TMI Tax Updates e-Newsletter
May 27,2026

Transit-State jurisdiction under GST - Cross-empowerment of State and Central tax authorities - Inter-State supply - Detention and penalty on inter-State movement of goods - Absence of tax incidence in transit State -provisions relating to inspection, detention, cross-empowerment and e-way invoice requirements

Whether the State GST authorities of Uttar Pradesh had jurisdiction to detain goods and impose penalty in respect of an inter-State transaction where the goods merely transited through Uttar Pradesh from one State to another outside Uttar Pradesh? - HELD THAT: - The Court held that the statutory scheme permits the authorities of a transit State to intercept, inspect and physically verify goods in movement as a regulatory measure, but that power does not extend to detention and penalty under the GST enactments where the transaction neither originates in nor terminates in that State and gives rise to no levy there.

Sections 6 of the State and Central Acts and Section 4 of the IGST Act embody cross-empowerment only between the State and Central authorities operating in relation to the same State and taxable transaction; they do not create cross-empowerment between one State's GST authorities and another State's taxpayers for transactions wholly outside the former State.

Since the goods were admittedly covered by a valid e-way bill and physical tax invoice, and there was no allegation that the goods were different, that the documents were bogus, or that the goods were meant for supply within Uttar Pradesh, the absence of e-tax invoice was only a deficiency to be reported to the competent authorities of the originating or destination State. In the absence of any tax payable in Uttar Pradesh, penalty could not be levied there under Section 129. [Paras 40, 41, 42, 44, 45]

The penalty orders were without jurisdiction; at most, the anomaly noticed could be communicated to the competent authorities in the concerned States, and the goods ought to have been allowed to pass through Uttar Pradesh.

Final Conclusion: The Court allowed the writ petitions and quashed the penalty orders, holding that Uttar Pradesh, as a pure transit State with no tax incidence on the admitted transaction, lacked jurisdiction to penalise the movement of the goods. It directed release of the goods and vehicles forthwith.

Scope of supply - supply of services - assignment of leasehold rights - transfer of immovable property - Schedule II clause 2(b) - assessment under Section 74(1) of the Central Goods and Services Tax Act, 2017 - HC [2026 (1) TMI 701 - BOMBAY HIGH COURT] held that, the assignment/transfer of leasehold rights does not constitute a taxable supply of services under the GST law in the circumstances of this case, and the show cause notice issued under Section 74(1) is unsustainable; conclusion is in favour of the assessee. - HELD THAT:- Delay was condoned and the special leave petition was dismissed, the Court declining to interfere with the impugned judgment and order of the High Court.

Entitlement to regular bail in a prosecution under Section 132 -Prolonged pre-trial incarceration - Filing of complaint and continued custody - HELD THAT: - The Court took note that the appellant had remained incarcerated for more than nine months and that the complaint had already been filed. It held that, in that situation, continued incarceration was no longer required, particularly having regard to the maximum punishment that could be imposed if the charges were ultimately proved. [Paras 4, 5, 6, 7]

The impugned order refusing bail was set aside and the appellant was directed to be released on bail on terms and conditions to the satisfaction of the trial court.

Final Conclusion: The Supreme Court granted regular bail to the appellant, holding that after more than nine months of custody and filing of the complaint, further incarceration was not warranted, especially in light of the maximum punishment prescribed for the alleged offences.

Entitlement of the petitioner to regular bail in a prosecution - issuance of fake invoices and wrongful availment and passing on of input tax credit - Parity in bail - Prolonged custody and likely delay in trial - HELD THAT: - The Court granted bail after taking into account that the petitioner had remained in custody for more than four months, a co-accused had already been granted regular bail, and the trial was likely to take considerable time to conclude. On that assessment, the Court held that no useful purpose would be served by further incarceration, while making it clear that no opinion was being expressed on the merits of the prosecution case. [Paras 7, 8, 9, 10]

Regular bail was granted during pendency of the trial, subject to furnishing bail and surety bonds, with liberty to the State to seek cancellation if the petitioner was found involved in any other criminal case or activity while on bail.

Final Conclusion: The petition for regular bail was allowed. Bail was granted on the considerations of custody period, parity with a co-accused already enlarged on bail, and the likelihood of the trial taking considerable time, without any expression on the merits of the case.

Bar on parallel adjudicatory proceedings on same subject matter - Coordination between Central and State GST authorities - Principle Against Duplication - Inter-se Coordination -HELD THAT: - Relying on M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East & Anr. [2025 (8) TMI 991 - SUPREME COURT], the Court held that the bar operates against parallel adjudicatory proceedings on the same subject matter once one authority has first initiated such proceedings. The Supreme Court having clarified that the test turns on identity or overlap of the liability, deficiency or obligation arising from the same contravention, the High Court found that no further adjudication on that legal question was required and directed the authorities to act in conformity with the law so declared. The petitioner was required to place its responses and documents before the respective authorities, after which the State and Central authorities were to communicate and decide which of them would continue, ensuring that only one competent authority proceeds further on the same subject matter. [Paras 11, 12, 13, 14]

The petition was disposed of with directions that the petitioner file responses before the Central and State authorities, the authorities coordinate in terms of Armour Security, and no parallel adjudicatory process be continued for the same period and subject matter.

Final Conclusion: The writ petition was disposed of by directing the petitioner to file its responses before the concerned authorities and by requiring the Central and State GST authorities to coordinate and determine the competent authority in accordance with Armour Security. The Court ensured that, for the same periods and subject matter, no parallel adjudicatory proceedings would continue.

Bail in GST offences - Non-initiation of proceedings under Sections 73 and 74 - Presumption of innocence and speedy trial -fraudulent availment, utilisation and passing on of admissibility input tax credit -Entitlement to bail in the prosecution under Section 132.

Criminal prosecution under GST - Assessment proceedings - HELD THAT: - The Court held that proceedings under Sections 73 and 74 are assessment proceedings in respect of the alleged violation and may result in issuance of show cause notice to the taxpayer, but criminal prosecution is not barred merely because such proceedings have not yet been initiated. At the same time, the Court observed that if in assessment proceedings it is found that the taxpayer has not violated the law, that finding may have a bearing on the criminal prosecution. [Paras 8]

The plea that prosecution could not continue in the absence of prior assessment was not accepted.

Grant of bail - Documentary and electronic evidence - Delay in trial - Bail is the rule - HELD THAT: - The Court applied the principle that pre-trial detention is not punitive and that presumption of innocence operates at the pre-conviction stage. It noted that the prosecution case rested primarily on documentary and electronic material, investigation had been completed, and the complaint had already been filed. The offences were triable by a Magistrate, the maximum punishment was five years, the applicant had remained in custody for a substantial period, no criminal antecedents were shown, and no exceptional circumstance was brought on record to show likelihood of tampering with evidence, intimidating witnesses, absconding, or subverting justice. The Court also considered that even if the trial commenced in the near future, it was unlikely to conclude within a reasonable time, and therefore continued detention was not justified. [Paras 18, 19, 20, 21, 22]

The bail application was allowed subject to conditions.

Final Conclusion: The Court held that absence of assessment proceedings under Sections 73 and 74 of the CGST Act did not, by itself, bar criminal prosecution under Section 132. On the facts of the case, however, considering the completed investigation, documentary nature of evidence, limited maximum sentence, absence of antecedents and lack of exceptional circumstances justifying further custody, the applicant was granted bail subject to conditions.

Statutory time limit - ninety-day period for passing the appellate order under Section 101(2) - mandatory or directory - departmental appeals barred by limitation - Limitation for appeal against advance ruling - Concerned officer and jurisdictional officer - Manual filing of appeal - relevant date of communication -No estoppel against statute - Locus Standi - Natural justice in procedural verification.

Directory statutory time limit - Appeal against advance ruling - HELD THAT: - The Court held that the statute does not prescribe any consequence for non-compliance with the 90-day period, nor does it provide for automatic lapsing of an appeal on expiry of that period. A construction treating the provision as mandatory would defeat the statutory right of appeal itself. The period was therefore treated as an outer timeline meant to secure expeditious disposal and not as a jurisdictional condition whose breach nullifies the proceedings. Mere passage of time, in the absence of demonstrated prejudice, was held insufficient to terminate a validly instituted appeal. [Paras 8]

The use of the word "shall" in a statute does not by itself thus render a provision mandatory in every case. The Hon’ble Supreme Court has also held in Mohan Singh v. International Airport Authority of India- [1996 (11) TMI 461 - SUPREME COURT], Bachahan Devi v. Nagar Nigam Gorakhpur- [2008 (2) TMI 869 - SUPREME COURT], and Dinesh Chandra Pandey v. High Court of Madhya Pradesh- [2010 (7) TMI 1205 - SUPREME COURT], that whether "shall" is mandatory or directory depends upon the context, the object of the provision, the scheme of the statute, and the consequences that would flow from the interpretation thereof.

The objection founded on expiry of the 90-day period was rejected.

Limitation for appeal against advance ruling - Condonation of delay - Communication of order - HELD THAT: - The Court accepted the dates of actual receipt of the advance ruling as found by the Appellate Authority and held that, for the purpose of limitation, such established actual receipt could be acted upon. On that basis, one appeal was within the original period of limitation, while the other, filed within the maximum permissible extended period, was accompanied by a request for condonation which the Appellate Authority was competent to consider under the proviso to Section 100(2). The Court further held that the acceptance of those dates and the condonation granted were findings within jurisdiction and did not call for interference in writ proceedings. [Paras 9]

The challenge to maintainability of the appeals on limitation was rejected.

