ORDER (LB)] & connected matters, these appeals are disposed of in the same terms.

Validity of show cause notices issued u/s 144 and u/s 148 - barred by the limitation provisions prescribed under the said Act - availability of an efficacious statutory appellate remedy - whether the case disclosed exceptional circumstances warranting exercise of extraordinary writ jurisdiction?

HELD THAT: - The Court held that the questions raised by the petitioner, including limitation and the applicability of the relied upon provisions, were not free from doubt and therefore ought not to be examined in writ proceedings when the statute provides a complete appellate mechanism. It found that the case did not disclose any exceptional circumstance warranting bypass of the alternate remedy, and reiterated that challenges to show cause notices or assessment orders are to be entertained under Article 226 only in exceptional cases. [Paras 6, 7, 8, 9]

The writ petition and the application to amend it were declined, with liberty to the petitioner to pursue the statutory appeal against the assessment order, and all contentions were left open.

Final Conclusion: The Court dismissed the writ petition on the ground of availability of an efficacious statutory appellate remedy and absence of exceptional circumstances for exercise of writ jurisdiction. Liberty was granted to challenge the assessment order in appeal, with all contentions kept open.

Validity of rectification order - period of limitation - Jurisdictional error - Prior notice under rectification proceedings - Document Identification Number

HELD THAT: - The Court held that, under Section 154(7), rectification could not be made after expiry of four years from the end of the financial year in which the order sought to be amended was passed. Since the original order sought to be rectified was passed on February 25, 2015, the last date for passing a rectification order was March 31, 2019, whereas the impugned order was passed on March 25, 2022. The order was therefore beyond limitation and suffered from a jurisdictional error.

Also Department had not disclosed service of any prior notice as required under Section 154(3), and also noted substance in the contention that the document did not contain any Document Identification Number. The Revenue's objection as to delay in filing the writ petition was accepted as satisfactorily explained. [Paras 7, 8, 9, 10, 11]

The rectification order was held to be time-barred and unsustainable, and was set aside along with all consequential recovery proceedings.

Final Conclusion: The writ petition was allowed. The impugned rectification order was set aside as having been passed beyond limitation, and the consequential recovery proceedings were also set aside.

Exemption u/s 11 and 12 - Proviso to charitable purpose - General public utility - Statutory corporation - assessee-Corporation established under the Gujarat Industrial Development Act, 1962

HELD THAT: - The Court held that the controversy was concluded by the earlier decision in the assessee's own case [2023 (7) TMI 734 - ITAT AHMEDABAD] and by the Supreme Court decision in ACIT Vs. AUDA [2022 (11) TMI 255 - SUPREME COURT] affirming the rejection of the Revenue's appeals against Gujarat Industrial Development Corporation along with similar statutory development authorities.

Applying that binding position, the Court treated the assessee's objects and activities as advancing an object of general public utility, with collection of fees or cess being only incidental to the statutory purpose. It accepted that such activities could not be characterised as trade, commerce or business so as to attract the proviso to section 2(15), and therefore the assessee continued to qualify for exemption under sections 11 and 12. [Paras 5, 6, 7]

No substantial question of law arose; the question was answered in favour of the assessee and against the Revenue.

Final Conclusion: Following the earlier decision in the assessee's own case and the Supreme Court decision rejecting the Revenue's appeals against Gujarat Industrial Development Corporation and similar statutory bodies, the Court held that the assessee's activities were not hit by the proviso to section 2(15). The appeal was dismissed and the exemption under sections 11 and 12 was sustained for Assessment Year 2012-13.

Transfer pricing Adjustment - comparability - Functional comparability of captive service provider - Extraordinary events affecting comparability - Segmental data and product-service mix

Comparable selection - Software development services -Functional dissimilarity - Product company - HELD THAT: - The Tribunal held that companies having significant intangibles, brand value, patents, research and development functions, diversified operations, software products, inventory or high-end technical activities could not be compared with the assessee, which was a captive service provider. On that basis, Infosys Technologies Ltd., Wipro Ltd., Kals Information Systems Ltd., Celestial Labs Ltd., Avani Cimcon Technologies Ltd. and E-Zest Solutions Ltd. were directed to be excluded. In the case of Tata Elxsi Ltd. and Persistent Systems Private Ltd., the TPO as well as the DRP had not undertaken any specific examination and had retained them mainly because they had been selected by the assessee; the Tribunal held that there is no estoppel against contesting such comparables and remitted both for fresh consideration after giving opportunity of hearing. [Paras 15, 16, 17, 18, 19]

Infosys Technologies Ltd., Wipro Ltd., Kals Information Systems Ltd., Celestial Labs Ltd., Avani Cimcon Technologies Ltd. and E-Zest Solutions Ltd. were excluded from the software support services comparables, while Tata Elxsi Ltd. and Persistent Systems Private Ltd. were restored to the TPO for fresh adjudication.

ITES comparables - KPO versus BPO - Extraordinary event - Segmental unreliability - HELD THAT: - The Tribunal treated the assessee as a captive provider of low-end IT enabled services and held that companies rendering high-end KPO or specialised services, possessing substantial intangibles or brand advantages, or undergoing mergers, acquisitions or demergers during the relevant year were not comparable. On that reasoning, Mold-Tek Technologies Ltd., Accentia Technologies Ltd., Eclerx Services Ltd., Infosys BPO Ltd., HCL Comnet System & Services Ltd., Wipro Ltd. (earlier Wipro BPO Ltd.), Acropetal Technologies Ltd., Genesys International Corporation Ltd. and Datamatics Financial Services Ltd. were directed to be excluded. Coral Hub Ltd. was retained because the objection to its inclusion was not pressed before the Tribunal. [Paras 29, 30, 31, 32, 33]

Except Coral Hub Ltd., whose inclusion stood undisturbed as not pressed, all the disputed ITES comparables were directed to be excluded.

Final Conclusion: The Tribunal held that most of the disputed comparables adopted for the software support services and ITES segments were not suitable, principally on account of functional dissimilarity, ownership of intangibles, product-based operations, extraordinary events, or absence of reliable segmental basis. The matter was restored to the AO/TPO for giving effect to these findings, with Tata Elxsi Ltd. and Persistent Systems Private Ltd. remanded for fresh consideration; the appeal was allowed for statistical purposes.

Ad hoc estimation of bogus purchases - Warranty expenditure - Commission expenditure - Search assessment jurisdiction - Telescoping - Unexplained investment in stock

Ad hoc estimation of bogus purchases - Rejection of books of account - HELD THAT: - The Tribunal found that the purchases were recorded in the books, payments were made through banking channels, and the assessee had furnished supporting material including invoices, transport documents and stock records. The Assessing Officer had not rejected the books of account and had merely presumed non-genuineness because separate freight charges were not shown, though the assessee explained that the purchases were on a basis where freight formed part of the purchase value. The rate adopted from the case of another concern could not be borrowed in the absence of any finding that the assessee had indulged in the same practice. An estimated disallowance founded on presumption, without rejecting the books and without cogent material against the assessee, was therefore unsustainable. [Paras 13, 14, 30]

The Revenue's challenge to deletion of the bogus purchase additions for AY 2018-19 failed, and the same view was applied mutatis mutandis for AYs 2019-20, 2020-21 and 2021-22.

Warranty expenditure - Doctrine of consistency - HELD THAT: - The Tribunal accepted that warranty replacement formed an integral part of the assessee's battery business and that the assessee consistently followed a method of accounting for the replacement cost after considering the recoverable value of defective batteries. That method had been accepted in earlier and subsequent assessments, and no incriminating material relating to warranty expenditure was found during search. In those circumstances, and there being no change in facts, the disallowance could not be sustained. [Paras 28, 30]

The deletion of the warranty expense disallowance for AY 2018-19 was affirmed, and the same reasoning governed AYs 2019-20, 2020-21 and 2021-22.

Commission expenditure - Consistency in assessment - HELD THAT: - The Tribunal noted that the commission payments had been made through banking channels with deduction of tax at source and that the payees had confirmed receipt in response to notices. It further found that in the original assessment for the same year the identical disallowance had already been deleted by the first appellate authority and the Revenue had accepted that position by not pursuing any further appeal. On the same transaction, contrary factual conclusions could not be sustained in later proceedings. [Paras 34, 35, 36]

The assessee's ground against the commission disallowance for AY 2021-22 was allowed.

Search assessment jurisdiction - Special provision overrides general provision - Prior approval in search-related reassessment - whether Assessments for the years preceding the search year could not validly be framed under the general scrutiny provision after search, without following the special reassessment route and obtaining the statutory approval? - HELD THAT: - The Tribunal held that where search was conducted on or after 01.04.2021, the statutory scheme treated the Assessing Officer as having information suggesting escapement of income for the specified preceding years, and the proper course was to proceed under the special mechanism contemplated for such cases. The assessments under consideration had nevertheless been completed under the general scrutiny provision, and the Revenue did not place material to show compliance with the procedure and approval required under the special provisions. Respectfully following the coordinate bench decisions, the Tribunal applied the principle that the special search-related assessment route prevails over the general scrutiny provision, and non-compliance with that mandatory scheme rendered the assessments without jurisdiction. [Paras 39, 44, 45]

The assessments of Pilot Industries Ltd. for AYs 2022-23 and 2023-24, and of Ardee Industries Ltd. for AY 2023-24, were held bad in law and without jurisdiction; the additional legal grounds were allowed and the Revenue's appeals for AYs 2022-23 and 2023-24 failed consequentially.

Telescoping - Cash found during search - HELD THAT: - The Tribunal held that cash physically found during search had to be explained independently by the assessee. The existence of an addition on account of unaccounted sales did not, by itself, justify telescoping of the cash found. [Paras 54, 55]

The challenge to the addition for cash found during search for AY 2024-25 was rejected.

Unexplained investment in stock - Telescoping - HELD THAT: - The Tribunal distinguished between the stock differences. In respect of raw material, it found that the book stock exceeded the physical stock, showing that purchases had been recorded and that the variation indicated excess consumption or loss, not undisclosed investment. In respect of finished goods, where physical stock exceeded book stock, the Tribunal held that the assessee had an available source within the business itself, since unaccounted sales for the year had already been found and sustained. The excess finished goods could therefore be telescoped against that undisclosed business income. [Paras 61, 62, 63, 64, 65]

The additions on account of alleged unexplained investment in stock for AY 2024-25 were deleted.

Final Conclusion: The Revenue's appeals were dismissed throughout. In the case of Pilot Industries Ltd., the assessee's appeals for AYs 2022-23 and 2023-24 were allowed on the jurisdictional issue, AY 2021-22 and AY 2024-25 were partly allowed, and AY 2020-21 was dismissed; the appeal of Ardee Industries Ltd. for AY 2023-24 was allowed on the same jurisdictional ground.

