TMI Tax Updates e-Newsletter
May 15,2026

Ex parte adjudication - Opportunity of reply to show cause notice- Principles of natural justice - Validity of the impugned adjudication orders - Seeking an opportunity to place its reply and material before the authority, including its objection that two orders had been passed for the same tax period on the same ground. -HELD THAT: - The Court noted that all the impugned orders had admittedly been passed ex parte. In view of the petitioner's assertion that two sets of orders related to the same tax period and involved the same ITC mismatch ground, and that the factual position could be demonstrated by placing material before the authority, the Court held that the matter required reconsideration from the stage of reply to the show cause notice. The remand was therefore ordered by putting the petitioner on terms, while leaving all contentions on merits open. [Paras 5, 6]

The impugned orders were set aside and the proceedings were remitted to the adjudicating authority for fresh consideration from the stage of reply to the show cause notice, subject to payment of 10% of the tax demand under the specified annexures.

Final Conclusion: The writ petition was disposed of by setting aside the ex parte adjudication orders and remitting the matter for fresh adjudication after giving the petitioner an opportunity to respond, subject to the condition imposed by the Court. All contentions on merits were left open.

Rejection of the Waiver application - filed beyond three months from the notified date - interest and penalty waiver - Condonation of delay - Directory time limit for filing waiver application. - HELD THAT: - The Court held that the notification permitted a person seeking waiver to file an application within three months from the date notified under sub-section (1) of Section 128A, but the provision employed the expression "may" and was therefore enabling and directory, not mandatory. Since the authority rejected the application only on the footing that the three-month period was an inflexible bar, it misdirected itself in law. On that construction, the rejection could not be sustained and the application was required to be considered on merits in accordance with law. [Paras 5]

The order rejecting the waiver application was quashed and the authority was directed to consider the application afresh in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the rejection of the waiver application and directing its consideration on merits. Till such consideration, the show cause notice, summary notice and the order in original were kept in abeyance.

Reopening of assessment - Reason to believe - Change of opinion - Disclosure of primary facts - tangible material - Amount accrued from the AOP - Profit sharing v. revenue sharing - Overriding title

Reopening of assessments for the relevant assessment years - Reason to believe - Change of opinion - Disclosure of primary facts - Recorded reasons- fundamental character of the receipt from the association -HELD THAT: - The Court held that the validity of reopening had to be tested on the basis of the reasons recorded under Section 148 and not by reference to the eventual merits of reassessment. Mere disclosure by the assessee of the existence of the AOP and receipt of income from it did not amount to a full disclosure of the primary facts material to the controversy, since the crucial feature of the arrangement under Clause 7, namely entitlement to 35% of gross sale receipts, had not been specifically brought to the Assessing Officer's notice in the original proceedings. On a close reading of the original assessment orders, the Court found that no opinion had in fact been formed on the true nature of the receipt from the AOP, and therefore the plea of change of opinion was unavailable.

The impounded documents and the director's statement obtained during survey constituted fresh tangible material giving rise to a bona fide belief that taxable income had escaped assessment. The Court further held that the High Court was wrong in sustaining reopening for AY 2008-09 by relying on material not forming part of the recorded reasons, since reopening must stand or fall on those reasons alone. [Paras 112, 113, 116, 117, 118]

The notice reopening assessment for AY 2007-08 was upheld and the challenge to reopening for AY 2008-09 failed, though the High Court's reasoning in the latter case was disapproved.

Amount accrued from the AOP -Profit sharing v/s revenue sharing - Overriding title - Business receipt - Interpretation of contractual clause - Whether amount received by the assessee from the AOP under Clause 7 was taxable in its hands for AY 2008-09 and AY 2009-10 as a business receipt and not exempt as a share of profit? - HELD THAT: - The Court held that interpretation of Clause 7 of the AOP agreement was a question of law. On a plain reading of that clause, the assessee was entitled to withdraw 35% of the gross sale proceeds upfront, while all project expenses were to be met only from the remaining 65% share. Since the assessee's entitlement arose at the stage of gross receipts and was not contingent upon the ascertainment of net profit, the amount could not be characterised as a share of profit.

Applying the principle of overriding title, the Court held that to the extent of 35% the receipts were diverted to the assessee before they could become income in the hands of the AOP. The assessee's share, being insulated from expenses, lacked the essential character of profit and was in substance revenue or business receipt. The contrary view taken by the ITAT and the High Court, based on earlier proceedings concerning the AOP, was therefore erroneous. [Paras 123, 124, 125, 126, 127]

The assessee's 35% share from the AOP was held taxable in its hands for AY 2008-09 and AY 2009-10 as a business receipt, and the Revenue's appeal on this issue was allowed.

Final Conclusion: The Court upheld the reopening of assessment for AY 2007-08 and AY 2008-09, holding that the Revenue had acted on fresh tangible material and not on a mere change of opinion. It further held that the assessee's 35% entitlement under Clause 7 of the AOP agreement was a share of gross revenue diverted by overriding title and was therefore taxable in the assessee's hands as a business receipt for AY 2008-09 and AY 2009-10.

Deduction of interest paid on borrowed funds u/s 36(1)(iii) - Interest on borrowed capital - Commercial expediency - Purpose of business - Deduction of interest paid on borrowed capital denied merely because the borrowed funds were routed through a subsidiary or group concern

HELD THAT: - The Court held that Section 36(1)(iii) turns on three elements: interest, borrowed capital, and use for the purposes of business. It emphasised that the expression for the purpose of business is of wider import and that the enquiry is to be made from the standpoint of commercial expediency, not by asking whether the advance directly earned profits for the assessee.

The definition of “interest” in Section 2(28A) means “interest payable in any manner in respect of any moneys borrowed or debt incurred”. But for Section 36(1)(iii), “interest” is restricted to that on money borrowed and not on debt incurred. The essence of interest is that it is a payment which becomes due because the creditor has not had his money at his disposal. It may be regarded either as representing the profit he might have made if he had had the use of his money, or conversely, the loss he suffered because he had not that use. The general idea is that he is entitled to compensation for the deprivation.

The provisions of Section 36(1)(iii) concern capital borrowed and not other debts or liability. A loan of money undoubtedly results in a debt, but every debt does not involve a loan. Liability to pay a debt may arise from diverse sources and a loan is one of such sources. The legislature has, under this clause, permitted as an allowance interest paid on capital borrowed for the purposes of the business; and the capital, in this context, means money and not any other asset purchased on credit [Bombay Steam Navigation Co. Pr. Ltd.[1964 (10) TMI 12 - SUPREME COURT]].

This court made an analysis of Section 36 of the Income Tax Act, 1961, more particularly, Section 36(1) (iii) thereof. After referring to its earlier decision in S.A. Builders [2006 (12) TMI 82 - SUPREME COURT] it has been opined that the court should examine the transfer of borrowed funds from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits.

After referring to its earlier decision in S.A. Builders [2006 (12) TMI 82 - SUPREME COURT] it has been opined that the court should examine the transfer of borrowed funds from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits.

