TMI Tax Updates e-Newsletter
May 25,2026

Presumption of constitutionality of subordinate legislation - power to issue instructions or directions under Section 168 of the CGST Act - assignment of functions to central tax officers - proper officer - Commissioner in the Board - summons under Section 70 of the CGST Act - Division Bench of the High Court of Delhi[2026 (2) TMI 385 - DELHI HIGH COURT] held that writ petition is partly allowed by permitting the petitioner to appear in compliance with the summons and directing the competent officer to proceed lawfully; the substantive challenge to Circular No. 3/3/2017 is rejected for want of proof that it was issued without requisite authority. - HELD THAT:- No good ground to interfere with the impugned judgment/order(s) passed by the Division Bench of the High Court of Delhi. The Special Leave Petition is, accordingly, dismissed.

GST registration cancellation - Procedural non-compliance - Alternative remedy under Article 226 - Restoration of registration subject to statutory compliance - HELD THAT: - The Court held that the existence of an alternative remedy is only a self-imposed restraint on the exercise of writ jurisdiction and not an absolute bar to maintainability. Since the statutory period for filing the appeal, including the grace period, had expired, and the cancellation had resulted in stoppage of the petitioner's business, the Court found it appropriate, in the facts of the case, to entertain the writ petition in exercise of its equitable jurisdiction under Article 226. [Paras 13, 14]

The writ petition was entertained despite the earlier rejection of the statutory appeal on limitation.

Cancellation of GST registration - Procedural non-compliance - Curable defects - Restoration of registration subject to statutory compliance - HELD THAT: - The Court found from the cancellation order that the registration had been cancelled for procedural non-compliance, particularly non-filing of returns, and treated such lapses as curable. Applying the principle that substantive justice and rights should not suffer for procedural non-compliance of formal requirements, the Court held that continuance of cancellation would benefit neither the revenue nor the petitioner, whereas restoration would enable the petitioner to resume business and comply with tax obligations. On that basis, the cancellation order and the appellate order were set aside, with a direction to file returns for the entire default period and pay tax, interest, fine and penalty within the time granted, failing which the benefit of the order would automatically stand withdrawn. The authorities were also directed to open the portal to facilitate such compliance. [Paras 15, 16, 17, 18, 19]

The cancellation and appellate orders were quashed, and restoration of registration was made conditional on timely filing of pending returns and payment of statutory dues.

Final Conclusion: The Court entertained the writ petition and held that the cancellation of GST registration, being founded on curable procedural defaults, should not continue where restoration would facilitate compliance and revenue collection. The cancellation order and the appellate order were quashed, and restoration was directed subject to filing pending returns and payment of the statutory dues within the stipulated time.

Claim for additional payment on account of the increase in GST rate and take corrective measures - HELD THAT:- Recording the statement of the respondents that the competent authority would reconsider the petitioner's claim for additional payment on account of the increase in GST rate and take corrective measures, if necessary, the petition was disposed of with a direction to do the needful within two months.

Alternative statutory remedy - Maintainability of writ petition - Appeal to Appellate Tribunal - Seeking liberty to withdraw and pursue that remedy -HELD THAT: - The Court noted that when the writ petition had been filed, the Appellate Tribunal under Section 112(1) had not been constituted. Since a subsequent notification had been issued notifying the date up to which appeals could be filed before the Appellate Tribunal in cases where the impugned order had already been communicated, the statutory appellate remedy had become available to the petitioner. On that basis, the Court declined to entertain the writ petition and permitted the petitioner to avail the appeal remedy before the Appellate Tribunal in terms of the notification. [Paras 4, 5, 6, 8]

Leave to withdraw was granted and the writ petition was disposed of with liberty to the petitioner to prefer an appeal before the Appellate Tribunal in terms of the notification.

Final Conclusion: The Court declined to entertain the writ petition in view of the now-available statutory appellate remedy before the Appellate Tribunal and disposed of the matter with liberty to the petitioner to file such appeal in accordance with the notified timeline.

Availability of an efficacious alternative statutory remedy - Maintainability of writ petition challenging a consolidated show cause notice and the consequent adjudication order - show cause notices accrues multiple financial year - contrary to the scheme of Section 73(10) - Lack of jurisdiction - Delay and laches - violation of principles of natural justice - HELD THAT: - It is well settled proposition of law that the High Court in exercise of its writ jurisdiction under Article 226 of the Constitution of India, does not ordinarily entertain a writ petition where an efficacious alternative statutory remedy is available, under an exceptional case of violation of principles of natural justice, lack of jurisdiction or challenge to vires of a statute is made out.

The Court held that writ jurisdiction is not ordinarily exercised where an efficacious statutory appeal is available, unless a case of breach of natural justice, lack of jurisdiction, or challenge to vires is made out. In the present case, the petitioners had not challenged the show cause notice at the initial stage and approached the Court only after the adjudication order was passed. The questions sought to be raised, including limitation and jurisdiction, were held capable of being effectively urged before the appellate authority under Section 107. The Court further noted that the permissibility of consolidated show cause notices was already under consideration before a larger Bench of another High Court in Mirloc Good Earth Developers [2025 (10) TMI 867 - BOMBAY HIGH COURT] and therefore declined to examine the merits. On that reasoning, no exceptional case for interference was found. [Paras 17, 18, 19, 20, 22]

The writ petition was dismissed on the ground of availability of an efficacious alternative remedy, with liberty to the petitioners to file an appeal, and all questions of law including limitation and jurisdiction were left open for consideration by the appellate authority.

Final Conclusion: The Court declined to entertain the writ petition against the consolidated GST proceedings, holding that the petitioners had an efficacious statutory appeal and had not made out any exceptional ground for writ interference. Liberty was granted to pursue the appellate remedy, and all questions on limitation and jurisdiction were kept open.

Legality and validity of the impugned order passed under Section 73(9) - No opportunity to reply to the show cause notice -intimation uploaded in the GST portal under the tab ‘Additional Notice and Orders’ - Audi Alteram Partem - Garnishee Proceedings - HELD THAT: - The Court found that the petitioner had not been able to receive the show cause notice and, therefore, could not file a reply to it. Proceeding on that basis, the Court held that the petitioner must be afforded an opportunity to submit a reply, and directed the authority to consider the reply and pass a reasoned order after granting hearing. In consequence of that procedural defect, the Court also directed de-freezing of the petitioner's bank account, while clarifying that the amount already realised from the bank would remain subject to the result of the fresh decision by the authority. [Paras 11, 12, 13, 15]

Fresh opportunity was granted to the petitioner to reply to the show cause notice for the financial year 2019-2020, the authority was directed to pass a reasoned order after hearing, and the bank account was directed to be de-frozen subject to the amount already realised abiding by the eventual outcome.

Final Conclusion: The writ petition was disposed of by directing fresh consideration of the show cause proceedings after giving the petitioner an opportunity to reply and be heard for the financial year 2019-2020. The petitioner's bank account was ordered to be de-frozen, while the amount already recovered was made subject to the result of the adjudication.

Entitlement to regular bail in a prosecution under Section 132 - availing fraudulent input tax credit - Prolonged pre-trial incarceration - bogus/fake invoices, without underlying supply of goods & services -HELD THAT: - The Court found that the complaint had already been filed and the investigation stood completed. It noted that the competing allegations were matters for trial, that the petitioner had no criminal antecedents, that the maximum prescribed sentence was up to five years, and that the petitioner had remained in custody for more than one year. The Court further observed that the trial was likely to take sufficient time and held that, in these circumstances, a case for bail was made out; the authorities cited for the respondents were treated as distinguishable on facts. [Paras 5, 6, 7, 8]

Regular bail was granted, subject to furnishing bail and surety bonds to the satisfaction of the trial Court or Duty Magistrate.

Final Conclusion: The petition was allowed and the petitioner was directed to be released on regular bail. The Court rested the relief on completion of investigation, absence of criminal antecedents, the period of custody already undergone, the maximum prescribed sentence, and the likelihood of the trial taking time.

Entitlement to bail in the prosecution - Presumption of innocence - Documentary nature of evidence - Right to speedy trial - reasonable, fair and just procedure enshrined under Article 21 of the Constitution of India - fraudulent availment of input tax credit - HELD THAT: - The Hon’ble Supreme Court of India in the case of Radhika Agarwal Vs. Union of India [2025 (2) TMI 1162 - SUPREME COURT (LB)], has propounded that “the arrest must proceed on the belief supported by reasons relying on material that the conditions specified in Section 132(5) are satisfied, and not on suspicion alone. An arrest cannot be made to merely investigate whether the conditions are being met. The arrest is to be made on the formulation of the opinion by the Commissioner, which is to be duly recorded in the reasons to believe. The reasons to believe must be based on the evidence establishing to the satisfaction of the Commissioner that the requirements of sub-section (5) to Section 132 of the GST Act are met’.

The principles laid down by the Hon’ble the Supreme Court of India in the case of ‘Satender Kumar Antil v. Central Bureau of Investigation’ [2022 (8) TMI 152 - SUPREME COURT] are also relevant in this case. In the abovementioned case, it has been observed that “the rate of conviction in criminal cases in India is abysmally low. It appears to us that this factor weighs on the mind of the Court while deciding the bail applications in a negative sense. Courts tend to think that the possibility of a conviction being nearer to rarity, bail applications will have to be decided strictly, contrary to legal principles. We cannot mix up consideration of a bail application, which is not punitive in nature with that of a possible adjudication by way of trial. On the contrary, an ultimate acquittal with continued custody would be a case of grave injustice”.

This Court is conscious of the basic and fundamental principle of law that right to speedy trial is a part of reasonable, fair and just procedure enshrined under Article 21 of the Constitution of India. This constitutional right cannot be denied to an undertrial prisoner, as mandated by Hon’ble Apex court in ‘Balwinder Singh versus State of Punjab and another’ [2024 (9) TMI 1744 - SC ORDER]

The Court granted bail on a cumulative assessment of the relevant bail factors. It noted that the petitioner had remained in custody for about four months, had no criminal antecedents, the prosecution case rested essentially on documentary material, there was nothing on record to show likelihood of tampering with evidence, influencing witnesses, or non-cooperation in trial, and the trial was not likely to conclude in the near future. Applying the settled principle that in such cases continued incarceration is not justified merely because the allegation concerns an economic offence, the Court held that further detention was not likely to serve any useful purpose. [Paras 32, 33]

Bail was granted, subject to conditions to secure the petitioner's presence and prevent interference with the trial.

Final Conclusion: The petition for bail was allowed. Having regard to the period of custody, absence of antecedents, documentary nature of the evidence, absence of material showing likelihood of interference with the trial, and the expected delay in conclusion of trial, the Court held that continued detention was unwarranted and directed release on bail subject to conditions.

Maintainability of writ petition - Challenged the order passed under Section 74 and the rectification order - validity of the show cause notice preceded the final demand - availability of an efficacious statutory alternative remedy - Principles of Natural Justice - Disputed questions of fact - HELD THAT: - The Court held that a mere defect in notice does not by itself vitiate jurisdiction unless it goes to the root of the matter and results in breach of natural justice. On examining the annexure to the notice in Form GST DRC-01, the Court found that the discrepancy noticed by the authority had been made known to the petitioner. Since the grounds urged involved appreciation of connected records, factual aspects, and the legal perspective of the controversy, those matters were held fit for examination by the statutory appellate fora under the GST law. Applying the principle by the Hon’ble Supreme Court of India in Radha Krishan Industries Vrs. State of Himachal Pradesh [2021 (4) TMI 837 - SUPREME COURT], that where an effective alternative remedy exists the High Court should ordinarily refrain from exercising writ jurisdiction, the Court declined to examine the legality of the impugned orders on merits. [Paras 5, 6, 7]

The writ petition was dismissed as not fit for interference under Article 226, with liberty to the petitioner to pursue the statutory remedy.