Rejection of application for grant of registration u/s. 12A r.w.s 12AB and approval u/s. 80G(5) - as alleged trust's activities were not charitable or genuine - activities of the appellant trust are not in the nature of education as it is not engaged in systematic instruction schooling and training given to young in preparation for the work of life

HELD THAT: - The Tribunal held that, even if the trust's activities did not strictly fall within the ambit of education, they would nonetheless fall under general publicutility. It further held that charging only nominal fees to recover expenses does not by itself render the activity commercial. Since no material had been brought on record to show that the trust's activities were not genuine, the rejection of registration could not be sustained. [Paras 8, 9]

The Commissioner was directed to grant registration under section 12AB from the date of application.

Approval under section 80G(5) - Denial of approval u/s 80G(5) solely because registration u/s 12AB had been refused - HELD THAT: - The Tribunal found that the only reason for refusing approval under section 80G(5) was the denial of registration under section 12AB. Once the earlier refusal of registration was reversed, the basis of the denial of approval disappeared, and the same reasoning required grant of approval as well. [Paras 11]

The Commissioner was directed to grant approval under section 80G(5) from the date of application.

Final Conclusion: The Tribunal held that absence of strict classification as education and recovery of only nominal fees did not justify treating the trust's activities as non-genuine or non-charitable. Registration under section 12AB and consequential approval under section 80G(5) were directed to be granted from the date of application.

Nature of expenditure - Software expenditure - Capital versus revenue expenditure - Double disallowance of year-end provisions

Software expenditure- nature of expenditure - Capital versus revenue expenditure - Enduring benefit test - assessee incurred substantial expenditure towards software acquisition, licenses, database support, and related IT infrastructure - HELD THAT: - The Tribunal found that the expenditure was predominantly incurred for software licences, database access, support services and periodic upgrades, and did not bring into existence any independent or enduring capital asset. In the context of rapid technological change, software requires constant updates and replacement, which weakens the application of the traditional enduring benefit test.

Relying on Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] Tribunal held that where only a limited right to use software is obtained and no proprietary or copyright rights are acquired, the payment remains in the revenue field. As the Revenue had not shown acquisition of any copyright or proprietary rights in the software, the expenditure was held to be incurred for facilitating day-to-day business operations. [Paras 5]

The deletion of the disallowance was upheld and the Revenue's grounds on software expenditure for both years were dismissed.

Double disallowance of year-end provisions - Correct computation of income intimation issued u/s 143(1)(a), the claim was disallowed on the ground that tax had not been deducted at source - assessee suo motu disallowed the said provisions in the year of creation - HELD THAT: - The Tribunal noted that the assessee had originally claimed deduction for year-end provisions, which were disallowed under section 143(1)(a), and had thereafter suo motu disallowed those provisions in the year of creation while claiming deduction in the year of tax deduction at source or reversal. On the reconciliation placed on record, the Tribunal held that a repeated addition of the same amount in the year under consideration would result in impermissible double disallowance. It further held that the objection that such adjustment could not be reflected in the return filed in response to notice under section 148 was misplaced, since the assessee was not making a fresh claim but only realigning the timing of deduction to avoid duplication. The appellate authority erred in treating the ground as academic, since the issue went to the root of the correct computation of income. [Paras 10]

The issue was restored to the Assessing Officer for limited verification of whether the amount had already been disallowed or offered in earlier years and whether corresponding deduction had been claimed on tax deduction or reversal, with a direction to grant appropriate relief so as to avoid double taxation.

Final Conclusion: The Revenue's appeals for A.Y. 2014-15 and A.Y. 2018-19 were dismissed, the Tribunal holding that the software expenditure was revenue in nature. The assessee's appeal for A.Y. 2014-15 was allowed for statistical purposes by restoring the claim of double disallowance to the Assessing Officer for limited verification and appropriate relief.

Unexplained cash credit - addition u/s. 68 r.w.s 115BBE - Creditworthiness of lender - Source of source - onus to prove - Genuineness of loan transaction -disallowance of interest on such loan - CIT(A) deleted addition

HELD THAT: - The Tribunal found that the assessee had received the funds through banking channels and had produced material establishing the lender's identity, financial capacity and the genuineness of the transaction, including its financial statements and bank statements showing sufficient balance at the time of transfer. It was also noted that the AO himself had accepted the lender's creditworthiness for the larger part of the very same loan transaction and had doubted only the balance amount without any distinguishing material.

Tribunal further accepted the appellate finding that invocation of the source of source theory was unwarranted for the assessment year in question, and, following the coordinate Bench decision in Allure Developers Pvt. Ltd. [2025 (12) TMI 780 - ITAT DELHI] held that the Revenue had failed to dislodge the factual findings recorded by the Commissioner (Appeals). On that basis, the deletion of both the section 68 addition and the related interest disallowance was affirmed. [Paras 8, 9, 11]

The Revenue's challenge to the deletion of the addition and the related interest disallowance failed.

Final Conclusion: For Assessment Year 2020-21, the Tribunal upheld the order of the Commissioner (Appeals) deleting the addition made under section 68 in respect of the impugned loan and the related interest disallowance. The Revenue's appeal was accordingly dismissed.

Bogus purchases - Estimation of profit element - Grey market purchases

HELD THAT: - The Tribunal found no material or reason to dislodge the appellate finding that, though the purchases were not liable to be accepted at face value from the named parties, the books reflected the purchases and the case was one where material was reasonably inferred to have been procured from the open or grey market with accommodation bills taken to regularise them.

On that basis, and in line with the authorities relied on by the appellate authority, sustaining the addition at 12.5% of the alleged bogus purchases was treated as fair and reasonable, and the balance addition made by applying 20% was rightly deleted. [Paras 4]

The restriction of the addition to 12.5% of the alleged bogus purchases was upheld and the Revenue's challenge was rejected.

Final Conclusion: The Tribunal upheld the appellate order restricting the addition on alleged bogus purchases to 12.5% of the purchases and dismissed the Revenue's appeal.

Addition u/s 43CA - difference between the consideration amount shown in the agreement date and registration date - Adoption of stamp duty value - benefit of Safe harbour tolerance u/s 43CA

HELD THAT: - The Tribunal held that section 43CA(3) mandates that where the date of agreement fixing the consideration and the date of registration are different, the stamp duty value on the date of the agreement may be adopted, subject to the statutory condition regarding receipt of consideration or part thereof through the prescribed banking or electronic modes on or before the date of agreement.

Since the assessee produced documents including allotment letters, registered sale agreements, possession letters, completion-related documents, and financial statements to support its claim regarding the relevant stamp duty valuation and taxation of the consideration in later years, and these aspects had not been examined by the authorities below, the matter required fresh verification. The Tribunal therefore directed the AO to reconsider the issue in the light of section 43CA(3), verify the documents and claims, and grant the benefit of the 10% safe harbour, if found applicable. [Paras 7, 8, 9, 10, 11]

The issue was not finally decided on merits and was remanded to the jurisdictional Assessing Officer for fresh adjudication after verification of the assessee's claim and documents, with opportunity of hearing.

Final Conclusion: For A.Y. 2015-16, the Tribunal set aside the sustained addition under section 43CA for fresh consideration by the jurisdictional Assessing Officer in accordance with section 43CA(3), the claimed safe harbour benefit, and the assessee's plea regarding taxability of the consideration in subsequent year. The connected appeal involving identical facts was directed to be governed by the same order.

Rejection of books of account - Accommodation entries receipts - Estimation of net profit - disallowance of tanker running expenses

Rejection of the assessee's book results by treating transactions with Hardiyal Milk Products Pvt. Ltd. as accommodation entries and estimating profit only on receipts from that concern -HELD THAT: - The Tribunal held that the lower authorities had proceeded only against transactions with Hardiyal Milk Products Pvt. Ltd. while accepting the rest of the assessee's transactions, which in substance amounted to a partial rejection of the books. It found that once books are rejected, the course open is estimation of net profit on the business as a whole, and such rejection must rest on cogent defects in the books, which had not been brought on record.

Tribunal further found that the assessee's business model explained the existence of both purchase and sale entries in the same ledger account, since raw milk was purchased, pasteurised and sold back. It also noted the inspector's report from the earlier scrutiny proceedings confirming the existence and operation of the milk chilling plant of Hardiyal Milk Products Pvt. Ltd. On that material, the transactions with that concern could not be treated as mere accommodation entries. [Paras 6]

The basis adopted by the lower authorities for rejecting the books and estimating profit only on transactions with Hardiyal Milk Products Pvt. Ltd. was rejected.

Tanker running expenses - Overall business profit estimation - HELD THAT: - The Tribunal held that the tanker running activity was incidental to and inextricably linked with the assessee's main business of pasteurisation and supply of milk. It accepted that the assessee had not fully furnished all details called for during assessment, and therefore some overall estimation of profit was justified to cover such deficiencies. Instead of sustaining the separate disallowance of tanker expenses, it adopted a reasonable estimate of net profit for the entire business on the basis of the comparative profitability of the preceding three years, and fixed the rate at 0.031 per cent on the total turnover from both activities. As the net profit already declared by the assessee exceeded the profit so estimated, no addition survived. [Paras 6, 7, 8]

Net profit was directed to be estimated for the business as a whole at 0.031 per cent of total turnover, and since the returned profit was higher, the returned income was to be accepted.

Final Conclusion: The appeal was allowed. The Tribunal held that the transactions with Hardiyal Milk Products Pvt. Ltd. could not be treated as accommodation entries, rejected the selective approach adopted by the lower authorities, and directed acceptance of the returned income since the profit already declared was higher than the profit reasonably estimable on the overall business.

Penalty u/s 271(1)(c) - Penalty on estimated additions - estimation of income on bogus purchases -Failure to consider appellate submissions

Penalty u/s 271(1)(c) - addition on estimated basis in respect of alleged bogus purchases -HELD THAT: - The Tribunal noted that, in the assessment order, only the profit element embedded in the alleged bogus purchases had been brought to tax and that the quantum addition had ultimately been sustained at a percentage of such purchases. It therefore held that the addition rested on estimation. Following its earlier decision on the same principle, the Tribunal held that penalty under Section 271(1)(c) is not leviable merely because an estimated addition has been made, there being no basis to sustain penalty solely on such estimation. [Paras 10, 11]

The penalty for Assessment Year 2010-2011 was deleted.

Appellate order sustaining penalty for the later assessment year - assessee's submissions were not dealt with - HELD THAT:- The Tribunal found that the appellate authority had not considered the submissions placed by the assessee during the appellate proceedings. The defect went to the validity of the appellate adjudication itself. On that ground alone, the impugned order could not be sustained, and the matter was directed to be heard afresh after granting reasonable opportunity and considering the submissions and including the judgment of The Principal Commissioner of Income Tax-6 Vs. Colo Colour Pvt. Ltd. [2025 (9) TMI 1041 - BOMBAY HIGH COURT] and Coach Builders [2026 (2) TMI 984 - ITAT MUMBAI]. The remand was thus on procedural grounds without adjudication on the merits of the penalty. [Paras 15]

Final Conclusion: For Assessment Year 2010-2011, the Tribunal deleted the penalty under Section 271(1)(c) as the underlying addition was only an estimated addition. For Assessment Year 2011-2012, the appellate order was set aside and the matter was remanded for fresh adjudication because the assessee's submissions had not been considered.