Concerned officer and jurisdictional officer - Locus to file appeal - HELD THAT: - Reading Sections 98 and 100 together, the Court held that the Act recognises separate authorities from the Central GST and State GST sides, each having an independent statutory status. The right of appeal is conferred by statute on both and is not dependent on whether a particular officer had participated before the advance ruling authority. Prior participation in the earlier proceedings was therefore held irrelevant to the existence of appellate locus. [Paras 10, 11]

The objection to the maintainability of the CGST appeal for want of locus standi was rejected.

Manual filing of appeal - Procedural requirement - HELD THAT: - The Court held that Rule 107A expressly saves manual filing notwithstanding provisions contemplating electronic filing. Rule 106 was treated as prescribing procedure and not as creating a jurisdictional bar. The mode of filing was therefore held to be a technical matter incapable of defeating the appeal itself. [Paras 14]

The procedural objection based on manual filing was rejected.

No estoppel against statute - Departmental change of stand - HELD THAT: - The Court reiterated that there is no estoppel against the State in matters of taxation and statutory duty. A stand taken by a subordinate officer without approval of the competent authority could not bind the department if the higher authority later found it legally incorrect. The statutory remedy of appeal could therefore be invoked to correct such an error, and the earlier position adopted before the authority for advance ruling did not bar the appeal. [Paras 13]

The plea of estoppel against the department was rejected.

Natural justice in procedural verification - HELD THAT: - The Court held that the communications relied on were internal inquiries made for verification of the limitation objection itself. Since the substance of that material and the conclusion drawn from it were disclosed in the impugned order, and the petitioner had an opportunity of being heard on the objection, non-supply of every internal communication did not amount to denial of natural justice. [Paras 12]

The procedural challenge based on non-furnishing of internal correspondence was rejected.

Final Conclusion: The High Court declined to interfere with the order rejecting the petitioner's preliminary objections and held that the departmental appeals against the advance ruling were maintainable. The writ petition was dismissed, with the petitioner being left to participate in the appellate proceedings on merits.

Entitlement to regular bail in a GST fake-input-tax-credit prosecution -Completion of investigation - Prolonged incarceration pending trial - HELD THAT: - The Court noted that the petitioner had been prosecuted under Section 132(1)(b) and Section 132(1)(c) of the CGST Act; that the investigation stood completed, the complaint had already been filed and charges had been framed; and that the rival allegations were matters for trial. It further took into account the petitioner's incarceration for about six months and observed that the trial would take sufficiently long time. On that basis, while leaving the merits to be examined at trial, the Court held that a case for bail was made out. [Paras 5, 6, 7, 8]

The petitioner was directed to be released on regular bail, subject to furnishing bail and surety bonds to the satisfaction of the trial Court or Duty Magistrate.

Final Conclusion: Considering completion of investigation, filing of complaint, framing of charges, the period of custody, and the likelihood of the trial taking time, the Court granted regular bail. The merits of the allegations were left open for determination at trial.

Maintainability of writ against show cause notice issued without jurisdiction - Validity of the Confiscation proceedings without prior determination of tax liability- violation of record-keeping requirements without prior determination of tax liability under the statutory machinery.

Maintainability of writ against show cause notice issued without jurisdiction - HELD THAT: - The Court held that once the impugned notice was found to be without jurisdiction, it was bound to interfere and decide the jurisdictional issue notwithstanding the objection to maintainability at the show cause notice stage. The challenge therefore fell within the exception permitting judicial review against a notice lacking lawful authority. [Paras 8, 9]

The objection to maintainability was rejected and the Court entertained the writ petition against the show cause notice.

Confiscation proceedings without prior determination of tax liability - Invocation of confiscation power for alleged record-keeping violation - HELD THAT: - The Court held that the legal position stood settled that proceedings under Section 130 of the Act, 2017 cannot be initiated without determination of tax under Sections 73 or 74. It further held that a notice under Section 130 could not be issued for an alleged violation of Section 35. On that basis, the show cause notice and the consequential confiscation proceedings were held to be without jurisdiction and contrary to law. The Court, however, left it open to the department to proceed afresh in accordance with the relevant provisions of the Act. [Paras 8, 10, 11]

The impugned show cause notice and the consequential confiscation order were quashed, with liberty to the department to initiate fresh proceedings in accordance with law; the claim for refund was left open to be pursued in accordance with law.

Final Conclusion: The Court held that the impugned show cause notice invoking confiscation jurisdiction was without authority of law, since such proceedings could not be founded on an alleged violation of record-keeping requirements without prior determination of tax liability under the statutory machinery. The show cause notice and consequential confiscation order were quashed, while leaving liberty to the department to proceed afresh in accordance with law and to the petitioner to pursue the refund claim in accordance with law.

Challenged the show cause notice and Ex parte adjudication order under Section 74 - Alternative statutory remedy -Technical glitch on portal - Manual filing of appeal - Condonation of delay in appeal - HELD THAT: - The Court found that the petitioner had already taken steps to avail the statutory appellate remedy, including making the required pre-deposit, and that the appeal could not be uploaded electronically because of a technical glitch on the portal. On that basis, the Court considered it appropriate, in the interest of justice, to require the petitioner to pursue the appeal before the appellate authority rather than examine the merits in writ jurisdiction. The petitioner was therefore permitted to file the appeal afresh in terms of the proviso to Rule 108 of the CGST Rules, 2017, raising all grounds including the challenge to the show cause notice, and the delay in filing the appeal was directed to stand condoned. [Paras 9, 10, 13]

The petitioner was directed to file the appeal afresh before the appellate authority within the time granted, and the writ petition was disposed of without adjudicating the merits.

Final Conclusion: The Court declined to examine the merits of the challenge and relegated the petitioner to the statutory appellate remedy, having regard to the prior attempt to file the appeal and the technical glitch on the portal. Fresh filing of the appeal was permitted and the delay was condoned.

Validity of an assessment order issued without a Document Identification Number - inherent defect - Service by portal upload - Delayed challenge to assessment order - Conditional entertainment of writ petition.

Document Identification Number - Validity of assessment order - HELD THAT: - The Court followed its earlier view in the case of M/s. Cluster Enterprises Vs. The Deputy Assistant Commissioner (ST)-2, Kadapa [2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT] and in the case of Sai Manikanta Electrical Contractors Vs. The Deputy Commissioner, Special Circle, Visakhapatnam [2024 (6) TMI 1158 - ANDHRA PRADESH HIGH COURT] held that absence of a DIN is by itself sufficient to invalidate the assessment order. Since the impugned order undisputedly did not contain a DIN, the defect went to the validity of the order itself and warranted interference. [Paras 10, 12]

The impugned assessment order was set aside on account of absence of a DIN and the matter was remanded to the Assessing Officer for fresh consideration after due opportunity of hearing.

Delayed challenge to assessment order - Conditional entertainment of writ petition - HELD THAT: - The Court noted the dispute on service through portal but did not finally adjudicate that question. It observed that, though ignorance of law or inability to access the portal would ordinarily not justify delay, practical difficulties under the GST online regime and the existence of a patent irregularity in the assessment order justified entertaining such delayed writ petitions. To balance hardship to registered persons and the State's interest in tax administration, the Court held that such writ petitions can be considered on condition of deposit of 20% of the disputed tax. [Paras 9, 10, 11, 12, 13]

Relief was granted subject to the petitioner depositing 20% of the disputed tax within the stipulated period, with adjustment of amounts already paid or recovered and exclusion of the pendency period for limitation.

Final Conclusion: The writ petition was disposed of by setting aside the assessment order for want of a DIN and remanding the matter for fresh assessment after opportunity of hearing. The relief was made conditional upon deposit of 20% of the disputed tax, with consequential protection on limitation and adjustment of prior payments or recoveries.

Mandatory pre-show cause intimation under Rule 142(1)(A) - Validity of assessment order passed without prior notice - HELD THAT: - The Court recorded that the assessment proceedings had been initiated without prior issuance of notice under Rule 142(1)(A), and that this position was not disputed. Following the earlier Division Bench ruling on the same question, the Court held that such non-compliance vitiates the assessment order and requires it to be set aside. The matter was therefore remitted for fresh completion of assessment in accordance with law, subject to the condition regarding deposit of part of the disputed tax. [Paras 2, 3]

The impugned summary of the assessment order was set aside and the matter was remanded to the assessing authority for fresh proceedings in accordance with law, subject to payment of 20% of the disputed tax within the time granted.

Final Conclusion: The writ petition was allowed. The assessment order for the relevant financial year was set aside for want of prior notice under Rule 142(1)(A), and the matter was remanded for fresh assessment in accordance with law subject to the deposit condition imposed by the Court.

Writ petition challenging the rectified GST demand order - Available statutory appeal under Section 107 - Non-consideration of Section 14 of the Limitation Act - time-barred - Statutory pre-deposit and deemed stay of recovery.

Section 14 exclusion of time - Dismissal of appeal on limitation - HELD THAT: - The Court found that the appellate authority had rejected the appeal only on the ground of delay. On the record, the contention that the appeal had been filed after the petitioner had been prosecuting the writ petition, and that Section 14 of the Limitation Act required consideration, had not been examined at all. Since the appellate authority failed to consider that statutory aspect, the order was vitiated on that ground alone. The Court expressly left open both the merits of the appeal and the question of limitation. [Paras 13, 14]

The order dismissing the appeal on limitation was quashed and the appeal was remanded to the appellate authority for fresh consideration limited to the non-consideration of Section 14 of the Limitation Act.

Recovery proceedings - Pre-deposit under Section 107(6) - Deemed stay under Section 107(7) - HELD THAT: - The Court noted that the recovery order proceeded on outstanding dues which included an amount arising from the order under challenge in the writ petition, an amount which had already been rectified and was proposed to be challenged in appeal, and another amount for which an appeal was already pending. In that situation, once the petitioner pursued the statutory appeal and deposited the amount contemplated by Section 107(6), the consequence under Section 107(7) would be that recovery for the balance amount would remain stayed. The recovery order, founded on the unadjusted aggregate dues, therefore could not be allowed to stand. [Paras 13, 14]

The recovery order was quashed, with clarification that upon filing the appeal and making the statutory pre-deposit, the recovery proceedings would be deemed to remain stayed, and further action would be taken only in accordance with law after disposal of the appeals.