Final Conclusion: The High Court declined to entertain the writ petition against the adjudication and rectification orders, holding that the controversy involved matters capable of examination by the statutory authorities under the GST law. Liberty was reserved to the petitioner to approach the appropriate forum under the Act and the writ petition was dismissed.

Taxability of Charges collected for preferential location of apartments, along with consideration for construction services - Separately or as part of the composite supply of construction services - Binding nature of clarificatory circulars - Retrospective Clarification -Whether the charges collected by the petitioner against preferential location of its flats are to be taxed independently or along with its main activity of construction/development ? - HELD THAT:- The issue raised and decided by the Authority [2019 (9) TMI 1482 - AUTHORITY FOR ADVANCE RULING, HARYANA] and [2020 (9) TMI 1249 - APPELLATE AUTHORITY FOR ADVANCE RULING, HARYANA] was that the charges accepted by the petitioner on account of preferential location of an apartment were to be separately taxed from the charges collected for the supply of other construction services because such charges were not an integral part of supply of construction services.

The Court held that the controversy decided by the advance ruling authorities stood concluded by the later clarification issued by the Government of India on the recommendation of the GST Council. The clarification expressly stated that choice of location of an apartment is an integral part of the supply of construction services and that preferential location charges form part of a composite supply in which construction service is the principal supply, attracting the same GST treatment. Since the circular was issued under Section 168(1), it was binding on the respondent authorities. The Court further held that, being clarificatory in nature, the circular would operate retrospectively. Consequently, the earlier rulings treating such charges as separately taxable could not survive. [Paras 9, 10, 11]

The advance ruling and the appellate order holding preferential location charges to be independently taxable were quashed, and such charges were held liable to the same GST treatment as construction services.

Final Conclusion: The writ petition was allowed. The Court quashed the advance ruling and the appellate order, holding that preferential location charges form part of the composite supply of construction services and, in view of the binding and retrospective clarificatory circular, cannot be taxed separately.

Condonation of delay in filing appeal - Limitation under GST appellate remedy - HELD THAT: - The Court recorded the common position of counsel that the question of delay in filing appeals, leading to their dismissal on limitation, already stood examined in earlier decisions of the Supreme Court in the case of M/s Tecnimont Pvt. Ltd vs. State of Punjab and Ors. [2019 (9) TMI 788 - SUPREME COURT] and that the present matters could be disposed of in the same terms. Proceeding on that basis, and noticing that no other relief was pressed, the Court condoned the delay and directed that if fresh appeals were filed within the time granted, the Appellate Authority should entertain them on merits without reopening the question of limitation. The Court further directed that all contentions of the petitioners be permitted to be raised and that a speaking order be passed. [Paras 4, 5]

The writ petitions were disposed of by condoning the delay and directing filing of fresh appeals within 15 days, to be heard on merits without objection on limitation.

Final Conclusion: The Court disposed of the writ petitions by condoning the delay in filing the statutory appeals and permitting fresh appeals to be filed within 15 days. If so filed, the Appellate Authority was directed to decide them on merits, without examining limitation, after allowing all contentions to be raised and by passing a speaking order.

Clubbing of financial years - Composite assessment order - Separate assessment for each tax period - single assessment order covering more than one financial year under the GST regime - HELD THAT: - The Court, following the earlier Division Bench decision in S.J. Constructions, Suma Infra, M/s. SKS Traders, Bhaarat Scrap Traders [2025 (9) TMI 1215 - ANDHRA PRADESH HIGH COURT] held that a single show-cause notice or a single composite assessment order cannot be issued for more than one tax period. Where the due date for filing annual return has been reached, assessment has to be undertaken year-wise and not by a consolidated order covering multiple financial years. Since the impugned assessment order covered the period from 2017-2018 to 2019-2020 in one proceeding, it was unsustainable on that ground alone. The other grounds of challenge were left open, and fresh proceedings were permitted separately for each assessment year, subject to deposit of 20% of the disputed tax and exclusion of the intervening period for limitation. [Paras 4, 5, 6, 7, 8]

The composite assessment order was set aside, with liberty to the authorities to initiate fresh proceedings separately for each assessment year, subject to the conditions stated by the Court.

Final Conclusion: The writ petition was allowed on the limited ground that the impugned GST assessment was a composite order covering multiple financial years. The assessment order was set aside, leaving the other grounds open, and the authorities were permitted to proceed afresh year-wise subject to the deposit and limitation directions.

Validity of Cancellation of GST registration -failure to record reasons in cancellation order - Mandatory requirement of proper officer to record the reasons for cancellation and Order of cancellation of GST Registrationto be passed in Form GST REG-19 -Violated the statutory prescription in the prescribed form - Natural justice - Non- Application of mind - HELD THAT: - The Court held that though Section 29 read with Rule 22 permits cancellation of registration for non-furnishing of returns, an order in Form GST REG-19 must disclose the reasons for cancellation. The impugned order merely recorded that no reply had been submitted and that the registration was liable to be cancelled for reason "Others", without assigning any actual reason. Since cancellation of registration carries adverse civil consequences, the Proper Officer was bound to pass a speaking order; failure to record reasons showed non-application of mind, violated the statutory prescription in the prescribed form, and rendered the order illegal. The petitioner's non-submission of reply or non-appearance did not dispense with that obligation. In view of this defect, the cancellation order was quashed and the matter was restored to the stage of the show cause notice, leaving it open to the petitioner 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 24, 25, 27, 28, 29]

The impugned cancellation order was set aside as a non-speaking order, and the proceedings were remitted to the stage of the show cause notice for fresh action in accordance with law.

Final Conclusion: The writ petition was allowed to the extent that the order cancelling the petitioner's GST registration was quashed for absence of reasons. The matter was restored to the show cause stage, with liberty to the petitioner to respond or regularise the defaults, and a direction to the Proper Officer to conclude the proceedings afresh in accordance with the statute and rules.

Clubbing of assessment years - Composite assessment order for multiple tax periods - Separate assessment for each financial year under GST - Violation of the provisions of Section 73 and Section 74 - HELD THAT: - The Court followed the earlier Division Bench in S.J. Constructions, Suma Infra, M/s. SKS Traders, Bhaarat Scrap Traders [2025 (9) TMI 1215 - ANDHRA PRADESH HIGH COURT] view that a single show-cause notice or a single composite assessment order cannot be passed in relation to more than one tax period, namely more than one month where assessment is undertaken before the due date for filing the annual return, or more than one year where that due date has been reached. As the impugned assessment order covered multiple financial years, it was liable to be set aside on that ground alone. The other grounds of challenge were expressly left open, and fresh proceedings were permitted for each assessment year separately, with exclusion of the intervening period for limitation. [Paras 4, 5, 6, 7]

The composite assessment order was set aside, leaving it open to the authorities to initiate fresh proceedings separately for each assessment year.

Final Conclusion: The writ petition was disposed of by setting aside the composite assessment order covering the period from 2018-2019 to 2021-2022. The respondents were left free to commence fresh proceedings for each assessment year separately, and the intervening period was directed to be excluded for limitation.

Clubbing of assessment years - Composite assessment order for multiple tax periods - single assessment order covering more than one financial year - Violation of the provisions of Section 73 and Section 74 -HELD THAT: - The Court followed its earlier Division Bench in S.J. Constructions, Suma Infra, M/s. SKS Traders, Bhaarat Scrap Traders [2025 (9) TMI 1215 - ANDHRA PRADESH HIGH COURT] ruled that a single show-cause notice or a single composite assessment order cannot be passed in relation to more than one tax period and, where the due date for filing annual return has been reached, not for more than one year. As the impugned order covered multiple financial years, it was held to be unsustainable on that ground alone. Since the petitioner confined the challenge to this primary defect, the other grounds were left open and the matter was remitted for fresh proceedings year-wise, with exclusion of the intervening period for limitation. [Paras 4, 5, 6]

The impugned composite assessment order was set aside and the respondents were left at liberty to initiate fresh proceedings separately for each assessment year.

Final Conclusion: The writ petition was disposed of by setting aside the composite assessment order covering the period 2018-2019 to 2022-2023. Fresh proceedings, if initiated, were directed to be undertaken separately for each assessment year, while leaving the other grounds open.

Stay of disputed demand pending first appeal - garnishee proceedings for recovery -Adjustment of refunds against disputed tax demand - Coercive recovery during pendency of appeal - petitioner has already deposited more than 50% of the demand

HELD THAT: - The Court held that, in the light of the earlier decisions of this Court in Danieli India Limited [2023 (9) TMI 1726 - CALCUTTA HIGH COURT], Gaurav Enterprises [2025 (12) TMI 624 - CALCUTTA HIGH COURT] and Bothra Shipping Services [2026 (5) TMI 905 - CALCUTTA HIGH COURT] adjustment of refunds for assessment years 2014-15, 2015-16, 2016-17 and 2019-20 against the disputed demand for assessment year 2011-12 was unsustainable. Since the petitioner had already deposited more than 50% of the disputed demand, recovery by way of refund adjustment and coercive process could not be continued during pendency of the appeal before the CIT (Appeals). [Paras 13, 14]

The revenue was directed to release the recovered sum with interest under section 244A, and no coercive recovery steps were permitted for assessment year 2011-12 until disposal of the pending appeal.

Final Conclusion: The writ petition was disposed of by holding the impugned recovery for assessment year 2011-12 to be unsustainable during pendency of the first appeal, the recovered amount was directed to be refunded with interest, and the appellate authority was directed to dispose of the appeal expeditiously.

Proceedings against deceased assessee - Liability of legal representatives - Whether Proceedings could not be initiated against a person who had already expired without proceeding against the legal representatives in the manner required by law? - HELD THAT: - The Court held that the position in law was settled that proceedings under Section 148A cannot be initiated against a dead person. Where the assessee has expired, the Department must proceed by taking recourse to the statutory mechanism applicable to legal representatives under Section 159, which had not been done in the present case.

Following the earlier Division Bench decisions of this Court [2024 (3) TMI 1543 - RAJASTHAN HIGH COURT] the impugned notices were therefore unsustainable, though liberty was left to the Department to proceed in accordance with law. [Paras 3, 6]

The writ petition was allowed and the impugned notices were quashed, with liberty to the respondents to act in accordance with law against the legal representatives.

Final Conclusion: The Court held that proceedings could not be initiated against a deceased assessee without invoking the statutory route for proceeding against legal representatives. On that basis, the impugned notices were quashed, while preserving liberty to the Department to proceed in accordance with law.

Reassessment beyond four years - Reasons to believe -Failure to disclose fully and truly all material facts - Change of opinion

HELD THAT: - The Court accepted the Tribunal's view that, where reopening is sought after expiry of four years from the end of the relevant assessment year, the proviso to section 147 requires the Revenue to satisfy the jurisdictional condition of failure by the assessee to make a full and true disclosure of material facts. The recorded reasons must show a rational nexus with escapement of income and cannot rest on mere reappraisal of material already examined.

On facts, the AO relied only on the existing record, as reflected in the reopening notice itself, and did not refer to any new tangible material. Tribunal had found that the details regarding sale of development rights, receipt of consideration and investment in fixed deposits had been furnished and considered during the original scrutiny assessment.