In the facts of that case, it was held that the assessee was entitled to claim allowance of interest on the borrowed funds invested in a sister concern for acquiring controlling interest.

On that test, the High Court erred in treating the utilisation of funds through the subsidiary as outside the assessee's business and in rejecting the Tribunal's view. Accepting the Tribunal's reasoning on the composite nature of the assessee's business and the business purpose of the borrowing, the Court held that the interest paid on the bank loan was allowable under Section 36(1)(iii). [Paras 18, 20, 21, 22, 25]

The assessee was held entitled to deduction of the interest paid on the borrowed capital under Section 36(1)(iii), and the High Court's contrary view was set aside.

Final Conclusion: The appeal was allowed. The Supreme Court set aside the High Court's judgment and declared that the assessee was entitled to deduction of the interest paid on the capital borrowed for the purposes of its business under Section 36(1)(iii).

Curative Petitions - High-Pitched scrutiny assessment - Role and powers of Local Committee under the Standard Operating Procedure - Right to opportunity of hearing before an administrative grievance committee - Local Committee not an alternative forum to appellate or dispute resolution proceedings

HELD THAT:- Application for listing Curative Petitions in open Court is rejected.

As per the office report, the present Curative Petitions are defective. Despite the defects being communicated to the learned counsel for the petitioner(s) by the Registry, the same have not yet been cured.

However, instead of rejecting these petitions for non-prosecution, we have gone through the same on merits.

In our opinion, no case to entertain these Curative Petitions is made out within the parameters indicated by this Court in the case of Rupa Ashok Hurra v. Ashok Hurra & Anr.,[2002 (4) TMI 889 - SUPREME COURT]

Curative Petitions are dismissed.

Validity of reassessment proceedings - Time-barred reassessment notices - Determination of applicable assessment year - Assessment Year 2015-16 -

HELD THAT: - The Court recorded the Revenue's concession that, in cases pertaining to Assessment Year 2015-16, notices issued or proposed to be issued for reassessment would be barred by time in light of Union of India & Ors. v. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)]. It held that if the instant matters are found to relate to that assessment year, the notices are liable to be struck down without any further adjudication. If, however, the matters relate to any assessment year other than 2015-16, the respondent-assessees would be entitled to raise all contentions permitted under the earlier order of this Court, and the High Courts must decide the cases accordingly. On that basis, the impugned judgments were set aside and the matters remitted for fresh determination confined in the first instance to the assessment year question. [Paras 4, 5, 6, 7]

The High Courts must first determine whether each matter pertains to Assessment Year 2015-16; if so, the notices are to be declared time-barred, and if not, the remaining issues are to be decided in terms of the earlier order of this Court.

Final Conclusion: The appeals were disposed of by setting aside the impugned judgments and remitting the matters to the jurisdictional High Courts. The High Courts were directed to first determine whether the cases relate to Assessment Year 2015-16, in which event the reassessment notices must be declared time-barred; otherwise, the remaining issues are to be considered in terms of this Court's earlier order.

Reopening of assessment - reason to believe - assumption of jurisdiction u/s 147 - reasons recorded - borrowed satisfaction - independent application of mind - tangible material - investigation report as basis for reopening - finality of assessment - delay of 487 days in filing this Special Leave Petition

As decided by HC [2024 (9) TMI 156 - DELHI HIGH COURT] mere reproduction of the report amounts to a 'borrowed satisfaction' and is insufficient. The reasons must speak for themselves and show the application of mind by the AO to the material before assuming jurisdiction u/s 147; that requirement is absent on the facts. In consequence, the AO has not acquired or recorded material which could justify reopening the assessment

HELD THAT:- No plausible and bona fide explanation to condone this inordinate delay.

Special Leave Petition is, accordingly, dismissed on the ground of delay.

Validity of order u/s 143 (3) r/w 144 (C) (13) r/w 144B - Department was not fully shared with the assessee and the record disclosed incomplete data - AO has relied on incomplete CBIC data as well as entry wise returns were not shared with the assessee to make its case before the AO.

HELD THAT: - The Court held that when the assessing authority relies on information for completing assessment on a disputed issue, all material available with the Department must first be shared with the assessee. The order under challenge itself recorded that complete invoice-wise CBIC data could not be retrieved, and the adjudication had nevertheless proceeded on that basis. The Court further held that if the material is incomplete, no adverse presumption can be drawn against the assessee, and such incomplete material cannot be used unless supported by other material making it complete. Since the assessment had been completed despite absence of complete data and without full disclosure of the material in departmental custody, the order stood vitiated for breach of natural justice. [Paras 11, 13, 14, 15]

The final assessment order was set aside and the matter was remitted to the stage of passing final assessment after sharing the information in the Department's custody, including any additional material, and after affording appropriate opportunity to the assessee.

Final Conclusion: The writ petition was disposed of by setting aside the final assessment order for breach of natural justice. The revenue was permitted to proceed afresh from the stage of final assessment only after disclosing the material in its custody and granting due opportunity to the assessee.

Principles of natural justicedenied - Non-supply of relied upon material - Audi alteram partem - addition of unaccounted income from accommodation entry - material and information relied upon in the assessment order, including the JSK Server details, corroborative search material and the screenshot received from the Investigation Wing not supplied to the assessee for response

HELD THAT: - The Tribunal recorded that the addition was founded on material said to have emerged from the search on the J.M. Jain Group, including server data, corroborative documents and a screenshot from the Investigation Wing, but the Revenue could not show that these were ever furnished to the assessee. Since such undisclosed material was used against the assessee without affording an opportunity to explain or rebut it, the assessment suffered from a patent breach of natural justice. On that ground alone, without entering into the merits of the additions, the assessment order was held to be arbitrary, bad in law and legally unsustainable. [Paras 12, 13]

The assessment order was quashed for violation of natural justice.

Final Conclusion: The Tribunal allowed the appeal and quashed the assessment for Assessment Year 2022-23 on the ground that material relied upon against the assessee had not been supplied to him, resulting in violation of natural justice. In consequence, the issues on the merits of the additions were left open as academic.

Deduction u/s 80P(2)(a)(i) - Interest on deposits with nationalised banks -Operational funds and liquidity maintenance - whether Interest earned by the assessee, a credit co-operative society, on investments and balances kept with nationalised banks was eligible for deduction u/s 80P(2)(a)(i)?

HELD THAT: - The Tribunal held that the controversy stood covered by co-ordinate Bench decision Nagpur District Shala Karmachari Credit Cooperative Society [2026 (4) TMI 893 - ITAT NAGPUR] and RIL NMD EMP CO-OP. CREDIT SOCIETY LTD. [2025 (7) TMI 1120 - ITAT PUNE] allowing deduction u/s 80P(2)(a)(i) where a credit co-operative society places funds with banks in the course of its business for maintaining liquidity and operational requirements. On examining the facts in the light of those decisions, the Tribunal found the same principle squarely applicable and noted that no binding contrary precedent was shown by the Revenue. The interest from deposits with nationalised banks was therefore treated as attributable to the assessee's business of providing credit facilities to its members, and the disallowance was held to be unsustainable. [Paras 4, 6]

The assessee's claim for deduction under section 80P(2)(a)(i) on interest earned from investments with nationalised banks was allowed for all the assessment years under appeal.