Final Conclusion: One writ petition was permitted to be withdrawn with liberty to pursue the statutory appeal against the rectified order. In the other writ petition, the order dismissing the appeal on limitation was set aside for non-consideration of Section 14 of the Limitation Act and remanded, and the recovery order was also quashed, subject to the statutory appeal and pre-deposit mechanism.

Judicial review of arrest under special statutes - non-compliance with the statutory safeguards governing arrest and communication of grounds of arrest - Reason to believe - Non-speaking order - Natural justice - Remand custody.

Judicial review of arrest under special statutes - Grounds of arrest - Reasons to believe - HELD THAT: - The Court found from the record that, prior to arrest, the petitioner's statements had been recorded and the material disclosed his alleged involvement in the offence. The document containing the reasons to believe and grounds of arrest was on record; it had been issued by the competent authority, digitally signed, and bore the officer's seal on each page. The grounds of arrest, translated into Hindi, were served on the petitioner and acknowledged by him. The Court also accepted the respondents' statement that intimation of arrest had been given to the petitioner's wife, while the arrest memo had been signed by the petitioner's friend who was present. Applying the principle stated in Radhika Agarwal v. Union of India [2025 (2) TMI 1162 - SUPREME COURT (LB)], the Court held that in judicial review of arrest under special statutes, scrutiny is confined to whether statutory and constitutional safeguards were complied with, and not to the sufficiency of the material forming the belief. On that standard, no illegality in the arrest was made out. [Paras 7, 8, 13, 14, 15]

The arrest was held to be in accordance with law and no violation of Articles 21 or 22 was established.

Speaking order in remand proceedings - Judicial custody authorization - HELD THAT: - The Court reproduced the remand order and noted that the Magistrate had specifically recorded that compliance with Sections 47 and 48 of the BNSS appeared to have been made and that the arrest was justified. In that view, the contention that the remand order was non-speaking or passed in violation of natural justice was found to be without substance. [Paras 10, 11, 12]

The challenge to the remand order failed.

Final Conclusion: The High Court dismissed the petition, holding that the arrest satisfied the applicable statutory and constitutional safeguards and that the remand order could not be treated as non-speaking. It clarified that the trial Court shall decide the matter on its own merits without being influenced by the observations in the order.

Deemed withdrawal of best judgment assessment - Filing of returns after assessment under Section 62 - HELD THAT: - The Court recorded the respondents' acceptance that the petitioner had filed the relevant GSTR-3B returns on the dates stated and had also paid the amounts due as disclosed in those returns. On that admitted position, the deeming provision under Section 62(2) became applicable, with the result that the earlier assessment orders made under Section 62 for non-filing of returns were required to be treated as withdrawn. [Paras 4, 5]

The assessment orders were declared to be deemed to have been withdrawn.

Final Conclusion: The writ petition was allowed, and the assessment orders passed under Section 62 were declared to have been withdrawn by operation of the deeming provision once the petitioner filed the pending returns and paid the admitted dues.

Revision u/s 263 - Erroneous and prejudicial order - Mere change of opinion - whether provisions for doubtful debts constitute ascertained liabilities?

Whether Exercise of revisional jurisdiction under section 263 was not sustainable where the Assessing Officer had adopted a view already accepted in the assessee's own earlier year and the Principal Commissioner proceeded only on a different opinion regarding doubtful debts? - HELD THAT: - The Court held that recourse to section 263 is available only when the assessment order is both erroneous and prejudicial to the interests of the Revenue. The Tribunal had found that, in the assessee's own case for assessment year 2008-09, the co-ordinate Bench had already upheld the view that provision for doubtful debts constituted ascertained liabilities, and even the Principal Commissioner had accepted that the issue stood decided in favour of the assessee in earlier years.

In that situation, the Assessing Officer's adoption of the same view could not be treated as erroneous, and the revisional exercise was no more than a mere change of opinion.

The decision in M/s. Paville Projects Pvt. Ltd. [2023 (4) TMI 295 - SUPREME COURT] was distinguished because there the assessment view was itself patently erroneous and prejudicial, whereas that element was absent here. [Paras 4, 5, 6, 7]

The Tribunal was justified in quashing the revisional order, and no substantial question of law arose.

Final Conclusion: The appeal was dismissed. The Court upheld the Tribunal's view that the revisional power under section 263 could not be invoked, since the assessment order followed the accepted view in the assessee's own earlier year and was not shown to be both erroneous and prejudicial to the interests of the Revenue.

Offence punishable u/s 276B - Vicarious criminal liability of directors - Discharge for absence of material on day-to-day management

HELD THAT:- The Trial Court had recorded a common finding in respect of accused Nos.2 to 6 that there was no evidence showing that they were in charge of the day-to-day affairs of accused No.1 company. Since that very finding, insofar as it related to accused No.2, had already been set aside by the Co-ordinate Bench in the earlier revision proceedings, the Court held that the same basis could not continue to sustain the discharge of accused No.6.

At the same time, liberty was reserved to the respondent to demonstrate before the Trial Court that there was no material to show his participation, along with accused No.2, in the day-to-day management affairs of the company. [Paras 6]

The discharge order was set aside as against accused No.6, with liberty to raise before the Trial Court the contention that there is no material showing his participation in the day-to-day management of the company.

Final Conclusion: The revision petition was allowed and the order discharging the respondent-accused No.6 was set aside. The respondent was, however, left at liberty to establish before the Trial Court that there is no material showing his role in the day-to-day management affairs of the company.

Unsecured loan u/s 68 - Identity, creditworthiness and genuineness of transaction - Accommodation entries - Consequential disallowance of interest and alleged commission

HELD THAT: - The Tribunal found that the assessee had taken the loan through banking channels for a short period and had repaid it with interest in the subsequent year. The first appellate authority had recorded that the assessee furnished confirmation, return details, bank statement, audited financial statements of the lender and proof of repayment, and that no discrepancy was pointed out in those documents.

Tribunal held that the Revenue's reliance on material gathered in the search against the alleged entry operator and on the lender being a shell concern could not, in the absence of any material specifically linking the assessee or its transaction to any sham arrangement, displace the documentary evidence produced by the assessee. It also accepted the distinction drawn from the Mumbai Bench decision relied upon by the Revenue, noting that there was no finding here of any circular movement of funds.

Following the coordinate Bench decisions cited before it on similar facts like RMP HOLDINGS PRIVATE LIMITED [2025 (4) TMI 1035 - ITAT DELHI], NOUVELLE SECURITIES PVT LTD. [2026 (2) TMI 633 - ITAT DELHI] the Tribunal held that once the loan transaction itself stood proved as genuine, the related interest could not be treated as non-genuine and no commission could be assumed to have been paid for obtaining an accommodation entry. [Paras 10, 11]

The order of the Commissioner (Appeals) deleting the addition under section 68, the disallowance of interest and the addition towards alleged commission was affirmed.

Final Conclusion: The Tribunal upheld the order of the Commissioner (Appeals) deleting the additions made in respect of the unsecured loan, the related interest and the alleged commission. The Revenue's appeal for Assessment Year 2017-18 was dismissed.

Limitation for reassessment after search - Escaped income represented in the form of asset - Conditions u/s 149(1)(b) - Post-search assessment procedure - Estimation of gross profit on unaccounted sales - Cessation of liability

Limitation for reassessment after search - Ten-year period under section 149 - validity of Reassessment for A.Y. 2013-14 beyond the permissible ten-year period - HELD THAT: - The Tribunal held that, the search having taken place on 21.01.2023 in the previous year relevant to A.Y. 2023-24, the ten assessment years that could be covered by notice under section 148 extended only up to A.Y. 2014-15. A.Y. 2013-14 thus fell outside the statutory period. The notice under section 148 and the consequent reassessment were therefore barred by limitation. [Paras 17]

The Revenue's appeal for A.Y. 2013-14 was dismissed as the reassessment was time-barred.

Escaped income represented in the form of asset - Jurisdiction for reopening beyond six years - whether Reassessment for A.Ys. 2014-15 to 2017-18 was without jurisdiction since the alleged escaped income was not represented in the form of an asset? - HELD THAT: - For these years, the Tribunal found that the notices under section 148 had been issued beyond six years from the relevant assessment years. In such a case, reopening was permissible only if the case could have been reopened u/s 153A, which required the escaped income to be represented in the form of an asset. The additions in these years were on account of unaccounted sales and estimated expenses, and no cash was found in search. Since the escaped income was not represented as an asset, the initiation of proceedings itself lacked jurisdiction. [Paras 18]

The notices under section 148 and the reassessment proceedings for A.Ys. 2014-15 to 2017-18 were held bad in law; the assessee's appeals were allowed and the Revenue's appeals were dismissed for the overlapping years.

Conditions u/s 149(1)(b) - Reopening beyond three years - Reassessment for A.Ys. 2018-19 to 2020-21 validity if escaped income alleged by the Assessing Officer did not fall within any of the categories specified in section 149(1)(b) - HELD THAT: - The Tribunal noted that the notices under section 148 for these years were issued after expiry of three years, so the conditions of section 149(1)(b) had to be satisfied. The assessments, however, were made on account of unaccounted sales and estimated disallowance of expenses. The Tribunal found that such income was not represented in the form of an asset, expenditure in respect of a transaction or event, or entry in the books of account of the nature contemplated by section 149(1)(b). Since the statutory condition for reopening beyond three years was not met, the notices lacked legal jurisdiction. [Paras 19, 20]

The notices under section 148 and the consequent reassessment orders for A.Ys. 2018-19 to 2020-21 were quashed.

