TMI Tax Updates e-Newsletter
May 16,2026

Entitlement to bail in a prosecution - clandestine manufacture and evasion of duty on the basis of installed packing machines under the newly introduced capacity-based duty regime - Non-disclosure of packing machines- Economic Offences - statutory scheme under the Rules of 2026 - failed to pay central excise duty in terms of Notification No. 04/2025- Central Excise -Prima Facie Case - Triple Test -Possibility of tampering with evidence and influencing witnesses - HELD THAT: - The Court held that, at the bail stage, it could not undertake a detailed adjudication on actual production, actual utilisation of the machines, or exact duty liability, since those were matters for evidence and trial. It found that the prosecution case rested on the statutory scheme prescribing levy with reference to installed packing machines, and the applicant's contention that one machine was non-functional could not prima facie displace that case in the absence of any declaration of breakdown or non-functioning before the competent Commissioner as contemplated by that scheme. The Court further found that seizure of machines, raw materials and finished goods, along with statements recorded under Section 70 of the CGST Act, constituted prima facie material supporting the allegations of concealment and clandestine manufacture. Having regard to the nature of the accusation as an economic offence, the magnitude of the alleged revenue evasion, the continuing investigation into procurement, supply chain and involvement of other persons, and the apprehension of tampering with evidence or influencing witnesses, the Court declined to extend bail. [Paras 21, 22, 23, 24, 25]

Bail was refused and the application was dismissed.

Final Conclusion: The Court declined bail, holding that the prosecution disclosed prima facie material of deliberate non-disclosure of packing machines and evasion under the statutory machinery-based duty scheme, and that disputed questions as to actual production or functionality of a machine were not matters for adjudication at the bail stage. In view of the gravity of the alleged economic offence, the continuing investigation and the apprehended risk of interference with the process, the application was dismissed.

Validity of an Oder for Cancellation of GST registration - Without assigning reasons and non-compliance with the prescribed procedure - Application of mind - Principles of natural justice or fair play - Recording of reasons - HELD THAT: - The Court held that Rule 22(3) requires the proper officer to pass the cancellation order in Form GST REG-19, whose contents indicate that specific reasons for cancellation must be stated. The impugned order merely referred to non-submission of reply and mentioned "Others" with a remark relating to Rule 22(1)/Rule 21A(2A), but disclosed no reason for cancelling the registration. Since cancellation of registration entails adverse civil consequences, the proper officer was bound to pass a speaking order. The assessee's failure to reply to the show cause notice or appear did not dispense with that obligation. Recording reasons was held to be part of fair procedure, indicative of application of mind, and a safeguard against arbitrary exercise of statutory power. As the impugned order did not meet the statutory prescription and was non-speaking, it was set aside; the matter was restored to the stage of the show cause notice, and the petitioner was permitted either to reply to the notice or to furnish pending returns and pay dues, interest, late fee and penalty, whereupon the proper officer was directed to proceed afresh in accordance with Section 29 and Rule 22. [Paras 23, 24, 26, 27, 28]

The cancellation order was quashed as a non-speaking order passed without application of mind, and the proceedings were restored to the show cause notice stage with liberty to the petitioner to pursue the statutory options indicated by the Court.

Final Conclusion: The writ petition was allowed to the extent that the cancellation of the petitioner's GST registration was set aside for want of reasons and non-compliance with the prescribed form and procedure. The proper officer was directed to proceed afresh from the show cause notice stage after giving the petitioner opportunity to reply or regularise the default in the manner permitted by law.

Efficacious statutory appeal under Section 107 -Maintainability of writ petition - Appeal despite delay - HELD THAT: - The Court recorded the preliminary objection that an efficacious alternative remedy of appeal was available under the statute. On the petitioner's submission that the assessment order was ex parte and that there was delay in approaching the appellate forum, the Court accepted the request to relegate the petitioner to the appellate remedy and directed that, if the appeal was filed within the time granted by the Court, the Appellate Authority should consider it on merits without going into delay. Interim protection against coercive action was continued only till such filing. [Paras 3, 4, 6]

The petitioner was permitted to file an appeal within the time granted, the Appellate Authority was directed to consider it on merits without rejecting it on delay, and coercive action was restrained till then.

Final Conclusion: The writ petition was disposed of by relegating the petitioner to the statutory appellate remedy. Liberty was granted to file the appeal within the time fixed by the Court, with a direction that delay be ignored and no coercive action be taken till such filing.

Dismissal of the statutory appeal as barred by limitation without giving the appellant an opportunity to explain the alleged delay - Natural justice - Condonation of delay - Opportunity of hearing. - HELD THAT: - The Court held that the question whether the appeal was delayed had to be examined first by the appellate authority before entering into the merits. Even if the electronic portal flags delay, the opportunity to explain whether there was in fact any delay, or whether the system had wrongly computed limitation, must be afforded by the appellate authority and cannot be left to the portal alone. The Court further held that scrutiny of limitation and other mandatory conditions should be undertaken in the office of the appellate authority, and if delay is noticed, the appellant must be permitted to explain the position and, where necessary, seek condonation. Since in the present case the appeal was heard on merits and no objection on limitation was raised before the appeal was dismissed as time-barred, the appellant was denied such opportunity. [Paras 6, 7, 9, 10, 11]

The impugned appellate order was set aside and the matter was remanded to the appellate authority to permit the petitioner to explain the objection regarding delay, and thereafter to proceed in accordance with law.

Final Conclusion: The writ petition was allowed on the ground that the appellate authority dismissed the appeal as time-barred without first giving the petitioner an opportunity to explain the alleged delay. The matter was remanded for fresh consideration on limitation and, if maintainable, on merits.

Refund withholding - Release of refund amount deposited in court - Absence of interim restraint in appellate proceedings - Wilful disobedience/ non-compliance of the directions -HELD THAT:- The Court noted that the Department's challenge to the order giving rise to refund had already been disposed of by relegating it to the statutory appellate remedy before the Tribunal, without any adjudication on merits. Since no interim order had been passed by the Appellate Tribunal preventing release of the refund, the amount lying deposited in Court pursuant to the earlier interim direction could not continue to be withheld. The Court therefore directed release of the deposited amount to the petitioner, while making it subject to any further orders that may be passed in the Department's appeal before the Tribunal. [Paras 7, 8, 9]

The deposited refund amount was directed to be released to the petitioner after three weeks, subject to further orders in the appeal before the Appellate Tribunal.

Final Conclusion: The petition was disposed of with a direction to release to the petitioner the refund amount lying deposited in Court, there being no interim order of the Appellate Tribunal restraining such release. The release was made subject to further orders that may be passed in the Department's appeal before the Tribunal.

Clubbing of Tax Periods - Composite assessment order for multiple tax periods - Separate assessment for each financial year - Violative of the provisions of Section 73 and Section 74 of the GST Act, 2017 - HELD THAT: - The Court followed the earlier Division Bench view of this Court in S.J. CONSTRUCTIONS, SUMA INFRA, M/S. SKS TRADERS, BHAARAT SCRAP TRADERS [2025 (9) TMI 1215 - ANDHRA PRADESH HIGH COURT] that a single show-cause notice or a single composite assessment order cannot be issued for more than one tax period, and where the due date for filing annual return has been reached, not for more than one year. Since the impugned assessment order covered multiple financial years in one proceeding, the Court accepted that objection and declined to examine the other grounds, leaving them open. The matter was remitted with liberty to the respondents to initiate fresh proceedings separately for each assessment year, with exclusion of the intervening period for limitation. [Paras 4, 5, 6, 7]

The composite assessment order was set aside and the matter was remanded for fresh proceedings for each assessment year separately.

Final Conclusion: The writ petition was disposed of by setting aside the composite assessment order covering the period from 2019-20 to 2022-23. Liberty was given to the respondents to commence fresh proceedings separately for each assessment year, and the intervening period was directed to be excluded for limitation.

Condonation of delay in filing appeal - Appeal dismissed on limitation - appeal filed beyond the outer period of limitation - HELD THAT: - The Court recorded that the petitioner had filed the appeal immediately after coming to know of the original order and that the delay was beyond the statutory period of 120 days. Taking note of the submission, which was not disputed by the respondents, and following the course adopted by this Court in M/s Dandin Motors v. Joint Commissioner of Commercial Tax (Appeal) and another [2025 (3) TMI 1659 - KARNATAKA HIGH COURT] in similar circumstances, the Court condoned the delay and held that the appeal should be considered on merits instead of being rejected only on limitation. [Paras 5, 6]

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

Final Conclusion: The High Court allowed the writ petition, quashed the order dismissing the appeal on limitation, condoned the delay, and remitted the appeal for consideration on merits.

Entitlement to claim Input Tax Credit - Belated return - Retrospective operation - non-obstante clause in Section 16(5) -HELD THAT: - The Court held that, by reason of the non-obstante clause in Section 16(5), the later amendment operated retrospectively and the time-limit under Section 16(4) had to be read as extended till November, 2021 for the covered financial years. Since the return for the tax period 2019-20 had been filed on 22.10.2020, it fell within that extended period. Accordingly, the adjudication order founded on delayed filing under Section 16(4) could not stand. The matter was remitted to the stage of reply to the show cause notice, while clarifying that the question of delayed availment of input tax credit was not to be reopened and that other contentions on merits remained open. Consequentially, the bank attachment was directed to be reversed. [Paras 5, 6, 7, 9]

The adjudication order disallowing input tax credit was set aside, the matter was remitted to the show cause notice stage without reopening the issue of delay in availing credit, and the bank attachment was directed to be reversed.

Final Conclusion: The petition was disposed of by holding that the petitioner's return for the relevant tax period was within the extended time recognised by Section 16(5), rendering the disallowance of input tax credit on the ground of delay unsustainable. The adjudication order was therefore set aside, the matter remitted for fresh consideration on remaining merits, and the garnishee attachment directed to be withdrawn.