Final Conclusion: The Tribunal allowed all four appeals and held that the assessee, being a credit co-operative society, was entitled to deduction under section 80P(2)(a)(i) in respect of interest earned on deposits and investments with nationalised banks for the assessment years in question.

Concessional tax rate for domestic company - Turnover threshold under Finance Act - assessee's claim to tax at 25% for A.Y.2018-19 - HELD THAT: - The Tribunal held that paragraph (e) of the 1st Schedule to the Finance Act, 2018 clearly provides that a domestic company is taxable at 25% for A.Y.2018-19 if its total turnover or gross receipts for F.Y.2015-16 do not exceed the prescribed threshold. It also noted that the return form for A.Y.2018-19 did not contain a specific column to disclose the turnover for that earlier year. In that situation, denial of the claim merely because such information was not available in the return form could not conclude the matter when the assessee relied on audited financial statements showing turnover below the threshold. The determinative course, therefore, was verification of the audited financials and other relevant material by the Assessing Officer. [Paras 6]

The issue was restored to the Assessing Officer to verify the turnover or gross receipts for F.Y.2015-16 and, if found not exceeding Rs. 50 crore, to apply tax at 25%.

Final Conclusion: The Tribunal set aside the impugned order and remanded the matter to the Assessing Officer for verification of the assessee's turnover or gross receipts for F.Y.2015-16. The appeal was allowed for statistical purposes.

Validity of Reassessment - period of limitation - Validity of notice under section 148 - Effect of TOLA on reassessment proceedings

HELD THAT: - The Tribunal noted that the notice under section 148 was admittedly issued on 13/04/2022 for A.Y. 2015-16. Relying on the Supreme Court decision in Union of India vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] Tribunal held that for A.Y. 2015-16, notices issued on or after 01/04/2021 were required to be dropped as they would not fall within the limitation period preserved under TOLA. Since the present notice was issued after that date, the reassessment proceedings were not sustainable in law. [Paras 5]

The notice under section 148, the order under section 148A(d), and the consequential assessment order were quashed.

Final Conclusion: The appeal was allowed on the legal ground that the reassessment initiated for A.Y. 2015-16 by notice issued on 13/04/2022 was time-barred. In consequence, the notice u/s 148, the order under section 148A(d), and the consequential assessment order were quashed, and the remaining grounds were left unadjudicated as academic.

Deduction for donation to political party - deduction u/s 80GGC - Genuineness of donation - initiation of penalty proceedings u/s 270A

Deduction for donation to political party - Genuineness of donation - Bogus donation - deduction u/s 80-GGC in respect of donation made to Kisan Party of India - HELD THAT: - The Tribunal held that though the payment was made through banking channels and receipts were produced, those facts by themselves were insufficient to establish a genuine donation. It relied on the material showing that the political party was covered in the search action concerning circuitous donation transactions, and on the surrounding circumstances arising from the assessee's own case, namely, absence of material showing any presence of that party in the assessee's place of residence and assessment, absence of any material explaining how the party's staff approached the assessee having no demonstrated nexus with the party's stated constituency, and the fact that this was the assessee's sole claimed philanthropic activity and constituted a substantial part of the year's profit. On this cumulative appreciation, the Tribunal held that the assessee's explanation did not inspire confidence and that the deduction was rightly denied. The decisions cited on behalf of the assessee were held to be distinguishable on facts or on the issue involved. [Paras 14, 15, 16, 17, 18]

The disallowance of the deduction claimed u/s 80-GGC was upheld.

Penalty proceedings u/s 270A - HELD THAT: - The Tribunal treated the ground directed only against initiation of penalty proceedings as premature in nature and therefore declined to entertain it. [Paras 19]

Final Conclusion: The Tribunal upheld the denial of deduction claimed under section 80-GGC for the alleged donation to Kisan Party of India, holding that the assessee had failed to establish the genuineness of the claim on the overall facts. The separate ground against initiation of penalty proceedings was dismissed as premature, and the appeal was dismissed.

Unexplained cash credit u/s 68 - Cash deposits during demonetisation - Recorded business receipts - Double taxation

Whether Cash deposits made during the demonetisation period out of cash sales already recorded in the audited books could be treated as unexplained cash credit merely because specified bank notes were accepted after 08.11.2016 in violation of RBI guidelines? - HELD THAT: - The Tribunal found that the assessee maintained day-to-day books, including cash book, ledger, VAT returns, stock register, bills and vouchers, and that these books were audited and accepted by the AO - It further noted that both the AO and the appellate authority had in substance accepted that the deposits represented cash sales effected during the demonetisation period, but rejected the explanation solely because the assessee was not authorised to receive specified bank notes under RBI guidelines.

Tribunal held that for the purpose of Section 68, the relevant enquiry is confined to the nature and source of the credit, and since the assessee had explained the source through recorded sales and supporting documents, invocation of Section 68 was unsustainable. It also held that once such sales had already been disclosed as part of turnover and were not doubted by the AO, bringing the same amount to tax again under Section 68 would amount to double taxation. [Paras 9]

The addition under Section 68 was held to be untenable and was directed to be deleted.

Final Conclusion: The Tribunal allowed the appeal and held that the cash deposits, having been explained as recorded cash sales supported by accepted books and other evidence, could not be assessed again as unexplained cash credit under Section 68 merely on the ground of receipt of specified bank notes during demonetisation.

Penalty u/s 270A - Defective penalty notice - Penalty for under-reporting and misreporting of income - Bona fide explanation and disclosure of material facts - denial of Principles of natural justice - non identification of applicable charge - as argued AO remained uncertain whether the case was one of under-reporting simpliciter or under-reporting in consequence of misreporting

Defective penalty notice - Specific charge u/s 270A - Under-reporting and misreporting of income - HELD THAT: - The Tribunal held that section 270A contemplates a sequential exercise - AO must first establish that the case falls within one of the contingencies of under-reporting, and only thereafter examine whether such under-reporting is in consequence of any specified form of misreporting.

In the present case, the show-cause notice alleged only under-reporting, while the penalty order proceeded on under-reporting in consequence of misreporting, and the order itself incorrectly interchanged the statutory limbs. AO also failed to specify the exact clause u/s 270A(2) and the exact clause u/s 270A(9) said to be attracted. Such absence of a definite charge was held to invalidate the proceedings, since non-communication of the precise default obstructed the assessee's opportunity to meet the allegation and resulted in breach of natural justice. [Paras 9]

The penalty proceedings were held invalid and untenable in law for want of a clear and specific charge under section 270A.

Bona fide explanation and disclosure of material facts - Exception to under-reported income - assessee's explanation for claiming exemption on the basis of Form 16 issued by the employer - HELD THAT: - The Tribunal found that the employer had issued Form 16 showing the amount as exempt under section 10 and had not deducted tax at source on that amount. In those circumstances, the assessee's explanation that he proceeded on an honest and bona fide belief based on the employer's certificate was accepted. The Tribunal further held that there was no intention on the assessee's part to deprive the Revenue of legitimate tax and that all material facts had been disclosed to substantiate the explanation. On that basis, the case was held to fall within section 270A(6)(a). The Tribunal also observed that penalty under section 270A is discretionary and not to be imposed routinely. [Paras 9]

The assessee was held entitled to the protection of section 270A(6)(a), furnishing an additional ground for deletion of the penalty.