Benami transaction - immovable properties - Burden of proving source of consideration - beneficial owner and benamidar - unexplained routed bank credits and cash component - Circumstantial Evidence - Confirmation of provisional attachment. -HELD THAT: - The Tribunal held that the challenge raised by the appellants was confined to the plea that there was no proof of transfer of consideration by the alleged beneficial owner. On examining the record appellant-wise, it found a consistent pattern: the appellants had either negligible or insufficient disclosed income to fund the purchases; substantial credits were routed into their bank accounts immediately before the acquisitions; the transferors of those amounts themselves lacked explained source and, in several instances, admitted that they neither knew the appellants nor had any loan agreement, security, or mortgage in relation to the transfers; and statements recorded under the PMLA showed accommodation entries and cash repayment arrangements. The Tribunal also noted the material regarding cash deposits in the sellers' accounts immediately before registration, treated as amounts paid over and above the stated sale consideration, with no satisfactory source shown. On that material, a prima facie case of benami transaction stood proved, and the appellants failed to rebut it by establishing their own independent source for purchase. The Tribunal further held that, even if the allegation regarding Smt. Ranu Sahu being the beneficial owner were left aside, the case of benami transaction would still survive because the benamidars themselves failed to explain the source of consideration for the properties standing in their names. [Paras 41, 42, 43, 44, 45]

The Tribunal found no ground to interfere with the orders confirming the provisional attachment, and all seven appeals were dismissed.

Final Conclusion: The Tribunal held that the evidentiary chain relating to the routed bank transfers, unexplained cash deposits, statements of the transferors and sellers, and the appellants' failure to prove their own source of funds was sufficient to sustain the finding of benami transactions. The orders confirming provisional attachment were therefore maintained and all the appeals were dismissed.

Delay in filing the review applications - Review jurisdiction - Recall of judgment - Per incuriam - Error apparent on the face of the record - Misdescription of provision - Binding precedent - Review Applications and Condonation of Delay (CoD) applications filed to seek review of the earlier orders passed by this Tribunal -HELD THAT: - The Gauhati High Court in the case of Satyajit Saha and 9 Ors. versus Union of India [2026 (2) TMI 303 - GAUHATI HIGH COURT] has not analyzed the issue to render judgment dated 18.10.2024 to be per incuriam. In fact, the main issue about the prospective and retrospective application of the Amending Act of 2016 to the Prohibition of Benami Property Transactions Act, 1988 is pending consideration before the Apex Court and the judgment is yet to be given by the Apex Court. It would govern the issue. However, by virtue of setting-aside the order passed by this Tribunal, the appellant before the High Court would get benefit in the discrimination if the Apex Court ultimately takes a view holding Amending Act of 2016 to apply retrospectively. The prayer of the Ld. Counsel for the Review Applicant was accordingly to allow the Review Application because three-judge bench order in Ganpati Dealcom [2022 (8) TMI 1047 - SUPREME COURT] is having binding precedent and cannot be offended by this Tribunal.

The Tribunal adopted the reasoning contained in its earlier detailed order allowing similar review petitions founded on the recall by the Supreme Court of its judgment in Ganpati Dealcom. It held that the order of the three-Judge Bench recalling that judgment and granting liberty to aggrieved parties to seek review in matters disposed of on the basis of that judgment was binding on the Tribunal, and the Tribunal had no competence to disregard it or to treat it as per incuriam.The Gauhati High Court decision taking a different view could not prevail over the binding force of the Supreme Court's three-Judge Bench order. On that basis, and for the reasons already recorded in the earlier detailed order as to review and delay, the Tribunal held that the review petitions deserved to be entertained, the delay condoned, and the matters reopened.

The review applications and the condonation applications were allowed.

Final Conclusion: Following its earlier detailed reasoning and holding itself bound by the Supreme Court's three-Judge Bench order recalling Ganpati Dealcom and granting liberty to seek review, the Tribunal declined to follow the contrary Gauhati High Court view. The review applications and the applications for condonation of delay were accordingly allowed.

Classification of quicklime with CaO purity < 98% - interference with appellate tribunal orders - Tribunal [2025 (8) TMI 1662 - CESTAT KOLKATA] held that, admittedly, in the Bills of Entry filed, the purity of Calcium Oxide is less than 98% and therefore, the product in question i.e., Quicklime, is rightly classifiable under Customs Tariff Item No. 25221000 - HELD THAT:- Delay was condoned, and the appeals were dismissed as the appellant fairly stated that the issue stood settled against the Revenue in view of the earlier decision M/s. Viraj Profiles Ltd.[2023 (10) TMI 1260 - CESTAT MUMBAI] as upheld by SC [2024 (4) TMI 187 - SC ORDER], [2025 (8) TMI 1662 - CESTAT KOLKATA].

Legality and validity of the detention of the vehicle - transaction of purchase of Car is under investigation​​​​​​​ - Pending Proceedings - vehicle in possession/custody - Alternate Remedy - HELD THAT:- The main matter is still pending in the High Court. The petitioner wants the Car to be released subject to terms and conditions.

Delay was condoned, the exemption application was allowed, and the Special Leave Petition was disposed of with an observation that the Department should promptly complete its inquiry and proceed in accordance with law; the issue of legality and validity of the detention of the vehicle was expressly kept open.

Entitlement to provisional release of the seized imported goods pending adjudication - Conditional release pending adjudication - HELD THAT: - The Court found that the case stood on the same footing as earlier writ petitions in which similar seizure of imported goods had been dealt with by directing provisional release on conditions. Since at the present stage only a seizure memo had been issued and the prayer was confined to interim release, the Court adopted the same course and directed the authorities to pass orders for release upon payment of the enhanced duty as quantified, furnishing of a bank guarantee for ten per cent of the value of the imported goods, and maintenance of transaction particulars if the goods were sold after release. The Court also clarified that such conditional release would not affect the authority's power to continue adjudication and that the adjudicating authority must decide the matter independently on the objections and contentions of the parties, without being influenced by the order of release. [Paras 8, 9, 10, 11, 12]

Conditional provisional release was directed, while preserving the adjudicating authority's liberty to proceed independently in accordance with law.

Final Conclusion: The writ petition was allowed by directing provisional release of the seized consignment on compliance with the stated conditions. The adjudication proceedings were left open to be continued and decided independently in accordance with law.

Classification of goods - Mandarin (kinnow) frozen concentrate - classifiable under Heading 2009 11 00 as orange juice Or under Heading 2009 39 00 as juice of any other single citrus fruit - Common Parlance Test - Trade Parlance Test - Specific Heading Prevails Over Residuary Entry - Extended limitation - Suppression of facts- Confiscation, redemption fine and penalty.

Tariff classification of mandarin juice concentrate - HELD THAT: - The Tribunal held that the tariff scheme itself distinguishes oranges from mandarins. Chapter 8 separately classifies oranges and mandarins, and Heading 2009 separately provides for orange juice, grapefruit or pomelo juice, and juice of any other single citrus fruit. Reading the tariff consistently, the specific entry for orange juice cannot be extended to mandarin juice when mandarins are treated as a distinct commodity in the statutory framework. The Tribunal further held that the common parlance test is only a restricted aid and cannot override clear or implicit statutory guidance.

In the case of Akbar BadruddinJiwani v. Collector [1990 (2) TMI 50 - SUPREME COURT], referred to in Welkin Foods [2026 (1) TMI 348 - SUPREME COURT] declined to interpret "marble" in its common parlance sense because Entry 25.15 of the ITC Schedule separately enumerated marble, travertine, ecaussine, alabaster, and other calcareous stones. The Court held that if the common parlance meaning of "marble" were adopted to include all calcareous stones, it would render the separate enumeration of travertine, ecaussine, alabaster, and other calcareous stones completely otiose and redundant.

Since the tariff structure and HSN notes provided sufficient guidance, trade descriptions, website material, end-use, and the foreign customs ruling could not displace the statutory classification. On that reasoning, mandarin orange concentrate fell under the residuary citrus juice entry 2009 3900. [Paras 29, 30, 31, 32, 33]

The classification adopted by the Revenue under tariff entry 2009 3900 was upheld on merits.

Extended limitation in classification disputes - HELD THAT: - The Tribunal found that the appellant had been regularly importing the goods and classifying them under the declared tariff item over the years, with the department being fully aware of that practice through assessment, out-of-charge clearance and post-clearance audit. The dispute arose from an audit objection, and no positive act showing suppression or intent to evade duty was established. In those circumstances, the plea of suppression could not be maintained merely by referring to self-assessment. As the demand beyond the normal period failed on limitation, the Tribunal sustained the demand only for the normal period and set aside the fines and penalties. [Paras 34, 35]

The appeal was partly allowed on limitation; demand for the normal period alone survived, while penalties and fine were set aside.

Final Conclusion: The Tribunal upheld on merits the reclassification of the imported mandarin concentrate under tariff entry 2009 3900. However, as the demand arose from audit and no suppression or intent to evade duty was established, the extended period was held inapplicable; the demand survived only for the normal period, and the confiscation, redemption fine and penalty were set aside.

Tariff classification of imported goods - Cold Heading Quality Alloy Steel Wire in Coils - Classifiable under CTH 7229 as alloy steel wire or under CTH 7227 as wire rods - Entitlement to the benefit of Notification No. 152/2009-Cus. - differential duty and interest demand​​​​​​​ - Common trade understanding - Essential character​​​​​​​ - Confiscation of the goods under Section 111(m)​​​​​​​ - Extended period of limitation​​​​​​​ - limitation and the penalties imposed under Sections 112(a) and 114AA - Distinction between wire rod and cold-drawn wire - Burden to displace declared classification.

Tariff classification - Cold-drawn wire - Wire rod versus wire - HSN explanatory notes - HELD THAT: - The Tribunal held that under Chapter Note 1(o) to Chapter 72 and the HSN explanatory notes, wire is a cold-formed product in coils, ordinarily obtained by drawing hot-rolled rods through a die or by other cold-forming processes, whereas wire rod is the hot-rolled input material. On the material placed on record, including the supplier's catalogue, the imported product had undergone wire drawing after pickling and thereafter annealing processes, and was supplied as cold heading quality wire. The mention of SCM435 in the mill certificate was treated as denoting the steel grade of the input wire rod used for drawing and not as determinative of the physical form of the imported product. The Tribunal further held that SAIP is a heat-treatment process distinct from cold working and that, in the present case, it operated on the product after the drawing stage to make the wire suitable for cold heading. The IIT opinion was not accepted as determinative, since it itself noticed cold drawing and did not establish that a minimal reduction in diameter would keep the product within the category of wire rod. BIS certification and the evidence regarding the appellant's domestic procurement pattern and absence of wire-drawing facility were treated as supporting the conclusion that the appellant received wire as input for fastener manufacture. The department, which sought to alter the declared classification, had not produced technical evidence sufficient to show that the goods remained hot-rolled wire rods. [Paras 8, 9, 10]

The imported goods were correctly held to be alloy steel wire classifiable under CTH 7229 9090 as declared by the appellant.