In these circumstances, the subsequent reopening was only a change of opinion, and the omission of the AO to make further enquiry in the original proceedings could not be converted into a ground for reopening beyond four years.

The decision in Yuvraj v. Union of India [2009 (4) TMI 131 - BOMBAY HIGH COURT] was held inapplicable on facts - Tribunal was therefore justified in treating the reassessment as invalid and, that finding being sufficient, in not examining the remaining issues on merits. [Paras 16, 17, 18, 19, 20]

The Tribunal's order invalidating the reopening for A.Y.2004-05 and A.Y.2005-06 was upheld, and the Revenue's appeals were dismissed.

Final Conclusion: The High Court found no perversity or infirmity in the Tribunal's view that the reassessment notices, issued beyond four years, were founded only on reappraisal of material already disclosed and examined in the original scrutiny. No substantial question of law arose, and both appeals were dismissed at the admission stage.

Deduction u/s 80-IB(10) - Academic question of law - Concession restricting deduction claim - surviving challenge to deduction on profits from the partly completed housing project for the assessment year 2011-12 - HELD THAT: - The Court accepted the respondent's stand that, since the Assessing Officer had not brought the concerned amount to tax as income derived from the housing project on the footing that the project was incomplete, the question of allowing deduction on that amount did not arise in the assessment for the year in question. In that view, the surviving substantial question of law was treated as merely academic and was left open to be decided in an appropriate case. The Court further clarified that, in view of the assessee's stand, no benefit under the Tribunal's order could be claimed in future proceedings in relation to that amount for the assessment year 2011-12. [Paras 8, 9, 10]

Question No. 6.8 was not answered and was kept open, with a clarification that the assessee cannot claim benefit under the Tribunal's order in respect of that amount for the assessment year 2011-12.

Final Conclusion: The appeal was disposed of by declining to answer the surviving substantial question of law as academic in view of the assessee's accepted stand that no deduction was claimable on the concerned amount for the assessment year 2011-12. The issue was kept open for an appropriate case, and the assessee was precluded from claiming any future benefit under the Tribunal's order to that extent.

TP Adjustment -aggregation approach followed by the assessee for benchmarking 13 different types of international transactions belonged to different manufacturing as well as trading segments

HELD THAT: - The Court noted that the DRP had, on the basis of the materials relating to the transactions, accepted the assessee's case that the various international transactions were commercially interlinked and that benchmarking on an aggregated basis was appropriate. Those findings were not disturbed by the Tribunal.

Court further held that the controversy stood covered by its earlier decision in Cummins India Ltd. [2025 (4) TMI 52 - SC ORDER] which recognised that once TNMM is accepted as the most appropriate method for the international transactions, it is not open to isolate one element and subject it to a different method, as that would distort the arm's length determination. In view of the binding precedent and the concurrent factual findings in favour of aggregation, no interference was warranted. [Paras 9, 10, 11]

The challenge to the acceptance of the aggregation approach failed, and the appeal was dismissed as no substantial question of law arose.

Final Conclusion: The Court held that the assessee's aggregated benchmarking of the international transactions under TNMM stood supported by concurrent factual findings and was covered by the earlier decision of the Court. No substantial question of law arose, and the Revenue's appeal was dismissed.

Revision u/s 263 - income earned by the assessee from share transaction as income from business instead of Long/Short Term capital gain claimed by the assessee - addition u/s 68 - treating the advance received from friend as unexplained cash credits - addition on account of low withdrawal - ITAT accepted issues for statistical purpose only holding that it would be proper to restore the Appeal to the file of the Assessing Officer to consider the facts afresh and pass Order after verification of the evidences, in accordance with law.

HELD THAT:- As submitted that the view taken by the ITAT is in line with the decision of this Court rendered in the case of Smt. Sarah Faizal Hawa [2018 (1) TMI 1778 - BOMBAY HIGH COURT] and therefore, the substantial question of law urged in this appeal, no longer survives for consideration of this Court. The said submission couldnot be denied or disputed by the learned Counsel for the Revenue.

In view of the above and considering the submissions made by the Appellant’s Counsel, as noted above, this Appeal stands disposed of in aforesaid terms.

Transition amount u/s 115JB(2C) - amount representing the convertible debentures as transition amount -Compound financial instrument - Recording of satisfaction u/s 14A

Transition amount u/s 115JB(2C) - Compound financial instrument - Other equity - Substance over form approach - Whether convertible debentures issued by the assessee constitute a compound financial instrument or other equity so as to form part of the transition amount for MAT adjustment u/s 115JB(2C)? - HELD THAT: - The Tribunal held that, for classification as a compound financial instrument under Ind AS-32, the instrument must contain both a liability component and an equity component. On the terms of the debentures, the assessee was not under any unilateral contractual obligation to deliver cash, since conversion into a fixed number of equity shares could be effected unilaterally, while redemption was not unilateral but dependent on mutual agreement. The instruments were shown in Note 11 as instruments classified as equity, and the stray statement in note 36.2 describing them as equity component of a compound financial instrument was treated as an inadvertent error which could not override the true character emerging from the contractual terms and accounting treatment. The later ICAI guidance and recast financial statements only clarified the correct presentation as instruments entirely equity in nature. On that basis, the Tribunal applied a substance over form approach and concluded that no transition amount arose under section 115JB(2C). [Paras 26, 29, 30, 31, 32]

The deletion of the addition made u/s 115JB(2C) was upheld.

Revision u/s 263 - Year of convergence - Consequential application - Judicial discipline - HELD THAT: - The Tribunal held that the nature and character of the financial instruments for purposes of section 115JB(2C) had to be determined in the year of convergence, namely AY 2017-18, and once the transition amount was determined or negated in that year, the subsequent four years involved only consequential application of one-fifth thereof. Since, in the assessee's own case for A.Y. 2017-18, the co-ordinate bench had already examined the issue on merits and held that the instruments did not form part of transition amount, no contrary view could be taken for the years under appeal. The objection that the earlier order arose out of proceedings u/s 263 was rejected, as the revisional authority had itself recorded conclusive findings on merits, making it open to the Tribunal in that appeal to decide the substantive issue. Tribunal further held that judicial discipline required adherence to the co-ordinate bench decision on identical facts. [Paras 38, 39, 40, 41, 42]

The first appellate authority was justified in following the earlier Tribunal order, and the Revenue's challenge on this aspect failed.

Addition u/s 14A r/w Rule 8D - recording Satisfaction under section 14A(2) - HELD THAT: - The Tribunal found that, although the Assessing Officer rejected the assessee's suo motu disallowance and proceeded to apply Rule 8D, he did not record the statutorily required dissatisfaction regarding the correctness of that disallowance having regard to the books of account. The assessee had specifically asserted that interest-free funds were sufficient, that manpower-related expenditure had been recovered, and that investments not yielding exempt income should be excluded, but these contentions were not meaningfully examined. The observations in the assessment order were held to be merely general and not a valid satisfaction under section 14A(2). In those circumstances, invocation of Rule 8D was unsustainable. [Paras 44, 46]

The deletion of the section 14A disallowance was upheld.

Final Conclusion: The Tribunal dismissed the Revenue's appeals for A.Ys. 2018-19, 2019-20 and 2020-21. It held that the impugned debentures were entirely equity in nature and not part of the transition amount under section 115JB(2C), that the earlier decision in the year of convergence governed the subsequent years, and that the section 14A disallowance was rightly deleted for want of proper satisfaction.

Tax deduction at source on inoperative PAN - Higher deduction u/s 206AA - Verification of deductee's tax disclosure - Liability for higher TDS on purchase of property where the seller's PAN was inoperative for non-linking with Aadhaar

HELD THAT: - The Tribunal held that, on the date of the property transaction and deduction of tax, the deductee's PAN was inoperative owing to non-linking with Aadhaar, and therefore section 206AA read with Rule 114AAA(3) was attracted; the assessee was not entitled to the benefit of the extended compliance period since the PAN was claimed to have been linked only after the extended date. At the same time, the Tribunal observed that the Department's system ought to have auto-flagged the inoperative PAN and the consequence of higher deduction. Proceeding on an analogy drawn from the principle underlying section 40(a)(ia) read with section 201(1), and referring to CIT v. Ansal Landmark Township Private Limited [2015 (9) TMI 79 - DELHI HIGH COURT] the Tribunal held that no liability for higher TDS should be cast on the assessee if evidence is produced that the seller had declared the sale transaction in her return and paid due taxes. The matter was therefore sent back for de novo verification and determination in accordance with law and the observations made. [Paras 6]

The impugned demand was not finally sustained; the matter was restored to the Assessing Officer for fresh adjudication after verifying the deductee's tax disclosure and payment.

Final Conclusion: The Tribunal held that section 206AA read with Rule 114AAA(3) was attracted on the date of deduction, but remitted the matter for fresh determination on verification whether the seller had disclosed the transaction in her return and paid due taxes. The appeal was accordingly allowed for statistical purposes.

Deduction u/s 80P(2)(a)(i) - Interest on bank deposits attributable to business income - Provision for expenditure on accrual basis

Deduction u/s 80P(2)(a)(i) - Interest on bank deposits attributable to business income - assessee, being a credit co-operative society providing credit facilities only to its members - HELD THAT: - The Tribunal found that the assessee dealt only with its members and that the funds deposited in bank formed part of its reserve funds. In the absence of any material to show that such interest was assessable as income from other sources, the revenue could not deny deduction by treating the claim as one under section 80P(2)(d), when the assessee had throughout claimed deduction only under section 80P(2)(a)(i).

Following Tumkur Merchants Souharda Credit Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] the Tribunal held that interest earned by a co-operative society on surplus funds temporarily parked in bank, pending their use in the business of providing credit to members, remains attributable to that business and qualifies for deduction under section 80P(2)(a)(i). The decision in Totagars Co-operative Sale Society [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] relied on by the revenue was held inapplicable to the facts. [Paras 18, 19, 20, 21]

Deduction under section 80P(2)(a)(i) was directed to be allowed on the business income attributable to providing credit facilities to members, including the impugned bank interest.

Provision for expenditure on accrual basis - Allowability of interest provision - disallowance of provision for interest expenditure and other expense provisions HELD THAT: - The Tribunal held that the disallowance of the interest provision and the provision for expenses had been made merely on surmises and conjectures. Since the assessee had made the provisions on the basis of the accrual system of accounting, the provisions represented accrued expenditure and could not be disallowed on the reasoning adopted by the lower authorities. [Paras 22, 23]

The disallowances of provision of interest expenditure and provision of expenses were deleted.

Final Conclusion: The Tribunal allowed all three appeals. It held that the assessee was entitled to deduction under section 80P(2)(a)(i) on the income attributable to its business of providing credit facilities to members, and also deleted the disallowances of interest and other expense provisions made on accrual basis.

Estimated income on bank deposits - unexplained money u/s. 69A r.w.s 115BBE - estimated profit @ 8% of the entire receipts/ total credit passed u/s. 147/144/144B

HELD THAT: - The Tribunal noted that the submissions made before the AO appeared to be confined only to a part of the receipts, whereas before the Tribunal the assessee produced paper books containing various evidences in support of the nature of the deposits, including receipts from business activities and redeposit of earlier withdrawals. Since these materials required factual verification and examination, the Tribunal did not adjudicate the estimation on merits and held that the issue should be restored to the AO for a fresh decision in accordance with law after considering the assessee's submissions and evidences. The same course was directed to apply mutatis mutandis to the connected appeal, the facts and issues being similar. [Paras 11, 12]

The issue of estimated addition at 8% was set aside to the AO for fresh consideration, and both appeals were allowed for statistical purposes to that extent.