Final Conclusion: The Tribunal allowed the appeal and directed deletion of the penalty levied under section 270A. It held that the penalty proceedings were vitiated by an uncertain and defective charge, and that in any event the assessee's explanation based on the employer's Form 16 was bona fide and supported by disclosure of all material facts.

Exemption u/s 11 - Form No. 10B having been filed after the prescribed form-filing date but before the due date for filing the return of income

HELD THAT: - The Tribunal found it undisputed that Form No. 10B was filed on 28.01.2021 and the return was filed thereafter on 04.02.2021, while the due date for filing the return for the relevant year stood extended to 15.02.2021. On that basis, it held that the statement in Form No. 10B had been furnished within the due date specified u/s 139(1).

Reading section 11(2)(a) with section 13(9), the Tribunal held that denial of exemption u/s 11 arises only where the statement is not furnished on or before the due date for furnishing the return. Since that condition was satisfied, the disallowance made while processing the return and the rejection of rectification were not sustainable, and the appellate order allowing the assessee's claim was rightly passed. [Paras 7]

Revenue's challenge failed, and the allowance of exemption u/s 11 to the assessee was upheld.

Final Conclusion: The Tribunal upheld the order of the appellate authority and held that, for AY 2020-21, Form No. 10B having been filed before the return and within the extended due date u/s 139(1), exemption u/s 11 could not be denied. The Revenue's appeal was accordingly dismissed.

Validity of reassessment notice - Limitation for reopening - Prior approval of specified authority - addition of bogus purchases

Validity of reassessment notice - Limitation for reopening - Prior approval of specified authority - HELD THAT: - The Tribunal held that the assessee's objection on limitation and absence of approval was contrary to the record. The notice issued u/s 148A(b) itself recorded prior approval of the Principal Commissioner with reference number and date, and the material showed that the notice and approval were both within the permissible period ending on 31.03.2022 for the relevant assessment year. In these circumstances, the statutory requirements under the substituted reassessment regime stood complied with and the challenge to the notice failed. [Paras 14, 15, 16, 17]

The legal challenge to the reassessment notice was rejected.

Bogus purchases - Burden to prove genuineness of purchases - restriction of addition to 15% of the disputed purchases - HELD THAT: - Tribunal found that the Assessing Officer had relied on specific material from the Investigation Wing and GST authorities showing that the suppliers were allegedly accommodation entry providers, and had also pointed out deficiencies in transportation evidence and in correlating the purchases with corresponding sales. It held that mere production of invoices, ledger entries, banking records and quantitative statements was not conclusive where serious doubt existed about the identity and capacity of the suppliers. At the same time, the Tribunal observed that addition of the entire purchase amount under section 69C was a serious consequence requiring thorough factual examination. Since the CIT(A) had restricted the addition to a profit element mainly on acceptance of sales and quantitative records, without adequately addressing these material deficiencies, the issue was restored to the Assessing Officer for fresh verification of movement of goods, purchase-to-sale nexus, rebuttal of GST findings and independent enquiries, with the burden placed on the assessee to substantiate the genuineness of the transactions. [Paras 25, 26, 27, 28, 29]

The order restricting the addition to 15% was not upheld and the entire issue of disputed purchases was remanded to the Assessing Officer for fresh adjudication.

Final Conclusion: The Tribunal upheld the validity of the reassessment proceedings for A.Y. 2018-19. On the addition relating to disputed purchases, it found that neither complete disallowance nor restriction to 15% could be sustained on the existing factual examination, and restored the matter to the Assessing Officer for fresh adjudication; both appeals were allowed for statistical purposes.

Refund of claim for Extra Duty Deposit - barred by limitation - Unjust enrichment - Consumer Welfare Fund - Loan-funded customs deposit - Interest on delayed refund - liable to be credited to the Consumer Welfare Fund.

Unjust enrichment - Extra Duty Deposit refund - HELD THAT: - The Tribunal held that the first appellate authority had proceeded on an erroneous factual basis by referring to the balance sheet note for Financial Year 2020-21, though the disputed deposit related to the Bill of Entry of January 2022 falling in Financial Year 2021-22. On examining the balance sheet notes for Financial Year 2021-22 and the subsequent balance sheet, the Tribunal found that the disputed amount had in fact been shown as recoverable from the customs authority. The amount used for payment of EDD had been obtained by the appellant as a loan from its promoter, and that financing arrangement was a transaction distinct from the import transaction. Such loan could not be treated as passing on the incidence of duty to another person for the purpose of unjust enrichment. The Chartered Accountant certificate also supported that the burden of the EDD had been borne by the appellant. On that basis, the finding that the refund was liable to be credited to the Consumer Welfare Fund was held to be unsustainable. [Paras 4]

The refund was held payable to the appellant and not liable to be credited to the Consumer Welfare Fund.

Interest on delayed refund - Customs refund - HELD THAT: - The Tribunal held that, for delay in payment of the refund claim, the appellant would be entitled to interest in accordance with the provisions of the Customs Act, 1962. The entitlement was recognised by applying the principle noticed from Ranbaxy Laboratories Ltd.[2011 (10) TMI 16 - SUPREME COURT]. [Paras 4]

Interest on the refund was held payable in accordance with law.

Final Conclusion: The Tribunal allowed the appeal, holding that the refund of the Extra Duty Deposit could not be denied to the appellant on the ground of unjust enrichment merely because the deposit had been made out of a loan from its promoter. The appellant was also held entitled to interest on the delayed refund in accordance with law.

Classification of imported goods - classified on the basis of the laboratory reports -Inconclusive laboratory test reports - Retesting on all prescribed parameters - claimed that test values of various parameters as tested by CRCL Vadodara, match with both the IS specifications - one pertaining to Thinner, General Purpose for Synthetic Paints and Varnishes and the other pertaining to Petroleum Hydrocarbon Solvent. -HELD THAT: - The Tribunal found that the specifications applicable to the competing descriptions contained some overlapping parameters, but also contained distinct parameters which were necessary for determining the correct classification. The CRCL Vadodara reports were held to be incomplete because they did not test all the prescribed parameters and yet indicated conformity with both specifications. The Visakhapatnam laboratory reports were also found insufficient for final classification because they too did not furnish test values for all the parameters. Applying the principle stated in Gastrade International [2025 (4) TMI 23 - SUPREME COURT], the Tribunal held that where goods are not examined on all relevant parameters, the evidence remains inconclusive and cannot safely sustain confiscatory consequences or final classification. Since the samples and goods were still available, the proper course was to direct retesting through an appropriate Government laboratory on all parameters under both IS specifications and thereafter determine the exact nature and correct classification of the goods. Pending such determination, the goods were directed to be provisionally cleared on bond for full value supported by bank guarantee, and provisional clearance was to be allowed as per the classification declared by the importer because neither test report conclusively established the nature of the goods. [Paras 5, 6]

The matter was remanded to the adjudicating authority for fresh testing of all prescribed parameters and redetermination of classification, with provisional clearance of the goods on the conditions specified by the Tribunal.