Clubbing of Tax Periods - Composite show-cause notice for multiple tax periods - Jurisdictional validity of issuing one notice covering multiple tax periods - HELD THAT:- The Court treated the challenge as turning on a jurisdictional defect. Relying on the view already taken by a Co-ordinate Bench in M/s. Pramur Homes and Shelters vs. The Union of India and Others [2025 (12) TMI 1188 - KARNATAKA HIGH COURT] that clubbing or combining multiple tax periods in a single show-cause notice under the CGST/KGST regime is illegal and impermissible, it held that the impugned notice and the adjudication founded on it were liable to be set aside. Since the petitioner agreed that fresh proceedings may be taken through separate notices for each tax period, liberty was reserved to the revenue to proceed afresh on that basis, with all other contentions left open. [Paras 5, 6]

The impugned notice and adjudication order were set aside, and the revenue was permitted to issue separate show-cause notices for each tax period.

Final Conclusion: The petition was disposed of by setting aside the composite show-cause notice and the adjudication order passed on its basis. Fresh proceedings were permitted only through separate show-cause notices for each tax period, with all other contentions kept open.

Challenged the show cause notice and the order passed under the GST law - availability of the appellate remedy - Delay Condonation - Statutory Pre-deposit - HELD THAT:- The Court declined to examine the merits of the challenge to the show cause notice and consequential order, and permitted the petitioner to approach the appellate authority within two weeks with a delay condonation application and statutory pre-deposit. It also left it open to the petitioner to seek lifting of the bank lien before the appellate authority, which was directed to consider that request in accordance with law.

Entitlement to avail input tax credit on the inputs and input services used in setting up the CCV tower - Input tax credit on plant and machinery - Structural support as plant and machinery - Blocked credit on construction of immovable property - HELD THAT: - The Authority held that, under the Explanation to section 17(5), plant and machinery includes apparatus, equipment and machinery fixed to earth by foundation or structural support, and expressly includes such foundation and structural supports. On the applicant's own manufacturing layout and process, the specialised steel CCV tower was found to be an essential support system for the CCV line, providing the required height, stability, alignment, precision and operational integrity necessary for manufacture of insulated cables. Once the tower was found to be foundation or structural support relating to plant and machinery, the restriction under section 17(5)(c) and (d) concerning construction of immovable property did not apply, irrespective of whether the arrangement was in the nature of a works contract or whether the expenditure was capitalised. The Authority also drew support from the CBIC clarification regarding ducts and manholes in OFC networks and from the similar ruling in M/s. KEI Industries ltd. [2025 (8) TMI 551 - APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT], and concluded that the CCV tower was not to be treated as land, building or any other excluded civil structure. [Paras 20, 22, 23, 24, 25]

The applicant was held entitled to avail input tax credit on the inputs and input services used in setting up the CCV tower, and such credit was not barred by section 17(5)(c) or section 17(5)(d).

Final Conclusion: The Authority ruled that the specialised steel CCV tower constituted structural support forming part of plant and machinery used for manufacture of insulated cables. Consequently, input tax credit on the inputs and input services used for setting up that tower was held admissible and not hit by the blocked credit provisions in section 17(5)(c) and section 17(5)(d).

Challenged the GST assessment-cum-penalty orders - Form GST DRC-07 passed for multiple tax periods on allegations of circular trading - fake sales for passing ineligible Input Tax Credit -Doctrine of proportionality - Alternative statutory remedy - Imposition of penalty under Section 122(1)(vii) and Section 122(1)(ii) -​​​​​​​ lack of discretion, procedural irregularity, or disproportionality enactment.

Penalty for certain offences under GST - Doctrine of proportionality - HELD THAT: - The Court held that the language of Section 122(1), particularly the expression "whichever is higher", does not confer discretion on the assessing authority to levy a lesser penalty once the provision is attracted. The decisions cited from labour and service jurisprudence on proportionality were held inapplicable in view of the statutory scheme of Section 122(1). The Court further noted that the decisions in Union of India Vs. Dharamendra Textile Processors and others [2008 (9) TMI 52 - Supreme Court] and Union of India Vs. Rajasthan Spinning and Weaving Mills [2009 (5) TMI 15 - SUPREME COURT], turned on Section 11-AC of the Central Excise Act, 1944, and could not govern Section 122 of the GST enactments beyond the principle that the effect of penalty depends on the language of the provision itself. On the material noticed in the assessment orders, the Court observed that the petitioners were prima facie liable to penalty under Section 122(1). [Paras 21, 23, 24, 25, 26]

The challenge to the quantum of penalty on the ground of proportionality was rejected.

Alternative statutory remedy - Reasoned assessment order - HELD THAT: - The provisions of the respective GST Enactments contemplate an appellate remedy before the Appellate Authority under Section 107 of the respective GST Enactments and further appeal before GST Tribunal under Section 122 of the respective GST Enactments and thereafter remedy before the High Court. The finer aspects of law at best can be left to be decided by the Division Bench of this Court in its appellate jurisdiction under Section 117 of the respective GST Enactments which is in line with the Judgment of the Hon’ble Supreme Court in L. Chandrakumar Vs. Union of India and others [1997 (3) TMI 90 - Supreme Court].

The Court found no procedural irregularity in the impugned orders and recorded that they contained adequate reasons and disclosed application of mind. Since the GST enactments provide an appeal before the Appellate Authority and further statutory remedies, the petitioners could not bypass that mechanism and directly invoke writ jurisdiction on the merits of the penalty. At the same time, to ensure that the appellate remedy was not rendered illusory by the requirement of pre-deposit on the penalty amount, the Court dispensed with the 10% pre-deposit under Section 107 for the purpose of filing appeals and permitted the petitioners to approach the Appellate Authority within the time granted. [Paras 27, 28, 29, 30, 31]

The writ petitions were dismissed with liberty to file statutory appeals within the time granted, and the requirement of 10% pre-deposit on penalty at the filing stage was dispensed with.

Final Conclusion: The Court declined to interfere with the assessment orders in writ jurisdiction, holding that Section 122(1) did not permit reduction of penalty on proportionality grounds and that the petitioners must pursue the statutory appellate remedy. The writ petitions were dismissed with liberty to file appeals within the time granted, and the requirement of pre-deposit of 10% of the penalty at the filing stage was dispensed with.

Reopening of assessment - Reasons to believe - Application of mind in recording reasons - Reassessment invalid where issue examined in original assessment - Change of opinion not permissible - Objections to reopening - requirement to rebut - Delay filling SLP

As decided by HC [2025 (3) TMI 1440 - BOMBAY HIGH COURT] reassessment was invalid both because the reasons were recorded without application of mind and because each substantive ground for reopening had been examined in the original assessment (so reopening would amount to impermissible change of opinion); the order on objections also failed to rebut the assessee's contentions.

HELD THAT:- There is a delay of 276 days in filing this Special Leave Petition and we do not find any plausible and bona fide explanation to condone this inordinate delay.

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

Adjustment of refund against disputed demand - Pendency of stay application and appeal - Recovery during pendency of statutory remedies

HELD THAT: - The Court, following the coordinate Bench decisions in Danieli India Limited 2023 (9) TMI 1726 - CALCUTTA HIGH COURT and Gaurav Enterprises, 2025 (12) TMI 624 - CALCUTTA HIGH COURT held that the adjustment of refund against a disputed demand during pendency of the assessee's statutory remedies was not sustainable. On that basis, the refund adjustment was quashed and the respondents were directed to release the refund with statutory interest. The Court further protected the assessee against coercive recovery until the stay application is decided, while requesting expeditious disposal of the pending appeal. The matter was disposed of without entering into the merits of the underlying assessment dispute. [Paras 9, 10, 11]

The impugned adjustment was set aside; the refund for Assessment Year 2021-22 was directed to be released with interest, and no coercive recovery was permitted for Assessment Year 2023-24 until disposal of the stay application.

Final Conclusion: The Court quashed the adjustment of the refund for Assessment Year 2021-22 against the disputed demand for Assessment Year 2023-24, directed release of the refund with interest, and restrained coercive recovery until the stay application is decided. The pending appeal before the CIT(A) was requested to be disposed of expeditiously.

Petitioner's claim for monetary reward under the CBDT reward guidelines for for officers and staff of the Income Tax Department which had remained pending - petitioner having rendered exceptional and meritorious service in the field of detection of TDS defaults, intelligence gathering, creation of substantial tax demands, and actual recovery of revenue resulting in significant financial benefit to the Income Tax Department

HELD THAT:- Taking into consideration the fact that a recommendation in favour of the petitioner has already been made vide communication/order dated 16.07.2010, this Court deems it appropriate to dispose of the present petition with a direction to the petitioner to submit a copy of the said recommendation/order along with a certified copy of this order and a copy of the writ petition before respondent No. 2 within a period of 15 days from the date of receipt of a copy of this order; and upon such submission being made, respondent No. 2 is directed to consider and decide the petitioner’s claim/representation strictly in accordance with law by passing a reasoned and speaking order within a further period of 45 days thereafter.

Penalty proceedings in abeyance pending quantum appeal - Penalty proceedings initiated u/s 271C for the assessment year 2017-2018 - HELD THAT: - The Court noted that in respect of the other assessment years, similar show cause notices had earlier been closed on the respondents' own stand that the proceedings would be kept in abeyance till disposal of the appeal. It further recorded that the assessee had challenged the appellate orders before the Tribunal and had also deposited the amount earlier directed by the Court to secure the Revenue. In view of the pendency of those appeals and the likelihood of their being heard shortly, the Court held that the respondents should await the Tribunal's decision before proceeding further with the impugned penalty action. [Paras 6, 7]

The impugned penalty proceedings were directed to remain in abeyance until orders are passed by the Tribunal in the respective appeals.