Final Conclusion: The Tribunal restored the issue of estimation of income at 8% of the bank deposits to the Assessing Officer for fresh examination in the light of the assessee's submissions and evidences. The connected appeal, involving similar facts and issues, was also disposed of on the same terms, and both appeals were allowed for statistical purposes.

Rectification of mistake apparent from record - Computation of profits for deduction - Doctrine of merger

Mistake apparent from record - Substitution of actual cost - Deduction under section 80-IB(10) - HELD THAT: - The Tribunal found from the assessee's financial statements that the work-in-progress debited in the Profit and Loss Account already included the cost of land, and that the earlier appellate direction proceeded on the erroneous assumption that such cost had not been debited. It further held that under the joint development arrangement the construction cost was to be borne by the builder and not by the assessee, making the direction to treat the construction cost of 73 flats as the assessee's cost patently erroneous. The Tribunal also held that there was no provision in law permitting substitution of actual cost with fair market value or any other notional value for computing profits of the eligible project, and that the profits disclosed in the accounts of the only housing project undertaken by the assessee could not be reworked on a different notional basis solely for section 80-IB(10). Relying on Asoka Textiles Ltd. [1960 (12) TMI 14 - SUPREME COURT] and English Electric Company of India Ltd.[1979 (10) TMI 21 - MADRAS HIGH COURT] it held that the error, being evident from the record itself and comprising both factual and legal mistakes, fell within the scope of rectification. [Paras 15, 16, 17, 18, 21]

The assessee's rectification plea was maintainable and the erroneous direction was ordered to be expunged, with deduction to be recomputed on the basis of profits disclosed in the Profit and Loss Account.

Doctrine of merger - Scope of appellate adjudication - Whether earlier appellate order had not merged with the orders of the higher forums on the question of quantification of deduction? - HELD THAT: - The Tribunal held that the controversy decided by the Tribunal and by the High Court in the earlier round was confined to the assessee's eligibility in principle to claim deduction under section 80-IB(10). The direction relating to quantification of the eligible deduction was never the subject matter of those appeals. Since that part of the earlier appellate order had not been examined or adjudicated upon by the higher forums, the doctrine of merger had no application. The Tribunal also noted that the High Court had in fact recognized that the cost of land formed part of the work-in-progress debited to the Profit and Loss Account, reinforcing the assessee's grievance. The maxim approved in Jayalakshmi Coelho v. Oswald Joseph [2001 (2) TMI 980 - SUPREME COURT] was noticed to emphasize that an act of court should prejudice no one. [Paras 19, 20, 21]

The rejection of the rectification application on the ground of merger was held to be unjustified.

Final Conclusion: The Tribunal allowed the appeal and held that the earlier appellate direction substituting actual land cost with construction cost or market value suffered from patent errors of fact and law apparent from the record. The impugned rejection of rectification was set aside, and the Assessing Officer was directed to recompute deduction under section 80-IB(10) on the basis of the profits disclosed in the Profit and Loss Account.

Disallowance u/s 14A -Rule 8D satisfaction requirement - Capital work-in-progress interest disallowance - Presumption from sufficiency of own funds - Capital gains versus business income - Foreign tax credit - Form No. 67 - ESOP expenditure - Interest on non-performing assets

Disallowance u/s 14A - Rule 8D satisfaction requirement - Suo motu disallowance - HELD THAT: - The Tribunal found that the assessee had placed a scientific basis for its suo motu disallowance of expenditure relatable to exempt income, and the methodology was stated to be identical to that accepted in the assessee's own case for the earlier year. The Assessing Officer did not point out any specific infirmity in that computation and proceeded on the premise that Rule 8D would automatically apply. The Tribunal held that Rule 8D can be invoked only after recording dissatisfaction with the correctness of the assessee's claim having regard to the accounts; in the absence of such defect-finding, the further disallowance could not be sustained. The appellate order was also found to have ignored binding orders in the assessee's own case. [Paras 5, 14]

The additional disallowance under section 14A was deleted for both assessment years.

Capital work-in-progress interest disallowance - Presumption from sufficiency of own funds - addition u/s 36(1)(iii) - HELD THAT: - The Tribunal noted that in the assessee's own earlier years identical disallowance had been deleted on the factual finding that own funds were more than sufficient to cover CWIP, giving rise to the presumption that CWIP was financed out of such funds and not out of borrowed capital. It held that the amendment to the proviso to section 36(1)(iii) did not alter this factual and legal basis, because once no borrowed funds were shown to have been used for acquisition of the asset, the question whether the asset was put to use or not did not revive any disallowance. On the facts of the present years also, the assessee had demonstrated substantial own interest-free funds far in excess of CWIP. [Paras 8, 15]

The disallowance of interest in respect of CWIP was directed to be deleted for both assessment years.

Capital gains versus business income - Strategic investment - Banking investments - HELD THAT: - The Tribunal held that the lower authorities had erred in treating the decision in Nawanshahar Central Cooperative Bank Ltd [2003 (1) TMI 37 - PUNJAB AND HARYANA HIGH COURT] as laying down a blanket proposition that every investment of a bank is a business asset. It found that the said decision turned on statutory investments made to satisfy legal requirements, whereas the present investments were shown to be strategic or long-term investments and not investments made pursuant to any statutory banking requirement. The Tribunal also accepted that a bank may hold different portfolios and that the Department had accepted similar treatment in the assessee's own earlier years. On that basis, and applying consistency, the reclassification as business income was held to be unjustified. [Paras 9, 16]

The Assessing Officer was directed to assess the gains under the head capital gains for both assessment years.

Disallowance of claim of foreign tax credit - requisite form no.67 not having been filed by the assessee - Additional claim before appellate authorities - HELD THAT: - The Tribunal held that filing of Form No. 67 is a directory procedural requirement and delay in filing it cannot defeat the substantive claim for foreign tax credit. It further held that an assessee is not barred from making an additional claim before the Assessing Officer or appellate authorities merely because the claim was not made through a revised return, especially where the additional foreign tax was paid after the time for revising the return had expired. Since the assessee had made the claim during assessment proceedings and had also filed a revised Form No. 67 before the appellate authority, denial of the credit on these technical grounds was held to be contrary to law. [Paras 19]

The additional foreign tax credit claim was allowed.

ESOP expenditure - Consistency with assessee's own case - HELD THAT: - The Tribunal noted that the Assessing Officer himself had recorded that similar disallowance had been deleted by the Tribunal in earlier years and that the addition was being repeated only to keep the issue alive. Since the appellate authority had followed the earlier orders in the assessee's own case and the Revenue could not controvert that position, no ground for interference survived. [Paras 11, 21]

The Revenue's ground against allowance of ESOP expenditure was dismissed for both assessment years.

Interest on non-performing assets - Section 43D - Rule 6EA - Revenue's challenge to deletion of addition on account of interest on non-performing assets - HELD THAT: - The Tribunal recorded that the Commissioner (Appeals) had deleted the addition by following the Tribunal's earlier order in the assessee's own case on the same issue. The Revenue was unable to controvert that identical additions had already been deleted in preceding years. In those circumstances, the Tribunal declined to interfere with the deletion. [Paras 12, 21]

The Revenue's ground relating to deemed interest on NPAs stood dismissed for both assessment years.

Final Conclusion: For Assessment Years 2020-21 and 2021-22, the assessee succeeded on deletion of disallowance under section 14A, deletion of interest disallowance on CWIP, and treatment of the impugned investment gains as capital gains; for 2021-22, the additional foreign tax credit claim was also allowed. The Revenue's appeals on ESOP expenditure and addition relating to interest on NPAs were dismissed.

Expenditure wholly and exclusively in connection with transfer - Cost of acquisition - Interest on borrowed capital in capital gains computation

Expenditure wholly and exclusively in connection with transfer - Travel and professional expenses - assessee's claim for deduction of travel and related expenditure from the sale consideration under section 48(i) - HELD THAT: - The Tribunal held that deduction under section 48(i) is confined to expenditure incurred wholly and exclusively in connection with the transfer, and the onus to establish such proximate connection lies on the assessee. On the material noticed, expenditure incurred long before execution of the sale deed, and expenditure relatable to persons other than the assessee, could not be accepted outright as connected with the transfer. At the same time, the claim included air travel and professional charges stated to have been incurred for execution of the sale deed, and the Dispute Resolution Panel had not properly examined the claim in that light. The decision in Adil Rehman was held not to assist the assessee because that decision did not discuss the requirement that the expenditure must be wholly and exclusively in connection with the transfer. [Paras 19, 20, 21, 22, 23]

The issue was restored to the Assessing Officer for verification of whether the claimed expenditure was incurred wholly and exclusively in connection with the transfer.

Cost of acquisitionof the flat - One-time maintenance deposit - Electricity and water deposits - HELD THAT: - The Tribunal held that the one-time maintenance deposit was necessarily part of the cost of acquiring the flat because possession would not have been given without such payment. It was also noted that the Revenue did not show that these deposits were separately recovered from the purchaser on transfer. For the same reason, the electricity and water deposits were also held to be part of the cost of acquisition. [Paras 24, 25]

AO was directed to treat the maintenance, electricity and water deposits as part of the cost of acquisition.

Interest on borrowed capital in capital gains computation - Cost of acquisition - Whether Interest paid on the loan taken for purchase of the property was allowable as part of the cost of acquisition where it had not been claimed earlier under the head income from house property? - HELD THAT: - Following CIT v. Sri Hariram Hotels P. Ltd.[2009 (12) TMI 369 - KARNATAKA HIGH COURT] Tribunal held that interest incurred on the loan used for purchase of the property could be included in the cost of acquisition for computing capital gains. Since the assessee had produced past returns to show that such interest had not been claimed as deduction under the head income from house property, the bar under section 55(1)(b)(2) was held inapplicable. The Tribunal also held that the assessee would be entitled to indexation on that amount. [Paras 26]

The Assessing Officer was directed to allow the interest expenditure as part of the cost of acquisition with indexed benefit.

Final Conclusion: The Tribunal condoned the delay on the ground that the assessee had pursued a wrong appellate remedy under a bona fide mistake. On merits, the claim for travel and related transfer expenditure was remanded for fresh examination, while the maintenance deposit, electricity and water deposits, and unclaimed loan interest were directed to be allowed as part of the cost of acquisition; the appeal was partly allowed.

Best judgment assessment - Estimation of net profit - Chapter VI-A deductions - TDS credit and self-assessment tax credit

Best judgment assessment - Estimation of net profit - Civil contract business - Profit estimated at 15 per cent of contract receipts in best judgment assessment - HELD THAT: - The Tribunal accepted that, in the absence of return, books and supporting material, the AO was justified in resorting to best judgment assessment. At the same time, it held that such assessment must rest on fair and reasonable estimation having nexus with available material and cannot be a wild or arbitrary guess.

Referring to Brij Bhushan Lal Parduman Kumar [1978 (10) TMI 2 - SUPREME COURT] and Jayanthilal R. Tunk [1981 (6) TMI 135 - KARNATAKA HIGH COURT] and Sri Shankar Khandasari Sugar Mills [1991 (3) TMI 74 - KARNATAKA HIGH COURT] it held that the Assessing Officer had adopted 15 per cent without proper material and had misconstrued the assessee's explanation regarding depreciation and cash profit. Considering that the assessee was a civil contractor, that receipts were from Government departments, that payments were received through banking channels and subjected to tax deduction at source, the flat adoption of 15 per cent was held to be unjustified. The Tribunal found 7 per cent of the turnover declared by the assessee to be a reasonable estimate. [Paras 10]

The Assessing Officer was directed to recompute business profit at 7 per cent of the total turnover declared by the assessee, and the ground was partly allowed.