Final Conclusion: The Tribunal held that neither of the laboratory reports conclusively established the exact nature of the imported goods, and therefore final classification could not be sustained on the existing material. The matter was remanded for fresh testing on all prescribed parameters, while permitting provisional clearance of the goods on bond and bank guarantee.

Duty drawback eligibility - Misdeclaration in export goods - unlocking and activation of the phones before export - Suppression of facts - Confiscation of the exported mobile phones and the consequential redemption fine and penalties - Whether the confiscation of goods and consequently imposition of penalty, is legally sustainable or not?​​​​​​​ - HELD THAT: - The Tribunal held that the foundation of the impugned order was the departmental view that unlocking or activating mobile phones for use outside India amounted to the goods having been taken into use, and that omission to describe them as such constituted misdeclaration and suppression. That basis no longer survived in view of the decision of the Delhi High Court in AIMS Retail Services Pvt. Ltd. & Anr. Vs. Union of India & Ors. [2025 (2) TMI 596 - DELHI HIGH COURT], which quashed the CBIC clarification and held that such unlocking or activation is only a configuration to make the product usable and does not amount to goods being taken into use under the drawback rules. The Tribunal noted that the departmental challenge to that view had been dismissed by the Supreme Court [2026 (3) TMI 1096 - SC ORDER]. Once that legal position was accepted, the alleged misdeclaration, suppression, confiscability of the export goods, and the consequential redemption fine and penalties could not legally stand. [Paras 7, 8]

The confiscation, redemption fine and penalties were set aside as the very basis for treating the exported phones as misdeclared or ineligible did not survive.

Final Conclusion: Following the legal position that unlocking or activation of mobile phones for export is only configuration and not taking the goods into use, the Tribunal held that the charge of misdeclaration could not survive. The impugned order was therefore set aside and the appeals were allowed with consequential relief according to law.

Refund of Special additional duty (SAD) under Notification No. 102/2007-Cus. - Pre-requisite - Appropriate sales tax or VAT - Exemption notification conditions. -HELD THAT: - The Tribunal held that the controversy turned on satisfaction of the notification condition requiring payment of appropriate sales tax or VAT on subsequent sale. It was undisputed that SAD had been paid at the time of import and that no VAT was discharged because the goods were exempt from sales tax. Following the coordinate Bench view on identical facts in the case of M/s. Honda India Power Products Ltd. Vs. Commissioner of Customs, Customs House [2024 (12) TMI 1321 - CESTAT BANGALORE], the Tribunal held that the notification does not require that VAT or sales tax must be payable at a positive rate; what is required is payment of the tax at the rate appropriately applicable to the sale. Therefore, where the appropriate rate itself is nil, non-payment of any positive amount does not amount to breach of the condition, and rejection of refund on that ground was unjustified. [Paras 8, 9]

The denial of refund was held unsustainable and the appeal was allowed with consequential relief as per law.

Final Conclusion: The Tribunal held that where the appropriate rate of sales tax or VAT on the subsequent sale was nil, refund of SAD under Notification No. 102/2007-Cus. could not be denied on the ground that no tax had been paid. The appeal was accordingly allowed with consequential relief as per law.

Implementation of approved settlement schemefor payment to investors -Keeping impugned orders in abeyance - HELD THAT: - The Court noted that the scheme for payment to investors had already received approval and that its implementation could be obstructed by the continued operation of the impugned orders and by consequential orders required from the designated court and other authorities. Taking note of the appellants' stated willingness to give full effect to the scheme and to bring the controversies to an end, the Court considered it appropriate, at that stage, to keep the impugned orders in abeyance and to direct the concerned courts and authorities to act expeditiously so that payment could be made to the entitled investors. The Court further fixed a time-bound direction that, once the designated court de-freezes the account, the settlement amount be transmitted to the escrow account within two weeks. [Paras 7, 8, 9, 10]

The impugned orders were kept in abeyance, consequential facilitative directions were issued for implementation of the scheme, and liberty was reserved to mention the matter in case of difficulty.

Final Conclusion: The Court kept the impugned orders in abeyance to facilitate implementation of the approved scheme for payment to investors, directed the designated courts and authorities to pass necessary orders expeditiously, and required deposit of the settlement amount in the escrow account within two weeks of de-freezing of the account.

Power of the Official Liquidator under section 446(2) of the Companies Act 1956 - lack of jurisdiction of the Company Court in deciding the application of the Official Liquidator - Involuntary transfer of leasehold rights -Differential premium vis-a-vis stand - HC held that, the Company Court's jurisdiction to decide the questions raised by the Official Liquidator was upheld, MIDC's claim to differential premium was rejected on the footing that the transfer in liquidation was an involuntary formal transfer, and the question of extension charges was left to be considered when MIDC lodges its claim in liquidation. - HELD THAT:- The special leave petition was dismissed, the Court stating that on facts it was not inclined to interfere with the impugned judgment of the High Court [2025 (12) TMI 1830 - BOMBAY HIGH COURT].

Institution of appeal under the Insolvency and Bankruptcy Code - Certified copy of impugned order - Incurably defective appeal - Condonation of delay in filing and refiling. - HELD THAT: - The Court held that Rule 22(2) of the NCLAT Rules requires every appeal to be accompanied by a certified copy of the impugned order, and that this requirement cannot be treated as automatically dispensable. The filing of an appeal without even applying for a certified copy within limitation, and without seeking exemption from producing it, showed absence of diligence and meant that there was no valid institution of the appeal in the eyes of law. In the present case, the certified copy was not filed with the appeal or its refiling, and the application for the certified copy itself was made much later. In these circumstances, the defect went to the root of the institution of the appeal and was not a curable defect in refiling. The NCLAT, before condoning delay in filing and refiling, ought first to have examined whether the appeal had been instituted in accordance with the Code and the NCLAT Rules. Its failure to do so vitiated the order condoning delay. [Paras 7, 8, 9, 10, 11]

The filing and refiling of the appeal were held to be incurably tainted and liable to be rejected at the threshold; consequently, the order condoning delay was set aside.

Final Conclusion: The Supreme Court held that the respondent's appeal before the NCLAT had not been validly instituted, as it was filed and refiled without the certified copy of the impugned order and without any exemption being sought. The order condoning delay in filing and refiling was therefore set aside and the appeals were allowed.