Final Conclusion: The writ petition was disposed of by directing the respondents to keep the penalty proceedings for the assessment year 2017-2018 in abeyance and to await the Tribunal's orders in the pending appeals.

Speaking order in stay of demand - Application of mind under stay jurisdiction - Recovery abeyance pending fresh consideration - CBDT stay guidelines - stay order directing payment of 20% of the outstanding demand in instalments

HELD THAT: - The Court found from the impugned order itself that the first respondent had fixed the amount payable and the instalment schedule without any discernible application of mind. In view of the CBDT Circular requiring consideration of all relevant factors and communication of the decision through a speaking order while dealing with a stay application, the impugned order was held defective. Following the approach adopted in the earlier decisions referred to by the Court, the matter was remitted for fresh consideration on merits after hearing the petitioner, with the respondent directed to take into account the Supreme Court decision and the Circular. [Paras 7, 9]

The impugned stay order was set aside for want of a reasoned consideration and the matter was remitted for fresh orders on merits after hearing the petitioner; recovery was directed to remain in abeyance till such reconsideration.

Final Conclusion: The writ petition was disposed of by setting aside the stay order on the ground that it lacked a reasoned consideration of the relevant factors. The matter was remitted for fresh decision on the stay request, and recovery pursuant to the assessment order was kept in abeyance meanwhile.

Penalty u/s 270A - under-reporting of income - disallowance of expenditure claims treated as capital in nature or as not eligible u/s 35D - Debatable disallowance of expenditure - Bona fide claim of deduction

HELD THAT: - Tribunal found that, in respect of the loan processing charges and stamp duty charges, the AO had not disputed that the expenditure was actually incurred, but had only treated it as capital in nature instead of revenue. Likewise, in respect of the preliminary expenses claimed u/s 35D, the incurring of expenditure was not doubted and the dispute was confined to the assessee's eligibility to claim deduction.

The controversy, therefore, was only as to allowability of the claims, which the Tribunal treated as a debatable matter decided against the assessee in assessment. Since there was no wilful act of the assessee involving furnishing of inaccurate particulars, under-reporting or misreporting of income, penalty under section 270A was held to be unsustainable. [Paras 4]

The penalty levied and confirmed in appeal was deleted.

Final Conclusion: The Tribunal allowed the appeal and deleted the penalty under section 270A, holding that the disallowances arose only from a dispute regarding allowability of expenditure claims and did not constitute under-reporting or misreporting of income.

Ad hoc disallowance of business expenditure - Bogus purchases - Profit element on unverifiable purchases

Ad hoc disallowance of business expenditure - Rejection of books of account - Ad hoc disallowance of 5 per cent of the claimed expenses - HELD THAT: - The Tribunal found that the factual basis adopted by the lower authorities, namely that no details were furnished, was incorrect because the assessee had produced books of account, bills, vouchers, stock register, purchase details and bank statements, and had also produced the expense vouchers before the appellate authority. The expenditure had been paid through banking channels and the ledger accounts were also on record. In these circumstances, and particularly in the absence of any rejection of the books u/s 145(3), there was no justification for making an ad hoc disallowance of the expenditure. [Paras 6]

The disallowance of expenses on an ad hoc basis was deleted.

Bogus purchases - Addition based on estimation of profit element in purchases - HELD THAT: - The Tribunal noted that payments were made through banking channels; ledger account, balance sheet, confirmation, purchase invoices and stock register were furnished; and notices issued u/s 133(6) were replied to by the supplier confirming the transactions. It also found that the supplier had been assessed in scrutiny and no adverse finding had been recorded there regarding sales to the assessee. Since the corresponding sales in the assessee's hands were not doubted and there was no evidence that the payments had come back to the assessee in cash, the supplier could not be treated as ingenuine and there was no basis to estimate any profit element or commission on those purchases. [Paras 10]

The addition made by estimating profit in respect of purchases from Nasruddin Qureshi was directed to be deleted in full.

Profit element on unverifiable purchases - Grey market purchases - HELD THAT: - The Tribunal found that, as regards this supplier, the assessee had furnished only preliminary documents and had not placed on record the audited financial statements or income-tax assessment orders of that party. At the same time, the corresponding sales arising from those purchases had not been doubted by the Revenue. On that footing, the Tribunal held that the proper course was not to disallow the entire purchase figure but to tax only the profit element embedded in the disputed purchases, treating the case as one of purchases from the grey market. In the peculiar facts, that element was estimated at 2 per cent. [Paras 11]

The addition relating to purchases from Baloch Jamal Khan Bhuran Khan was restricted to 2 per cent of the disputed purchases.

Final Conclusion: For AY 2018-19, the Tribunal deleted the ad hoc disallowance of expenditure and also deleted the addition based on estimated profit in respect of purchases from Nasruddin Qureshi. In respect of purchases from Baloch Jamal Khan Bhuran Khan, it held that only the embedded profit was taxable and restricted the addition to 2 per cent.

Capital gains computation - applying section 50C on the alleged sale of immovable properties - flip-flopping between making addition u/s 56(2)(x) or u/s 50C - addition made by applying the stamp duty valuation provisions to treat the impugned property transactions as giving rise to long-term capital gains

HELD THAT: - The Tribunal found that the assessment record itself showed inconsistency in the treatment of the same two properties, since they appeared as having been both purchased and sold on the same date for the same consideration, while the AO had also oscillated between potential taxability under section 56(2)(x) and addition under section 50C.

AO had issued a show cause notice to the assessee for treating the difference in the purchase consideration as income u/s. 56(2)(x) of the Act. However, we do not find any discussion in this regard in the assessment order and no addition u/s. 56(2)(x) of the Act was made. The AO had made addition u/s 50C of the Act in respect of sale of those two properties. In fact, there was sale of 3rd property as well in respect of which no addition was made, as the stamp duty value of that property was within the limit of 10% of actual sale consideration.

In such circumstances, the foundational character of the transactions required verification before any addition could properly be made. The assessee's further contention that the relevant sale deeds had later been cancelled was also not supported by the necessary material on record. Since the addition under section 50C had been made without proper verification of the correct factual position, the matter required fresh examination by the jurisdictional AO on the basis of evidence and necessary enquiry. The Tribunal expressly refrained from expressing any view on the correctness of the assessee's claim on cancellation and directed the assessee to place all relevant evidence before the Assessing Officer. [Paras 7, 8]

The addition was set aside for fresh adjudication after verification of the true nature of the transactions and the supporting evidence.

Final Conclusion: For A.Y. 2020-21, the Tribunal held that the impugned addition had been made without proper verification of the basic facts relating to the property transactions. The matter was therefore restored to the jurisdictional Assessing Officer for fresh examination and re-adjudication in accordance with law.

Share application money u/s 68 - Burden of proof - Identity, creditworthiness and genuineness - HELD THAT: - The Tribunal held that once the investor company responded to notice under section 133(6), confirmed the investment, and furnished its financial statements, return particulars, bank statement, board resolution, confirmation and justification for the premium, the assessee had discharged the required burden regarding identity, creditworthiness and genuineness.

The investor was also shown to be assessed to tax, and its scrutiny assessment order was on record, so its identity could not be doubted.

On these facts, CIT vs Gangeshwari Metal P Ltd [2013 (1) TMI 624 - DELHI HIGH COURT] was applied, since the enquiry made by the AO had in fact resulted in direct confirmation and supporting evidence from the investor. PCIT vs NRA Iron & Steel Pvt Ltd [2019 (3) TMI 323 - SUPREME COURT] was distinguished as, unlike that case, the investor here was not shown to be non-existent and the documentary trail supporting the source and transaction stood furnished. [Paras 6, 7]

The assessee was held to have satisfactorily explained the share application money, and the addition was deleted.

Final Conclusion: The Tribunal allowed the appeal and deleted the addition made towards share application money for AY 2011-12. It held that the investor's direct compliance, tax status and supporting documents sufficiently established the transaction, making the reliance on the contrary precedent inapposite on facts.

Bogus sales addition - Third-party statements - Documentary evidence of genuineness - Addition of estimated profit by treating sales made by the assessee to his partnership firm - HELD THAT: - The Tribunal held that the finding of bogus sales rested only on statements of third parties and not on any cogent material showing that the transactions were sham. The assessee had furnished GST returns, Form 26AS, ledger accounts and banking evidence to support the sales and job work transactions, and no defect was found in those documents.

Corresponding purchases were accepted, the stock position showed reduction on sale, and it was not the Revenue's case that the goods remained in closing stock. In the absence of any incriminating material found in search and when even the relied upon statements did not state that the assessee's sales to the partnership firm were bogus, the Revenue could not disregard the documented transactions and estimate commission or profit at 8% on mere assumptions and conjectures. [Paras 5]

The sales to the partnership firm were held to be genuine and the addition made by applying 8% profit thereon was deleted.

Final Conclusion: For AY 2023-24, the Tribunal deleted the addition made on the footing that the assessee had earned commission or profit from alleged bogus sales to his partnership firm. Having granted relief on merits, the remaining legal grounds were left open and the appeal was partly allowed.

Cessation of liability- addition u/s 41(1) - Reclassification of loan balances into capital account - Unexplained cash credit

Cessation of liability - Reclassification of loan balances into capital account - Unexplained cash credit - Transfer of outstanding loan balances from family members, earlier shown under sundry creditors and carried to the proprietor's capital account - HELD THAT: - The Tribunal found from the tabulated movement of balances that no fresh cash was introduced during the year and the impugned capital increase represented only a transfer of existing credit balances. On that basis, section 68 had no application, since there was no new sum credited in the relevant year. The Tribunal further held that the assessee continued to acknowledge the amounts as payable to the family members and the Revenue had brought no material to show that those creditors had waived their right to recover the loans. In the absence of proof of cessation of liability, addition under section 41(1) could not be sustained. [Paras 7, 9]

The deletion of the addition representing transfer of family loan balances to the capital account was upheld.