Chapter VI-A deductions - TDS credit and self-assessment tax credit - Claims for deductions under Chapter VI-A and credit for TDS and self-assessment tax - HELD THAT: - The Tribunal found that the assessee had not been able to place before the Assessing Officer the necessary supporting documents for the claims under section 80C and section 80TTA, as well as for TDS credit and self-assessment tax. Since the allowability of those claims depended upon verification of the insurance payment, savings bank interest, self-assessment challan, TDS certificates, Form 26AS and reconciliation, the matter could not be conclusively decided on the existing record. The Tribunal therefore restored the issue for examination in accordance with law after giving the assessee reasonable opportunity of being heard. [Paras 12]

The issue was remitted to the Assessing Officer to verify the claims and grant eligible deductions and tax credits in accordance with law.

Final Conclusion: The Tribunal condoned the delay in filing the first appeal, held that estimation of income at 15 per cent of contract receipts was arbitrary in the facts of the case, and directed recomputation of profit at 7 per cent of the declared turnover. The claims for Chapter VI-A deductions and credit for TDS and self-assessment tax were restored to the Assessing Officer for verification; the same findings were directed to apply mutatis mutandis to both assessment years.

Penalty for misreporting of income - Survival of penalty on deletion of quantum additions - effect of deletion of foundation additions

HELD THAT: - The Tribunal noted that, in the assessee's own quantum proceedings, the Coordinate Bench [2025 (10) TMI 1416 - ITAT MUMBAI] for the assessment year, 2018-19 had deleted all additions which had led to the impugned penalty. The determinative principle applied was that when the foundation addition itself does not survive, the penalty built upon it also cannot be sustained. Since the very basis for alleging under-reporting or misreporting had ceased to exist, the penalty order had no legal substratum to stand on. [Paras 9, 10]

The penalty order under section 270A was quashed.

Final Conclusion: The appeal was allowed. As the quantum additions giving rise to the penalty had already been deleted in the assessee's own case, the penalty under section 270A was held unsustainable and was quashed.

Admissibility of statements recorded under section 108 - Non- compliance with the mandatory section 138B - Whether a statement made under section 108 of the Customs Act can be considered as relevant if the procedure contemplated under section 138B of the Customs Act has not been followed ? - HELD THAT: - Section 108 of the Customs Act deals with power to summon persons to give evidence and produce documents. It provides that any Gazetted Officer of customs shall have the power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making under the Customs Act.

In M/s. Drolia Electrosteel P. Ltd. vs Commissioner, Customs, Central Excise & Service Tax [2023 (11) TMI 10 - CESTAT NEW DELHI], a Division Bench of the Tribunal examined the provisions of section 9D of the Central Excise Act and after placing reliance upon the decision of the Punjab and Haryana High Court in Jindal Drugs Pvt. Ltd. vs. Union Of India [2016 (6) TMI 956 - PUNJAB & HARYANA HIGH COURT], observed that if the mandatory provisions of section 9D(1)(b) of the Central Excise Act are not followed, the statements cannot be used as evidence in proceedings under Central Excise Act. T

The Tribunal held that section 138B governs the circumstances in which a statement recorded before a gazetted customs officer can be treated as relevant for proving the truth of its contents in adjudication proceedings as well. Where the case does not fall within the exceptional situations contemplated by clause (a), the maker of the statement has first to be examined before the adjudicating authority, which must then form an opinion that the statement should be admitted in evidence in the interests of justice; only thereafter does the question of cross-examination arise. Since the penalty on the appellant rested solely on his earlier statement under section 108 and the statutory procedure under section 138B was not followed, that statement could not be relied upon as relevant evidence. [Paras 13, 19, 20]

The penalty imposed on the appellant under section 112 was set aside and the appeal was allowed.

Final Conclusion: The Tribunal held that, in the absence of compliance with section 138B, the appellant's statement recorded under section 108 was not relevant evidence in adjudication. As the penalty was founded solely on that statement, the impugned order imposing penalty was set aside and the appeal was allowed.

Smuggling of foreign-origin goods - Confiscation of gold - Burden of proof under Section 123 of the Customs Act - Evidentiary value of purchase invoice -Proof of foreign origin - HELD THAT: - The Tribunal accepted the Commissioner (Appeals)'s reasoning that the seized ornament was a worn gold chain, had no foreign markings or inscriptions, and there was no cogent evidence establishing that it was of foreign origin or smuggled. The respondent had subsequently produced a GST tax invoice, and the department had neither recorded any finding showing that the invoice was false nor conducted inquiry with the seller to discredit it. The finding that the laboratory report showed purity of 99.5% also supported the conclusion that the article was not shown to be of the purity or form in which foreign gold is imported or smuggled. In these circumstances, mere non-production of documents at the spot could justify seizure on suspicion but was insufficient to justify confiscation and penalty in the absence of contrary evidence. The Tribunal found no reason to interfere with the detailed appellate order, which had also applied M/s LUXMI ENTERPRISERS -v- Collector of Central Excise [1988 (10) TMI 208 - CEGAT, NEW DELHI]. [Paras 7, 9, 10]

The Revenue's challenge failed, and the order setting aside confiscation and penalty was upheld.

Final Conclusion: The appeal filed by the Revenue was dismissed. The Tribunal upheld the order of the Commissioner (Appeals) holding that, in the absence of cogent evidence of foreign origin or falsity of the subsequently produced purchase invoice, confiscation of the gold chain and penalty were not justified.

Tariff classification of food testing kits - classifiable under CTI 3822 00 90, as held in the impugned order, or under CTI 3822 00 19, as claimed by the importer - Entitlement to the benefit of Notification No. 50/2017-Cus - Exemption for diagnostic test kits - Invocation of the extended period of limitation - Imposition of penalties on the importer and its directors.

Tariff classification of food testing kits - Exemption for diagnostic test kits - HELD THAT: - Both sides fairly submit that an identical question was before this Tribunal in Illishan Biotech Pvt. Ltd. versus Principal Commissioner [2024 (11) TMI 740 - CESTAT NEW DELHI] and in Adinath Veterinary Products Pvt. Ltd. versus Commissioner of Customs, ACC (Import) [2025 (7) TMI 1269 - CESTAT NEW DELHI] and the issue was decided on merits against the importers and in favour of the Revenue.

Following those decisions, it upheld the classification adopted in the impugned order and rejected the claim to exemption on the footing that the imported goods were food testing kits and not diagnostic test kits covered by the notification. [Paras 5]

The dispute on classification and exemption was decided in favour of the Revenue and against the importer.

Extended period of limitation - Penalty for misdeclaration in self-assessment - HELD THAT: - The Tribunal found that the imported kits were clearly meant for food testing and not for diagnostics, yet were declared as for 'Diagnostic use only'. In the regime of self-assessment, the importer was obliged to correctly declare the goods, and the incorrect description amounted to a conscious misdeclaration to claim an inapplicable exemption. Since the directors were in full knowledge of and responsible for the business, the extended period and the penalties imposed on the importer and the two directors were held to be justified. [Paras 7]

The finding on extended limitation and the penalties imposed on the importer and its directors were upheld.

Final Conclusion: The Tribunal upheld the impugned order in entirety. The classification and denial of exemption were sustained, and the extended period of limitation and penalties on the importer and its directors were also affirmed, resulting in dismissal of all three appeals.

Mis- declaration of classification and valuation show cause notice - redetermination of classification - Reclassification from aluminium profiles to aluminium tubes - Rejection of declared value on the basis of parallel invoices - Extended period of limitation in successive show cause notices - absence of sample examination and specific findings - undervaluation and penalty findings against the sister concern and connected individual.

Classification of aluminium tubes and profiles - For bill of entry No. 3350643 dated 24.09.2013, part of the goods declared as aluminium profiles were reclassified as aluminium tubes under CTH 7608 2000, and the declared value rejected on the basis of parallel invoices recovered during investigation. - HELD THAT: - The Tribunal found that the consignment was subjected to detailed examination, representative samples were drawn, and the goods bearing specified section numbers answered the description of hollow rectangular aluminium tubes with uniform cross-section. The catalogue and examination findings matched the description adopted in the notice and the order, establishing that those items were tubes classifiable under CTH 7608 2000 and not profiles under CTH 7604 2990. On valuation, parallel invoices for the same quantity and description showing a higher value were recovered from the importer's office, which constituted evidence to reject the declared value and enhance it. Since misdeclaration stood established both as to classification and value, confiscation was justified; however, the redemption fine was reduced, penalty under Section 112(a) was sustained, and penalty under Section 114AA was set aside. [Paras 5]

The duty demand on reclassification and enhanced value was upheld for this bill of entry, confiscation was sustained with reduced redemption fine, penalties under Section 112(a) were maintained, and the penalty under Section 114AA was set aside.

Burden to establish reclassification - Absence of examination for subsequent consignments - HELD THAT: - The Tribunal noted that, unlike the live bill of entry, no samples had been drawn for these consignments and the impugned order did not specify which goods in those imports answered the description of tubes so as to warrant reclassification. Since the differential duty for these consignments rested only on the proposed reclassification and there was no valuation dispute, the evidentiary basis accepted for the live consignment could not be extended to them without separate proof. [Paras 6]

The entire demand for the eight bills of entry, together with redemption fine and penalties, was set aside.

Extended period of limitation in successive show cause notices - Demand confined to normal period - Freight component in assessable value - HELD THAT: - The Tribunal held that, after issuance of an earlier notice invoking the extended period on the basis of the same investigation, a further notice for past imports founded on the same material could not again allege suppression so as to invoke the extended period. Applying the principle in Nizam Sugar Factory vs. Collector of Central Excise, A.P. [2006 (4) TMI 127 - SUPREME COURT], it found that the material facts were already within the knowledge of the department and the extended period was therefore unavailable. The record also did not establish, through examination reports, that the description of goods in those consignments differed from what had been declared. However, since the appellant had admitted non-payment of duty on freight, the duty attributable to freight charges was liable to be confirmed for the normal period alone. [Paras 7]

The demand for past imports was restricted to duty on freight charges for the normal period, and all remaining demands, redemption fine, and penalties were set aside.

Undervaluation through parallel invoices - Extended period of limitation in successive show cause notices - Penalty on non-importing person - HELD THAT: - The Tribunal found that the recovered invoices for the same consignments showed values higher than those declared, and the documents also indicated that the freight was not actually included despite the invoices being shown as C&F. It further recorded that the differential amounts were transferred to the supplier and that the undervaluation was borne out by the material recovered during investigation. Even so, the notice in this appeal was based on the same investigation as the earlier notices, and for that reason the extended period could not be invoked again; the demand was therefore sustainable only for the normal period. As regards penalty, the penalty under Section 114AA imposed on the director was set aside along with the extended-period demand, and Shri Harikumar, being the supplier's group general manager, could not on the facts be held liable for violation of the Customs Act so as to justify penalty. [Paras 8]

The duty demand with interest was upheld only for the normal period in respect of the three bills of entry, and the penalties imposed on the appellant's director under Section 114AA and on Shri Harikumar were set aside.