Condonation of delay in refiling - sufficient cause - continuous diligence - applicant failed to establish sufficient cause for condonation of 140 days' delay in refiling the appeal. - HELD THAT: - The Tribunal held that, although delay in refiling may be approached liberally so that substantive justice is not defeated by procedural defects, such liberal approach cannot be applied mechanically, particularly in proceedings under the IBC which are intended to be time-bound. The determinative test was whether the applicant had furnished a satisfactory, credible and coherent explanation for the entire period of delay, including a defect-wise and date-wise account of the steps taken after the Registry notified defects. On the material placed, the explanations based on illness, family obligations, foreign travel, and difficulty in procuring legible records were found lacking in cogency and credibility. The medical papers related largely to an earlier period and did not show complete incapacitation; the plea of restricted movement was found inconsistent with the asserted foreign travel; and no continuous chronology or specific particulars were given regarding the curing of defects, procurement of documents, or the exact time consumed by each stated circumstance. The Tribunal therefore found that unavoidable circumstances beyond the applicant's control had not been satisfactorily established for the entire period of delay. [Paras 9, 11, 12, 13, 14]

The application for condonation of refiling delay was rejected, and consequently the appeal memo also stood rejected.

Final Conclusion: The Tribunal declined to condone the 140 days' delay in refiling, holding that the applicant had failed to furnish a satisfactory explanation covering the entire period of delay. The delay condonation application was rejected and, as a consequence, the appeal was also rejected.

Actus curiae neminem gravabit - Dismissal for non-service of notice - Failure to upload judicial orders - failure to take steps to serve the corporate debtor. - HELD THAT: - The Appellate Tribunal found from the case history that the order directing steps on 17.02.2025 was uploaded only on 28.02.2025, and the subsequent order dated 28.02.2025 directing fresh steps was uploaded only on 17.03.2025, though the matter had been listed on 13.03.2025 and dismissed on that date for non-service. It held that, in the absence of the orders being available to the Registry in black and white, the appellant could not be treated as being under an obligation to take steps, since such steps might not even be received by the Registry. Applying the principle actus curiae neminem gravabit, the Tribunal held that the appellant could not be prejudiced for delay or default attributable to the court process itself. [Paras 13, 14, 15, 16, 17]

The impugned order was set aside, the petition was restored, and the matter was remanded to the Adjudicating Authority for disposal in accordance with law after hearing the parties.

Final Conclusion: The Appellate Tribunal held that the appellant could not be faulted for not taking service steps when the relevant orders had not been uploaded before the next listing dates. The dismissal of the Section 7 petition was therefore set aside and the matter was restored to the Adjudicating Authority for fresh consideration.

Utilisation of foreign exchange for declared purpose- failure to import goods or realize and repatriate the foreign exchange remitted for the imports - Third party adjustment and refund-Penalty under FEMA.

Utilisation of foreign exchange for declared purpose - HELD THAT: - The Tribunal held that where foreign exchange was acquired for import of goods from a particular overseas supplier, the importer was required either to obtain the goods from that supplier or realise and repatriate the amount on non-import. The appellant's case that part of the outstanding remittance stood adjusted through imports and refunds from M/s TCC Wireless Inc./M/s TCC Metal was rejected because those entities were separate legal entities from M/s Metal World Wide Inc., and no legal provision or RBI permission was shown permitting such adjustment. The Tribunal accepted the reasoning that third party payments or receipts were not permissible in the manner claimed for the relevant transactions, and therefore the unadjusted amount could not be treated as duly utilised merely on account of business compulsion. It further held that the Customs proceedings did not govern liability under FEMA, since both sets of proceedings were independent. [Paras 9, 10, 11]

The finding of contravention under Section 10(6) of FEMA read with Regulation 6(1) was upheld.

Penalty under FEMA - Quantum of penalty - HELD THAT: - While sustaining the contravention, the Tribunal found that the ends of justice would be met by reducing the penalty. The adjudication on merits was maintained, but the quantum was moderated. [Paras 11]

The penalty was reduced to Rs. 5,50,000/-, with adjustment of any pre-deposit against the reduced amount.

Final Conclusion: The appeal was partly allowed. The Tribunal upheld the finding that the appellant had contravened Section 10(6) of FEMA read with Regulation 6(1), but reduced the penalty imposed.

Delay and laches - Show Cause Notice (SCN) issued with respect to transactions, occurred 15 years ago - Contravention of requirement to furnish documentary evidence of import in respect of the remittances - Proof of import documents - Vicarious liability of Managing Director - Reduction of penalty.

Delay and laches - Proof of import documents - Contravention of Section 10(6) - - HELD THAT: - The Tribunal held that the plea of delay could not assist the appellants because the company had been put to notice as early as 28.11.2002 and had, in its reply, itself stated that it was searching its records in relation to the outstanding transactions. Having been alerted at a time proximate to the transactions, the appellants could not later contend that passage of time disabled them from producing the relevant material. The Tribunal further found that, despite such notice and despite being a company engaged in regular imports, the appellants failed not only to produce the Exchange Control Copies of the Bills of Entry but also failed to furnish any alternative documents showing that goods had in fact been imported against the 13 remittances. The authorities cited by the appellants, namely Xerox Modi Corp. Ltd. v. Enforcement Directorate [2015 (1) TMI 1122 - DELHI HIGH COURT] and Innovative Tech Pack Ltd. v. Special Director of Enforcement [2017 (1) TMI 826 - DELHI HIGH COURT] were distinguished because in those matters there was documentary material raising doubt about non-import or the proceedings had other factual features absent in the present case. On the material on record, including follow-up by the authorised dealers, the contravention under Section 10(6) read with Regulation 6(1) stood established. [Paras 7, 8, 9, 10]

The finding of contravention against the company was sustained and the objection founded on delay or laches was rejected.

Vicarious liability of Managing Director - Liability under Section 42 - HELD THAT: - The Tribunal held that the contention that separate penalty on the Managing Director amounted to punishing the same offence twice over was untenable. It found that Section 42 specifically fastens liability on persons responsible for the conduct of the company's business at the time of contravention. Since the individual appellant was the Managing Director and there was nothing on record to show that he had exercised due diligence to prevent the contravention, he could not disclaim responsibility. [Paras 11]

The separate liability of the individual appellant under Section 42 was upheld.

Reduction of penalty - Proportionality of penalty - HELD THAT: - The Tribunal considered the quantum of penalty imposed on both appellants to be harsh in the circumstances of the case. Without disturbing the findings on contravention and responsibility, it held that the ends of justice would be met by substantially reducing the penalties imposed on the company and on the Managing Director. [Paras 12]

The penalties were reduced, and the appeals were partly allowed to that extent.

Final Conclusion: The Tribunal upheld the finding that the company had contravened Section 10(6) of FEMA read with the relevant regulation and also upheld the Managing Director's liability under Section 42. The appeals were partly allowed only to the extent of reducing the penalties imposed on both appellants.

Entitlement to bail in the prosecution - appellant's advanced age of 75 years, undergone two years of incarceration - scheduled offences - prima facie case against the petitioner - proceeds of crime is acquired in the form of commission/bribe in lieu of allotment of tenders - burden of prove - HELD THAT:- Leave was granted, the impugned orders were set aside, and bail was granted to the appellant in both matters, in the first matter having regard to the examination of four key witnesses, the appellant's age, and the period of incarceration already undergone, and in the second matter in view of the order passed in the connected appeal.