Estimation of gross profit on unaccounted sales - Reasonable profit rate - HELD THAT: - The Tribunal accepted that material found in search indicated unaccounted purchases as well as unaccounted indirect expenses including salary and administrative expenses. In that factual setting, it held that adoption of gross profit at 16.50% was excessive. To meet the ends of justice, the gross profit rate was restricted to 10%. [Paras 21]

The addition for A.Y. 2021-22 was sustained only by applying a gross profit rate of 10%, and the assessee's appeal was partly allowed.

Post-search assessment procedure - Mandatory recourse to section 148 - HELD THAT: - The Tribunal held that, in view of Explanation 2 to section 148, once search had been conducted on 21.01.2023, the permissible statutory course for the impugned year was to initiate proceedings under section 148 and comply with section 148B before passing the assessment order. The Assessing Officer instead proceeded under the normal provisions of section 143(3). That course being contrary to the statutory scheme applicable after search, the assessment proceedings and the order were held to be without jurisdiction. [Paras 22]

The assessment for A.Y. 2022-23 was held bad in law and the assessee's appeal was allowed.

Cessation of liability - Addition u/s 41(1) - Commissioner (Appeals) treating the recorded sundry creditors as ceased liabilities u/s 41(1) - HELD THAT: - The Tribunal found that the liabilities continued to be recorded and acknowledged in the books of account and audited financial statements. It was also uncontroverted that the amount had neither been written back in the books nor claimed as deduction in any earlier year. In those circumstances, there was no cessation of liability, and the addition sustained under section 41(1) was unwarranted. [Paras 23]

The addition sustained under section 41(1) for A.Y. 2023-24 was directed to be deleted.

Final Conclusion: The Tribunal held the reassessment proceedings for A.Ys. 2013-14 to 2020-21 unsustainable on limitation and jurisdictional grounds, partly reduced the profit addition for A.Y. 2021-22, and quashed the assessment for A.Y. 2022-23 as well as the section 41(1) addition for A.Y. 2023-24. Accordingly, all departmental appeals were dismissed, the assessee's appeals were allowed except for A.Y. 2021-22, which was partly allowed.

Penalty u/s 271DA - Admissibility of electronic evidence - Penalty for cash receipts - section 269ST violation - Interplay between cash receipt restriction and loan transaction provisions

Penalty under Section 271DA - Admissibility of electronic evidence - HELD THAT: - The Tribunal held that the penalty against the assessee was based on the very same seized digital material and alleged hawala token that had been found inadmissible in the connected case of the searched group. Once the underlying electronic material was not legally admissible for drawing factual conclusions, the same material could not furnish the basis for levy of penalty in the assessee's case. On that footing, the penalty lacked legal foundation. [Paras 7, 8]

The penalty was held unsustainable and was quashed.

Section 269ST vis-a-vis loan transactions - Exclusion of transactions covered by Section 269SS - HELD THAT: - The Tribunal found that the nature of the money transaction was a loan transaction. It therefore held that, if at all, the matter would fall under Section 269SS and not Section 269ST. Since the proviso to Section 269ST expressly excludes transactions covered by Section 269SS, penalty founded on contravention of Section 269ST could not be maintained. [Paras 7]

The penalty under Section 271DA, premised on Section 269ST, was not legally tenable.

Final Conclusion: The Tribunal quashed the penalty under Section 271DA for all the three assessment years. It held that the penalty was founded on inadmissible electronic material and, in any event, Section 269ST was not attracted to a loan transaction falling within the exclusion for matters covered by Section 269SS.

Reopening after four years - Failure to disclose fully and truly all material facts - Scope of reassessment - Addition on issue other than recorded reasons

Reopening after four years - Failure to disclose fully and truly all material facts - reopening of assessment for AY 2014-15 initiated after four years on the basis of Form 26AS material - HELD THAT: - The Tribunal found that the recorded reasons showed that the AO reopened the case only on the footing that excess TCS had been claimed with reference to purchases reflected in Form 26AS. It further held that the reasons did not make out any proper case of escapement arising from failure of disclosure by the assessee, and no material was shown to establish such failure. Since Form 26AS was already available to the Assessing Officer at the time of the original assessment, the statutory condition for reopening after four years was not satisfied. [Paras 8, 9]

The reopening was held unsustainable.

Scope of reassessment - Addition on issue other than recorded reasons - TCS credit - Whether addition on account of excess purchases could not be sustained when the recorded reasons for reopening were confined to withdrawal of alleged excess TCS claim and no addition was made on that recorded issue? - HELD THAT: - The Tribunal noted that the recorded reasons were specifically directed to withdrawal of excess TCS claimed in the relevant year. In the reassessment order, however, the Assessing Officer proceeded to disallow the alleged excess purchases themselves, though the assessee's case was that the goods were received and accounted for in the next year, a fact not controverted by the Assessing Officer. Applying the settled principle in Mohammad Juned Dadani [2013 (2) TMI 292 - GUJARAT HIGH COURT] that where no addition is made on the issue for which reopening was initiated, an addition cannot be made on another issue, the Tribunal held that the impugned addition could not survive. [Paras 8, 9]

The addition made on account of excess purchases was deleted as being beyond the permissible scope of the reassessment.

Final Conclusion: The Tribunal allowed the assessee's appeal, holding that the reassessment was invalid and that the addition made on account of excess purchases could not be sustained, the recorded reasons being confined to alleged excess TCS claim.

Revision u/s 263 - Lack of inquiry - Erroneous and prejudicial order - Taxability of difference between purchase consideration and stamp duty value - Principal Commissioner invoked revisionary jurisdiction on the ground that the reassessment and consequential rectification orders had not examined the applicability of the relevant provision governing taxability of the difference between the purchase consideration of immovable property and its stamp duty valuation

HELD THAT: - The Tribunal found that, though the reassessment proceedings had examined the sale-side transaction and the valuation dispute relating thereto, there was complete absence of inquiry on the purchase-side issue arising from the record.

The material on record showed purchase of immovable property at a value lower than the stamp duty valuation, yet the reassessment order was entirely silent on the applicability of section 56(2)(vii)(b).

AO had merely accepted the assessee's reference to section 56(2)(x), which was not applicable to the assessment year under consideration, and therefore failed to examine the correct statutory provision.

Tribunal held that such lack of inquiry and non-application of mind on a material issue rendered the order both erroneous and prejudicial to the interests of the Revenue. Since the Principal Commissioner had not made any conclusive addition but had only restored the matter for proper verification and fresh decision after giving opportunity to the assessee, the exercise of revisionary power was valid. [Paras 7]

The order passed under section 263 was upheld and the challenge to the revision failed.

Final Conclusion: The Tribunal upheld the revision under section 263, holding that the reassessment order suffered from lack of inquiry on a material issue affecting the Revenue. The assessee's appeal was accordingly dismissed.

Additional interest on refundu/s 244A(1A) - delay in passing the order giving effect to the appellate order - Entitlement to additional interest on refund where the order giving effect to the appellate order was not passed within the period prescribed for such consequential order

HELD THAT: - The Tribunal held that where the Assessing Officer failed to pass the appeal effect order within the period contemplated by section 153(5), the assessee became entitled to additional interest under section 244A(1A). On the facts verified before it, the Tribunal found that the appeal effect order had been passed only on 2.2.2023, much beyond the statutory period, and therefore additional interest at 3% per annum was payable from 1st November, 2018, being the date following expiry of the time allowed, until the actual grant of refund. The direction of the first appellate authority merely to verify the claim was, therefore, insufficient once the statutory entitlement stood attracted. [Paras 4]

The Assessing Officer was directed to verify the computation and grant interest under section 244A(1A) to the assessee.

Final Conclusion: The appeal was allowed. The Tribunal held that, owing to the delay in passing the appeal effect order beyond the statutory time, the assessee was entitled to additional interest under section 244A(1A), subject to verification of computation by the Assessing Officer.

Limitation for final assessment order - Communication of electronically issued assessment order - E-Assessment Scheme authentication and delivery - validity of final assessment order made pursuant to the DRP directions - HELD THAT: - The Tribunal held that, for purposes of section 144C(13), completion of the final assessment order is not achieved merely by manually signing or dating the order. Applying the principle that an order affecting rights becomes effective only when it is put beyond the control of the authority and, in the context of electronic assessment, must be delivered in the manner prescribed under the E-Assessment Scheme, the Tribunal found that the order was admittedly served on the assessee only on 21 August 2024. Since the DRP directions were issued on 27 June 2024, the final assessment order had to be completed within one month from the end of that month, i.e. by 31 July 2024. In the absence of dispatch or communication within that statutory period, the order was barred by limitation. [Paras 14, 15]

The assessment order, though bearing the date 31 July 2024, was held invalid as time-barred because it was communicated only on 21 August 2024.

Final Conclusion: The Tribunal allowed the appeal and held that the final assessment order for AY 2020-21 was barred by limitation. Mere signing of the order within time did not satisfy section 144C(13) when its communication to the assessee occurred only after expiry of the statutory period.

Applicability of section 56(2)(viib) - Consideration for issue of shares - sale of shares at a pricemore than the Fair Market Value

HELD THAT: - The Tribunal held that section 56(2)(viib) applies only where a closely held company receives consideration for issue of shares in excess of the fair market value. On the facts recorded, the assessee had purchased or subscribed to shares and had not received any consideration on issue of shares by itself. Since the statutory condition for attracting section 56(2)(viib) was absent, the addition made by applying that provision was unsustainable. [Paras 4]

The addition made under section 56(2)(viib) was deleted.