Entitled to the benefit of Notification No. 152/2009-Cus. - HELD THAT: - The Hon’ble Supreme Court in Commissioner of Customs v. Dilip Kumar & Co. [2018 (7) TMI 1826 - SUPREME COURT (LB)], has held that exemption notifications must be interpreted strictly with respect to eligibility conditions. At the same time, once the assessee satisfies the conditions prescribed in the notification, the benefit thereof cannot be denied. Further, in Hindustan Zinc Ltd. v. Commissioner of Central Excise [2014 (5) TMI 253 - SUPREME COURT], the Hon’ble Supreme Court held that where the foundation of a demand fails, the entire demand must necessarily fail.

The Tribunal found that the denial of exemption rested entirely on the department's reclassification of the goods under Heading 7227. Since the goods were held classifiable under Heading 7229, the very foundation for denying the notification benefit failed. The Tribunal also noted that there was no allegation of breach of any condition of the notification. On that basis, the demand of differential duty and interest under Section 28AA could not survive. [Paras 10]

The exemption was held admissible, and the differential duty demand with interest was set aside as unsustainable.

Confiscation, Limitation and Penalties- misclassification and wrongful availment of exemption​​​​​​​ - invocation of the extended period - HELD THAT: - The Tribunal held that the confiscation and penalties were wholly founded on the allegation of misclassification and wrongful availment of exemption. Once the appellant's classification and exemption claim were upheld, the allegation of misdeclaration ceased to exist and confiscation under Section 111(m) could not stand. The penalties, being purely consequential to the same allegation, also failed. As to limitation, the Tribunal observed that the dispute concerned classification and interpretation of tariff entries and that there was no material showing suppression, misdeclaration or wilful misstatement; hence, the invocation of the extended period would not in any case be sustainable. [Paras 11, 14]

The confiscation, penalties, and extended-period invocation were held untenable.

Final Conclusion: The Tribunal held that the imported Cold Heading Quality Alloy Steel Wire in Coils was correctly classifiable under CTH 7229 9090, with the result that the benefit of Notification No. 152/2009-Cus. was available. Accordingly, the demand of differential duty with interest, confiscation, and penalties were set aside, and the appeal was allowed.

Burden of proof in seizure of gold - Reasonable belief of smuggled goods - Non-analysis of documentary evidence - Limitation for show-cause notice - Absolute confiscation - Documentary evidence.

Whether 4046.300 gms of gold cut pieces seized under Mahazar dated 16.10.2019 from the possession of appellant Shri M.R. Ranjith is liable for confiscation and consequent actions on other appellants as held by the adjudicating authority or absolute release of the gold as held by the learned Commissioner(Appeals) is in accordance with law? -HELD THAT: - The Tribunal held that the principle stated in Om Prakash Khatri [2019 (3) TMI 457 - KERALA HIGH COURT] applied to seizure of gold even if the gold carried no foreign markings and even if the seizure was not effected near an international border, airport or seaport. It reiterated that, for notified goods like gold, the Department discharges its initial burden by seizure under reasonable belief, and the burden then shifts to the person concerned to prove lawful acquisition. The Commissioner (Appeals), while treating the case as distinguishable, accepted the respondents' books, invoices and GST-related records by making a sweeping observation that the seized gold stood accounted for, but did so without analysing and correlating the relevant entries, invoices and surrounding discrepancies noticed by the adjudicating authority. The Tribunal further found that the statement of the GST practitioner admitting fabrication of invoices and preparation of stock records cast serious doubt on the evidentiary value of the documents. Since the appellate authority had not undertaken the necessary scrutiny of the documentary evidence, the order directing absolute release of the gold and setting aside penalties was found unsustainable, requiring fresh consideration. [Paras 13, 14, 16]

The impugned appellate order was set aside and the matter was remanded to the Commissioner (Appeals) for fresh decision after proper examination of the documentary evidence and the Revenue's grounds.

Limitation for show-cause notice- time-barred - Extension of time under relaxation law - HELD THAT: - The Tribunal accepted the Revenue's contention that the limitation objection had not been raised before the authorities below and was being urged for the first time in the Revenue's appeals without any cross-objection by the respondents. It also found merit in the Revenue's submission that the notice issued on 10.12.2020 stood covered by Section 6 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 extending the time limit till 31.12.2020, and that the circular relied upon by the respondents related to GST matters and was not relevant to the present customs dispute. [Paras 15]

The limitation objection was rejected, and the other new issues not raised earlier were not considered.

Final Conclusion: The Tribunal held that the Commissioner (Appeals) had released the seized gold without properly analysing the documentary material in the light of the governing principle under Section 123 applicable to seizure of gold. The appellate order was therefore set aside and the matter remanded for fresh decision, while the respondents' plea of limitation against the show-cause notice was rejected.

Maintainability of petition - Statutory restriction on overseas travel of bankrupt - impounding of passport - Efficacious remedy to seek permission from the NCLT under Section 141(1)(f) - reasonable restrictions - Procedure Established by Law - Scope of powers and duties of Bankruptcy Trustee - right to travel abroad - personal liberty under Article 21.

Statutory restriction on overseas travel of bankrupt - Impounding of passport - Procedure established by law - HELD THAT: - The Court held that, once the order declaring the petitioner bankrupt remained operative and unstayed, the consequence under Section 141(1)(f) of the Insolvency and Bankruptcy Code, 2016 came into force by operation of law, namely, that the bankrupt could not travel overseas without permission of the Adjudicating Authority. On that basis, the letters addressed by the Bankruptcy Trustee merely conveyed the existing statutory position to the passport authority and sought adherence to it. The Court drew a clear distinction between impounding under the Passports Act, 1967 and administrative action taken to ensure compliance with a restriction created by another valid statute, and found that no power under the Passports Act had been exercised. Since permission to travel could still be sought from the National Company Law Tribunal, the restriction was not absolute and could not be said to violate personal liberty in the manner alleged. [Paras 6, 7, 9, 11, 12]

The impugned communications were upheld as consequential to the statutory travel restriction and not as unlawful impounding of the passport.

Scope of powers and duties of Bankruptcy Trustee - Alternative statutory remedy - Maintainability of writ petition - HELD THAT: - The Court held that a Bankruptcy Trustee appointed under the Insolvency and Bankruptcy Code, 2016 is charged with administering the estate and ensuring effective conduct of the bankruptcy process under the supervision of the Tribunal. Ensuring that the bankrupt remains available within jurisdiction and complies with the statutory travel restriction was found to be intrinsically connected with those duties. The Court further held that the Code provides a complete mechanism for redressal of grievances against acts of the Bankruptcy Trustee and that the petitioner had an efficacious remedy before the National Company Law Tribunal, including for permission to travel. It also found that the present writ petition, though framed as a challenge to the communications, effectively sought to dilute the consequences of the subsisting bankruptcy order and amounted to an attempt to circumvent the statutory process while parallel proceedings were already pending without interim protection. [Paras 8, 10, 11, 12]

The challenge was rejected on the ground that the Bankruptcy Trustee acted within statutory authority and the writ petition was not maintainable.

Final Conclusion: The Court dismissed the writ petition, holding that the travel restriction flowed directly from the subsisting bankruptcy order and Section 141(1)(f) of the Insolvency and Bankruptcy Code, 2016. The Bankruptcy Trustee's communications were treated as merely consequential and the petitioner was left to pursue the statutory remedy before the National Company Law Tribunal.

Moratorium - Personal guarantor's application under Section 94, filed after an auction sale - Abuse of process in insolvency proceedings - Misuse of interim moratorium to obstruct SARFAESI enforcement - subsequent issuance of a sale certificate - Right of Redemption - Confirmed Sale - Prospective Operatio - HELD THAT: - It is seen that notice under Section 13(2) was issued on 31.12.2019 and thereafter Bank also enforced its rights under Section 13(4) by issuing possession notice. Notice for sale of the assets dated 19.03.2024 was issued fixing 11.04.2024 for the sale of the assets by e-auction. E-auction was held on 11.04.2024 and auction was also confirmed by the Bank on 12.04.2024. It was thereafter on 27.04.2024 Section 94 application was filed by the appellant. Appellant also filed Securitization Application 340/2024 before the DRT challenging the auction which was the appropriate remedy availed by the appellant. Securitization Application was dismissed on 09.08.2024, when appellant could not get any relief from the DRT who refuse to grant relief by order dated 09.08.2024, applications have been filed under Section 94 giving rise to this appeal. In the facts of the case as noticed above, we are of the view that initiation of proceeding under Section 94 by the personal guarantor was not with object of resolution of insolvency of the personal guarantor rather it was only with the intent to somehow create hurdles in the conclusion of the proceedings initiated by the Bank for recovery of its debts when auction was already held on 11.04.2024 which was confirmed on 12.04.2024, filing of the application on 27.04.2024 clearly was not bona fide application and the application was an abuse of process of Court and we are not inclined to interfere with the impugned order passed by the adjudicating authority rejecting the application filed by the appellant in facts of the present case.

In that sequence, the filing was found to be lacking in bona fides and to be an abuse of process intended only to stall recovery. Having reached that conclusion, the Tribunal declined to interfere with the rejection of the applications and left it open to the appellant to pursue the challenge to the auction before the DRT. [Paras 14, 16, 17]

The rejection of both applications was upheld and no interference was warranted.

Final Conclusion: The Tribunal dismissed the appeals, holding that the appellant's resort to Section 94 after the auction and its confirmation was not a bona fide insolvency resolution step but an attempt to stall SARFAESI recovery. The appellant was left to pursue any challenge to the auction before the DRT.

Third Member opinion under Section 419(5) - Non- Adjudication of appeal on the merits of admission under Section 7 - Prematurity of appeal - Subsequent events in Section 7 proceedings. - HELD THAT: - Section 419 sub-section (5) require reference by President on point of difference between Members and decision on the opinion of majority Members. The opinion of third Member, which is questioned in the present Appeal is opinion given by third Member, due to split verdict between Judicial Member and Technical Member and on reference made by the President, NCLT. The opinion is to be placed before the NCLT Ahmedabad Bench to pass appropriate order with regard to Company Petition.

The law is well settled that in Section 7 proceedings, it is open for the parties to place before the Adjudicating Authority any subsequent event, which has material bearing on the proceedings. It is open for the Appellant to place subsequent events before the Adjudicating Authority, which may have bearing on the outcome of Section 7 application. The opinion of third Member impugned in the Appeal is opinion, which is to be placed before the NCLT Ahmedabad Bench to pass appropriate order. At this stage various submissions raised by the Appellant, need no consideration.

As observed, it is open for the Appellant to place subsequent facts and events before the Adjudicating Authority. Ends of justice will be served in fixing a date before the Adjudicating Authority for both the parties to appear. The Appellant is also at liberty to file an additional affidavit before the Adjudicating Authority, brining on record subsequent events, which may have material bearing on Section 7 proceedings within two weeks from today. No expressions on merits of submission of either of the parties and it is for the Adjudicating Authority to take a decision in accordance with law.

The appeal was disposed of without adjudicating the merits of the Section 7 dispute, liberty being granted to place subsequent events before the Adjudicating Authority, which was left to decide the matter in accordance with law.