Final Conclusion: The appeals were partly allowed. The demand on the live bill of entry was sustained on classification and valuation with reduced redemption fine and limited penalties, the demand on the eight subsequent bills was set aside, the demand on the 100 past bills was confined to freight charges for the normal period, and in the case of M/s. Tricone Building Products (I) Pvt. Ltd. the demand was upheld only for the normal period with all penalties set aside.

Legality of the Continuation of the Look Out Circular after completion of SFIO investigation - absence of any pending prosecution or court proceeding - conditions necessary for issuance of the LOC -subsistence of the Look Out Circular - Right to travel abroad - Article 21 of the Constitution of India - Proportionality - Economic interests of India - HELD THAT: - The constitutional dimension of the issue further fortifies the appellant’s case. In Maneka Gandhi v. Union of India [1978 (1) TMI 161 - SUPREME COURT], the Hon’ble Supreme Court unequivocally held that the right to travel abroad is an integral facet of personal liberty under Article 21, and any restriction thereon must satisfy the test of being just, fair and reasonable. The impugned LOC, which effectively prevents the appellant from resuming his professional commitments abroad, and separation from his family, constitutes a serious invasion of his right.

It is equally well-settled that such restrictions must meet the test of proportionality, namely, that the measure must have a legitimate aim, be rationally connected to that aim, be necessary in the sense that no lesser restrictive alternative is available. The measure must strike a proper balance between competing interests. In the present case, while the objective of securing investigation into alleged economic offences may be legitimate, the continuation of the LOC, after completion of the investigation and without any prosecution being initiated, fails the tests of necessity and balance.

The Court held that the 2021 Office Memorandum permits issuance of an LOC only on the existence of the stipulated conditions, and even under the exceptional clause there must be concrete material showing that departure of the person would be detrimental to the sovereignty, security, integrity or strategic or economic interests of India, or that departure ought not to be permitted in the larger public interest. In the present case, there was no material of that nature. The Single Judge had sustained the LOC on the apprehension that if prosecution were initiated in future, the appellant, who resides in China and is married to a Chinese national, might not return to face trial. The Division Bench found that reasoning to be contingent, speculative and premature, particularly when investigation had already concluded, the report had been submitted to the Central Government, no prosecution had yet been launched and no proceeding was pending before any court. Mere reference to the appellant's association with the company under investigation, his residence abroad, or the expression economic interest of India, without specific material showing necessity to restrain his travel, could not justify such a coercive measure. The Court further held that the LOC infringed the appellant's right to travel abroad under Article 21 and failed the test of proportionality, since after completion of investigation less restrictive safeguards such as an undertaking and disclosure of contact particulars were sufficient to secure his availability. [Paras 29, 30, 31, 32, 33]

The LOC was quashed, subject to the appellant filing a notarized affidavit undertaking to appear before the jurisdictional court if prosecution is instituted, to cooperate fully, to furnish his addresses and contact particulars, and not to surrender his Indian passport for the stipulated period; failing such affidavit, the LOC would continue.

Final Conclusion: The appeal was allowed and the judgment of the Single Judge was set aside. The Look Out Circular was quashed as its continuation after completion of investigation, without any pending proceeding and on merely speculative apprehension, was arbitrary and disproportionate, subject to the appellant furnishing the undertakings directed by the Court.

Scope of judicial review over an approved resolution plan under the IBC -Overriding effect - Interplay in between IBC and Electricity Laws - non obstante clause in Section 238 - Effect of non-filing of claim during CIRP - Binding effect of approved resolution plan - Extinguishment of pre-CIRP statutory dues - Public announcement as sufficient notice in CIRP - sufficient notice to statutory authorities - clean slate doctrine -commercial wisdom of the committee of creditors - Demand towards electricity dues pertaining to the period prior to the commencement of the CIRP of the concerned companies, which are resolved long ago after following due procedure prescribed under IBC.

Whether IBC overrides the electricity laws and regulations, thereby barring the respondent authorities from raising demands for the pre-resolution period after the resolution plan is duly approved and implemented ? - HELD THAT: - The principle established by the Supreme Court in the Ghanshyam Mishra & Sons (P) Ltd. [2021 (4) TMI 613 - SUPREME COURT], is that a successful resolution applicant must be permitted to take over the corporate debtor on a “clean slate” the entity should be free from past liabilities except those specifically preserved in the resolution plan. The IBC is based on the principle that upon approval of a resolution plan, the corporate debtor emerges from insolvency in a renewed form, with its past liabilities crystallised and confined strictly to those recognised in the resolution plan.

It is a settled legal principle that the corporate soul, once purged through the judicial resolution process under IBC, is a legally reborn entity that does not carry the burden of its past debts, therefore, even if the Corporate Debtor continues to operate under its old name, it cannot be held liable for extinguished dues that were not recognised in the NCLT approved resolution plan.

Supreme Court in Paschimanchal Vidyut Vitran Nigam Ltd.[2023 (7) TMI 831 - SUPREME COURT] has held the primacy of IBC over electricity dues and as per this principle, all submissions made by respondents regarding claiming primacy of Electricity Laws over IBC are unacceptable.

The Court held that Sections 31 and 238 of the IBC create a complete and self-contained insolvency framework under which an approved resolution plan binds all stakeholders, including statutory authorities, and concludes all claims against the corporate debtor except those preserved in the plan. In resolving the apparent conflict between Section 238 of the IBC and Sections 173 and 174 of the Electricity Act, the Court applied the principle that the later and comprehensive enactment must prevail to the extent of inconsistency. It therefore rejected the contention that the statutory character of electricity dues or the overriding clauses in electricity law could defeat the finality attached to an implemented resolution plan. [Paras 80, 82, 101, 102, 103]

Pre-CIRP electricity dues could not be enforced by invoking electricity laws in derogation of the IBC, whose provisions were held to prevail.

Whether the respondent authorities are entitled to receive separate notice of the CIRP and whether they had information to provide them opportunity to file their claims ? - HELD THAT: - The Court held that the statutory scheme of Section 15 of the IBC contemplates public announcement of the CIRP and not individual service on each creditor. Treating the insolvency process as one in rem, it held that public announcement is sufficient notice to all stakeholders, including statutory authorities, who are expected to act with diligence and lodge their claims within the prescribed period. Accordingly, in the absence of any procedural irregularity in the CIRP, the respondents could not plead want of separate notice to justify omission to file claims or to challenge the resolution plans before their approval. [Paras 89, 90, 106, 107, 108]

The plea of absence of separate notice was rejected, and unfiled pre-CIRP claims were held not to survive the approved resolution plans.

Whether the respondent authorities could raise demand for their statutory dues after implementation of resolution plan, while they have neither filed their claim during CIRP nor objected to the resolution plan before NCLT ? - HELD THAT: - Applying the clean slate principle, the Court held that any demand relatable to the pre-CIRP period, which could have been raised and filed during the insolvency process but was not included in the approved resolution plan, stood extinguished by operation of law. It further held that tariff classification, misuse, excess load, or similar electricity issues were not adjudicated on merits for the post-resolution period; if any demand pertains to post-resolution conduct or continuing liability, the authorities may proceed in accordance with the electricity law. The Court also observed that even in relation to any future post-resolution demand, fairness, transparency, and adequate disclosure of breakup and basis of computation must be maintained. [Paras 110, 111, 112, 114, 115]

The impugned demands were quashed to the extent they sought recovery for the pre-CIRP period, with liberty to issue fresh demand notices only for dues arising in the post-resolution period in accordance with law.

Final Conclusion: The Court held that electricity authorities could not recover dues pertaining to the pre-CIRP period once the resolution plans had been approved and implemented, as such claims stood extinguished under the IBC. The impugned demand notices were quashed, while liberty was reserved to the authorities to raise fresh demands only for lawful post-resolution dues.

Electricity arrears relating to the corporate debtor's pre-auction period - Extinguishment of statutory dues - Auction on “as-is-where-is”, as-is-what-is, “whatever-there-is” - Applicability of clean slate doctrine - Liability of auction purchaser for prior electricity arrears - demand notice for arrears - Disconnection of electricity supply - Limitation on recovery of electricity dues.

IBC clean slate principle - Extinguishment of statutory dues - Liability of auction purchaser for prior electricity arrears - HELD THAT: - The Court held that the position governing a sale under the Insolvency and Bankruptcy Code is distinct from a sale on "as is where is" basis under the SARFAESI Act. Relying on Ghanashyam Mishra & Sons (P) Ltd., v. Edelweiss [2021 (4) TMI 613 - SUPREME COURT], and referring to Mamta Binani v. Kolkata Municipal Corporation [2026 (2) TMI 849 - CALCUTTA HIGH COURT], the Court held that once a resolution plan is approved, statutory and governmental dues not forming part of that plan stand extinguished. Since the electricity distributor had not lodged its claim before the resolution professional, it could not subsequently enforce those dues against the writ petitioner as auction purchaser. The decision in TSSPDCL v. Srigdhaa Beverages [2020 (6) TMI 37 - SUPREME COURT] was held inapplicable because it concerned a different statutory setting, namely an auction under the SARFAESI Act. [Paras 18, 19, 20]

The demand for prior electricity arrears against the petitioner as auction purchaser under the IBC was unsustainable.

Limitation on recovery of electricity dues - Section 56(2) bar on stale demand - HELD THAT: - The Court held that the impugned demand was made after an inordinate lapse of time and was therefore contrary to the two-year limitation recognised under Section 56(2) of the Electricity Act. Referring to Sri Sai Baba Cellulose Pvt. Ltd., Hyderabad v. State of Telangana [2023 (1) TMI 1531 - TELANGANA HIGH COURT], the Court held that the respondents were precluded from raising such a stale demand and that the impugned notice was unsustainable on the ground of limitation as well. [Paras 21]

The demand notice was independently liable to fail on the ground of limitation.

Final Conclusion: The Court allowed the writ petition and set aside the impugned demand notice. It held that the prior electricity dues stood extinguished against the auction purchaser under the IBC and, in any event, the demand was barred by limitation, with the consequence that disconnection on the basis of that notice was impermissible.

Rejection of section 9 - existence of a pre-existing dispute - Acknowledgment of debt - Operational debt - Moonshine defence - barred by Section 10A -HELD THAT: - The law with respect to Section 8 and 9 of the I&B Code and the scope and ambit regarding considering existence of dispute between the parties with reference to Section 9 application has been settled by the Hon’ble Supreme Court in its judgment in Mobilox Innovations Private Ltd vs Kirusa Software Private Ltd. [2017 (9) TMI 1270 - SUPREME COURT], the Tribunal held that the alleged dispute was neither contemporaneous with the invoices in question nor supported by material showing a genuine dispute as to the debt arising from the 2021 supplies. The contemporaneous emails showed acknowledgment of outstanding dues and a request for time to pay, and the post-dated cheques issued thereafter constituted acknowledgment of liability. The defence first articulated in the reply to the Section 138 notice related to unsold iPhone 8 inventory of 2018 and backend discount claims arising under arrangements with Apple, and not to the invoices forming the subject matter of the Section 9 application. Such reply was in substance a counter-claim and, in the absence of any earlier objection to the supplies, could not furnish a genuine pre-existing dispute. The Adjudicating Authority also erred in relying on the Local Commissioner's report, which had not been taken on record and in any event related to 2018 inventory, and on arbitration proceedings between the respondent and Apple in which the appellant had been deleted and which were initiated subsequent to the Section 9 filing. The defence was therefore held to be a moonshine defence, while the operational debt and default stood established. [Paras 28, 29, 30, 31, 32]

The finding of pre-existing dispute was set aside, and the appellant was held to have proved debt and default under Section 9.