Book entry - TDS and self-assessment tax - Cessation of liability - Unexplained cash credit - HELD THAT: - The Tribunal held that the drawings already included the self-assessment tax component and the TDS stood reflected on the asset side, the omission being only a matter of transfer in accounts. Since the Revenue did not allege that those taxes were paid from undisclosed sources, the entry remained a mere journal or book adjustment without any cash movement. No deduction had been claimed in respect of those amounts, so section 41(1) was inapplicable; equally, there was no credit entry attracting section 68. [Paras 8, 9]

The separate addition in respect of TDS and self-assessment tax was rightly deleted.

Final Conclusion: The Tribunal upheld the order deleting the addition to the capital account for AY 2015-16. It held that the impugned entries were only reclassification or accounting adjustments and did not establish either unexplained cash credit or cessation of liability.

Weighted deduction u/s 35(2AB) - Rectification of mistake apparent from record - Form 3CL quantification of eligible expenditure - rectification application for quantifying the deduction u/s 35(2AB) of the Act as per Form 3CL

HELD THAT: - The Tribunal found that the dispute was not about the assessee's basic eligibility for deduction under section 35(2AB), but only about the quantum of expenditure eligible for weighted deduction. It noted that Form 3CL issued by the prescribed authority had already been sent to the jurisdictional Assessing Officer, and therefore could not be treated as additional evidence produced for the first time in rectification proceedings.

On a plain reading of Rule 6(7A), for the relevant assessment year, quantification of eligible expenditure under section 35(2AB) had to be made on the basis of the expenditure approved by the prescribed authority in Part B of Form 3CL. Consequently, once the assessee sought rectification on the basis of that report, the AO was required to take cognizance of it and quantify the deduction accordingly. [Paras 9, 12]

The impugned order was set aside and the matter was restored to the jurisdictional Assessing Officer for fresh quantification of deduction under section 35(2AB) in accordance with the expenditure approved by DSIR in Form 3CL, after giving the assessee reasonable opportunity of hearing.

Final Conclusion: Tribunal held that Form 3CL, having already been sent to the jurisdictional Assessing Officer, could not be rejected as additional evidence in section 154 proceedings. The appeal was allowed for statistical purposes by restoring the issue of quantification of deduction under section 35(2AB) to the Assessing Officer for fresh determination in line with Form 3CL.

Exemption u/s 54B - Actual agricultural use of land - AO denied claim solely on the basis of the earlier land revenue records which reflected that the land was not under cultivation during the relevant period - HELD THAT: - The Tribunal held that for relief under section 54B, it is not enough that the land is described or classified as agricultural in the revenue records; the statutory requirement is proof of actual use for agricultural purposes. The revised 7/12 extracts produced in appellate proceedings could, at best, give rise to a presumption, but they were not conclusive in the absence of corroborative material showing agricultural operations.

Since no supporting evidence such as sale bills of produce, purchase records of seeds or fertilizers, labour records, or other material establishing active cultivation was brought on record, the essential condition for section 54B remained unproved. On that basis, the Tribunal upheld the concurrent denial of the exemption and distinguished the decision in Govardhan S. Pawar [2017 (11) TMI 1206 - ITAT PUNE] on facts, while relying on Abhijit Subhash Gaikwad [2015 (5) TMI 971 - ITAT PUNE] for the principle that mere recording of land as agricultural is insufficient without proof of actual agricultural use. [Paras 7]

The denial of exemption under section 54B was upheld and the addition sustained by the lower authorities was affirmed.

Final Conclusion: The Tribunal dismissed the appeal and upheld the denial of exemption under section 54B. It held that mere revenue classification of the land as agricultural, without cogent evidence of actual agricultural use during the prescribed period, was insufficient to sustain the claim.

Business expenditure - Commercial expediency - professional fees paid in connection with imports from OFAC entities, i.e., import of goods originating from Iran - ExpenditureWholly and exclusively for business

HELD THAT: - The Tribunal held that the assessee had established the identity of the recipient, genuineness of the payment, and movement of funds through banking channels, since the payee responded to the notice, confirmed the transactions, and furnished its return of income, financial statements, invoices and bank statements showing that the receipts were accounted for and offered to tax. It further held that the nature of the services could not be judged as an ordinary import-export function, because the payments related to imports of goods subjected to OFAC-related banking scrutiny, causing abnormal delay in remittances.

The comparative material placed by the assessee showed reduction in the foreign payment cycle and corresponding increase in turnover and profits after availing the services, thereby establishing nexus with business and commercial expediency. The Tribunal found that the Revenue had proceeded on assumptions in treating the work as routine, without making any independent enquiry from banks or similarly placed importers, and had brought no material to show that the services were non-existent or that the payments had come back to the assessee. Mere suspicion arising from the payee having limited infrastructure or predominantly one client was held insufficient to disallow the claim. [Paras 11]

The disallowance was held unsustainable, and the professional fees were allowed under section 37(1).

Final Conclusion: The Tribunal allowed the appeal and deleted the disallowance of professional fees. It held that the expenditure was genuine, commercially expedient, and incurred wholly and exclusively for the purposes of the assessee's business.

Capital gains computation - Assessment year mismatch in property transfer - Duplicate inclusion of sale transaction - Co-owner's share in sale consideration

Assessment year mismatch in property transfer - Capital gains computation - co-owned property transaction - HELD THAT: - The Tribunal examined the relevant documents and found that the transaction covered by Document No.3923 dated 17/08/2016 related to the immediately succeeding year and therefore could not form part of the assessee's income for the year under appeal. It further found that Document No.3495 dated 23/07/2015 was a sale deed pertaining to the year under consideration and had to be taken into account while computing the assessee's income for AY 2016-17. [Paras 13]

The AO was directed to exclude the transaction under Document No.3923 and include the transaction under Document No.3495 while computing income for AY 2016-17.

Duplicate inclusion of sale transaction - Capital gains computation - separate sale transactions for the year - HELD THAT: - On perusal of the corrected document, the Tribunal found that it expressly recorded that the earlier document contained an error in the survey number and that the later document was issued only to rectify that mistake. The earlier document was therefore not an independent sale transaction but stood subsumed in the amended transaction already considered. Inclusion of both had resulted in duplication in quantifying the sales for the year. [Paras 14]

The Assessing Officer was directed to exclude the transaction covered by Document No.2327, it having already been represented by Document No.2361.

Co-owner's share in sale consideration - Capital gains computation - HELD THAT: - The Tribunal, on examining the sale document, accepted that the assessee had transferred the property jointly with four others as a co-owner. Since the document did not mention separate shares, the Tribunal treated the assessee's share as one-fifth of the total consideration and held that only that proportion could be brought to tax in his hands. [Paras 16]

The Assessing Officer was directed to restrict the assessee's share in the transaction to one-fifth of the total sale value.

Final Conclusion: The Tribunal partly accepted the assessee's contentions on computation of capital gains for AY 2016-17. The order under appeal was set aside and the Assessing Officer was directed to recompute the income by correcting the assessment year mismatch, removing duplication of one sale transaction, and restricting the co-owned transaction to the assessee's one-fifth share.

Leave to appeal against acquittal - Release of seized property after confiscation - recovery and seizure of the prohibitory items.

Release of seized property after confiscation - HELD THAT: - The Court found it undisputed that the seized gold items had already been confiscated by the customs authority. It held that, even leaving aside the position regarding the motorcycle and bicycle, the confiscation of the gold items prima facie stood in contradiction to the trial court's direction for release of the seized articles. On that basis, leave was granted to the appellant to pursue the challenge against the release portion of the order. [Paras 6, 7]

The appeal was permitted to proceed only in relation to the order directing release of the seized items.

Leave to appeal against acquittal - Insufficiency of prosecution evidence - HELD THAT: - The Court noted from the impugned judgment that only one prosecution witness had been examined and that witness had not supported the prosecution case regarding recovery and seizure. In view of that state of evidence, the Court declined to grant leave against the acquittal of the respondents. [Paras 6, 8]

The prayer for leave against acquittal was rejected.

Final Conclusion: The criminal leave petition was allowed only in part. Leave was granted to challenge the trial court's order releasing the seized items, but was refused insofar as the acquittal of the respondents was concerned.

Entitlement to Provisional release of seized imported goods -Conditional release pending adjudication. - HELD THAT: - The Court found that the case stood on facts identical to earlier writ petitions [2025 (1) TMI 800 - SC ORDER], in which seized imported goods had been directed to be released on specified safeguards. Since the matter was still at the stage of seizure memo and the prayer was confined to interim release, the Court adopted the same course and directed the authorities to pass orders for provisional release subject to payment of the enhanced duty as quantified, furnishing of bank guarantee to the extent directed, and maintenance of transaction details if the goods were supplied after release. The Court expressly preserved the authority of Customs to continue adjudication in accordance with law and clarified that the order of conditional release would not influence the adjudicating authority. [Paras 8, 9, 10, 11, 12]

Conditional provisional release was directed, while leaving the adjudication proceedings entirely open to be decided independently on merits.

Final Conclusion: The writ petition was allowed by directing conditional provisional release of the seized goods on payment of quantified enhanced duty and furnishing of bank guarantee, with liberty to the Customs authorities to proceed with adjudication independently and uninfluenced by the release order.