Final Conclusion: The Tribunal declined to examine the merits of the challenge to the third Member's opinion at that stage, since the final order on the Section 7 application was yet to be passed by the Adjudicating Authority. The corporate debtor was permitted to place subsequent events by additional affidavit before the Adjudicating Authority, and the appeal was disposed of accordingly.

Demand notice issued under Section 13(2) - Invocation of personal guarantee - Continuing guarantee after restructuring - Moratorium vis-a-vis personal guarantor - barred by limitation - Section 95 application - acknowledgments of debt - Limitation for insolvency proceedings against personal guarantor.

Whether notice under Section 13(2) dated 05.11.2016 can be said to notice invoking guarantee of personal guarantor or not? - HELD THAT: - The Tribunal held that the notice was expressly addressed to the personal guarantors, specifically recorded that the financial assistance was secured by their personal guarantees, and called upon them to discharge the outstanding liability within the stipulated period. On a plain reading, the communication was a clear invocation of the guarantee and no separate format or independent invocation document was required. The objection regarding non-service of the notice was also rejected since no such objection had been raised before the Adjudicating Authority in response to the resolution professional's report. The recovery proceedings had also proceeded on the same notice, and it was not open to the personal guarantors thereafter to contend that the guarantee had never been invoked. [Paras 8, 9, 15, 16]

The challenge founded on absence of invocation of the personal guarantee failed.

Continuing guarantee - Restructuring of debt - HELD THAT: - The Tribunal noted that the restructuring documents and the subsequent guarantee were disclosed in the Section 95 application, but the restructured repayment itself was not honoured and the account was thereafter classified as NPA. The clause in the restructuring agreement modified earlier documents only to the extent of inconsistency. The Tribunal found no inconsistency between the guarantee executed earlier and the guarantee executed after restructuring. In those circumstances, the earlier guarantee remained operative as a continuing guarantee for the borrower's debt, and the bank was entitled to rely on it while issuing the demand notice. Non-invocation of the later guarantee was therefore not fatal to the proceedings. [Paras 11, 12, 13, 14]

The earlier guarantee dated 30.09.2014 continued to bind the appellants and the proceedings were not vitiated by non-reliance on the later guarantee.

Moratorium vis-a-vis personal guarantor - Proceedings against surety - HELD THAT: - The Tribunal accepted the Adjudicating Authority's view that the statutory moratorium under Section 14 is confined to the corporate debtor and, by virtue of the exclusion relating to a surety in a contract of guarantee, does not bar proceedings against personal guarantors. Consequently, pendency of CIRP against the corporate debtor did not disable the financial creditor from pursuing recovery proceedings against the guarantors, and the decree or recovery certificate could not be treated as vitiated on that ground. [Paras 17]

The objection based on the moratorium operating in the corporate debtor's CIRP was rejected.

Limitation for insolvency proceedings against personal guarantor - Acknowledgment of debt - HELD THAT: - The Tribunal upheld the finding that the application filed in 2021 was within time because the corporate debtor had continuously acknowledged the debt in its balance sheets for successive financial years, which extended limitation, and the recovery certificate also provided a fresh cause of action. The Tribunal further observed that any question as to the precise amount recoverable after realizations in the corporate debtor's CIRP could be examined at the stage of preparation of the repayment plan and did not affect admission of the application. [Paras 18]

The plea of limitation did not defeat the Section 95 application.

Final Conclusion: The Tribunal found no error in the admission of the Section 95 applications against the personal guarantors. Holding that the guarantees had been validly invoked, remained binding notwithstanding restructuring, were not protected by the corporate debtor's moratorium, and that the proceedings were within limitation, it dismissed both appeals.

Rejection of discharge and the subsequent framing of charge for the offence under Sections 3 and 4 - definition of “proceeds of crime” as provided under Section 2(1)(u) - Offence of money-laundering as an independent offence - Admissibility of statements under Section 50 of the PMLA - Requirement of Previous Sanction for prosecution of public servant - lack of evidence demonstrating any link or association between the petitioner and the proceeds of crime and no money trail.

Discharge and framing of charge - Prima facie case - HELD THAT: - From perusal of the entire prosecution complaint prima facie it appears that the whole modus operandi regarding collection of commission and later distribution has been illustrated to the respondent ED by the co-accused Veerendra Kumar Ram and Sanjeev Kumar Lal, during their statement’s u/s 50 of PMLA, which are mentioned in Para-10.1 and 10.3 of the prosecution complaint dated 04.07.2024.

It is settled connotation of law that at the stage of considering discharge, the duty of the Court is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities and Court should not venture into the merit of the case by analyzing that whether conviction is possible or not. Meaning thereby at this stage the Court has to see the prima facie case only.

The three Judge Bench the Hon’ble Apex Court in the case of Rohit Tandon vs. Directorate of Enforcement[2017 (11) TMI 779 - SUPREME COURT], held that the statements of witnesses recorded by Prosecution – ED are admissible in evidence in view of Section 50. Such statements may make out a formidable case about the involvement of the accused in the commission of the offence of money laundering.

It is evident that statements recorded under Section 50 of the PMLA hold evidentiary value and are admissible in legal proceedings. The Hon’ble Supreme Court, while emphasizing the legal sanctity of such statements, observed that they constitute valid material upon which reliance can be placed to sustain allegations under the PMLA.

In the instant case, it has been found that during the course of investigation statement so recorded of the accused persons as also of the statement of various Chief Engineers/Engineers of RWD, JSRRDA and RDSD and the witnesses were recorded u/s 50 of PMLA, who all are consistent in their statement that the commission is 3% of total LOA, for the allotment of tenders. The said 3% commission amount is distributed in share of 1.35% Minister, Alamgir Alam through his PS Sanjeev Kumar Lal and rest 1.65% to Top bureaucrats and other engineers/officials.

The investigating agency has relied not only on the statement of co-accused under Section 50 of the PMLA but also other evidences which indicate the applicant’s active role in the alleged money laundering activities.

Thus, from the entire discussion it is evident that the petitioner is an influential person being Cabinet Minister in the State of Jharkhand and the evidence collected during investigation by the agency broadly speaks that the co accused Veerandra Kumar Ram used to collect commission in terms of allocation of tender and execution of work and the said commission/fixed share of 1.35% was distributed among his seniors and politicians and the said commission is also collected by co-accused Sanjeev Kumar Lal, P.S. of the present petitioner through certain persons. It has also been submitted that during the investigation, it has been ascertained that the entire collection and distribution of commission was taken care of by the assistant engineers posted at the Rural Development Special Division and RuralWorks Department. Further, it was also found that the share of the petitioner, who was the Minister, was 1.35% of the allocated tender amount and also, in one of the instances, it was found that the petitioner had received his share of commission of Rs. 3 Crore which was sent by one Assistant Engineer in September 2022 which was facilitated by one of his close persons.

This Court, based upon the imputation as has been discovered in course of investigation, is of the prima facie view that what has been argued on behalf of the petitioner that he is nowhere related with proceeds of crime is not fit to be acceptable because as would appear from the preceding paragraphs, money which has been alleged to be obtained by the petitioner/accused has been routed through his Private Secretary, Sanjeev Kumar Lal. If there is a prima facie material to show that the amount has been received by misusing the position of the petitioner that by itself will be construed as proceeds of crime and it is not necessary for the respondent to further establish that such proceeds of crime was projected as untainted money subsequently.

Applying that test, the Court found that the prosecution complaint contained consistent statements under Section 50 of the PMLA from co-accused and several engineers regarding collection of commission in tender allotments, the petitioner's alleged share through his personal secretary, recovery of large cash amounts from premises linked to his associates, and seized diaries and handwritten notes said to record the accounting and distribution of such commission. The Court further held that the absence of the petitioner's name in the predicate offence or initial complaint did not by itself negate liability under the PMLA, since money-laundering is an independent offence and a person not named in the scheduled offence may still be proceeded against if knowingly involved in processes connected with proceeds of crime.

The challenge to the orders refusing discharge and framing charge was rejected, and the petitioner was held liable to face trial.

Non-availability of money trail - It has come on the record that a huge cash of Rs.32.20 crore was recovered and seized from the premises of Jahangir Alam an associate of Sanjeev Kumar Lal who was personal Secretary to the Minister i.e. the present petitioner. It is also pertinent to note that several incriminating notes and pages of diaries were also found during search and seizure which was maintained by Sanjeev Kumar Lal recording the share of the minister Alamgir Alam from the total commission collected from the tenders. By way of Section 50 statement Sanjeev Kumar Lal, the personal Secretary to the Minister/petitioner, has admitted the contents of these seized pages and the fact that he was collecting commission on behalf of the applicant/minister as recorded in the “Hisab-Kitab‟ seized by ED corroborates the factum of recovery. He further decoded the code words and clearly mentioned that the applicant/minister was the beneficiary of commission amount.

Thus, this Court is of prima facie view that the contention of the petitioner that the prosecution has failed to establish the entire money trail, is without any factual basis and moreover section 3 of PMLA not requires the entire money trail or where the money eventually went.

Non-application of Section 5 and 8 of Act 2002 - Notices are crucial for due process and informing concerned individuals/defendants about legal proceedings but their absence doesn’t automatically absolve a petitioner of any connection to the property. In PMLA cases, the focus is on identifying and confiscating proceeds of crime, and attachment of property is a common step. The fact that a notice is not served to one petitioner doesn’t necessarily mean they are not connected to the property in question, even if it is attached. If the petitioner feels they are wrongly implicated or that the property is not theirs, they have legal recourse to challenge the attachment or other actions taken by the ED. The ED’s investigation and the evidence presented in court will determine the ownership and the involvement of each accused, including the petitioner who may not have received a notice.

Sanction for prosecution of public servant - Official duty - HELD THAT: - In the Indra Devi v. State of Rajasthan [2021 (7) TMI 1491 - SUPREME COURT], the Hon’ble Apex Court has observed that Section 197 CrPC seeks to protect an officer from unnecessary harassment, who is accused of an offence committed while acting or purporting to act in the discharge of his official duties and, thus, prohibits the court from taking cognizance of such offence except with the previous sanction of the competent authority. Public servants have been treated as a special category in order to protect them from malicious or vexatious prosecution. At the same time, the shield cannot protect corrupt officers and the provisions must be construed in such a manner as to advance the cause of honesty, justice and good governance.

In the case of Inspector of Police v. Battenapatla Venkata Ratnam [2015 (4) TMI 1372 - SUPREME COURT], the Hon’ble Apex Court has observed that “the alleged indulgence of the officers in cheating, fabrication of records or misappropriation cannot be said to be in discharge of their official duty. Their official duty is not to fabricate records or permit evasion of payment of duty and cause loss to the Revenue. Unfortunately, the High Court missed these crucial aspects. The learned Magistrate has correctly taken the view that if at all the said view of sanction is to be considered, it could be done at the stage of trial only”

Thus, the question of invoking Section 197 of the CrPC does not arise for act(s) which are not a part of the discharge of the official duty. There has to be a reasonable connection between the discharge of official duty and the act committed by the official to invoke Section 197 of the CrPC. Further all the aforesaid view can be well appreciated at the stage of trial by leading the evidence that whether the alleged act has nexus in discharge of duty.