Penalty under section 271(1)(c) - Consequential penalty - HELD THAT: - The Tribunal treated the penalty as entirely consequential to the disputed addition. Once the quantum addition was deleted, the basis for the penalty ceased to exist and the penalty was therefore liable to be deleted. [Paras 6]

The penalty in dispute was deleted.

Final Conclusion: The Tribunal allowed both appeals. It held that section 56(2)(viib) was inapplicable to the assessee's transaction since the assessee had not received consideration for issue of shares, and the penalty was consequently deleted.

TDS u/s 195 - Fees for technical services - make available test - Tax deduction at source on payments to non-residents - Treaty override where more beneficial 0 Disallowance for non-deduction of tax on payments to non-residents - Beneficial DTAA provisions - HELD THAT: - The Tribunal held that the controversy stood covered by the coordinate Bench decision in the assessee's own case [2024 (6) TMI 1215 - ITAT DELHI] wherein as accepted that for payments made to residents of countries whose treaties contain a make available condition, a payment can be treated as fees for technical services only if technical knowledge, know-how or skill is made available to the recipient so as to enable independent future use.

As no material was shown to establish satisfaction of that treaty condition in respect of the repair and overhaul services, the payments were not chargeable to tax in India under the applicable treaty provisions; consequently, the obligation to deduct tax under section 195 did not arise, and the disallowance under section 40(a)(i) could not be sustained. [Paras 9, 10]

The disallowance was deleted and the assessee's grounds on this issue were allowed.

Final Conclusion: Following the earlier coordinate Bench decision in the assessee's own case, the Tribunal held that the repair and overhaul payments to the non-resident entities were not taxable as fees for technical services under the applicable treaty provisions in the absence of satisfaction of the make available condition. The assessee was therefore under no obligation to deduct tax at source, and the disallowance under section 40(a)(i) was deleted.

Additions based on seized diaries and statements - Cross-examination of material witnesses - Principles of natural justice

Whether Additions founded on seized private diaries read with statements of the persons allegedly operating the cash committees could be sustained without granting the assessee an opportunity to cross-examine those witnesses? - HELD THAT: - The Tribunal held that the foundation of the additions was the statement of the person alleged to be maintaining or acting upon the diaries, followed by the statement of the person stated to be operating the committees, and not self-explanatory documentary evidence maintained in the regular course of business. The assessment order itself reflected discrepancy regarding the place from which the diaries were recovered, and the assessee had throughout denied participation in any such committee.

In these circumstances, where the private diaries did not contain complete narration of the transactions and their contents were sought to be supplemented by oral statements to establish the alleged modus operandi and the assessee's involvement, cross-examination of those vital witnesses became essential. Mere supply of copies of statements and the alleged incriminating material was not sufficient compliance with natural justice.

Tribunal further held that the authorities could not pre-judge that cross-examination would be ineffective or unnecessary merely because some evidentiary value attaches to a statement recorded on oath. Since the conclusions had been drawn on material which, in the absence of cross-examination, could not be relied upon against the assessee in the manner adopted, the additions were unsustainable. [Paras 12, 13, 14, 15, 16]

The denial of cross-examination vitiated the additions, which were accordingly deleted.

Final Conclusion: The Tribunal held that, on the facts of the case, the assessee was entitled to cross-examine the witnesses whose statements were used to connect the private diaries with the alleged unaccounted transactions. As that opportunity was not granted, the additions were held unsustainable and were deleted.

Unexplained cash credits in share capital - Public limited company and source of source - Ad hoc disallowance of business expenditure - Commercial expediency under section 37(1)

Unexplained cash credits in share capital - share capital received through preferential allotment - Public limited company and source of source - Burden of proof under section 68 - HELD THAT: - The Tribunal held that the assessee, being a public limited company whose shares were listed and allotted under regulatory supervision, had furnished the primary particulars of the subscribers, including their names, PAN, addresses and allotment details, as well as the return of allotment filed with the Registrar of Companies. On those facts, the initial burden under section 68 stood discharged. The Tribunal further held that the additional requirement of explaining the source of source did not apply to a company in which the public are substantially interested. Once the primary details were on record, any further doubt regarding creditworthiness required independent enquiry by the Assessing Officer, which was not undertaken. The addition was therefore held to rest on mere assumption, and the decision relied upon by the Revenue was distinguished on facts. [Paras 21, 22, 23, 25, 26]

The addition under section 68 on the share capital received in Assessment Year 2017-18 was deleted.

Ad hoc disallowance of business expenditure - Commercial expediency under section 37(1) - Personal expenditure of company - HELD THAT: - The Tribunal found that the expenses grouped under other expenses were regular business outgoings and that ledger accounts and supporting details had been furnished during assessment. No specific defect, unverifiable item, or non-business element was identified by the Assessing Officer, yet a lump-sum disallowance was made. Referring to section 37(1), the Tribunal held that once expenditure is shown to have been incurred wholly and exclusively for business, no ad hoc disallowance is permissible. It also held that, being an artificial juridical person, a company cannot incur personal expenditure in the manner assumed by the disallowance. The Tribunal further noted that some amounts had already been added back by the assessee and that similar disallowance in an earlier year had not survived, reinforcing that a fresh disallowance without specific defects could not be sustained. [Paras 31, 32, 33, 34, 35]

The disallowance of part of the other expenses for Assessment Year 2017-18 was deleted.

Final Conclusion: Both appeals were allowed. The Tribunal deleted the addition under section 68 and the ad hoc disallowance of expenses for Assessment Year 2017-18, and on the same reasoning deleted the additions made for AY 2022-23; the stay petition was consequently treated as infructuous.

Reassessment on borrowed satisfaction - Tangible material for belief of escapement - Section 68 and recorded sales receipts - Double addition

Reassessment on borrowed satisfaction - Tangible material for belief of escapement - basis of information received from the Investigation Wing and the statement of the alleged entry operator - HELD THAT: - The Tribunal found that, apart from the information received from the Investigation Wing and the statement of the alleged entry provider, the Assessing Officer had no material of his own to connect the assessee with any actual escapement of income. The notices issued to the alleged suppliers were viewed as a mere attempt to create documentation after already proceeding on the assumption that they were entry providers, rather than as real investigation against the assessee. The Tribunal held that reopening cannot be sustained merely on such information unless the Assessing Officer properly forms his own belief on credible material showing escapement in the assessee's case. The authorities cited for the Revenue were held distinguishable because those cases involved definite or prima facie material, which was absent here. [Paras 13, 14, 17]

The initiation of proceedings under sections 147 and 148 was held to be without credible material in the possession of the Assessing Officer and could not be sustained.

Addition u/s 68 - bogus purchases and accommodation entries - recorded sales receipts - Double addition - HELD THAT: - The Tribunal noted that the assessee was a wholesale trader and that the purchases as well as the resulting sales stood recorded in the books. Proceeding on that factual position, it held that once the amount had already entered the trading results and the sales had been declared, the same sum could not again be brought to tax under section 68. Applying the principle laid down by the coordinate bench in Kishore Jeram Bhai Khaniya [2014 (5) TMI 699 - ITAT DELHI] Tribunal held that invoking section 68 in such circumstances results in a duplicate addition, since the amount has already been offered through the disclosed business transactions. [Paras 15, 16, 17]

The addition made under section 68 in respect of the alleged bogus purchases was deleted.

Final Conclusion: Both appeals were allowed. The Tribunal held that the reassessment lacked independent tangible material in the hands of the Assessing Officer and, in any event, the addition under section 68 could not survive where the purchases and corresponding sales were already recorded in the books.

Reassessment on borrowed satisfaction - Reason to believe and live nexus with tangible material - Unexplained cash credit - Discharge of onus as to identity, creditworthiness and genuineness - Use of third-party statements without nexus to the relevant transaction

Reassessment on Borrowed satisfaction - Reason to believe - Tangible material - Reassessment jurisdiction - reassessment initiated u/s 147 solely on investigation wing material and third-party statements - live nexus between the material and the assessee's alleged escaped income - HELD THAT: - The Tribunal held that the recorded reasons merely reproduced information received from the Investigation Wing and statements of directors, without any fresh enquiry or independent examination by the Assessing Officer. The material relied upon was not confronted to the assessee, and the assessment order itself showed that the reported modus operandi related to another entity without establishing any correlation with the assessee or with the impugned receipts. The determinative principle applied was that information from the Investigation Wing cannot, by itself, constitute a valid foundation for reopening unless the AO independently examines the material and records a reasoned belief showing a live link between such material and escapement of income in the assessee's case. On that basis, the notice under section 148 and the consequential reassessment were held to be bad in law. [Paras 11, 13, 19]

The assumption of jurisdiction under section 147 was held to be invalid and the reassessment order unsustainable.

Addition u/s 68 - onus to prove - Identity, creditworthiness and genuineness - Banking channel transactions - Repayment of advances - Unreliable third-party statements - HELD THAT: - The Tribunal found that the assessee had produced the ledger accounts, bank statements, confirmations, returns and financial statements of the two concerns, along with the memoranda under which the funds were advanced for land procurement and project development purposes. The advances were reflected in the lenders' balance sheets, were routed through banking channels, and were subsequently repaid, with no adverse inference drawn by the Revenue at the time of repayment. The statement of one director relied upon by the Assessing Officer was held to have no evidentiary value against the assessee for the relevant receipts, since he was not a director of those companies when the funds were advanced. The Tribunal further held that, once the assessee had furnished primary documentary evidence establishing identity, creditworthiness and genuineness, the Assessing Officer could not sustain the addition merely by relying on appraisal material and untested statements without conducting specific enquiry to dislodge the documents produced. [Paras 23, 24, 27, 28, 29]

The assessee was held to have discharged its burden under section 68, and the addition was deleted on merits as well.