Admissibility of electronic evidence - Printout taken from hard disc and whatsapp chats - Proof of country of origin - Preferential tariff benefit - Customs valuation after clearance for home consumption - Penalty dependent on sustainable duty demand

Admissibility of electronic evidence - Section 138C compliance - Corroboration of statements - Printouts and WhatsApp chats taken from the electronic devices could not be relied upon in the absence of the certificate required under Section 138C(4), and the statements relied upon by the department also lacked independent corroboration. -

- HELD THAT: - The Tribunal held that the Customs Act prescribes a specific statutory mode for admitting computer printouts and other electronic output in evidence, and that mode had not been followed because the certificate contemplated by Section 138C(4) was not furnished. The panchnama could not substitute the statutory certificate. The hard disk was also noted to belong to a person not shown to have any role in the appellant-company's affairs. Apart from the defect in admissibility, the Tribunal found that no independent enquiry had been made from the persons named in the alleged documents, and the electronic material was not corroborated by investigation. It further held that reliance on the statements of Shri Puneet Kumar and Shri Sanjay Jain, without independent documentary corroboration, was legally unsustainable. [Paras 21, 22, 25, 35]

The electronic material and the uncorroborated statements were held unreliable and could not form the basis of the demand.

Proof of country of origin - Certificate of Origin - Preferential tariff benefit - HELD THAT: - The Tribunal found that the import documents, including the Certificates of Origin, consistently recorded the origin of the goods, and no enquiry had been undertaken by the department with the competent authority of the exporting country to establish that the certificates were fake or incorrect.

The Tribunal in the case of Alfakrina Exports [2023 (9) TMI 86 - CESTAT AHMEDABAD] on the issue of non-acceptability of Country of Origin Certificate for deciding origin of goods held that the Certificate of country of origin cannot be discarded without checking its authenticity and benefit if any cannot be denied.

Referring to the verification mechanism under the Rules of Origin framework, the Tribunal held that, in the absence of any such verification request or other evidence disproving the certificates, the department could not disregard the Certificates of Origin and infer Chinese origin merely on suspicion or on inadmissible electronic material. [Paras 26, 27, 28]

The finding that the goods were of Chinese origin and the consequent denial of preferential benefit were held unsustainable.

Transaction value - Proforma invoice - Customs valuation after clearance for home consumption - HELD THAT: - The Tribunal held that the undervaluation case rested only on proforma invoices recovered from the hard disk, which themselves were inadmissible for want of compliance with Section 138C(4). In any event, a proforma invoice is only a quotation or offer and not proof of the price actually paid or payable, and no evidence was produced to show extra payment by the importer or contemporaneous imports of identical or similar goods at a higher value. The Tribunal further held that Section 14 and the Customs Valuation Rules apply only to imported goods, and once the goods stood cleared for home consumption they ceased to retain that character.

The Hon’ble Punjab & Haryana High Court in the case of Jairath International vs. UOI [2019 (10) TMI 642 - PUNJAB AND HARYANA HIGH COURT], where the Court has dealt the issue relating to reassessment of already exported goods and held that the goods already exported are not covered under the definition of ‘export goods’, hence, the Department cannot invoke Valuation Rules for re-assessment. The Customs Valuation (Determination of Value of Export Goods) Rules, 2007 and the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007 are pari-materia. It is provided under Rule 1(3) of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 that they shall apply to export goods. In the case of Famina Knit Fabs vs. UOI [2019 (9) TMI 970 - PUNJAB AND HARYANA HIGH COURT], the High Court has expressed the same view. Similar provision is also available in the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007. Under Rule 1(3) the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007 it is specified that they shall be applied to imported goods. The ratio of aforesaid decision is unequivocally applicable in the present case also. Hence, enhancement of value of goods already cleared is not legally justified.

Accordingly, redetermination of value under the valuation rules for such already cleared goods was not legally permissible. [Paras 30, 31, 32, 33, 34]

The enhancement of value and the consequential differential duty demand were held not sustainable.

Penalty dependent on sustainable duty demand - Penalty on directors - HELD THAT: - Supreme Court in the case of H.M.M. Ltd. [1995 (1) TMI 70 - SUPREME COURT] where it has held in case main proceeding fail, the penalty imposed cannot stand independently. Similarly, in the case of Akbar Badruddin Jiwani [1990 (2) TMI 50 - SUPREME COURT], it has been ruled that Penalty under customs law cannot be imposed where the allegation itself fails. Since the allegations against the importing company have not been sustained and the proposal for imposition of penalty on the company has been dropped, the question of imposing penalty on the Director does not arise. It is a settled legal position that penalty on company officials cannot survive independently when the main case against the company fails, unless specific evidence of their individual involvement is brought on record. In the present case, no such independent evidence has been adduced. Accordingly, the penalty proposed on Shri Puneet Kumar and Shri Gaurav is also liable to be dropped.

All penalties were liable to be set aside.

Final Conclusion: The Tribunal held that the impugned demand was founded on inadmissible electronic evidence, unverified rejection of the Certificates of Origin, and an unsustainable enhancement of value. The common order was set aside and all three appeals were allowed with consequential relief as per law.

MEIS duty credit scrips - Payments of Education Cess and Secondary & Higher Education Cess - Valid discharge of customs duty liability - past cases - Effect of Clause 11 of Circular No. 02/2020-Cus - CBIC circular interpretation - Payments of Education Cess and Secondary & Higher Education Cess for the past period, made through debit in MEIS duty credit scrips, were valid discharge of duty liability. ​​​​​​​- HELD THAT: - The Tribunal held that the controversy turned on the scope of clause 11 of CBIC Circular No. 02/2020-Customs. Though the circular expressly referred to Social Welfare Surcharge, its underlying principle was that past payments made through duty credit scrips were not to be disturbed and were to be accepted as duty already collected. Following KTV Health Food Pvt. Ltd. vs. Commissioner of Customs (Preventive), Tiruchirappalli [2021 (10) TMI 119 - MADRAS HIGH COURT] and its own decision in Wellknown Polyester Ltd. vs. Commissioner of Customs, Mumbai [2023 (6) TMI 911 - CESTAT MUMBAI], the Tribunal held that Education Cess and Secondary & Higher Education Cess on imported goods were also to be treated as part of customs duty and that, for past imports, debit through MEIS scrips could not be rejected. Since the duty liability had in fact been discharged and there was no allegation of suppression, fraud, or misdeclaration, insistence on cash recovery would amount to impermissible double recovery. [Paras 8, 9, 10, 11, 13]

The Revenue's challenge failed, and the discharge of Education Cess and Secondary & Higher Education Cess through MEIS scrips for the past period was upheld as valid.

Final Conclusion: The Tribunal upheld the impugned orders and dismissed the Revenue's appeals. It held that, for past imports, debit of Education Cess and Secondary & Higher Education Cess through MEIS duty credit scrips constituted valid discharge of duty and could not be recovered again in cash.

Imposition of penalty on the appellant as a co-noticee - Under-valuation - Transaction Value - Identical Goods - Burden of Proof - Parity of Treatment - No Evidence of Collusion.

Penalty under section 112(a) - Co-noticee liability - Under-valuation - HELD THAT: - The Tribunal noted that penalties imposed on the importer and another co-noticee under the same impugned order and on the same factual foundation had already been set aside in earlier appeals, and held that the same ratio applied to the present appellant as well. It further found that the appellant was not the importer and that no material had been brought on record to show his involvement in undervaluation. The allegation of undervaluation rested only on comparison with the valuation adopted by another importer, which was held to be not comparable; apart from that comparison, there was no evidence of undervaluation. On that basis, the allegation itself was held not to survive and, consequently, penalty under section 112(a) was held not imposable. [Paras 9, 10]

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

Penalty under section 112(a) - Violation of provisions of the Customs Act - HELD THAT: - The Tribunal recorded that, so far as the allegation relating to safe custody of the seized air-conditioners was concerned, separate criminal action had already been initiated. It held that penalty under section 112(a) can be imposed only for violation of the provisions of the Customs Act. Since the customs allegation of under-valuation against the appellant had already failed, that separate allegation could not independently sustain the customs penalty. [Paras 11]

The penalty under section 112(a) was held unsustainable on this ground also.

Final Conclusion: The Tribunal held that the allegation of under-valuation was not established against the appellant and that his limited role after clearance did not attract penalty under section 112(a). The appeal was accordingly allowed and the penalty was set aside.

Cross-examination of witnesses - Evidentiary value of witness statements - Certificate of origin - HELD THAT: - An identical issue had come up before this Bench in the case of CC (Prev), Kolkata Vs Shri Krishan Goswami. This Bench vide Final Order [2025 (11) TMI 1117 - CESTAT KOLKATA] has held as under: “5. We find that the Respondents have produced the Certificate of Country of Origin issued by the Bangladesh Authorities and it has not been disputed by the Authorities and it has also not been held that the said Certificate issued by the Bangladesh Authorities for country of origin, is fake or fabricated. In that circumstances, the Ld. Adjudicating Authority has rightly dropped the proceedings against the respondents. In view of this, we do not find any infirmity in the impugned order and the same is upheld. - In the result, the appeals filed by the Revenue are dismissed.”

The Tribunal held that the adjudicating authority rightly declined to rely on the statements of the key witnesses once they were not made available for cross-examination, particularly in view of the direction of the High Court that such statements could not be relied upon if cross-examination was not allowed. It further noted that the Revenue itself admitted that the certificates of origin issued by the overseas authorities were still valid and had not been cancelled. Since the Revenue case rested on the allegation that those certificates were not proper, and that allegation stood unsupported in the absence of cancellation by the issuing authorities, no infirmity was found in the order dropping the proceedings. The Tribunal also found its earlier decisions on identical facts to be applicable. [Paras 4, 7, 8]

The Revenue appeals were dismissed and the order dropping the proceedings was upheld.

Final Conclusion: The Tribunal found no ground to interfere with the order dropping the proceedings. As the key witness statements could not be relied upon for want of cross-examination and the certificates of origin remained valid, the Revenue's appeals were dismissed.