Ex parte adjudication - Service tax demand based on income-tax returns - Fresh adjudication from show-cause notice stage. - HELD THAT: - The Court did not adjudicate the merits of the service tax demand or the petitioner's claim of exemption. Relying on its earlier order in [2024 (9) TMI 64 - KARNATAKA HIGH COURT] and connected petitions, where similar demands founded on inputs from the Central Board of Direct Taxes and income-tax returns had been relegated for fresh consideration, the Court held that the impugned order-in-original should also be set aside and the matter restored to the stage of reply to the show-cause notice. The authorities were directed to keep in view the observations extracted from the earlier order, including consideration of taxability, negative list, exemption notification, liability to remit tax and limitation, with all contentions of both sides kept open. [Paras 6, 7, 9]

The order-in-original was set aside, the matter was remitted to the show-cause notice stage for fresh adjudication, the petitioner was permitted to file a fresh reply, and consequential recovery instructions to the bank were directed to be rescinded.

Final Conclusion: The writ petition was disposed of by setting aside the impugned order-in-original and restoring the matter to the stage of reply to the show-cause notice for fresh consideration in accordance with the earlier directions of the Court. No contention on merits, including exemption and limitation, was adjudicated and all such contentions were left open.

Ex parte Order - Extended Period of Limitation - Show-cause notices issued on the basis of information received from CBDT/ITR - HELD THAT:- Following the earlier order in [2024 (9) TMI 64 - KARNATAKA HIGH COURT] and connected petitions, the Court set aside the Order-in-Original and the Order-in-Appeal, remitted the matter to the stage of reply to the show-cause notice, rescinded consequential bank attachment, and kept all contentions open.

Service tax exemption for business facilitator in rural area - threshold exemption - Entitlement to the exemption under serial No. 29(g) of Notification No. 25/2012-ST - taxable service under Section 65B(44) of the Finance Act, 1994 to HDFC Bank - Whether the demand can be raised against the appellant on the basis of Form 26A received from the income tax department alleging that the appellant is providing taxable service ? - HELD THAT: - The Tribunal found, on the basis of the certificate issued by HDFC Bank, that the appellant was engaged for providing banking facilitation services in rural and remote areas, including sourcing and facilitating personal loan applications of Government teachers posted in such areas. Since serial No. 29(g) exempts services provided by a business facilitator or business correspondent to a banking company in a rural area, and the appellant's services were certified to be in relation to banking business conducted in rural areas, the statutory exemption squarely applied. Once that exemption was held available, the demand itself could not survive. [Paras 16, 17, 18, 19]

The appellant was held entitled to the exemption under serial No. 29(g) of Notification No. 25/2012-ST, and the service tax demand was held unsustainable.

Final Conclusion: The Tribunal held that the appellant's services to the bank were rendered as a business facilitator in rural areas and were fully covered by serial No. 29(g) of Notification No. 25/2012-ST. On that finding, the impugned order was set aside and the appeal was allowed with consequential relief.

Extended period of limitation - Bona fide belief - Suppression of facts - Small service provider exemption - Works contract classification - threshold exemption - Burden of proof - Wilful misstatement - Intent to evade - demand of service tax, interest and penalties.

Works contract classification - Composite supply of goods and services - Composition scheme - HELD THAT: - The Tribunal found from the break-up of receipts, purchase and sale registers, sample invoices and the commercial tax declaration that the appellant was engaged not only in providing services but also in sale of goods. It further observed that the services were rendered along with supply of goods and therefore were in the nature of works contract services. In such a situation, the taxable value could not have been determined by treating the receipts as pure service consideration without first classifying the activity and considering the benefit of the composition scheme. The confirmation of demand on the full value of receipts, without such determination, was therefore not sustainable. [Paras 4]

The receipt-based demand was held unsustainable since the activity involved sale of goods coupled with services and required treatment as works contract.

Small service provider exemption - Bona fide belief - Extended limitation - HELD THAT: - On examining the trading and profit and loss account and the income tax return for the preceding year, the Tribunal found that the appellant's service turnover for 2015-16 was below the prescribed exemption limit. It therefore accepted the appellant's claim to the benefit of Notification No. 33/2012-ST for 2016-17. Having regard to that position, the Tribunal held that the appellant had a bona fide belief that no service tax was payable. On that basis, the allegation of suppression with intent to evade could not be sustained and the extended period was held to be unavailable. The demand, interest and penalties founded on such invocation consequently failed as being barred by limitation. [Paras 4]

The demand was held time-barred, and the impugned order was set aside.

Final Conclusion: The Tribunal held that the receipts could not be taxed as pure service income without proper classification and consideration of the composite nature of the activity. It further held that the appellant was entitled to the threshold exemption and that the extended period was not invocable; consequently, the impugned order was set aside and the appeal was allowed.

Levy of service tax on Photography services - Manufacture - Printing of photographs- activity of printing and developing photographs in the colour lab from soft copies received from customers - HELD THAT: - The Tribunal found that the appellant received only soft copies for printing and undertook printing and developing of photographs in its colour lab on duty-paid paper and other inputs. Following the Tribunal decision in Venus Album Company Pvt Ltd. & Others vs. CCE Chandigarh [2018 (11) TMI 754 - CESTAT CHANDIGARH], as affirmed by the Hon'ble Apex Court [2023 (3) TMI 835 - SC ORDER] it held that such activity results in a distinct product and amounts to manufacture. The contrary reliance placed by the Revenue on Matchwell vs. Commissioner of Central Excise, Ahmedabad-I [2019 (6) TMI 1019 - CESTAT AHMEDABAD] was not accepted, since that decision had not considered Venus Album Company Pvt Ltd. & Others vs. CCE Chandigarh and the latter stood affirmed by the Apex Court. On that basis, the demand under photography service was unsustainable. [Paras 7, 8]

No service tax was payable on the impugned activity and, consequently, the penalties also could not survive.

Final Conclusion: The Tribunal held that the appellant's activity of printing and developing photographs amounted to manufacture and therefore did not attract service tax under photography services. The demand and penalties were set aside and the appeal was allowed with consequential relief, if any.

Entitlement to refund of service tax paid on services used in relation to authorised operations - Wholly consumed services - Benefit of Notification No. 9/2009-ST, as amended, and alternatively under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. - HELD THAT: - The Tribunal held that the controversy stood covered by earlier decisions beginning with Tata Consultancy Services Ltd.[2012 (8) TMI 500 - CESTAT, MUMBAI], which had explained that the exemption for taxable services provided in relation to authorised operations in an SEZ does not mean that, where service tax has in fact been paid, refund becomes unavailable. The refund procedure under the notification may not be necessary where services are wholly consumed within the SEZ, but that does not defeat a claim otherwise maintainable under Section 11B, provided the claim is within time and the incidence of tax has been borne by the claimant. Since the rejection was based solely on the view that unconditional exemption excluded refund, that basis was found unsustainable. [Paras 5, 6, 7]

Refund could not be denied merely because the services were wholly consumed within the SEZ and were otherwise exempt; the impugned order was therefore set aside.

Final Conclusion: The Tribunal held that service tax refund to the SEZ unit could not be rejected merely because the services were wholly consumed within the SEZ and were otherwise exempt. The impugned order was set aside and the appeals were allowed with consequential relief.