Final Conclusion: The Tribunal allowed the appeal, holding that the reopening was invalid for want of an independent and legally sustainable reason to believe. It further held on merits that the assessee had satisfactorily established the identity, creditworthiness and genuineness of the impugned receipts, and the addition under section 68 was liable to be deleted.

Breach of conditions for operating a public bonded warehouse - location of bonded tanks, estimation of assessable value, and interpretation of regulations - Imposition of redemption fine and penalty -SC [2025 (8) TMI 1015 - SC ORDER],dismissed the special leave petition and upheld the HC's decision [2024 (12) TMI 101 - BOMBAY HIGH COURT] that no substantial question of law arose, thereby affirming suspension of the respondent's warehousing operations for breach of bonded warehouse conditions and the imposition of the redemption fine and penalty. The Court found no reason to interfere with the impugned HC order, leaving the suspension and financial sanctions in place.​​​​​​​ -HELD THAT:- Delay was condoned and the special leave petitions were dismissed after recording that a similar issue had already been dismissed in an earlier special leave petition.

Liability to pay cost recovery charges for customs officers deployed at the Container Freight Station -demand notices and consequential restriction on movement of cargo - Estoppel by conduct - Res judicata -Principle of contemporanea expositio est optima et fortissima in lege - Substantial compliance - Operational restrictions on Container Freight Station.

Cost recovery charges - Custodian liability - Substantial compliance - HELD THAT: - The principle of contemporanea expositio est optima et fortissima in lege [contemporaneous exposition is the best and strongest in law], also lends support to the respondent’s interpretation of the regulatory framework. The consistent executive understanding of the Regulations of 2009, the Public Notices, Circulars and administrative practice unmistakably indicate that operators of ICDs/CFSs are liable to bear the expenses of customs personnel deployed for facilitation and supervision of customs operations unless specifically exempted. Such contemporaneous administrative construction, particularly in matters involving specialised fiscal and customs administration, deserves due weight unless shown to be manifestly arbitrary or contrary to statute. The petitioner has failed to establish any such inconsistency. On the contrary, the petitioner’s own conduct over several years in remitting cost recovery charges accords with the respondent’s interpretation of the regulatory scheme.

On the record, the Court found that customs personnel were in fact deployed and that the CFS could not have functioned without customs supervision and clearance support. The later subsuming of diverted posts into the departmental cadre strength was treated as an internal administrative regularisation which did not extinguish the petitioner's obligation, particularly when no exemption order had been granted in its favour. Applying the doctrine of substantial compliance, the Court rejected the petitioner's technical objection founded on cadre sanction and held that the essential statutory purpose had been fulfilled through actual customs supervision and operational support at the facility. [Paras 38, 39, 40, 41, 42]

In a recent judgment in Sumita Jha Vs. Aaone Developers Private Limited [2025 (3) TMI 1662 - SC ORDER], the Supreme Court, though was dealing with absolute different fact situation as well as legal context, has propounded a principle that “substantial compliance”, in simple terms, refers to a pragmatic approach whereby Courts in exceptional circumstances, recognize a party’s partial or not-so-strict adherence to the statutory procedural requirements, provided the basic legislative intent is fulfilled.

The demand for cost recovery charges was held to be legally sustainable and the petitioner's challenge to the existence of such liability was rejected.

Res judicata - Estoppel by conduct - Acquiescence - Writ jurisdiction - HELD THAT: - The Court found force in the objection that the petitioner had already challenged the validity and applicability of the levy before the Delhi High Court, which rejected that challenge and left open only the question of quantification on grounds not previously decided. In that view, the petitioner was barred from reagitating the basic plea that no liability for payment of cost recovery charges existed at all. The Court also relied on the petitioner's own conduct in accepting the regulatory framework, furnishing security, remitting charges for a substantial period and applying for waiver, to hold that it was estopped from asserting an inconsistent position. Since the surviving controversy on quantification involved disputed questions relating to deployment, staffing pattern and calculation, the Court held that such matters were not amenable to determination in exercise of writ jurisdiction. [Paras 43, 46, 47]

The challenge to the levy on its foundational basis was held barred, and no interference was warranted under Article 226 on the remaining factual dispute of quantification.

Operational restrictions on Container Freight Station - Regulatory compliance - HELD THAT: - The Court held that once the petitioner had persistently defaulted in payment despite repeated demands, the respondent authorities were justified in imposing operational restrictions on the CFS to protect revenue and enforce regulatory compliance. The impugned communication was treated as a consequential administrative measure flowing from continued non-compliance under the statutory and contractual framework governing the facility. In the absence of arbitrariness, disproportionality, jurisdictional error or other procedural impropriety, the Court declined to interfere. [Paras 45, 47]

The impugned restriction on movement of cargo to the CFS was upheld.

Final Conclusion: The High Court dismissed the writ petition, upholding the demand notices for cost recovery charges and the consequential restriction imposed on movement of cargo to the petitioner's CFS. It held that the petitioner was bound by the accepted regulatory framework, could not reopen the issue of liability after the earlier Delhi proceedings, and had shown no ground for interference in writ jurisdiction.

Enhancement of assessable value based on written acceptance by the importer, without a speaking order - Waiver by consent letter - Transaction value - Reassessment of imported goods - Reason to doubt - Contemporaneous import data - Right to challenge reassessment. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) had rejected the appeals solely on the premise that written acceptance of the enhanced value dispensed with the need for a speaking order under Section 17(5), without considering the importers' letters seeking provisional or final clearance on payment of duty on the enhanced value under protest. Those letters showed that the case was not one of unconditional acceptance simpliciter. Following Niraj Silk Mills and Hanuman Prasad & Sons [2024 (11) TMI 1361 - DELHI HIGH COURT] the Tribunal held that written acceptance of reassessment, at the highest, relieves the proper officer only of the obligation to issue a speaking order and does not amount to abandonment of the statutory right to question the reassessment or the rejection of declared value. Since the impugned orders proceeded on a contrary basis, they were unsustainable. [Paras 9, 10, 11, 12, 13]

The impugned orders rejecting the appeals on the sole ground of written acceptance of enhancement were set aside and the appeals were allowed.

Final Conclusion: Following the Delhi High Court decision in Niraj Silk Mills and Hanuman Prasad & Sons, the Tribunal held that written acceptance of reassessment did not extinguish the importers' right to challenge enhancement of value. The orders of the Commissioner (Appeals) were therefore set aside and all five appeals were allowed with consequential relief according to law.

Classification of imported goods - Petroleum products - Classifiable as Industrial Composite Solvent under Customs Tariff Item 3814 0010 Or as Superior Kerosene Oil under Customs Tariff Item 2710 1910 on the basis of the laboratory test reports -Conclusive laboratory testing under BIS standards - Imposition of penalty - Appellate power under Section 128A.

Classification of Incomplete test reports - BIS standards - Most akin test -HELD THAT: - The Tribunal held that, for classification as Superior Kerosene Oil, the goods had to conform to the prescribed BIS specification referred to in the supplementary note to Chapter 27. The reports of the JNCH laboratory and the CRCL laboratory had not tested all the eight prescribed parameters, and the parameters relating to burning quality and total sulphur content had not been established. In the absence of complete conformity with the prescribed standard, the reports were inconclusive and could not form a legally sustainable basis for revising the declared classification, rejecting the declared value, or sustaining confiscation, penalty and related consequences. Following the Supreme Court [2025 (4) TMI 23 - SUPREME COURT] approach that incomplete conformity testing cannot justify confiscatory action and that classification in such cases cannot rest on inconclusive evidence, the Tribunal held that the declared classification had to prevail. [Paras 8, 9, 11]

The reclassification to CTI 2710 1910 and the consequential demands, confiscation, penalty and redemption fine were set aside.

Appellate jurisdiction - Enhancement of redemption fine - Reasonable opportunity of hearing - HELD THAT: - The Tribunal held that the Commissioner (Appeals), having already passed one order on the same order-in-original, could not uphold that order in one appeal and thereafter modify it in another appeal by enhancing the redemption fine. It further found that the statutory requirement of giving the appellant a reasonable opportunity before passing an adverse order had not been complied with. On that basis, the later appellate order was treated as contrary to Section 128A and void ab initio. [Paras 10, 11]

The appellate order dated 05.10.2023 enhancing the redemption fine was held void and was set aside.

Final Conclusion: The Tribunal held that the Department could not displace the declared classification of the imported goods on the strength of incomplete laboratory reports which did not establish conformity with all prescribed BIS parameters for Superior Kerosene Oil. It also held that the later appellate order enhancing redemption fine against the same order-in-original, without complying with the statutory requirement of reasonable opportunity, was void; both impugned appellate orders were therefore set aside and the appeals were allowed with consequential relief.

Seeking Transposition of parties on withdrawal of appeal - appeal under Section 10F - Error apparent on the face of the record Allotment of shares - Right issue - Alteration of AOA to allow sale of shares to third parties -Representative character of oppression and mismanagement proceedings - review applicant -prior notice of the withdrawal of the appeal - barred by estoppel and constructive res judicata - Scope of review jurisdiction - Multiplicity of proceedings.

Transposition of parties on withdrawal of appeal - Order XXIII Rule 1-A CPC - Live proceeding requirement - HELD THAT: - The general proposition laid down in Kiran Tandon v. Allahabad Development Authority & Anr. [2004 (3) TMI 835 - SUPREME COURT] and Smt Saila Smt Saila Bala Dassi v. Smt Nirmala Sundary Dassi [1958 (2) TMI 46 - SUPREME COURT], to the effect that the provision of Order I Rule 10 is available at any stage of the proceeding, including appeal, is not also in dispute here. The context of suo motu exercise of such power under Order I Rule 10(2) is not disputed; however, in view of the specific stipulation in Order XXIII Rule 1-A that the right of transposition accrues on an application being made, the question of this Court suo motu transposing the R/A, without there being any application by the R/A being on record at the time of dismissal of the appeal, cannot be a tenable proposition in law.