In the instant case allegations of the nature described in the prosecution complaint in question, can never be in the discharge of official duties as acts committed by the Petitioner relating to the offences of money laundering were not carried out in discharge of his official duties as a public servant.

The plea based on want of sanction was rejected.

Final Conclusion: The High Court held that the prosecution materials disclosed a prima facie case of money-laundering against the petitioner and that the Special Judge had rightly rejected the discharge application and framed charge. The revisions were therefore dismissed, with the trial directed to proceed uninfluenced by the prima facie observations made in the order.

Provisional Attachment - prior to the commission of crime - definition of “proceeds of crime” defined under Section 2(1)(u) - equivalent value attachment - pendency of predicate offence challenge - attachment of property of person involved - registration of the case by different financial institutions for commission of offence under Section 120-B IPC r/w Sections 420, 467, 468 and 471 IPC.

Proceeds of crime - equivalent value attachment - HELD THAT: - The argument has been raised in ignorance of the definition of “proceeds of crime” defined under Section 2(1)(u) of the Act of 2002. Proceeds of crime are not restricted only to acquisition of property out of the predicate offence but it can be even for equivalent value to the proceeds. In fact, the definition of “proceeds of crime” has three limbs and has been recently dealt with by the Division Bench of Punjab and Haryana High Court in the case of Dilbag Singh @ Dilbag Sandhu Vs. Union of India & Ors. [2024 (11) TMI 833 - PUNJAB AND HARYANA HIGH COURT]

It is held that if the proceeds are not available in the hands of the person/accused having been vanished or laundered, then the property of equivalent value can be attached. In the instant case, proceeds were not found available with the appellants and, therefore, as an alternative, the properties of equivalent value have been attached which may have been purchased prior to the commission of crime but it would fall within the definition of “proceeds of crime” finding it to be for the equivalent value.

The attachment was upheld on the footing that the attached properties could validly be treated as property of equivalent value within the definition of proceeds of crime.

Pendency of predicate offence challenge - provisional attachment - HELD THAT: - The Tribunal found that no court had quashed either the predicate offence or the PMLA proceedings. An interim order staying proceedings does not extinguish the existence of the predicate offence. So long as the predicate offence survives, the provisional attachment cannot be set aside on that ground alone. The Tribunal, however, made its order subject to the final outcome of the proceedings pending before the Supreme Court. [Paras 15]

The ground based on pendency of proceedings before the Supreme Court was rejected, subject to the result of those proceedings.

Attachment of property of person involved - recipient of proceeds of crime. - HELD THAT: - The Tribunal held that provisional attachment is not restricted to a person formally arrayed as an accused. It is sufficient if the person is involved in the commission of the crime or is a recipient of the proceeds of crime. In the present case, the objection based on the appellant not being named in the predicate offence was further weakened by the admitted position that he was named in the prosecution complaint under the PMLA. [Paras 16]

The objection to attachment based on non-impleadment as an accused in the predicate offence was rejected.

Final Conclusion: The Tribunal rejected all three grounds urged by the appellants and sustained the confirmation of the provisional attachment. It held that attachment of property of equivalent value was permissible, that pendency of proceedings before the Supreme Court did not nullify the attachment, and that formal arraignment as an accused in the predicate offence was not indispensable for such attachment; however, the order was made subject to the final outcome of the matter pending before the Supreme Court.

Provisional attachment - Proceeds of crime - reasonable belief - Attachment of property of non-accused persons - modus operandi - small short-term loans were sanctioned digitally with minimal verification, while substantial amounts were deducted upfront as processing fees, GST and other charges - Outsourcing of core lending functions by Non-Banking Financial Institution (NBFCs) and Fintech companies (Service Provider Company) - fraud - multiple mobile applications were involved in sanctioning instant micro loans and then its recovery via tele-callers.

Attachment of property of non-accused persons - Proceeds of crime -HELD THAT:- The Tribunal held that investigation under the Prevention of Money Laundering Act is distinct from the predicate offence investigation. Once scheduled offences stood disclosed, the Enforcement Directorate was competent to proceed under the Act. Referring to its earlier decision in Sant Singh vs. The Deputy Director, Directorate of Enforcement, Chandigarh [2024 (8) TMI 523 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI] and to Vijay Madanlal Choudhary and Others v. Union of India & Ors. [2022 (7) TMI 1316 - SUPREME COURT (LB)], the Tribunal held that Section 5 is not confined to property held by an accused in the scheduled offence, but extends to any person found in possession of proceeds of crime. Accordingly, the appellant's objection based solely on its not being named in the FIRs or charge-sheets was rejected. [Paras 40, 41]

The challenge to attachment on the ground that the appellant was not named in the FIRs or charge-sheets failed.

Outsourcing of core lending functions by NBFC - Proceeds of crime - HELD THAT: - On the material before it, the Tribunal found that the appellant had allowed fintech companies to use its NBFC licence and payment infrastructure while the fintech entities effectively funded, operated and controlled the lending business through mobile applications. The agreements showed that functions integral to lending, customer onboarding, collection of documents, operation of disbursement and repayment systems, monitoring and recovery were placed in the hands of the service providers, contrary to the RBI outsourcing framework which did not permit outsourcing of core management and loan sanction functions. The Tribunal further found that the lending model involved upfront deduction of substantial processing charges, repeated short-term lending at exorbitant effective rates, and coercive recovery practices through tele-callers using borrowers' personal data. In that factual setting, the profits earned through the model were prima facie linked to cheating, extortion and unlawful recovery practices, and the appellant was found to have facilitated and participated in the mechanism that generated such proceeds. [Paras 39, 42, 43, 44, 45]

The Tribunal upheld the finding that the appellant was involved in the offending lending structure and that the attached amount was liable to be treated as proceeds of crime.

Final Conclusion: The Tribunal upheld the confirmation of the provisional attachment order and dismissed the appeal. It held that the appellant's non-inclusion as an accused in the predicate FIRs did not bar attachment, and that the appellant's lending arrangements with fintech entities facilitated generation and receipt of proceeds of crime.

Provisional attachment - Computation of the proceeds of crime - Tracing of tainted funds - Deduction from attached value - Reverse burden of proof - cheating and commission of other offences under IPC - Reasons to believe for provisional attachment - non-speaking and mechanical.

Proceeds of crime quantification - HELD THAT:- The Tribunal held that the Provisional Attachment Order itself disclosed the basis of computation and the manner in which the amount recoverable from the appellant had been arrived at after taking note of the relevant figures. The appellant's plea for deduction of the amount allegedly sourced from Dhanasamridhi Finance Pvt. Ltd. was rejected because the material relied on did not establish that the amount formed part of the advances treated as proceeds of crime, and the advance of Rs. 34.61 crores had in any event been directly paid to the Noida Development Authority during an earlier period. The plea for proportionate deduction on the footing that CMPL had also received funds from other entities was also rejected, the Tribunal finding that only the amount traced to Unitech had already been taken as proceeds of crime. The further claim regarding payment to Mahinder Kumar Sen and the higher suppression figure mentioned in the Noida Development Authority letter was likewise rejected on the ground that those amounts were either not part of the quantified advance or had already been fairly accounted for on the basis of the police report. The Tribunal accordingly found no error in the quantification and treated the appellant's objections as resting on misstatement of facts. [Paras 30, 31, 32, 33, 34]

The quantified proceeds of crime were upheld and the factual challenge to the attachment failed.

Reverse burden of proof - Reasons to believe for provisional attachment - Speaking order - HELD THAT: - The Tribunal held that Section 24 places a reverse burden of proof on the person concerned and that the statutory scheme contemplates notice and opportunity under Section 8(1) to explain the source of acquisition and show that the property is not involved in money-laundering. Since the respondent had produced material sufficient to make out a prima facie case and to identify the proceeds, no infirmity arose from the appellant's reliance on Sections 24(b) and 8(2). The objection under Section 5(1) was also rejected because the reasons to believe for attachment were found to be borne out from the discussion in the Provisional Attachment Order and the material underlying the determination of the proceeds of crime. As to the contention that the impugned order was non-speaking, the Tribunal held that it had itself examined each issue in detail and passed a speaking order, with the result that no substance survived in that challenge. [Paras 35, 36, 37]

The legal challenge to the provisional attachment and confirmation order was rejected.

Final Conclusion: The Tribunal found no merit in either the factual challenge to the quantification of proceeds of crime or the legal challenge to the provisional attachment. The appeal was accordingly dismissed.

Reverse Charge Mechanism -Taxability of service - commission and perquisites paid by a company to its whole-time directors - Notification No. 30/2012 dated 20.06.2012 as amended vide notification No. 45/2012 dated 07.08.2012 - Employer-employee relationship - Reverse charge on director's services - Whether performance commission paid by the appellant company to its directors constitute “service” or not and accordingly “attracts service tax or not” ? -HELD THAT: - This is contrary to Section 17(1) of the Income Tax which expressly includes within of the meaning of salary, “ fee, commissions, perquisites or profits in lieu of or in addition to any salary or wages. Further, this issue is no more res integra and has been settled by various Benches of the Tribunal including the Division Bench of CESTAT, Ahmedabad [2024 (9) TMI 1549 - CESTAT AHMEDABAD] and [2024 (3) TMI 10 - CESTAT AHMEDABAD].

The Tribunal found, on the basis of the board resolutions and Form-16 issued by the company, that the concerned directors were appointed as working or whole-time directors and their remuneration was treated under the salary framework with deduction of tax at source. It held that the demand proceeded on an erroneous assumption that any payment to directors beyond fixed monthly salary necessarily represents consideration for an independent service. Referring to the statutory concept of salary and to the exclusion of services rendered by an employee to the employer in the course of employment, the Tribunal held that variable remuneration such as commission, perquisites or performance incentive paid to whole-time directors does not lose its character as salary merely because it is not a fixed component. In the absence of contrary evidence, the employer-employee relationship stood established, and the settled Tribunal view on identical facts was followed. [Paras 6]

The service tax demand on remuneration paid to the whole-time directors was held unsustainable; interest and penalties also could not survive.

Final Conclusion: Following the settled Tribunal view, the Tribunal held that remuneration paid to whole-time directors in the course of employment could not be treated as consideration for taxable services under reverse charge. The impugned order was therefore set aside and the appeal was allowed with consequential relief in accordance with law.

Multi-level marketing - taxable service under Business Auxiliary Service Or Not - Sale of goods vis-a-vis taxable service - Demand based on Form 26AS and income-tax data - Extended period of limitation.

Multi-level marketing - Sale of goods vis-a-vis taxable service - HELD THAT: - The Tribunal accepted the appellant's case that the arrangement essentially involved purchase of goods from the company and sale thereof to other persons introduced by the appellant. Following Tulip Global Pvt. Ltd. v. CCE Jaipur [2019 (6) TMI 684 - CESTAT NEW DELHI] and its own earlier decision in Imam Hussain Devan v. Commissioner, CGST & Central Excise, Bolpur [2026 (2) TMI 784 - CESTAT KOLKATA], it held that such activity is primarily one of sale of goods and does not amount to rendering taxable service under Business Auxiliary Service. [Paras 13, 15, 16]

The impugned demand was unsustainable on merits since the activity was treated as sale-based multi-level marketing and not as taxable service.