Classification of goods - black mineral water supplied under the brand name "ALVA" - classifiable under HSN 22011010, and if so, the applicable GST rate - GST rate on bottled water not containing added sugar or flavour.

HSN classification - Artificial mineral water - HELD THAT: - The applicant is engaged in the business of manufacture and supply of bottled water under the brand ALVA (trade name: OXYHYDRA BEVERAGES PVT.LTD.) which is sold in bottles of various capacities (250 ml, 475 ml, 500 ml& in 1 L) packed, labelled and marketed for human consumption. The applicant has submitted that their product is water with added minerals (as per laboratory report shown in para 3 above), does not contain any added flavoring, added sugar, sweetening matter, preservatives or any other additives (lab reports confirm only mineral composition and standard physico-chemical parameters). The applicant is of the opinion that their product is covered under HSN heading and sub-heading (2201/22011010) as it covers mineral waters and aerated waters that do not contain added sugar or flavour, that the applicant’s product contains added minerals only and contains no flavouring or sweeteners & therefore the product squarely fits within the scope of HSN 22011010. The applicant has further stated that the addition of minerals (to achieve mineral composition) does not transform the product into a different category outside heading 2201, that 2201 notes and explanatory notes for HS Chapter 22 treat mineral waters (22011010 etc.) (natural or artificial) as covered under sub-headings for mineral waters (22011010 etc.) and therefore, the presence of minerals (whether naturally occurring or added to purified water to produce a mineral water) does not preclude classification under 22011010 provided there is no added sugar or flavour (which is not present in the applicant’s product).

The Authority examined the laboratory report and the manufacturing flow charts and found that the product was drinking water containing added minerals, without added sugar, sweetening matter or flavouring substances. Referring to Heading 2201 and the HSN Notes, it held that artificial mineral waters prepared from potable water by adding mineral salts or gases remain covered within mineral waters, so long as they are not sweetened or flavoured. Since the product answered that description, it fell under Heading 2201, specifically sub-heading 22011010. [Paras 13]

The product was held classifiable as mineral water under HSN 22011010.

Rate notification - Entry 146 of Schedule I - GST rate - HELD THAT: - After determining the classification under Heading 2201, the Authority referred to Notification No. 09/2025-Central Tax (Rate) and noted that Entry 146 of Schedule I covers waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured. As the product had already been found to answer that description, it was held taxable at the notified rate of 5 per cent. [Paras 15]

The product was held covered by Entry 146 of Schedule I and liable to GST at 5 per cent.

Final Conclusion: The Authority ruled that the applicant's black mineral water sold under the brand ALVA is classifiable under HSN 22011010 as mineral water. Consequently, it falls under Entry 146 of Schedule I to Notification No. 09/2025-Central Tax (Rate) and attracts GST at 5 per cent.

Transfer of winding up proceedings to NCLT - Irreversible or irretrievable stage test - Claim for unpaid expenses incurred in protecting the assets of the company in liquidation - HELD THAT: - The Court held that, after Section 434 of the Companies Act, 2013 came into operation, the governing test for transfer of a pending winding up matter is the test laid down in Action Ispat and Power Private Limited v. Shyam Metalics and Energy Limited [2020 (12) TMI 535 - SUPREME COURT] and A. Navinchandra Steels Private Limited v. SREI Equipment Finance Limited and Others [2021 (3) TMI 38 - SUPREME COURT], namely, whether the winding up has reached an irreversible or irretrievable stage, or the company is near corporate death. The observations in those decisions regarding expenses incurred by the Official Liquidator did not lay down any rule that such expenses must first be paid as a condition precedent to transfer. The Court found that no sale of the assets had taken place and no fact was shown indicating any irreversible or irretrievable act or stage in the present winding up. It further held that the pendency or non-payment of the appellant's claim for services rendered under the Official Liquidator did not by itself render the proceedings irreversible, and Section 529 of the Companies Act, 1956 did not assist the appellant since its claim could be made before the NCLT. [Paras 22, 25, 26, 27, 30]

The challenge to the transfer orders failed, and the winding up proceedings along with connected applications were liable to remain transferred to the NCLT.

Final Conclusion: The Division Bench upheld both orders transferring the winding up matters to the NCLT. It held that unpaid claims arising from services rendered under the Official Liquidator do not bar transfer absent any irreversible or irretrievable stage in the winding up proceedings.

Adjudication of penalty - monetary penalty under Section 39(5) - Proportionality in penalty - Return of allotment - Officer who is in default - Joint and several liability - Whether the penalty is at all attracted in the facts of the case, and if so, whether the quantum of penalty imposed is compliant with the Companies Act and is a product of appropriate and reasonable exercise of jurisdiction.

Adjudication of penalty - Proportionality in penalty - Discretion in quantification - HELD THAT: - The Court held that Section 39(5), which uses the expression "shall be liable to a penalty" with a per-day measure capped by the phrase "whichever is less", had to be read in a constitutionally valid manner along with Rule 3(12) of the Companies (Adjudication of Penalties) Rules, 2014. An interpretation reducing the adjudicatory function to a purely mechanical computation, without examining the nature, gravity, impact, and surrounding circumstances of the default, would render the provision arbitrary. Relying on the larger Bench decision in SEBI v. Bhavesh Pabari [2019 (3) TMI 197 - SUPREME COURT], which interpreted the identically worded Section 15-A of the SEBI Act, the Court held that aggravating and mitigating factors must govern quantification and that Rule 3(13) had no application. The impugned order was therefore erroneous in treating Section 39(5) at once as a minimum penalty provision and a fixed penalty provision, and in failing to analyse the factors mandated by Rule 3(12). [Paras 35, 37, 38, 39, 40]

The impugned order was liable to interference to the extent it quantified penalty on the erroneous footing that Section 39(5) left no discretion and permitted no proportionality analysis.

Return of allotment - Certification of annexures - Technical breach - Non-certification of the attached list of allottees separately by the signatory of Form PAS-3 constituted a default under Rule 12(2), notwithstanding the affirmation contained in Form PAS-3. - HELD THAT: - The Court rejected the contention that the verification and affirmation in Form PAS-3 itself amounted to complete compliance with Rule 12(2). It held that Rule 12(2) requires a distinct and reiterative certification of the list of allottees by the same signatory who signs Form PAS-3, and this dual requirement cannot be effaced by the standard affirmation clause in the form. The affirmation in Form PAS-3 did, however, bear on the gravity of the lapse and showed the breach to be technical in the facts of the case, in the absence of aggravating circumstances. The breach therefore subsisted, though it called for a tempered measure of penalty rather than complete exoneration. [Paras 42, 43, 44, 45]

The finding that Section 39(5) stood attracted was sustained, but the lapse was treated as a technical default relevant to mitigation in quantifying penalty.

Officer who is in default - Joint and several liability - Arbitrary quantification - HELD THAT: - The Court held that the adjudicating officer's approach of imposing the maximum penalty and then multiplying it by the number of directors rendered the quantification arbitrary. Although Section 2(60)(iii) may bring all directors within the expression "officer who is in default" where no specific officer is designated, the impugned order contained no analysis of the conditions relevant to director liability, including those reflected in Section 2(60)(vi). Further, nothing in Section 39(5) compelled the conclusion that liability had to be several and mechanically multiplied by the number of directors. In the circumstances of a non-serious default with mitigating features, the Court held that a reasonable construction was to impose the penalty jointly and severally on the company and its directors. [Paras 47, 48, 49, 50, 51]

The penalty was modified to Rs. 1 lakh for each return of allotment in default, payable jointly and severally by the company and its directors.

Final Conclusion: The Court upheld the existence of a default in filing returns of allotment without separate certification of the list of allottees, but held that the penalty had been quantified on a legally erroneous and arbitrary basis. The impugned order was modified by fixing the penalty at Rs. 1 lakh for each default, payable jointly and severally by the company and its directors.

Entitlement to regular bail in the money-laundering case - Proceeds of Crime - Twin conditions under Section 45 - Prolonged pre-trial detention - Completion of investigation and filing of prosecution complaint. - HELD THAT: - The Court found that the ECIR was an offshoot of the predicate offence in which the applicant had already been granted bail by the Supreme Court. It further noted that, although the ECIR had been recorded much earlier, the applicant was arrested only after almost eleven months of investigation, despite his being continuously available in judicial custody and despite earlier searches having already been conducted. Since the investigation qua the applicant stood concluded and the prosecution complaint had already been filed, custodial interrogation was no longer required. Relying on Arvind Walia v. Directorate of Enforcement and Another [2026 (3) TMI 1376 - SC ORDER], the Court held that Section 45 of the PMLA cannot be interpreted to justify indefinite detention and that, in the facts of the case, the twin conditions stood satisfied. The substantial period of custody already undergone, the likely delay in conclusion of trial, and absence of material showing likelihood of absconding, tampering with evidence, or influencing witnesses weighed in favour of release. [Paras 14, 15, 17, 18, 19]

Regular bail was granted subject to conditions.

Final Conclusion: The Court held that, in the facts of the case, continued detention under the PMLA was not justified after completion of investigation and filing of the prosecution complaint, particularly when the applicant had already secured bail in the predicate offence and trial was likely to take time. The bail application was accordingly allowed subject to conditions.

Failure to consider exemption claim - Non-consideration of material reply to show cause notice - Benefit of Notification No.25/2012-ST - Opportunity to pursue statutory appeal- Principles of natural justice - Alternate remedy - HELD THAT: - The Court found that, although there was clear lapse on the petitioner's part in not updating the departmental address and in not diligently following up after filing the reply, the material contention based on the exemption notification went to the root of the tax liability. Since the reply to the show cause notice contained details of the nature of work executed and the notification specifically covered services provided to the Government in the specified forms of works, the adjudicating authority was required to examine and clarify why the petitioner was not entitled to the claimed exemption. As the impugned order did not specifically address that exemption claim, the petitioner was required to be afforded an opportunity to establish the case before the appellate authority. On that ground, the Court permitted filing of the statutory appeal and directed that the delay be ignored subject to payment of costs. [Paras 11, 12, 13]

The petitioner was permitted to file an appeal, and the appellate authority was directed to decide it on merits after ignoring the delay, subject to payment of costs.