Section 10A bar - HELD THAT: - The Tribunal rejected the respondent's contention under Section 10A, noting that the Adjudicating Authority had already considered and negatived that objection, and found no reason to accept the plea. [Paras 33]

The objection based on Section 10A failed.

Final Conclusion: The appeal was allowed. The order rejecting the Section 9 application was set aside, and the Adjudicating Authority was directed to admit the application and pass consequential orders, subject to the respondent being given an opportunity to discharge the admitted debt within the time granted.

Application under Section 7 - Advanced received - Investment in lieu of equity allotment - Financial debt- Share application money - contemporaneous stand - corporate insolvency resolution process -HELD THAT: - The Appellate Tribunal treated the appellant's own pleadings in the pending complaint under Section 138 of the Negotiable Instruments Act as a clear admission that the amount was invested in the corporate debtor in exchange for equity and that the grievance arose because shares were not allotted and the invested amount was not returned. In the absence of any loan agreement, and in view of that admission, the transaction could not be characterised as a borrowing or financial debt under Section 5(8) of the Code. The subsequent issuance and dishonour of cheques did not alter the original character of the transaction. On that basis, the amount given as share application money or investment could not support initiation of the corporate insolvency resolution process. [Paras 14, 15, 16, 17]

The dismissal of the Section 7 application was upheld, and the plea on limitation was held unnecessary for consideration.

Final Conclusion: The appeal was dismissed. The Tribunal affirmed that the transaction was an equity investment and not a financial debt, and therefore the appellant was not entitled to invoke insolvency proceedings under Section 7 of the Code.

Prima facie threshold under Section 26(2) - Closure of the information under section 26(2) - Abuse of dominant position - allegations of unilateral price fixation, unfair tender terms, cash discounts and losses to private manufacturers - Appreciable adverse effect on competition - violation of Section 4 of the Competition Act - Burden to furnish substantiating material - Preferential treatment and competitive harm.

Prima facie threshold under Section 26(2) - HELD THAT: - The Tribunal held that, at the stage of Section 26, the Commission is required to form a prima facie opinion on the basis of material placed before it, and the informant must furnish complete and substantiating information. The material relied on by the appellants, including sample cost cards and general assertions regarding losses, increase in production costs and adverse market effects, did not provide actual data on cost sheets, margins, losses, price distortion, market exit, non-revision impact or decline in market share. The Commission was therefore entitled to conclude that the allegations remained general and unsubstantiated. The Tribunal also accepted the Commission's approach that, in a regulated sector such as alcoholic beverages, pricing is linked to taxes, levies and State policy considerations, and Clause 11(c) did not, on the material placed, prima facie disclose abusive conduct. Since the Commission had considered the material available, afforded opportunity to supplement the record, and found the evidentiary threshold unmet, no error was found in the order closing the case under Section 26(2). [Paras 73, 78, 79, 80, 81]

The challenge to the Commission's refusal to direct investigation on the allegations of unfair pricing, tender terms, discounts and consequential losses was rejected.

Preferential treatment and competitive harm - Public interest preference - Distortion of competition -HELD THAT: - The Tribunal held that, although preference to one brand over another may ex facie be discriminatory, the Commission had rightly considered that the preference in question was stated to flow from a policy declared upfront and tender clauses permitting such preference in public interest. The State-owned supplier was found to be supplying only a single brand, whereas numerous manufacturers were supplying multiple brands. In that background, the appellants failed to place any comparative market data or other material to show that the preference had distorted demand, impaired consumer choice or otherwise adversely affected competition in the market. The Tribunal also noted that despite being specifically afforded an opportunity, the appellants did not furnish supporting data regarding competing rum brands vis-a-vis the favoured product. On that evidentiary deficiency, the Commission's conclusion was upheld. [Paras 75, 76, 77, 84, 85]

The allegation of abusive preferential treatment in favour of the State-owned supplier was held not to disclose a prima facie competition law violation.

Final Conclusion: The Tribunal upheld the Commission's order closing the information under Section 26(2), holding that the appellants had failed to place concrete material sufficient to cross the prima facie threshold for investigation. The appeal was accordingly rejected.

Validity ofRetention of frozen bank accounts - Foundational facts for proceeds of crime - Presumption under burden of proof provisions - violation of copyright by broadcasting cricket matches illegally - Requirement of reasoned finding that property is involved in money-laundering - non-application of mind - offence punishable under Section 63 of the Copyright Act, 1957 which constitutes a scheduled offence .

Proceeds of crime nexus - Foundational facts - Presumption under burden of proof provisions - HELD THAT: - The Tribunal found that the appellant was neither named in the scheduled offence case nor alleged to be involved in the copyright violation forming the predicate offence. The reliance placed on her relationship with her brother, his alleged association with another entity, and her investment in a separate company did not establish that any proceeds of crime had travelled to her or that she was connected with such proceeds. The allegation of online betting could not by itself furnish the basis for action in the absence of an underlying scheduled offence in that regard. The appellant's assertion that the funds came from salary and disclosed income was not refuted, and the Tribunal held that the burden under the PMLA could not shift to her merely on the Directorate's assertion. The presumption as to involvement in money-laundering would arise only after the foundational facts of existence of proceeds of crime and the person's link with the process or activity connected thereto were first established. [Paras 44, 45, 46, 47, 48]

Since no material established that the frozen funds were proceeds of crime or that the appellant was linked to money-laundering activity, the basis for retention failed.

Reasoned adjudication - Property involved in money-laundering - Ongoing investigation - HELD THAT: - On examining the impugned order, the Tribunal held that the principal ground on which retention had been permitted was the stated need to facilitate the ongoing investigation. That approach was contrary to the statutory requirement that, after considering the reply, hearing the parties and the material on record, a finding must be recorded whether the property referred to in the notice is involved in money-laundering. Apart from a bare statement of prima facie involvement, the impugned order contained no reasoned finding that the appellant's frozen bank accounts were so involved. Retention could not therefore be justified solely, or even primarily, on the footing that investigation was still in progress. [Paras 49, 50, 51]

The impugned order was unsustainable because it allowed continued freezing on the ground of ongoing investigation without recording the requisite reasoned finding regarding involvement of the property in money-laundering.

Final Conclusion: The appeal was allowed and the order confirming retention of the appellant's frozen bank accounts was set aside. The Tribunal held that no material established the necessary nexus with proceeds of crime and that continued freezing could not be sustained merely on the ground that investigation was still ongoing.

Tour operator service - stage carriage versus tourist vehicle - CENVAT credit on input services used for non-taxable services - extended period of limitation arising from alleged suppression of facts - Tribunal held that demands and denial of CENVAT for the extended period of limitation are set aside; service tax demands on tour operator service, licence fee for transport of goods and bus stand fee are set aside even for the normal period; wrongful availment of CENVAT credit on third party insurance is upheld for the normal period; matter remitted to the Commissioner for computation in accordance with these findings. - HELD THAT:- Delay was condoned and the civil appeal challenging the Tribunal's order [2026 (1) TMI 1517 - CESTAT NEW DELHI] was dismissed, the Court finding no reason to entertain it.

Liability to pay Service Tax under the first Lease Deed - Entitlement to deduct from the refundable security deposit -Bar of limitation - HELD THAT: - The Court held that the first lease deed contained no covenant making the tenant liable for service tax, and under its express terms the liability for taxes was on the landlord. Though the second lease deed specifically made service tax on rental payments the obligation of the lessee, it contained no stipulation transferring liability for the earlier period under the first lease, and the alleged oral understanding to that effect was unsupported by evidence. The defendants had also earlier stated that any claim for the prior period would be pursued only through appropriate legal proceedings, but no such proceedings were initiated. On the date of deduction from the security deposit, the claim for service tax for the period 01.06.2007 to 15.08.2009 had become time-barred. In these circumstances, deduction of that amount from the security deposit was unlawful. [Paras 51, 54, 56, 57, 58]

The decree directing refund of the deducted amount with interest was upheld.

Final Conclusion: The appeal was dismissed. The Court affirmed that the defendants could not recover, by adjustment from the security deposit, an unproved and time-barred service tax claim for the period covered by the first lease deed.

Relegation to show-cause notice stage - Opportunity to file fresh reply - Service tax adjudication based on third-party data and resulted in a substantial enhancement of the quantified demand vis-a -vis the show-cause notice- Validity of the Order-in-Original -HELD THAT: - The Court noted that in similar circumstances it had already directed that matters challenging service tax proceedings based on such adjudication be reconsidered from the stage of the show-cause notice, while keeping all merits contentions open. Following that course, the Court set aside the impugned Order-in-Original and required the authority to take note of the observations extracted from the earlier order, including such aspects as may be applicable, while permitting the petitioner to submit a fresh reply. The Court did not adjudicate the contentions on quantification, limitation or jurisdiction. [Paras 5, 6, 7]

The Order-in-Original was set aside and the matter was remitted to the stage of reply to the show-cause notice, with liberty to the petitioner to file a fresh reply and with all contentions kept open.

Final Conclusion: The writ petition was disposed of by setting aside the impugned Order-in-Original and remitting the matter to the show-cause notice stage. The petitioner was granted liberty to file a fresh reply, and all contentions on merits were expressly kept open.

Relegation to show-cause notice stage - Reverse Charge Mechanism - Opportunity to file fresh reply - Service tax adjudication based on inputs from the Income Tax Returns - Validity of the Order-in-Original - HELD THAT:- Following the earlier order passed in M/s Karnataka Chinmaya Seva Trust, Chinmaya Mission Hospital, M/s. Concorde Housing Corporation Pvt Ltd., M/s Sahana Enterprises Partnership Firm, M/s. Sree Gajanana Motor Transport Company Limited, M/s. Source One Interiors, M/s. M Shivananda Class I Contractor, M/s. M Shivananda Class I Contractor, M/s. Merve Nanjappagowda Lokesh (M/s MN Lokesh), and Other [2024 (9) TMI 64 - KARNATAKA HIGH COURT] and connected petitions, the Orders-in-Original for the financial years 2015-16 and 2016-17 were set aside and the matter was relegated to the stage of reply to the show-cause notice, with all contentions kept open. The bank account attachment was also directed to be reversed.

Refund claim of service tax paid by mistake - Applicability of statutory limitation under Section 11B - Unjust enrichment -HELD THAT: - The Tribunal confined the controversy to the applicability of Section 11B to the refund claim. It held that where refund is sought before the departmental authorities, the claim is governed by the limitation prescribed in the statute, and the amount paid cannot be taken outside that scheme merely by describing it as a mistaken payment. Relying on the Supreme Court in the case of M/s Porcelain Electrical Mfg. Co. Vs. CCE [1994 (11) TMI 145 - SUPREME COURT], on statutory limitation governing departmental refund claims and following the later Tribunal view in the case of M/s Mahindra Holidays and Resorts India Ltd. [2025 (11) TMI 438 - CESTAT CHENNAI] examining refund under Section 11B, the Tribunal held that the claim filed for the relevant period was rightly rejected as time-barred. [Paras 7, 8, 9]

The refund claim was held barred by limitation under Section 11B, and the rejection of the claim was sustained.

Final Conclusion: The Tribunal held that the refund claim for service tax allegedly paid by mistake was governed by the limitation prescribed under Section 11B when made before the departmental authorities. As the claim was time-barred, the impugned order was upheld and the appeal was dismissed.