Form 26AS based demand - Arbitrary quantification - Corroborative evidence - HELD THAT: - The Tribunal found that, for 2016-17, the department had simply doubled the figure taken for the previous year and had adopted a similarly unsupported basis for part of 2017-18, which was impermissible. It further noted that the figures available from Form 26AS were materially different and that the confirmed demand far exceeded even the amount emerging from the department's own tabulation. Relying on the line of decisions noticed through Tabassum Enterprises v. C, CGST & CX [2025 (9) TMI 1275 - CESTAT KOLKATA], the Tribunal held that mere reliance on CBDT data or Form 26AS, without independent corroboration of taxable service and correct valuation, cannot sustain the demand. [Paras 11, 12, 14, 16]

The quantified demand was held legally unsustainable for want of a lawful and verified basis.

Extended period of limitation - Suppression of facts - Third-party data - HELD THAT: - Following the earlier decision of the Bench in Tabassum Enterprises v. C, CGST & CX (supra) and the decision referred to in Imam Hussain Devan v. Commissioner, CGST & Central Excise, Bolpur (supra), the Tribunal held that a notice founded solely on third-party income-tax data, without proper verification and without cogent material showing suppression or wilful misstatement, cannot justify invocation of the extended period. The demand was therefore also barred by limitation. [Paras 14, 15, 16]

The demand was held hit by limitation and could not be sustained on the extended period.

Final Conclusion: The Tribunal held that the impugned demand was unsustainable both on merits and on limitation. The order confirming service tax was set aside and the appeal was allowed with consequential relief in accordance with law.

Demand of service tax on liquidated damages and penalty - Declared service of tolerating an act - Service tax on dead rent - Renting of immovable property for residential use - Reverse charge liability where tax already paid by service provider - Compensation for Breach of Contract.

Taxability of liquidated damages - Declared service of tolerating an act - HELD THAT: - The Tribunal held that this issue stood covered in the appellant's own earlier case [2020 (12) TMI 912 - CESTAT NEW DELHI], where it had been held that recovery of liquidated damages, penalty or similar amounts for breach of contractual terms is not consideration for any service and does not amount to agreeing to tolerate an act under Section 66E(e). Following that decision, the demand under this head was held to be unsustainable. [Paras 10]

The demand of service tax on liquidated damages or penalty was set aside.

Service tax on dead rent - HELD THAT: - The Tribunal found from the record that the appellant had been paying dead rent since 2005 and that no agreement had been entered into after 01.04.2016. As the payments were made under earlier agreements, and the Tribunal's decision in Madhya Pradesh State Mining Corporation [2023 (4) TMI 1075 - CESTAT NEW DELHI] governed the point, the demand could not be sustained. [Paras 10]

The demand on dead rent was held not sustainable and was set aside.

Renting of immovable property for residential use - Consistency in departmental stand - HELD THAT: - The Tribunal recorded that the properties were provided for residential use of employees at site. It also noted that for the earlier period the adjudicating authority had already dropped the same demand and that the department had not appealed against that order. In those circumstances, the department could not adopt a contrary position for the subsequent period. [Paras 10]

The demand under renting of immovable property service was set aside.

Reverse charge liability where tax already paid by service provider - HELD THAT: - The Tribunal found that the service provider had deposited 100% of the tax in the Government treasury and the appellant had reimbursed that tax to the service provider. On that factual position, it held that no tax liability survived against the appellant on the same service. [Paras 10]

The demand on security and detective agency services was set aside.

Conceded interest liability - HELD THAT: - The appellant expressly conceded the interest demand and did not contest it. The Tribunal therefore confirmed only that amount and did not formulate any independent legal principle on limitation or valuation. [Paras 10, 11]

The interest demand for late payment of service tax was confirmed.

Penalty - HELD THAT: - After substantially setting aside the substantive tax demands and confirming only the conceded interest amount, the Tribunal held that penalty was not imposable in the facts and circumstances of the case. [Paras 11]

No penalty was held leviable.

Final Conclusion: The Tribunal set aside all service tax demands except the conceded interest liability for late payment of service tax. It also held that no penalty was imposable in the facts and circumstances of the case.

Service under Section 37-C - registered post and speed post as modes of service - substituted service by pasting on the factory gate - computation of limitation from date of knowledge of service - condonation of delay under Section 35 vis-a -vis Section 5 of the Limitation Act - The High Court [2013 (4) TMI 131 - ALLAHABAD HIGH COURT] affirmed that service by speed post followed by pasting on the factory gate constituted valid substituted service under Section 37-C - delay not satisfactorily explained for condonation, - Appeal dismissed as barred by limitation. - HELD THAT:- Delay was condoned and the special leave petitions were dismissed, the Court finding no good ground or reason to interfere with the impugned judgments/orders passed by the High Court.

Unchallenged independent finding - Validity of the show cause notice, issued beyond the normal period of limitation - extended period - want of suppression - HELD THAT: - The Court noted that, apart from deciding the matter on merits, the Tribunal had also recorded an independent finding that the show cause notice was beyond the normal limitation period of one year and that the extended period could not be invoked as there was no suppression. Since the substantial questions of law proposed before the High Court did not assail that finding at all, the unchallenged limitation finding remained unaffected. On that basis, the Court held that no good reason was made out to entertain the petition. [Paras 2, 3, 4]

The petition was not entertained and the special leave petition was dismissed.

Final Conclusion: The special leave petition was dismissed as the Tribunal's independent finding on limitation and non-availability of the extended period had not been challenged before the High Court.

Entitlement to interest on delayed refund under Section 11BB, from the expiry of three months from the date of refund application - Commencement of interest under refund provision - Interest on interest.

Interest on delayed refund - Refund application date - Deeming fiction. - HELD THAT: - The Tribunal held that the governing principle under Section 11BB is that interest becomes payable if the refundable amount is not paid within three months from the date of receipt of the refund application under Section 11B. The explanation deeming an appellate order of refund to be an order under Section 11B(2) does not postpone the commencement of interest. Since the refund or rebate application had been filed on 15.11.2007 and the appropriated amount was released only on 29.07.2008, interest became payable from 15.02.2008 on the unpaid refunded amount. The Commissioner (Appeals) erred in treating the date of the appellate order as the starting point for interest. [Paras 4]

The appellant was held entitled to statutory interest at the prescribed rate of 6% on the appropriated refund amount for the period from 15.02.2008 to 29.07.2008.

Interest on interest - Statutory entitlement - HELD THAT: - The Tribunal held that the Central Excise Act, 1944 contains no provision authorising payment of interest on delayed payment of interest. It further observed that the decision in Sandvik Asia[2006 (1) TMI 55 - SUPREME COURT] was explained by the Supreme Court as one granting compensation in the facts of inordinate delay and not as laying down a general rule permitting interest on interest. Where the statute specifically governs refund interest, the Tribunal, being a creature of statute, cannot award any further interest not contemplated by the enactment. [Paras 4]

The claim for interest on delayed payment of interest was rejected.

Final Conclusion: The appeal was partly allowed. The appellant was held entitled to statutory interest on the withheld refund amount from 15.02.2008 till 29.07.2008, but the separate claim for interest on delayed payment of that interest was rejected.

Applicability of the provisions of Rule 6 of Cenvat Credit Rules (CCR) - Credit of input services used for setting up and activities connected with the co-generation power plant - Definition of ‘excisable goods’ given in Section 2(d) -HELD THAT: - The Tribunal held that the demand had been founded entirely on the assumption that electricity was an excisable commodity and, being not chargeable to duty, had to be treated as exempted goods for the purposes of Rule 6. Relying on Gularia Chini Mills Vs UOI [2013 (7) TMI 159 - ALLAHABAD HIGH COURT], as affirmed by the Supreme Court in [2015 (10) TMI 566 - SUPREME COURT], it held that electrical energy is not excisable goods under Section 2(d) and therefore cannot be treated as exempted goods for attracting Rule 6. Once that basis failed, the demand for reversal of credit under Rule 6(3) could not survive. The Tribunal accordingly did not examine the appellant's other contentions on use of services for setting up or modernization, limitation, or penalty. [Paras 6, 7]

The demand, interest and penalty were held unsustainable since Rule 6 was inapplicable where the alleged exempted output was electricity.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal. It held that, since electricity is not excisable goods and cannot be treated as exempted goods for Rule 6, the recovery of input service credit, with interest and penalty, was without basis.

CENVAT credit on service tax paid for outward transportation of goods sold on FOR destination basis - Stock transfer to sister units - place of removal.

Place of removal - FOR destination sales - CENVAT credit on outward GTA services - HELD THAT: - As far as the CENVAT credit is concerned, up to 01.04.2008 the service tax paid on transportation of goods from the place of removal was allowed as an input service. From 01.04.2008 only cost of transportation up to the place of removal is allowed as CENVAT credit. The period of dispute in this case pertains to after 01.04.2008. The entitlement of CENVAT credit where goods are sold on FOR destination basis to buyers has been decided by the Larger Bench of Tribunal inRamco Cement Limited vs. Commissioner of Central Excise, [2023 (12) TMI 1332 - CESTAT CHENNAI-LB]. Where the goods are sold on FOR destination basis, it has been decided that the place of removal shall be the buyer’s premises. Respectfully following the decision, we hold that the CENVAT credit of Rs. 1,71,60,891/- will be available to the appellant in respect of the CENVAT credit on GTA services availed to transport goods sold on FOR destination basis.

The denial of credit on outward GTA services used for FOR destination sales was set aside.

Stock transfer to sister units - Place of removal - Assessable value - CENVAT credit of service tax paid on outward GTA services for transport of clinker to sister units - HELD THAT: - In the case of transfer of clinker to sister units, there was no sale and the entitlement to credit depended on the place of removal adopted by the appellant for the same transaction. The Tribunal examined the stock transfer invoices and found that excise duty had been computed on the value of the goods first, while freight to the sister units was shown separately and not included in the assessable value. This showed that the factory gate had been treated as the place of removal. Once that was so, credit on GTA service used beyond the factory gate was not available. The Tribunal also rejected the contention that the issue fell outside the show cause notice, holding that denial of the entire GTA credit had been proposed and the appellant's own defence made the place of removal issue relevant.

The decision of the Larger Bench in this regard was based on the decision of the Supreme Court in the case of CCE, vs. Roofit Industries [2015 (4) TMI 857 - SUPREME COURT], in which the Supreme Court held that in the case of FOR destination sale where the ownership and risk in transit remains with the seller till the goods are accepted by the buyer on delivery. Until such time of delivery, the seller remains the owner of the goods retains the right of the disposal and, therefore, in such transactions the buyer’s place become a place of removal. In case of clinker there was no seller or buyer or sale. Therefore, what needs to be seen is whether the appellant had treated its factory premises as the place of removal or the premises of its sister units as the place of removal.

It further held that the assessee could not adopt one place of removal for payment of duty and a different place of removal for availing credit in respect of the same transaction. [Paras 8, 9, 10, 11]

The denial of credit on GTA services for transfer of clinker to sister units was upheld.