Final Conclusion: The writ petition was disposed of by permitting the petitioner to pursue the statutory appeal notwithstanding delay, because the adjudication order had not specifically considered the exemption claim raised in reply to the show cause notice. The delay was directed to be ignored subject to payment of costs, and the appeal was to be decided on merits in accordance with law.

Application for rectification of mistake - Mistake apparent from record - Recall of final order - Failure to properly examine mutuality - Doctrine of Mutuality -incorrect reference to pages of the order-in-original. - HELD THAT: - The Tribunal held that the Revenue had made out a case for rectification, since the earlier order proceeded on the basis of mutuality without proper examination of the factual foundation for that conclusion. It also accepted that the earlier order wrongly referred to page numbers 84 to 86 of the order-in-original although no such pages existed. In view of these defects, the Tribunal treated the errors as apparent on the face of the record and found it necessary to recall the final order rather than sustain it on the existing reasoning. [Paras 5]

The rectification application was allowed and the earlier final order was recalled.

Final Conclusion: The Tribunal held that the earlier order contained mistakes apparent from the record, particularly in relation to the treatment of mutuality and the erroneous reference to non-existent pages of the order-in-original. The Revenue's rectification application was therefore allowed and the final order was recalled.

Validity of the show cause notice merely referred to Business Auxiliary Service without specifying the particular sub-clause of section 65(19) of the Finance Act, 1994 - Natural justice in tax adjudication - Audi Alteram Partem - Natural Justice - Vagueness of Show Cause Notice -Classification under business auxiliary service - Demand of service tax, interest, and penalties. - HELD THAT: - The Tribunal held that where a statutory definition contains distinct sub-clauses describing different taxable activities, the show cause notice must identify the precise sub-clause invoked, since the notice is the foundation of the proceedings and defines the limits of adjudicatory jurisdiction. A notice which cites only the parent taxable category and leaves the assessee to guess the exact charge is vague and denies an effective opportunity of defence, thereby offending natural justice. The defect could not be cured at the adjudication stage by the Commissioner classifying the activities under sub-clauses (vi) and (vii), because the adjudicating authority cannot travel beyond the notice or supply what it omits. On that basis, the notice was held fatally defective, and the demand, interest and penalties raised pursuant to it were unsustainable. The Tribunal therefore left the merits of whether the activities were information technology services expressly open. [Paras 16, 17, 18, 19, 20]

The show cause notice was vitiated for want of specific classification under section 65(19), and the entire demand with consequential interest and penalties was set aside without examining the merits of taxability.

Final Conclusion: The appeal was allowed on the preliminary ground that the show cause notice was fatally vague for not specifying the relevant sub-clause of section 65(19). Consequently, the service tax demand, interest and penalties were set aside, while the substantive issue on taxability of the appellant's data processing activities was left open.

Imposition of Penalty - Voluntary payment before show-cause notice - Applicability of section 73(3) - Prospective operation of section 73(4A) - Suppression of facts - Intent to evade tax - Extended period of limitation. -HELD THAT: - The Tribunal accepted the Commissioner's reasoning that section 73(3) applied once the assessee, on discrepancies being pointed out in audit, paid the service tax and interest before service of notice and informed the department. The determinative basis was that the allegation of suppression with intent to evade had not been sustained; in such a case, the department was not justified in seeking penalties merely because the payment followed audit objection. The Tribunal also accepted that section 73(4A), introduced with effect from 08.04.2011, had no retrospective application and therefore had no bearing on a dispute relating to the period prior to that date. Following CCE & ST, LTU, Bangalore Versus Adecco Flexicone Workforce Solutions Ltd. [2011 (9) TMI 114 - KARNATAKA HIGH COURT], the Tribunal held that where tax and interest stand paid before notice in a case not falling within the extended period, penalty was not exigible. [Paras 4, 5, 6]

The Revenue's challenge to non-imposition of penalty was rejected and the Commissioner's order was upheld.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and sustained the non-imposition of penalties. It held that, in the absence of sustainable suppression and with service tax and interest having been paid before notice, section 73(3) governed the case, while section 73(4A) was inapplicable to the pre-08.04.2011 period.

Demand on services relating to roads executed for PWD/CPWD - Retrospective exemption for management, maintenance or repair of roads - Exemption from service tax for the relevant period under the retrospective special provision -activities of handling, loading, unloading, haulage, cartage and clearing work - liable to service tax as manpower recruitment or supply agency service.

Retrospective exemption for management, maintenance or repair of roads -Management, Maintenance or Repair Service - HELD THAT:- The Tribunal held that Section 97 expressly exempted management, maintenance or repair of roads for the period from 16.06.2005 to 26.07.2009. Since the dispute on this part of the demand pertained to 16.06.2005 to 31.03.2009, the entire period fell within the statutory exemption. On that basis, the demand under Management, Maintenance or Repair Service was liable to be set aside. [Paras 6]

The demand under Management, Maintenance or Repair Service was set aside as covered by the retrospective exemption.

Classification of composite handling contract vis-a-vis manpower recruitment or supply agency service - Composite service contract - HELD THAT: - The Tribunal found that, under the tender conditions, the appellant was required to undertake the specified handling and allied operations as a whole and to comply with labour law requirements incidental to performance of that contract. Payment was linked to the quantum of work executed and not to the number of workers supplied. The communication from IOCL also stated that the contract was not for manpower supply but for execution of work. The mere fact that labour was engaged in performing the contract did not convert the arrangement into manpower recruitment or supply agency service when the obligation was to render a composite set of services. The demand under that category therefore lacked basis. [Paras 7]

The demand under Manpower Recruitment or Supply Agency Service was set aside.

Works Contract Service - Uncontested tax liability - HELD THAT: - The Tribunal recorded the appellant's express statement that the confirmed demand under Works Contract Service was not being disputed. In the absence of contest on merits, that part of the demand was upheld. [Paras 5]

The demand under Works Contract Service was upheld.

Final Conclusion: The appeal was partly allowed. The demands under Management, Maintenance or Repair Service and Manpower Recruitment or Supply Agency Service were set aside, while the demand under Works Contract Service was upheld as not contested.

Undervaluation of goods -Valuation of stock transfer to own unit - clearances of scrap/end cuttings to the amalgamated sister unit - Captive consumption - Amalgamation and absence of sale - Revenue neutrality - Suppression of facts - Substantive benefit - Extended period of limitation - Cenvat credit procedural lapse - duty demand, penalty and interest.

Valuation of stock transfer to own unit - HELD THAT: - The Tribunal held that, after amalgamation, the appellant and GPIL constituted the same legal entity, sharing the same PAN and Corporate Identification Number, and therefore the movement of goods between them was not a sale between two distinct legal persons. On that basis, Rules 9 and 10 of the Valuation Rules, which apply to related-party sales, were held inapplicable. Relying on Jindal Steel and Power Ltd. v. Commissioner of Central Tax, GST & Central Excise, Rourkela [2026 (1) TMI 648 - CESTAT KOLKATA], the Tribunal held that Rule 8 applied to such transfers within the same entity for further manufacture, and since that basis had not been examined by the authorities, the duty demand could not stand. The Tribunal further held that the situation was revenue neutral because duty paid by one unit would be available as Cenvat credit to the other unit. It also found that the department was aware of the clearances through regular returns and audit, and therefore suppression with intent to evade duty was not established, making invocation of the extended period unsustainable. For the same reasons, penalty under Section 11AC was also not sustainable, and the departmental authorities' contrary case law was distinguished on facts. [Paras 6]

The demand of central excise duty on alleged undervaluation, together with interest and penalty, was set aside.

Cenvat credit procedural lapse - beyond the prescribed period -HELD THAT: - The Tribunal found that the only ground for disallowance was that the credit had been availed beyond the prescribed time from the invoice date, while receipt and utilisation of the inputs in manufacture were not disputed. It treated the time requirement, in the facts of the case, as a procedural condition and held that substantive Cenvat credit otherwise admissible to the appellant could not be denied solely on that ground. Consequently, the associated interest and penalty were also held to be unsustainable. [Paras 7]

The disallowance of Cenvat credit, along with consequential interest and penalty, was set aside.

Final Conclusion: The Tribunal held that transfers to GPIL after amalgamation were not related-party sales and had been wrongly subjected to valuation under Rules 9 and 10; the duty demand was unsustainable also on the grounds of revenue neutrality and limitation. The disallowance of Cenvat credit taken beyond the prescribed period was likewise set aside, and the appeal was allowed with consequential relief.

Place of removal - Includibility of freight and allied charges in assessable value - Sale completed at the buyer's premises and FOR sale - Explosives goods requiring delivery through specialised vehicles in compliance with statutory conditions - Extended period of limitation - Penalty under section 11AC - Whether transportation charges incurred up to the buyer’s premises is includible or otherwise ?