Even as per the language of Rule 1-A of Order XXIII, the relevant point of time when an application for transposition is to be considered is when the suit is withdrawn or abandoned.

The authorities cited by the review applicant were distinguished on facts or context, and the Kerala view in Noushad [2018 (1) TMI 1779 - KERALA HIGH COURT] was expressly not accepted. The Court further held that no question arose of suo motu transposition, since Order XXIII Rule 1-A specifically contemplates an application by the party seeking transposition, which was not on record when the appeal was dismissed as withdrawn. [Paras 71, 72, 73, 84, 85]

The issue was decided against the review applicant; post-withdrawal transposition was held impermissible.

Representative capacity - Sections 397, 398 and 399 of the Companies Act, 1956 - Appeal by person aggrieved - HELD THAT: - Construing Sections 397, 398 and 399 of the 1956 Act, the Court held that proceedings for oppression and mismanagement may, depending on the facts, be instituted either in a representative capacity under Section 399(3) with written consent of other members, or in an individual capacity by a member holding the requisite qualification shares. In the present case, the original company petition had been filed by respondent No. 5 on the strength of her own qualifying shareholding and not on behalf of other members. The original appellants in the Section 10F appeal were respondents in that proceeding and, in any event, Sections 397 to 399 contemplate representative action only by applicants, not respondents. Section 10F itself confers a right of appeal on a 'person aggrieved', which the Court held to be an individual and not representative appellate right. The Court also found that the grounds available to the original appellants and to the review applicant were distinct, that they were represented by different counsel throughout, and that the order passed earlier in the appeal recorded that the review applicant supported the findings of the Company Law Board. Order XLI Rules 4 and 33 CPC were held not to create any automatic entitlement in a respondent to prosecute the appeal without independently preferring an appeal. [Paras 100, 101, 102, 103, 104]

The contention that the appeal was being prosecuted in representative capacity for the review applicant was rejected.

Notice of withdrawal - Service of notice - Diligence in pending proceedings - HELD THAT: - On the materials produced, the Court found that notice of withdrawal had been sent to the review applicant at its address, that the postal records and tracking report supported delivery, and that the same postal tariff paid for service on the other parties belied the suggestion that the withdrawal application had not been enclosed for the review applicant. The Court further held that, since the review applicant controlled respondent No. 1 company, service on that company also furnished a basis to attribute knowledge to the review applicant. The advocate's subsequent communication and the earlier service letter enclosing the withdrawal application were treated as additional material showing awareness. The Court also observed that the withdrawal application had remained in the cause list for some time and that listing itself ordinarily affords notice to parties who had entered appearance. Since the affidavits of service had been affirmed prior to the dismissal of the appeal, the challenge to their production at the review stage was not accepted. [Paras 108, 109, 110, 111, 112]

The Court held that the review applicant had ample prior notice of the withdrawal and yet neither appeared nor applied for transposition before dismissal of the appeal.

Whether the review applicant is barred by estoppel and constructive res judicata from seeking transposition at this stage ? - HELD THAT: - The Court relied on the earlier order in the appeal recording that the review applicant supported the findings of the Company Law Board and had no objection except on a limited aspect of valuation. That position, never challenged before the concerned Bench, precluded the review applicant from subsequently asserting a common cause with the original appellants and seeking to continue their appeal. The Court also found that, despite prior notice of the proposed withdrawal, no transposition application had been filed during the pendency of the appeal. Further, though a prayer for transposition formed part of the recall application, it was not pressed when that application was heard. The explanation that the Bench then lacked regular determination in company matters was rejected, the Court holding that once seized of the recall prayer, it could, if recall were granted, restore the matter to the stage prior to dismissal and pass all consequential orders. In that background, the Court held that the review applicant could not use review proceedings to reopen matters already concluded while dismissing the recall application. [Paras 113, 114, 115, 116, 117]

The Court held that the review applicant was barred from re-agitating the plea of transposition at the review stage.

Scope of review jurisdiction - Error apparent on the face of the record - Review not an appeal in disguise - HELD THAT: - In Y. Venkannachowdary & Ors. v. The special Deputy Collector, Land Acquisition (General), Hydrabad District & Ors.[1980 (4) TMI 315 - ANDHRA PRADESH HIGH COURT], it was observed that mistake of counsel in not arguing a provision amounts to an error apparent on the face of record. Similarly, counsel’s mistake or oversight leading to non-application of the Court’s mind to a provision of law was held to come within the ambit of the review jurisdiction in Tinkari Sen & Ors. v. Dulal Chandra Das & Ors. [1966 (12) TMI 81 - CALCUTTA HIGH COURT] and Girdhari Lal Gupta v. D.H. Mehta & Anr. [1971 (2) TMI 135 - SUPREME COURT]

The Court held that review is confined to the well-recognised limits under Order XLVII Rule 1 CPC, namely error apparent on the face of the record, discovery of new matter, or grounds of like nature. While accepting the general propositions stated in the decisions cited by the review applicant regarding correction of patent errors and mistakes of counsel, the Court found no such circumstance in the present case. The grounds now urged had either already been considered while dismissing the recall application or were available to the review applicant at that time. At the highest, the complaints raised could amount to alleged errors of law to be examined in challenge before a superior forum, but not in review. The Court therefore held that the review application was an impermissible attempt to re-agitate the same issues and prolong the litigation. [Paras 120, 121, 122, 123, 124]

Review was held not maintainable on the grounds urged, and no interference with the order dismissing the recall application was warranted.

Final Conclusion: The review application was dismissed with costs. The Court held that no review ground was made out, since transposition could not be sought after the appeal had already been withdrawn, the appeal was never representative of the review applicant, the review applicant had prior notice of withdrawal, and the issues sought to be urged stood barred from re-agitation in review.

Refund of service tax allegedly paid in excess - Opportunity to produce supporting evidence -HELD THAT: - The Tribunal did not examine the merits of the rival contentions on refund or on the availability of CENVAT credit. Since the appellant stated that material evidence regarding payment of the service tax in cash needed to be produced, the Tribunal considered it appropriate to remit the matter for a fresh decision in accordance with law, expressly leaving all questions of law and fact open and directing that adequate opportunity be given to the appellant. [Paras 8, 9]

The impugned order was set aside and the matter was remanded to the Assistant Commissioner for fresh decision on the refund claim after affording adequate opportunity to the appellant.

Final Conclusion: The Tribunal set aside the appellate order and remanded the refund matter to the Assistant Commissioner for fresh adjudication. All questions on facts and law were left open, with a direction to afford the appellant adequate opportunity to place its evidence.

Taxable value of services - Reverse charge mechanism on legal and professional services and GTA services after including reimbursable expenditure in the taxable value - CENVAT credit on common input services used for taxable franchise service and exempted trading activity - Extended period of limitation - Suppression of material facts.

Taxable value of services - Reimbursable expenditure - Reverse charge mechanism -HELD THAT: - The Tribunal found that the dispute on short-payment arose because the department included reimbursable amounts in the gross taxable value, while the appellant had already paid service tax under reverse charge on the service component. Referring to Intercontinental Consultants & Technocrats Pvt. Ltd. vs. Union of India [2012 (12) TMI 150 - DELHI HIGH COURT], the Tribunal held that Rule 5(1) of the Valuation Rules could not enlarge the value beyond the consideration for the taxable service. Since the statutory amendment expressly including reimbursable expenditure in consideration came only in May 2015, and the period in dispute was prior thereto, the demand on reimbursable amounts was unsustainable. [Paras 11]

The confirmation of short-paid service tax on reimbursable amounts was set aside and this issue was decided in favour of the appellant.

Common input service credit - Trading as exempted service - Proportionate reversal of Cenvat credit - HELD THAT: - The Tribunal held that the appellant was engaged in both taxable and exempted activities and had availed the entire service tax paid under reverse charge on common input services without establishing proper segregation in terms of Rule 6. It noted that trading stood clarified as an exempted service for the purposes of the CENVAT Credit Rules and that, in the absence of compliance with the mechanism for separate accounts or the alternative reversal options, credit attributable to exempted activity could not be retained. The Tribunal also referred to Metro Shoes Pvt. Ltd. v. Commissioner of Central Excise [2008 (1) TMI 155 - CESTAT, MUMBAI] to hold that composite credit relatable to trading activity is not admissible. [Paras 12]

The direction for reversal of proportionate Cenvat credit was upheld and this issue was decided in favour of the department.

Extended period of limitation - Suppression of material facts - Penalty - HELD THAT: - The Tribunal held that the appellant had not maintained regular separate accounts for taxable and non-taxable activities and had availed full credit on input services despite being aware of its trading activity and the requirement that proportionate credit relatable to exempted activity was not admissible. This conduct was treated as suppression of material facts with intent to evade tax liability, thereby justifying invocation of the extended period. On that basis, the penalties imposed were also sustained. [Paras 13, 14]

The extended period was held to be rightly invoked and the penalties were upheld.

Final Conclusion: The appeals were partly allowed. The demand of short-paid service tax based on inclusion of reimbursable amounts was set aside, but the reversal of proportionate Cenvat credit, invocation of the extended period, and the penalties were upheld.