Cenvat credit availed on input services used for restaurant and accommodation services - Nexus of Input Services - Burden of Proof - Eligibility to abatement under Notification No.01/2006-ST as amended by Notification No.34/2011-ST -HELD THAT: - The Tribunal held that the abatements claimed were under conditional exemption notifications, and the condition expressly barred availment of Cenvat credit on inputs, capital goods or input services used for providing the taxable services. The adjudicating authority had already verified that the ST3 disclosure describing the credit as relating to inputs was a clerical mistake and that the credit was in fact on input services covered by invoices pertaining to the period prior to 30.06.2012. Once such credit on services like maintenance and repair, internet and courier stood availed, the burden was on the appellant to establish that those services were not used for the restaurant or accommodation services. In the absence of cogent evidence showing absence of use, and having regard to the evident nexus of such services with hotel operations, the condition of the notification was not satisfied. Since exemption notifications issued under section 93(1) require strict construction, the benefit of abatement could not be extended merely on the plea that the services were not exclusively procured for the impugned output services. [Paras 8, 9, 10, 11]

The denial of abatement and the consequential confirmation of demand as sustained in the impugned order were upheld.

Final Conclusion: The Tribunal found no infirmity in the impugned order and held that availment of Cenvat credit on input services disentitled the appellant from the claimed abatement under the conditional notifications. The appeal was accordingly dismissed.

Demand of service tax on the basis of Income-tax returns and Form 26AS without independent enquiry into the nature of receipts - Invocation of the extended period of limitation - HELD THAT: - The Tribunal held that the entire demand had been built merely on the figures appearing in the income-tax records and Form 26AS, though Form 26AS is prepared by the Income Tax Department and may contain errors. It further noted that the figures in Form 26AS differed from the turnover declared in the Profit and Loss Account, yet no enquiry had been made by the Department to ascertain the reason for such difference. Since the demand, including invocation of the longer limitation period, rested solely on the Profit and Loss Account and Form 26AS without independent verification of taxable services, the impugned order was held unsustainable on limitation itself. [Paras 11, 12]

The demand confirmed by invoking the extended period was set aside and the appeal was allowed with consequential relief.

Final Conclusion: The Tribunal held that a service tax demand and invocation of the extended period could not be sustained where they were founded only on Profit and Loss Account figures and Form 26AS without any enquiry to establish taxable receipts. The impugned order was accordingly set aside and the appeal was allowed.

Cenvat credit on outward freight - Place of removal - Extended period of limitation - barred by limitation - suppression of facts.

Entitlement to Cenvat credit of service tax paid on outward freight for the period prior to 01.04.2008 - HELD THAT: - The Tribunal held that, under Rule 2(l) of the Cenvat Credit Rules, 2004 as it stood up to 31.03.2008, clearance of final products from the place of removal covered outward freight without the restriction introduced later. It, therefore, found that, whether the place of removal was taken as the factory premises or the buyer's premises, the credit remained admissible for that period. [Paras 10]

The demand relating to April, 2005 to March, 2008 was held to be unsustainable and was set aside.

Entitlement to Cenvat credit of service tax paid on outward freight for the period after 01.04.2008 on the footing that delivery was at the buyer's premises - HELD THAT: - For the period after the amendment, the Tribunal held that credit would be admissible if the facts established that delivery was effected at the customer's doorstep and ownership passed only there. On examining the purchase orders, it found that the appellant had to bear freight and insurance and was responsible for proper delivery at the place specified by the buyer. That documentary evidence established the buyer's premises as the place of removal for the goods in question, and the outward freight up to that point qualified for credit. [Paras 12, 14]

The credit for the period April 2008 to December 2009 was held admissible on merits and the impugned order was set aside.

Extended period of limitation - Suppression of facts - HELD THAT: - The Tribunal found that the appellant was registered under the central excise and service tax laws, the availment and utilisation of credit were reflected in the statutory returns, and the demand itself had been worked out from the appellant's profit and loss accounts and balance sheets. On those facts, it held that the department was already aware of the relevant particulars and no case of suppression had been made out. [Paras 15]

The demand for the extended period was also set aside as time-barred.

Final Conclusion: The appeal was allowed. The Tribunal held that the appellant was entitled to Cenvat credit on outward freight for the entire disputed period, and further held that the extended period could not be invoked in the absence of suppression.

Demand of duty on shortage of raw materials and finished goods based only on eye estimation - brand-name misuse -SSI exemption and use of another's brand name - Clandestine removal and corroborative evidence - private and statutory records - Parallel invoices - CENVAT credit on actual receipt of inputs - disallowance of CENVAT credit - penalty under Rule 26 .

Stock shortage based on eye estimation - Clandestine clearance - HELD THAT: - The Tribunal found that no physical stock taking had been undertaken and that the stock position had been recorded merely on eye estimation. Applying the settled principle that shortage of raw materials or finished goods cannot be established on eye estimation alone, it held that the very basis of the shortage demands failed. [Paras 12]

The demands raised on account of alleged shortage of raw materials and finished goods were held unsustainable.

Denial of SSI exemption on the footing that the appellants were manufacturing goods bearing another person's brand name - HELD THAT: - The Tribunal noted that the investigation showed only the marking 'Essel' embossed on the goods and that no corroborative evidence had been produced by the Revenue to establish use of another's brand for the goods in question. It further found that M/s. Essel Kitchenware Private Limited had that brand in relation to other goods and not the goods under consideration. On that basis, it held that the appellants could not be said to have used the brand name of others so as to lose the benefit of the exemption notifications. [Paras 13]

The benefit of SSI exemption under the notifications was held admissible and the related duty demands were set aside.

Clandestine removal and corroborative evidence - HELD THAT: - The Tribunal held that the Revenue had not brought on record any buyer of the finished goods, any supplier of raw materials for the alleged clandestine production, or any investigation of transporters. It also found that the Revenue had failed to establish the quantity of raw materials allegedly used for manufacture of the goods said to have been clandestinely removed. In the absence of such corroborative evidence, the charge of clandestine removal could not be sustained. [Paras 14]

The demands based on alleged clandestine removal were held not sustainable.

Parallel invoices - Evidence of clandestine removal - HELD THAT: - The Tribunal found that the alleged parallel invoices had not been verified with reference to the persons to whom they were said to have been issued or whether such persons had actually received them. In the absence of supporting evidence connecting the invoices with actual removals, the allegation founded on parallel invoices remained unproved. [Paras 15]

The demand raised on the basis of alleged parallel invoices was held unsustainable.

CENVAT credit on actual receipt of inputs - Denial of credit without proof of non-receipt - HELD THAT: - The Tribunal held that the credit taken by M/s. S.L. Polypack (Pvt.) Ltd. on the basis of computerised statements could not be denied when it was not the Revenue's case that the goods had not been received for manufacture of final products. It further held that the separate credit demands linked to alleged shortage of raw materials also failed once the shortage itself had not been clearly established. Thus, denial of credit lacked factual foundation. [Paras 16]

The denial of CENVAT credit was held without basis and the related demands were set aside.

Penalty consequential to unsustained demand - HELD THAT: - After finding all the substantive demands unsustainable, the Tribunal held that no penalty was imposable on the appellants. The penalty finding was treated as consequential to the failure of the underlying allegations. [Paras 17]

No penalty was held imposable on any of the appellants.

Final Conclusion: The Tribunal held that the impugned order was devoid of merit, as the shortages were based on eye estimation, the allegations of branded manufacture, clandestine removal, parallel invoices and wrongful CENVAT credit were unsupported by adequate evidence. All demands, interest and penalties were consequently set aside and all appeals were allowed with consequential relief.

Demand, interest, and penalty arising from alleged contravention of Rule 8(3A) - Cash payment on consignment to consignment basis - utilisation of CENVAT credit during defaulted period - HELD THAT: - The Tribunal held that the controversy stood covered by the decisions of the Gujarat High Court in Indsur Global Ltd. v. Union of India [2014 (12) TMI 585 - GUJARAT HIGH COURT] and the Punjab and Haryana High Court in Sandley Industries v. Union of India [2015 (10) TMI 2455 - PUNJAB & HARYANA HIGH COURT], which had taken the view that an assessee could not be compelled under Rule 8(3A) to make payment by cash on a consignment to consignment basis. The Tribunal further noted that the Revenue had carried the matter to the Supreme Court but chose not to press the appeal, and therefore treated the High Court view as having attained finality. Following its own earlier decisions adopting the same position, the Tribunal concluded that denial of CENVAT credit utilisation during the defaulted period and the consequential demand could not be sustained. [Paras 9, 10, 11, 12]

The impugned order was set aside and the appeal was allowed, with consequential relief in accordance with law.

Final Conclusion: Following the High Court decisions on Rule 8(3A), and noting that the Revenue had not pursued the challenge before the Supreme Court, the Tribunal held that the appellant could not be compelled to pay duty only through cash during the defaulted period. The demand confirmed in the impugned order was therefore held unsustainable and the appeal was allowed with consequential relief as per law.

Claim of stock transfer - Inter-State sale - Movement of goods from Maharashtra to the appellant's Buffer Depots and Satellite Depots in other States under the Agreement and MOU - Form F declarations - non mention of the lorry receipt number and vehicle details - Procedural defects - Proof of dispatch.

Whether the movement of goods from the State of Maharashtra to the other States in terms of the Agreement and MOU is inter-State sale within the meaning of section 3(a) of the Central Sales Tax Act or is merely a stock transfer by the appellant to its 3 Buffer Depots and 27 Satellite Depots situated across multiple States ? - HELD THAT: - In the year 2000, MOU was entered which modifies the Agreement and retains Hindustan Lever Limited merely as a distributor on a principle to principle basis. The important changes made to the Agreement are that the appellant shall sell it products to Hindustan Lever Limited at a discount of 4% for sale and distribution by Hindustan Lever Limited. Hindustan Lever Limited shall also have no objection to the appellant operating from its depots for the purpose of sale of its products to Hindustan Lever Limited and other customers.

The Tribunal held that for a transaction to fall within inter-State sale, the movement of goods from one State to another must be occasioned by a prior contract of sale. On the terms of the Agreement read with the MOU, there was no binding obligation as to quantity, specification or determinative price at the stage when goods moved from the manufacturing unit. The arrangement was only a framework or standing offer, while the concluded contracts arose only when purchase orders were placed on the appellant's depots and accepted there. The goods moved under stock transfer documents to Buffer Depots and Satellite Depots for inventory replenishment, formed part of a mixed and unascertained stock, and were appropriated only at depot level on placement and acceptance of purchase orders. Sales to Hindustan Lever Limited, CSD and other customers were effected from the Satellite Depots under local VAT. The interstate movement from Maharashtra, therefore, was not pursuant to any prior contract of sale and could not be treated as a sale occasioning such movement. [Paras 22, 26, 27, 35]

The transfers in dispute were stock transfers and not inter-State sales liable under section 3(a).

Form F declarations - Procedural defects - Proof of dispatch - HELD THAT: - The Tribunal found that the impugned order itself recorded that the appellant possessed the lorry receipts, which constituted valid proof of dispatch for the purposes of section 6A. In that situation, omission of particulars such as lorry receipt number and vehicle details in Form F was only a minor procedural lapse, particularly when those particulars were available in the lorry receipts. Rejection of the declarations on that basis was, therefore, unjustified. [Paras 36]

Rejection of Form F for minor procedural lapses in the 2008-09 matter was unsustainable.

Final Conclusion: The appeals were allowed. The Tribunal held that the disputed movement of goods from Maharashtra to the appellant's depots in other States was by way of stock transfer and not inter-State sale, and further held that Form F for 2008-09 could not be rejected for minor procedural defects when the lorry receipts evidencing dispatch were available.