Whether the goods have been sold at the factory gate or they have been sold at buyer’s premises, whereby, the place of removal shifts to the buyer’s premises ? - HELD THAT: - The Tribunal held that, having regard to the peculiar nature of explosives and the statutory requirements governing their transport and delivery, the transaction could not be split into a factory-gate sale followed by an independent transportation arrangement. Since the goods could be transported only by the appellant in specialised vehicles and delivery could effectively be completed only at the buyer's premises, the sale was treated as an FOR sale and the buyer's premises became the place of removal. On that basis, all costs incurred up to delivery at the buyer's premises, except permissible deductions, formed part of the assessable value. The Tribunal preferred the Larger Bench view in Ramco Cements Ltd Vs CCE, Puducherry [2023 (12) TMI 1332 - CESTAT CHENNAI-LB] after noticing the line of decisions including CCE, Nagpur Vs Ispat Industries Ltd [2015 (10) TMI 613 - SUPREME COURT]. [Paras 7, 8]

On merits, the demand was sustainable on the footing that the place of removal was the buyer's premises and freight up to that stage was includible in value.

Extended period of limitation - Interpretational dispute - Suppression - Penalty under section 11AC - HELD THAT: - The Tribunal found no material to establish deliberate suppression or intent to evade duty. The transportation arrangement arose from statutory requirements applicable to explosives, and the dispute as to includibility of freight turned on the determination of place of removal, on which conflicting judicial views existed during the relevant period. The different billing patterns adopted for different buyers were explained by contractual requirements and did not, by themselves, prove deliberate evasion. In these circumstances, the matter was treated as one of interpretation, and the conditions for invoking the extended period were held not to be satisfied. Consequently, the demand could survive only for the normal period, and penalty under section 11AC was held to be unsustainable. The matter was remanded only for recomputation of duty within the normal period. [Paras 9, 10, 11]

The demand was restricted to the normal period, penalty was set aside, and the matter was remanded solely for recomputation of duty within that period.

Final Conclusion: The Tribunal held that, on the facts, the buyer's premises constituted the place of removal and the freight component up to delivery was includible in assessable value. However, the extended period and penalty were held unsustainable, and the matter was remanded only for recomputation of duty within the normal period.

Liability to pay duty on inputs used in the manufacture of exempted goods cleared into the Domestic Tariff Area without payment of duty - Interpretation of proviso to exemption notification- 100% Export Oriented Unit -Whether the appellant is liable to pay duty on the inputs used in the manufacture of exempted goods cleared under Notification No. 22/2003 dated 31.03.2003 for the disputed periods -HELD THAT: - Following the earlier order in the assessee's own case [2025 (3) TMI 777 - CESTAT BANGALORE], the Tribunal held that the proviso to paragraph 3 of Notification No. 52/2003-Cus had to be read together with the main clause and could not be treated as independent of it. The proviso qualified the exemption by requiring payment of duty foregone on inputs where finished goods were cleared in DTA without payment of duty. The contention that the case fell only under the main clause, and that the proviso could not control it, was rejected, since the proviso operated as a restriction on the exemption in the situations covered by the main provision itself. On that reasoning, the demand sustained by the lower authorities was upheld. [Paras 5, 6]

The demand on inputs used in manufacture of exempted DTA clearances was sustained and the appeals were rejected.

Final Conclusion: The Tribunal, following its earlier order in the assessee's own case, held that the proviso to the exemption notification qualified the main exemption and required payment of duty on inputs used in manufacture of exempted goods cleared in DTA without payment of duty. The impugned orders were upheld and both appeals were rejected.

Rejection of the sale price - Assessable value - Definition of related person under Section 4(3)(b) - Mutuality of interest - Extended period of limitation - Suppression of fact.

Whether the appellant M/s. Neptune Industries (M/s. Jupiter Concrete blocks & Allied Products (P) Ltd., w.e.f. March 2016) and M/s. APCO Concrete Blocks and Allied Products (Apco) are related persons and the prices at which Apco sold the products be assessable to duty under Rule 11 read with Rule 9 and Rule 10 of the CEVR, 2000 ? - HELD THAT: - The Tribunal held that mere existence of a common partner in both firms and the fact that most of the production was sold to Apco were insufficient to establish relationship within the meaning of Section 4(3)(b). The determinative test was whether both entities had direct or indirect interest in the business of each other. Since the record disclosed no evidence of financial flow back, control of one firm over the other, or any other material showing mutuality of interest, the finding of related-person transactions could not be sustained.

This Tribunal in the case of Ananthapuri Polymers Pvt. Ltd. Vs. CCE,C&ST [2025 (7) TMI 2013 - CESTAT BANGALORE], considering more or less in similar facts and circumstances, held that merely one of the Directors of the appellant company is related to a partner of the related company of the appellant could not be considered that the transaction is between the ‘related persons’. Further, the scope of ‘related person’ has been examined by the Tribunal in the case of Eastern Bakeries Pvt. Ltd. Vs. CCE, [2013 (5) TMI 322 - CESTAT KOLKATA].

Applying the principles laid down in the aforesaid case to the facts of the present case, thus except making allegation that one of the partners is common in both the firms, no other evidence has been brought on record to substantiate that the appellant - seller and the purchaser - Apco have interest directly or indirectly in the business of each other.

The valuation adopted on the basis that the buyer was a related person was set aside.

Extended period of limitation - Suppression of facts - HELD THAT: - The Tribunal found that the appellant had been paying duty on the value at which goods were sold to Apco and had been subjected to periodic departmental audits. In that background, the demand could not be sustained by invoking the extended period on the allegation of suppression. [Paras 9]

The demand raised for the extended period was held unsustainable.

Final Conclusion: The Tribunal held that the material on record did not establish that the appellant and Apco were related persons, and therefore the valuation based on Apco's sale price could not stand. The invocation of the extended period was also rejected, with the result that the impugned orders, including the remand and consequential de novo quantification, were set aside and the appeals were allowed.

Scope and Effect of arbitral tribunal's award of prolongation costs and overheads - Employer-attributable delay - Patent illegality or perversity - Quantification of Damages - Change in Law - Limited judicial interference with arbitral awards - Contractual interpretation in arbitration - reimbursement of GST arising during the contract period - claim for minimum-wage escalation - contractual pricing and wage clauses - Environmental Compensation Charges levied during execution - direction on applicable taxes.

Prolongation costs - Quantification of damages - Section 34 review - HELD THAT: - The Court held that the Tribunal had examined the pleadings, evidence, extensions of time and the sequence of delay, and had returned a finding that the prolongation beyond the scheduled completion date was attributable to the petitioner. In that background, the Tribunal's adoption of a reasonable methodology based on contract value, accepted industry practice and material available on record was a matter falling within arbitral domain. Mathematical precision was not indispensable where exact computation was impracticable, and the use of a recognised estimation method did not amount to creation of a new case. As the challenge was essentially directed at the sufficiency of evidence and the formula adopted, it amounted to an impermissible attempt at re-appreciation of evidence under Section 34. [Paras 45, 46, 47, 48, 49]

No patent illegality or perversity was made out in the Tribunal's quantification of prolongation costs, and the objection to Claim No. 1 was rejected.

GST reimbursement - Change in law - Contractual interpretation - HELD THAT: - The Court held that the controversy turned on interpretation of the contractual clauses dealing with taxes and change in law. The Tribunal had construed those clauses in the factual context that GST was introduced after the scheduled completion date and during the extended period attributable to the petitioner, thereby imposing an additional financial burden on the respondent. The Court also noted that the petitioner had itself offered reimbursement at a lower rate, indicating acceptance of liability in principle. Since the Tribunal had not disregarded the contract but had adopted a possible view on its construction, mere disagreement with that interpretation could not found a challenge under Section 34 or Section 28(3). [Paras 50, 51]

The objection to Claim No. 3 failed, and the GST reimbursement awarded by the Tribunal was sustained.

Minimum wage escalation - Employer-caused delay - Contractual bar clauses - HELD THAT: - The Court accepted the Tribunal's interpretation that the clause excluding extra payment for increase in minimum wages during the currency of the contract could not be applied to deprive the contractor of compensation for an extended period attributable to the employer. The Tribunal had also recorded that evidence had been led to show payment of enhanced wages. The Court treated this as an exercise in contractual interpretation and appreciation of evidence, and held that the clause had not been ignored but harmoniously construed in light of the finding on delay. Such a view was neither perverse nor in direct conflict with the contract, and therefore did not warrant interference under Section 34. [Paras 52, 53]

The award on Claim No. 5 relating to increased minimum wages was upheld.

Environmental Compensation Charges - Additional payment under contract - Taxes on awarded amount - HELD THAT: - The Court held that the Tribunal had found ECC to be an additional charge arising during execution pursuant to directions issued during the subsistence of the works, and not squarely covered by the exclusion relating to tax, duty or levy. The Tribunal also relied on the contractual claim procedure permitting claims for additional payment under any clause of the conditions or otherwise. On that basis, the interpretation that the contractual exclusion did not unequivocally bar ECC was held to be a plausible one. As regards taxes on the awarded amount, the Court treated the direction as merely consequential, clarifying that only taxes legally leviable and payable could be recovered, and found no express contractual prohibition against such a direction. [Paras 54, 55, 56]

The objections to Claim No. 8 and to the direction regarding applicable taxes on the awarded amount were rejected.

Majority arbitral award - Dissenting opinion - Patent illegality - HELD THAT: - The Court held that arbitration law recognises the majority decision as the award. Once the majority award reflected a reasoned consideration of the pleadings, evidence and contractual framework, the Court could not replace that view with the reasoning contained in the dissent. On the Court's overall examination, the objections sought re-appreciation of evidence and re-interpretation of contractual clauses, and did not establish patent illegality, perversity, violation of Section 28(3), or conflict with the fundamental policy of Indian law. [Paras 58, 62, 63, 64, 65]

The majority award remained binding and the petition under Section 34 was dismissed.

Final Conclusion: The Court held that the majority arbitral award represented a reasoned and plausible view on delay, quantification of damages, and interpretation of the contractual clauses relating to GST, minimum wages, ECC and applicable taxes. As the objections sought re-appreciation of evidence and re-interpretation of the contract beyond the narrow confines of Section 34, the petition was dismissed.