Levy of service tax - Management course - classifiable as Commercial Training or Coaching Service - Applicability of retrospective Explanation to Section 65(105)(zzc) of the Finance Act, 1994 - Entitlement to the exclusion available to institutions issuing qualifications recognised by law - Penalty waiver for bona fide interpretational dispute.

Commercial Training or Coaching Service - Retrospective clarificatory amendment - Qualification recognized by law -HELD THAT: - The Tribunal held that the decisive test was whether the appellant imparted training or coaching for consideration and whether the course itself culminated in a certificate, diploma or degree recognized by law in force in India. Since the appellant's programme by itself did not confer an MBA degree and only enabled students, subject to further conditions, to join the second year programme of the foreign university, the exclusion available to institutes issuing qualifications recognized by law was unavailable. The retrospective Explanation to Section 65(105)(zzc) was treated as clarificatory of the expressions used in the charging entry and as making profit motive, charitable character or nomenclature of the institution irrelevant once training was imparted for consideration.

The Tribunal held that the earlier line of decisions relied on by the appellant was distinguishable or stood in a different statutory context after the retrospective amendment, while the later decisions relied on by the Revenue correctly stated the applicable legal position. [Paras 10, 11, 12, 13, 15]

The service tax demands on merits were upheld, with consequential interest.

Penalty waiver for bona fide interpretational dispute - Reasonable cause -HELD THAT: - The Tribunal found that the dispute arose in a field marked by divergent judicial views on the taxability of educational institutions operating under twinning arrangements, and that the appellant had disclosed the material facts relating to the course, fee structure and arrangement with the foreign university. As the controversy was essentially one of statutory interpretation and there was no allegation or evidence of suppression, misstatement or intent to evade tax, penal consequences were held to be unjustified. Invoking Section 80, the Tribunal treated the appellant's bona fide belief, supported by prevailing precedents, as reasonable cause for failure to pay tax. [Paras 14, 16]

The penalties under Sections 76 and 77 were set aside.

Final Conclusion: The Tribunal held that the appellant's course was taxable as Commercial Training or Coaching Service for all the periods in dispute, the course not leading to any qualification recognized by law in India, and the retrospective Explanation making profit motive or charitable status irrelevant. The service tax demands and interest were therefore sustained, but the penalties were set aside under Section 80 owing to the bona fide and interpretational nature of the dispute.

Clandestine clearance of finished goods without payment of duty - voluntary confessional statement - duty demand, interest and penalty against the firm - lorry receipts recovered from the factory and the partner's un-retracted statement - extended period of limitation - penalty on partner of partnership firm.

Clandestine removal - voluntary confessional statement - HELD THAT: - The Tribunal found that lorry receipts recovered from the factory showed dispatches for which no corresponding duty-paying invoices existed, while some other lorry receipts matched the appellant's invoices, thereby supporting the evidentiary reliability of the recovered records. The partner expressly accepted the department's method of valuation and admitted that goods covered by the unmatched lorry receipts had been cleared without invoices and without payment of duty; that statement was made long after the search and was never retracted. On that footing, the Tribunal held that the objection to valuation and the plea that clandestine removal required further proof such as excess raw material consumption, power consumption, labour use or sale proceeds could not prevail, because the recovered lorry receipts coupled with the voluntary admission constituted sufficient evidence. The Tribunal further held that admitted facts need not be separately proved, distinguished the authorities cited by the appellant on facts, and upheld invocation of the extended period along with interest and equal penalty. [Paras 5]

The duty demand for clandestine removals, with interest and equal penalty on the firm, was upheld.

Penalty on partner of partnership firm - specific role under Rule 26 - HELD THAT: - Relying on the Gujarat High Court decision in Pravin N. Shah [2012 (7) TMI 850 - GUJARAT HIGH COURT], the Tribunal held that where the firm has already been penalised, a separate penalty cannot be imposed on its partner in the absence of any specific role independently attributable to the partner under Rule 26. The Tribunal also noted consistent Tribunal decisions taking the same view in relation to partnership firms. Since the impugned penalty on the partner did not rest on any separately established role beyond his position as partner, the penalty could not be sustained. [Paras 5]

The penalty imposed on the partner under Rule 26(1) was set aside.

Final Conclusion: The appeal of the firm was dismissed and the demand of duty on clandestine clearances, with interest and equal penalty, was sustained. The partner's separate appeal was allowed and the penalty imposed on him under Rule 26(1) was set aside.

Levy of Additional Excise Duty - Excise levy on pre-levy manufactured goods - Taxable event of manufacture - Revenue consistency in accepted orders - Whether Additional Excise Duty (AED) is leviable on goods already manufactured and lying in stock prior to 11.07.2014 but cleared after 11.07.2014? - HELD THAT: - The Tribunal held that the decisive test was the stage at which the levy attached. Excise duty is attracted on manufacture or production, while collection at the time of removal is only a matter of convenience. Since the disputed goods had already been manufactured before the levy of Additional Excise Duty came into force on 11.07.2014, no such levy could be imposed on their subsequent clearance. The Tribunal also noted that in the assessee's own case [2023 (11) TMI 145 - CESTAT ALLAHABAD] adjudicating authorities at other places had already taken the same view and those orders had been accepted by the Department without challenge; in those circumstances, the Department could not adopt a contrary stand in the present matter. [Paras 4, 5]

The demand of Additional Excise Duty, interest and penalty on the pre-11.07.2014 manufactured stock was held unsustainable and the appeal was allowed.

Final Conclusion: The Tribunal held that Additional Excise Duty introduced with effect from 11.07.2014 was not leviable on goods already manufactured before that date, even if cleared thereafter. The impugned demand with interest and penalty was therefore set aside and the appeal was allowed with consequential relief in accordance with law.

Applicability of Rule 6 of the Cenvat Credit Rules- iron ore fines generated during screening of iron ore - by-products and waste - manufacture of exempted goods - reversal or payment of an amount on common input services credit -HELD THAT: - The Tribunal held that iron ore fines arising at the stage of screening are not brought into existence by any process amounting to manufacture, but emerge unavoidably as a by-product or waste while making the ore fit for use in the furnace. Since such fines are not manufactured goods, they cannot be treated as exempted final products for the purpose of Rule 6. On that reasoning, the requirement to reverse credit or pay an amount at the prescribed percentage of the value of such fines under Rule 6(3) did not arise. The Tribunal followed its earlier view in Nav Durga Fuels Pvt. Ltd. v. CCE, Raipur [2016 (7) TMI 1503 - CESTAT NEW DELHI] and agreed with the adjudicating authority's reliance on UOI v. DSCL Sugar Ltd. [2015 (10) TMI 566 - SUPREME COURT]. [Paras 9, 10]

The Revenue's challenge failed, and the dropping of the demand under Rule 6(3) was upheld.

Final Conclusion: The Tribunal held that iron ore fines generated during screening were merely by-product or waste and not manufactured exempted goods. Rule 6 of the Cenvat Credit Rules, 2004 was therefore inapplicable, and the Revenue's appeal was rejected.