Extended period of limitation - Suppression of facts - demand of service tax -difference between Form 26AS/ITR figures and the value declared in ST-3 returns - HELD THAT: - The Tribunal found that the appellant was admittedly registered and was filing ST-3 returns on the ACES portal during the period in dispute, and that both the original and appellate authorities had accepted the value already declared and tax already paid in those returns. In that background, the allegation in the show cause notice and adjudication order that the appellant had not filed returns or had suppressed receipts was self-contradictory and unsupported, particularly when the department itself stated that it could not retrieve the returns from its own portal. The demand in the notice had been founded entirely on information received from the Income Tax authorities, without any independent enquiry or investigation as to the nature of the activity, the taxability of the receipts, or valuation under the statutory provisions. In these circumstances, the finding of suppression for invoking the proviso to section 73(1) was held unsustainable, and the extended period was wrongly invoked. The Tribunal therefore held that the demand itself was bad in law and, once the tax demand failed, the consequential interest, penalties and late fee also could not survive. [Paras 4]

The demand of service tax, together with interest, penalties and late fee, was set aside and the appeal was allowed.

Final Conclusion: The Tribunal held that the extended period had been wrongly invoked, since the appellant was regularly filing ST-3 returns and the demand had been raised solely on the basis of Income Tax data without independent investigation. The impugned order was therefore found unsustainable, and the demand of tax, interest, penalties and late fee was set aside.

Denial of Cenvat credit on input service invoices - procedural defects such as absence of registration details, mismatch of address, issuance prior to registration, and non-compliance with the input service distributor mechanism -Whether the appellants are eligible to avail Cenvat credit on the impugned invoices despite procedural deficiencies and discrepancies in the invoices or otherwise ? -HELD THAT: - The Tribunal found that the services covered by the impugned invoices were actually received by the appellant, that service tax had been paid by the service provider, and that the services were input services used in the course of business. On that basis, the defects relied upon by the department, namely absence of registration particulars, invoices having been issued prior to registration, the invoices being raised on the Chennai office though services were received at the Visakhapatnam unit, and non-routing through the ISD mechanism, were treated as technical and procedural in nature.

It is a settled principle that substantive benefit cannot be denied for procedural lapses when receipt of services is not disputed and tax payment is established. Hon’ble Supreme Court in the case of CCE Vs MDS Switchgear Ltd.[2008 (8) TMI 37 - SUPREME COURT], held that procedural infractions cannot defeat substantive benefit. Similarly, Tribunal Ahmedabad in the case of Parekh Plast (India) Pvt Ltd Vs CCE, Vapi [2011 (6) TMI 595 - CESTAT, AHMEDABAD], held that even though the invoices are raised in the name of head office and not in the name of Input Service Provider, defects in invoices can be omissions, which are totally curable and condonable. Tribunal Ahmedabad also in the case of Doshion Ltd Vs CCE, Ahmedabad [2012 (10) TMI 952 - CESTAT AHMEDABAD] held that there being no restriction for utilization of Cenvat credit on input services without allocating proportionately to various units during the relevant period, the omission to take registration as Input Service Distributor can at best be considered as procedural irregularity and no extra benefit is accruing to the assessee and no loss is caused to Revenue. In these circumstances, procedural irregularity can be ignored.

The Tribunal held that substantive Cenvat credit cannot be denied where receipt and use of the services and payment of tax are not in dispute, and that the head office and branch being the same legal entity, the address mismatch or failure to follow the ISD procedure did not justify denial of credit. [Paras 6, 7, 8, 9]

The denial of Cenvat credit on purely procedural grounds was held unsustainable and the appeal was allowed.

Final Conclusion: The Tribunal held that the defects pointed out in the invoices and the non-adoption of the ISD procedure were only procedural lapses, since receipt and use of the input services and payment of service tax were not disputed. The denial of Cenvat credit was therefore set aside and the appeal was allowed with consequential relief as per law.

Demand of duty and penalties - Third-party documents in clandestine removal - Relevancy of statements under Section 9D - Corroborative evidence for clandestine removal - denial of cross-examination.

Third-party documents - Clandestine removal - Corroborative evidence - HELD THAT: - The Tribunal found that the entire case was built on records maintained by a person working under the loading and unloading contractor, and not on records belonging to the appellant. Though some entries were said to tally partly with the appellant's transactions, that circumstance by itself did not establish clandestine removal. The Tribunal held that third-party documents, without independent corroboration, are not sufficient to fasten duty liability. It also noted the complete absence of verification from buyers, transporters or suppliers, no ascertainment of production capacity, and no supporting evidence such as raw-material procurement or other material circumstances necessary to sustain a charge of clandestine removal. On that reasoning, the demand based on the documents recovered from the possession of Shri Joydev Karmakar was held to be unsustainable. [Paras 7, 8, 9, 10, 12]

The allegation of clandestine manufacture and removal failed for want of admissible and corroborated evidence, and the duty demand could not be maintained.

Section 9D compliance - Cross-examination - Admissibility of statements - HELD THAT: - The Tribunal held that the statement of Shri Joydev Karmakar could not be treated as reliable evidence in the absence of examination-in-chief and without affording cross-examination to the appellant. It further noted that the statement of the contractor, under whom Shri Joydev Karmakar worked, had not been recorded at all. Applying the requirement of Section 9D, the Tribunal concluded that statements relied upon in adjudication, without following the prescribed procedure, could not be accepted as evidence for establishing clandestine removal. [Paras 11]

The statements relied upon in adjudication were liable to be excluded from consideration and could not support the demand.

Final Conclusion: The Tribunal held that the case of clandestine manufacture and removal was not established, as the demand rested on uncorroborated third-party records and inadmissible statements. The impugned order was set aside and the duty demand, interest and penalties against both appellants were consequently deleted.

Extended period of limitation - Suppression of information in the ER-1 returns - input services -Self-assessment - demand for recovery of the wrongly availed CENVAT credit with interest and penalty - Deemed manufacturer under section 4A - HELD THAT: - The Tribunal held that section 11A(4) could be invoked only where the statutory ingredients such as wilful suppression or contravention with intent to evade duty are established. The show cause notice merely alleged deliberate availment of inadmissible credit and stated that the irregularity was noticed in audit, but did not allege suppression of particulars in the ER-1 returns. The appellant had specifically stated in reply that the availment of credit was reflected in the ER-1 returns, and the order itself did not indicate that any required information had been withheld or misstated therein. The Commissioner (Appeals) rested the finding largely on the self-assessment regime and on the proposition that the assessee was responsible for correct availment of credit, but that reasoning travelled beyond the allegation in the notice and, in any event, could not by itself justify invocation of the extended period. The Tribunal followed its decisions in M/s GD Goenka Private Limited vs The Commissioner of Central Goods and Services Tax, Delhi South [2023 (8) TMI 995 - CESTAT NEW DELHI] and National Engineering Industries vs Commissioner of CGST & Central Excise [2025 (8) TMI 1552 - CESTAT NEW DELHI], and applied the principle stated by the Supreme Court in Pushpam Pharmaceutical Co. vs. Commissioner of Central Excise, Bombay [1995 (3) TMI 100 - SUPREME COURT] that suppression must be deliberate and with intent to evade duty. Mere detection in audit, when returns had been filed, did not establish the conditions required for the extended period. [Paras 25, 26, 27, 28, 29]

The demand having been issued wholly beyond the normal period could not be sustained by resort to the extended period; the impugned order was therefore set aside and the appeal was allowed, without examination of the merits of credit eligibility.

Final Conclusion: The Tribunal held that the department had failed to establish the statutory conditions for invoking the extended period of limitation under section 11A(4). Since the entire demand period was covered only by the extended period, the impugned order was set aside and the appeal was allowed, leaving the merits of CENVAT credit eligibility unexamined.

Scope of revisional interference - Framing Of Charge - Allegation against the officers of DGCEI - illegal detention as well as torture - Grave Suspicion - Prima Facie Case - Admissibility of electronic evidence - Benefit Of Doubt - CCTV footage and medical material.

Framing of charge and grave suspicion- Discharge of accused - Material contradictions and improvements - Scope of revisional jurisdiction -HELD THAT: - The Court held that, at the stage of charge, the test is whether the material discloses grave suspicion and not whether the prosecution version can ultimately result in conviction. Applying that standard, it found that the petitioner's case was seriously affected by belated embellishments and admitted improvements in material allegations, which could not be treated as mere clarifications. The medical material did not clearly support the allegation of assault, as the MLCs did not record the age of injuries and no corroborative record existed of any complaint before the Duty Magistrate, while no adverse physical condition was recorded on admission to jail. The Court also found no perversity in the Sessions Court's acceptance of the explanation regarding summons and noted that anomalies in the arrest memo, by themselves, were insufficient to create grave suspicion. In view of the limited revisional jurisdiction, and since the Sessions Court's appreciation of these infirmities was neither unreasonable nor untenable in law, interference was declined. [Paras 27, 28, 29, 31, 33]

The finding that the material was insufficient to proceed to trial was upheld, and the discharge of the accused officers was sustained.

Admissibility of electronic evidence - Section 65B certificate - CCTV footage - HELD THAT: - The Court held that the view adopted by the Trial Court on admissibility of the CCTV footage, based on State (NCT of Delhi) v. Navjot Sandhu [2005 (8) TMI 663 - SUPREME COURT], could not survive after the law declared in Anvar P.V. v. P.K. Basheer [2014 (9) TMI 1007 - SUPREME COURT]. Since the recording was produced in a copied form without the requisite certificate under Section 65B, and the hotel manager neither downloaded the footage nor prepared the CD nor witnessed its preparation so as to vouch for its integrity, the electronic record was inadmissible. Once the footage was excluded, the allegation that the petitioner was illegally apprehended from the hotel remained unsupported by reliable corroboration. [Paras 22, 23, 24]

The CCTV footage was rightly excluded from consideration and could not be used to establish grave suspicion against the accused.

Final Conclusion: The High Court dismissed the revision petitions and affirmed the Sessions Court's order discharging the accused officers. It held that the record, viewed on the standard applicable at the stage of charge, did not disclose grave suspicion, and the electronic evidence relied upon by the petitioner was not admissible.