Recalculation of interest and penalty - HELD THAT: - Since the credit demand was sustained only in part, the consequential liability to interest and penalty could not remain in the form determined in the impugned order. The Tribunal therefore directed that both be recalculated in accordance with the extent of credit ultimately disallowed. [Paras 12]

The matter was remanded to the Commissioner only for recalculation of interest and penalty in line with the modified demand.

Final Conclusion: The appeal was partly allowed. Credit on outward GTA services for FOR destination sales was held admissible, while credit on transportation of clinker to sister units was disallowed since the factory gate had been treated as the place of removal; the matter was remanded only for consequential recalculation of interest and penalty.

Claim for reimbursement of additional cost on account of variation in tax rates -barred by limitation - Patent illegality - Reasoned arbitral award - Non-consideration of material defence - absence of evidence to establish that the taxes at the enhanced rates were actually paid.

Limitation in arbitral claims - Cause of action - HELD THAT: - The Court held that the cause of action arose when the additional cost incurred exceeded the contractual threshold of rupees one crore, which occurred in 2010. The respondent thereafter invoked the contractual mechanism under Article 11 and, upon rejection of the claim, proceeded to arbitration. On that basis, the tribunal's conclusion that the claim was not barred by limitation was found to be correct. [Paras 6]

The objection of limitation was rejected.

Patent illegality - No evidence - Additional cost - HELD THAT: - The Court found that, apart from tabulated statements, the respondent had led no evidence to establish either the change in tax rates after the proposal due date or actual payment of tax at the enhanced rates. Returns and proof of deposit were not produced. Since Article 11 required proof that additional cost had in fact been incurred, the absence of such evidence destroyed the foundation of the claim.

In Ssangyong Engg. & Construction Co. Ltd. v. NHAI [2019 (5) TMI 1879 - SUPREME COURT], wherein it was held as under: “41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders [Associate Builders v. DDA [2014 (11) TMI 1114 - SUPREME COURT], while no longer being a ground for challenge under “public policy of India”, would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse.”

The Court further noted that, for the later financial years, there was no proof that the contractual deduction up to rupees one crore per accounting year had been made in accordance with Article 11. Applying the principle that a claim statement by itself is not evidence, the Court held that allowing the claim on that basis rendered the award perverse and patently illegal. [Paras 9, 10, 11, 16]

The award was held unsustainable for having granted the claim without evidence.

Reasoned arbitral award - Non-consideration of material defence - Section 31(3) - failed to satisfy the requirement of a reasoned award - HELD THAT: - Section 31(3) of the Act mandates a reasoned award. The law is well settled that the requirement of Section 31(3) of the Act is not a mere formality. The reasoning in an appropriate case can be implied upon a fair reading of the award and the documents referred to therein. Reference is to the decision of the Supreme Court in Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd. [2019 (12) TMI 842 - SUPREME COURT], wherein it was held as under: “34. The mandate under Section 31(3) of the Arbitration Act is to have reasoning which is intelligible and adequate and, which can in appropriate cases be even implied by the courts from a fair reading of the award and documents referred to thereunder, if the need be. The aforesaid provision does not require an elaborate judgment to be passed by the arbitrators having regard to the speedy resolution of dispute.”

On reading the award as a whole, the Court found no discussion of the material on which the claimed amount was granted and no treatment of the petitioner's defence that service tax was not leviable in view of the notifications relied upon. Whether those notifications applied was a material issue requiring adjudication, but the tribunal neither noted nor decided it. The failure to consider that defence, coupled with the absence of reasoning on the evidence, made the award unreasoned and contrary to public policy. [Paras 12, 13, 14, 15, 16]

The award was set aside as an unreasoned award that ignored a material defence.

Final Conclusion: The Court upheld the tribunal's finding on limitation, but set aside the award on the ground that the claim for additional tax cost had been allowed without evidence and by an award lacking reasons, including failure to consider the petitioner's material defence on service tax. Questions on the substantive scope of Article 11 in relation to MAT, FBT and ST were left open.

Negotiable Instruments Act - Dishonour of the cheques and issuance of the statutory notice - Maintainability of complaint under section 138, after appointment of Provisional Liquidator - Account maintained by drawer - Directors becoming functus officio on provisional liquidation - essential ingredients - legal impossibility - control over bank account - drawer liability - winding up. - HELD THAT: - The Court held that appointment of a Provisional Liquidator does not dissolve the company, but displaces the board and renders the directors functus officio, with business operations, assets and contractual dealings thereafter remaining under the supervision and authority of the liquidator. Once that position arose, the petitioner, as director, had neither legal nor practical control over the company's bank accounts and could not ensure encashment of the cheques or comply with the demand notice.

The use of expression “an account maintained by him” in section 138 NI Act also suggests one of the prerequisite ingredient for constituting an offence thereunder is that accused must have control over the account.

In view of the settled legal position as rendered in M/S PEC LTD [2026 (5) TMI 575 - DELHI HIGH COURT] and M.L Gupta [2006 (11) TMI 346 - HIGH COURT OF DELHI] the appointment of a Provisional Liquidator, occurring prior to the dishonour of the cheques and the issuance of the demand notice, effectively divested the petitioner of his managerial authority and control over the company’s bank accounts. Since the statutory mandate of Section 138 of the N.I. Act requires the account to be “maintained” by the accused at the time of the offence, the transition of executive power to the Provisional Liquidator created a legal and practical impossibility for the petitioner to satisfy the demand or operate the accounts. Concomitantly, as the petitioner was neither in charge of the company’s affairs nor capable of ensuring the encashment of the cheques on the date the cause of action crystallized, therefore, the essential ingredients of the offence are not met, and the complaint against the petitioner is held to be legally non-maintainable.

Since the appointment of the Provisional Liquidator had preceded the dishonour of the cheques as well as the demand notice, the essential ingredients of the offence were not satisfied and the complaint against the petitioner was legally non-maintainable. [Paras 27, 28, 29, 30, 31]

The complaint and all consequential proceedings, insofar as they concerned the petitioner, were quashed.

Final Conclusion: The petition was allowed. Since the Provisional Liquidator had been appointed before the cheques were dishonoured and before the statutory notice was issued, the petitioner-director had ceased to control the company's affairs and bank accounts, and the complaint under Section 138 of the Negotiable Instruments Act was held not maintainable against him.

Negotiable Instruments Act, 1881 - Dishonour of cheque - entitlement to be heard before cognizance - Pre-cognizance hearing - statutory scheme of speedy disposal - Challenged to cognizance in proceedings under Section 138 - Power of Court to try cases summarily. - HELD THAT: - The Apex court “being Concerned with the large number of cases filed under Section 138 of the Negotiable Instruments Act, 1881 pending at various levels,” “decided to examine the reasons for the delay in disposal of these cases”. For which, suo motu writ petition (criminal) captioned as "Expeditious Trial of Cases under Section 138 of the NI Act, 1881" was registered and the same was disposed of by the order of constitution bench dated 16.04.2021 in Expeditious Trial of Cases Under Section 138 of NI Act, 1881, In re Expeditious Trial of Cases Under Section 138 of NI Act, 1881, In re, [2021 (4) TMI 702 - SUPREME COURT]".

The Court held that, in view of Sanjabij Tari vs. Kishore S. Borcar & Another [2025 (9) TMI 1634 - SUPREME COURT], there is no requirement of issuing summons to the accused at the pre-cognizance stage in complaints under Section 138 of the Negotiable Instruments Act, and the statutory scheme of the Act for expeditious disposal cannot be diluted by directing reconsideration of cognizance on such objection. Although the observation of the trial court that several opportunities had been granted to the accused was found to be de hors the record, that defect was not treated as sufficient to invalidate cognizance. The Court accepted that criminal prosecution causes hardship and noted the principle in Harshendra Kumar D. v. Rebatilata Koley [2011 (2) TMI 1278 - SUPREME COURT] that, in an appropriate case, the High Court may look into material having significant bearing at the prima facie stage; however, on the facts of the case, it was not persuaded to interfere with the cognizance order. The Court clarified that the grounds taken in the accused's objection could be urged during trial, and the trial court was to proceed in the light of the directions noticed in Sanjabij Tari regarding recording of the accused's responses and determining whether the complaint should be tried summarily. [Paras 8, 10, 11, 12]

The revision was dismissed, with liberty to the accused to press the grounds raised in the objection before the trial court during the course of trial, and without any expression of opinion on the merits of the rival stands on maintainability.

Final Conclusion: The High Court declined to interfere with the cognizance order in the cheque dishonour complaint and held that the accused's objections could be raised before the trial court during trial in accordance with the procedure indicated by the Supreme Court. The revision was accordingly dismissed without any opinion on the merits of the rival stands on maintainability.

Negotiable Instruments Act - Dishonour of the cheques - Presumption under Sections 118 and 139 - Security cheque - Legally enforceable debt - Revisional interference with concurrent findings - Appellate power to enhance sentence.

Presumption under Sections 118 and 139 of the Negotiable Instruments Act - Security cheque - HELD THAT: - In the case on hand, for the escrow agreement Yahoo Limited is not made as a party. Therefore, it is a private affair between the accused and the Yahoo Limited. Having not examined anybody from Yahoo Limited as a witness to establish that there was no liability at all of the accused to the complainant Company, the plea taken by the accused that there was no legally recoverable debt under Exhibits P-2 and P-3 and cheques which have been given as security has been misused by the complainant cannot be countenanced in law.

The Court held that the cheques belonged to the accused-company, bore the signature of accused No. 2, and were dishonoured for insufficiency of funds. The statutory notice referred to the outstanding liability and the acknowledgment of debt. Though some invoices stood in the name of Yahoo Limited and a notice had also been issued to Yahoo Limited, the accused failed to establish by evidence that the entire liability had been taken over by Yahoo Limited or that the complainant had accepted performance from such third party so as to extinguish the liability of the accused. Yahoo Limited was not a party to the escrow agreement relied on by the accused, and no witness from Yahoo Limited was examined. The Court further held that even if the cheques were issued as security, that by itself would not exclude Section 138 once the liability had matured and remained unpaid. The accused also took no positive action alleging misuse of security cheques. In the absence of cogent rebuttal, the statutory presumption in favour of the complainant remained unrebutted. Pendency of civil proceedings or proceedings against Yahoo Limited did not bar the criminal prosecution, and in revision the High Court would not reappreciate concurrent factual findings in the absence of perversity. [Paras 51, 52, 53, 54, 55]

The conviction of the accused for the offence under Section 138 was affirmed.

Appellate power to enhance sentence - HELD THAT: - The Court held that, while maintaining the conviction, the appellate court had no authority to suo motu enhance the sentence in the accused's appeal in the absence of any challenge by the complainant to the sentence imposed by the trial court. The enhancement of the default sentence from three months to one year was therefore unsustainable. [Paras 56, 57, 58]

The enhancement of default sentence by the First Appellate Court was set aside and the sentence imposed by the Trial Magistrate was restored.

Final Conclusion: The revision was allowed in part. The conviction under Section 138 of the Negotiable Instruments Act was maintained, but the appellate court's enhancement of the default sentence was set aside and the sentence imposed by the trial court was restored.